Carbon capture: EU’s slow approach risks losing out to the US

Europe needs to prioritise CO2 sequestration and provide a business case to avoid losing out on industrial competitiveness to the United States, argues Zoltán Szabó.

Zoltán Szabó is a sustainability consultant for the Irish bioproduct business, ClonBio Group.

While reducing emissions is essential, the removal of billions of tons of CO2 from the atmosphere is equally crucial in addressing global warming.

In this context, carbon capture and storage (CCS) technologies, such as bioenergy with CCS and direct air capture, are gaining momentum in the US, and there is no reason why Europe should not follow suit.

The US’s Inflation Reduction Act, known primarily for its support of wind, solar, electric vehicles, and hydrogen, will have a profound impact on CCS deployment. By offering a tax credit of $85 per ton of sequestered CO2, over $10 billion is being mobilised as private investments in CCS deployment.

From 2025 onwards, the US is projected to sequester an estimated 30 million tons of CO2 underground annually, surpassing the European Commission’s aspirational target of 5 million tons.

While CCS is a well-established technology, its progress has been limited in making a significant impact on climate action due to the lack of a compelling business case for capturing CO2.

However, with governments worldwide committing to net-zero targets, there is now an international consensus on the necessity of CCS to decarbonise hard-to-abate sectors like cement and steel production.

Notably, CCS can be applied not only in industrial applications but also in fermentation processes, leading to what could be called Fermentation-based CCS or FCCS. Fermentation processes yield a high-purity CO2 stream that requires no scrubbing, resulting in basically no cost of capture.

This presents an affordable CCS technology applicable to various industries such as beer, wine, spirits, ethanol and biomethane. The same principle applies to non-biogenic carbon in ammonia production by the fertiliser industry.

When capturing and permanently storing biogenic CO2, this process can result in negative emissions, also known as carbon removals, as the CO2 absorbed by the biomass from the atmosphere is used in the industrial process and then permanently stored in a geological formation, effectively removing it from the carbon cycle.

Currently, hundreds of millions of tonnes of CO2 are being vented into the atmosphere from fermentation processes, which could be easily captured. However, presently there is no incentive for industry to capture these emissions, except in the US.

In the US, CCS on ethanol is laying the foundation for CO2 transport and storage infrastructure. Infrastructure that will be crucial for the realisation of emissions reductions and removals targets.

While quantifying the amount of carbon stored through afforestation or changes in farming practices is challenging, and the longevity of carbon stored in fuels, such as e-fuels, is short-lived, the methodology for permanent storage is straightforward.

Carbon injected underground can be measured and will stay put for thousands of years.

While other carbon farming and CO2 utilisation methods may face complex methodology disagreements, the certification methodology for permanent storage can be readily agreed on.

It is in the interest of climate progress to allow a technology with a simple methodology to make progress and not to be held up by areas where swift policy progress is unlikely. Yet, the Industrial carbon management document put forward by the European Commission last week fails to recognise climate urgency and proposes setting targets for 2040.

Countries like the US, Canada, and several Asian nations, including India, are embracing FCCS and recognising its contribution to climate change mitigation.

The US, known for opting for practical solutions, is demonstrating leadership in CCS, while the EU remains embroiled in controversial debates, striving for an ideal solution.

Recent deals confirm that the voluntary carbon market values FCCS. In fact, the first large-scale CCS deals involve biogenic CO2, such as the US ethanol CCS of about a 100 kilotonnes (kt) CO2, and another CO2 pipeline partnership in the US.

Microsoft’s massive purchase of 2.76 megatonnes (mt) CO2 from a wood-chip-fired power plant in Denmark is also based on bioenergy.

While the US government has invested $737 million in CCS-related projects since 2021, the long-awaited Net Zero Industry Act recently presented by the European Commission fails to provide a business case.

As a result of financial incentives, the US is rapidly establishing CO2 pipeline networks, benefiting both the climate and enhancing the competitiveness of its heavy industries like cement and steel.

In contrast, Europe is falling behind not only in terms of carbon sequestration but also in industrial competitiveness, echoing previous gaps seen in electromobility, chip manufacturing, and renewable energy.

It is high time for the EU to develop simple and effective regulations that benefit both the climate and industry. The EU may catch up with implementing financial instruments that have been used in the power sector (Carbon Contracts for Difference).

In the absence of an EU scheme, EU member states will devise their own schemes, such as Denmark is doing, and if the affluent EU countries near the North Sea are the only ones to support CCS, then the result is a playing field at the EU level that is anything but level.

In conclusion, Europe must prioritise the development of a robust business case for CO2 sequestration to advance its efforts in tackling climate change.

By addressing methodological complexities and taking inspiration from successful US initiatives, Europe can catch up in the race for industrial competitiveness and make significant strides towards a sustainable future.