Government policy is critical in spurring investment in carbon capture and storage (CCS) and the US model appears to be a welcome standard compared with other jurisdictions.
"Long term, [CCS] must be led by the industries and commercially viable for it to be sustainable, robust and scale," 1PointFive president Jeff Alvarez told the CERAWeek by S&P Global conference in Houston, Texas, on Tuesday.
"In the short term, the role of government policy is extremely important," Alvarez continued, whose company is a subsidiary of Occidental Petroleum and the largest handler of carbon dioxide (CO2) in the world for enhanced oil recovery.
The US tax credits through the Inflation Reduction Act (IRA) appear to be spurring more investment compared with policies in the UK, and that is largely due to it having a broad goal of lowering CO2 and giving industry greater latitude in how it achieves that, panelists said.
"We need what you've got in America now," said University of Oxford professor Myles Allen. "Incentivizing people to actually get [CO2] back into the ground. That's the crucial incentive we're lacking" in the UK and Europe.
"The industry is pretty good at designing these things. And this is why we need a think, big picture, about the incentives," said Allen, and then to let the industry work out the value chain to make sure it happens. "We love to make things complicated in Europe."
There are 17 projects in the EU that have not gone past the final investment decision (FID) stage, according to International Association of Oil and Gas Producers (IOGP) chief executive Graham Henley. "That highlights that there is a lot more to be done in the policy space to de-risk these investments for the operators in the near-term," Henley said, while also noting the technological upside the projects still represent.
"What we're seeing now around the world is many, many first-of-its-kind projects, and whenever you implement first-of-its-kind projects you uncover problems," said Henley. "So don't judge the CCS technology by some of the examples that are around today, which are really pioneers and there's a lot more that we can do."
"A lot of these [projects] are bespoke," said Alvarez, noting one of his observations are challenges on the commercial side of proposed projects. "Can the whole value chain be successful? Because if it can't . . . the whole project fails."
"Policy is much more important early on and hopefully that will be supported by other mechanisms that can survive on their own," said Alvarez.
