Industrial production is the foundation of the global economy, but it is also a significant source of greenhouse gas emissions. As countries and industrial sectors strive to achieve net-zero emissions targets, carbon capture and utilization (CCU) shows promise. CCU offers the potential to convert captured CO2 into valuable products such as fuels, chemicals and building materials, thereby contributing to emission reductions and potentially creating new industrial value streams. These technologies have the potential "defossilize" industries that are dependent on carbon raw materials.

Although CCU holds significant promise for a sustainable industrial transition, it faces many systemic barriers in practice. With the exception of mature applications such as urea production for fertilizer, most applications of recycled carbon are only at pilot and demonstration scale and are not commercially mature.

Current status and projections

CCU has the potential to become a valuable lever in the broader effort to transition to a sustainable and circular economy. The captured CO2 can come from fossil point sources, biogenic sources or direct air capture (DAC). DAC (Direct Air Capture) is currently the most expensive and least available source.

Despite the theoretical potential, real investment is lagging behind. The International Energy Agency (IEA) has predicted that by 2050, 369 million tonnes per annum (Mtpa) CO2, which is in line with its Sustainable Development Scenario. However, the current project pipeline investment in CCU remains very low, with a total capacity of only approx. 21 Mtpa within the development until 2040. Current planned investments focus mainly on production fuels (such as PtL SAF and methanol), with a smaller share of chemicals and construction materials. For example, demand for e-methanol could reach around 40 Mtpa by 2050.

Political and financial obstacles

New CCU technologies face three main systemic barriers: inconsistent policy frameworks, financial obstacles, and the need for intensive cross-sectoral collaboration.

1. Political barriers: Policy frameworks are fragmented and inconsistent in different jurisdictions and often prefer sequestration (CCS) before use (CCU). This imbalance is holding back investment. For example, in the European Union (EU), the EU ETS (European Union Emissions Trading System) creates a disincentive for CCU because costs are charged unless the carbon is permanently stored. On the other hand, the US, with its 45Q tax credit, is attracting investment, although political volatility has led to uncertainty among investors.
2. Financial barriers: CCU companies face "valleys of death" (valleys of death), which are characterized by long development times, high capital requirements and immature business models. This makes access to conventional forms of financing difficult. Although investment in CCU companies has increased sharply since 2020, especially in the fuels and chemicals sector, investment is still dominated by US-based companies. To overcome these obstacles, it is necessary patient capital, which tolerates uncertainty and offers longer investment horizons.

Ways Forward: Stability and Cooperation

To make CCU viable, it requires supportive policy frameworks, patient capital and close collaboration between stakeholders. If governments want to implement CCU, they must commit to stable and long-term stimulus. It is crucial to develop a consensus on the methodology life cycle analysis (LCA)to ensure that CCU actually delivers emission reductions.

CCU growth also depends on unprecedented cross-sectoral collaboration. CCU innovators need to collaborate with existing industry players to gain access to infrastructure, expertise and market channels. The public sector can support this deployment, for example by providing catalytic capital, designing risk-sharing mechanisms (such as loan guarantees) and setting procurement requirements for CCU products.

CCU thus represents not only an environmental opportunity, but also an economic one, as it creates new sources of revenue from the valorization of waste streams. The success of CCU will depend on how stakeholders decide to create the right conditions for innovation, commitment and learning. JRi

Source: White book World Economic Forum (WEF) entitled "Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways"