1、Carbon capture and storageA carbon removal investment framework Strategy&|Carbon capture and storage2ContactsGermanyDr.Peter GassmannGlobal Strategy&Leader,PwC Strategy&Germany+49-69-9716-7470peter.gassmann Robert BischofPartner,PwC Strategy&Germany+49-175-560-About the authorsDr.Peter Gassmann is a

2、 Partner with Strategy&Germany based in Dusseldorf and Global Strategy&Leader.Robert Bischof is a Partner with Strategy&Germany based in Munich and ESG Leader for Strategy&Europe.Kelsey Pace is a Manager with Strategy&Germany based in Dusseldorf.She advises chemical and industrial product companies

3、on ESG strategy.Ferdinand Habbel is a Senior Associate with Strategy&Germany based in Munich.He advises international clients on ESG strategy and transformation.Lukas Wendt is an Associate with Strategy&Germany based in Berlin.He advises technology and telecommunication companies on ESG strategy.The

4、 authors would like to thank Adrian Del Maestro and Sammy Lakshmanan for their valuable contributions to the study.Strategy&|Carbon capture and storage3Heat waves,droughts,and forest fires across Europe and America epitomize how important consistent and rapid action on climate change is.The race to

5、develop technologies that help mitigate climate change is on.Carbon Capture and Storage(CCS)technologies have faced criticism in the past,based on their environmental impact and their use by the fossil fuel industry.However,the Intergovernmental Panel on Climate Change(IPCC)has concluded that CCS wi

6、ll be a necessary part to bring global carbon dioxide emissions to net zero by 2050.1Strategy&has developed a framework to assess the risks and benefits of CCS tech-nologies,and how to ensure their efficient deployment,depending on local conditions and circumstances.The framework identifies the foll

7、owing factors for consideration when implementing carbon removal technologies:Exclusionary criteria to reduce the range of potential technologies that investors and companies need to consider,based on their carbon market acceptance Financial and non-financial factors that address wider sustainabilit

8、y issues and concerns when investing in CCS Overall investment strategy to determine the weight given to each of the factors within the carbon removal investment framework 1 The IPCC is an intergovernmental body of the United Nations responsible for advancing knowledge on human-induced climate chang

9、eEXECUTIVE SUMMARYStrategy&|Carbon capture and storage4Introduction2 https:/www.ipcc.ch/report/ar6/wg2/3 https:/sciencebasedtargets.org/companies-taking-actionThe latest UN Intergovernmental Panel on Climate Change(IPCC)report highlights the urgency of accelerating the process of reaching net zero.T

10、he report states that it is“now or never”to limit global warming to 1.5C the now widely accepted scenario in which the physical effects of climate change are limited as pledged by the 2015 Paris Agreement.2 Over the last 18 months,a record number of companies have set decarbonization and net zero go

11、als,with more than 3,500 organizations worldwide committed to adopting science-based targets3.While reducing carbon emissions is the primary goal of net zero strategies,carbon removal will be necessary to abate residual emissions that companies cannot avoid.According to the latest IPCC report,remova

12、ls will be a key component to limit global warming to 1.5C.Nearly all companies with net zero or net negative carbon ambitions will need to invest into carbon removal technologies,either directly or indirectly.Although CCS was previously viewed critically,the technology has gained new momentum.For t

13、he U.S.administration under President Biden,CCS is key to making the U.S.emission-free by 2050.Not only Big Oil,but almost every company is under pressure to make their operations emission-free,and both organizations and governments are expected to significantly invest in CCS.CCS is the primary tech

14、nology deployed for long-lived carbon removal.While there are a range of CCS technologies,this report focuses on four promising and effective long-lived carbon removal and storage technologies.This report explains the Strategy&framework to identify and assess potential investments against key criter

15、ia for selecting long-term carbon removal technologies.SECTION 11Direct air carbon capture and storage(DACCS)3Microalgae carbon capture and storage2Bioenergy with carbon capture and storage(BECCS)4Cement carbon capture and storageStrategy&|Carbon capture and storage5SECTION 2The Oxford Principles fo

16、r Net Zero Aligned Carbon Offsetting(2020)4“Most offsets available today are emission reductions,which are necessary but not sufficient to reach net zero in the long-term.Carbon removals withdraw carbon directly from the atmosphere which can counteract ongoing emissions after net zero is achieved,as

17、 well as create the possibility of net removal for those actors who choose to remove more carbon than they emit.Offsets eventually need to come exclusively from carbon removals,but emission reductions will remain crucial for decades.Emission reductions include avoided emissions,for example the deplo

18、yment of renewable energy to replace planned fossil fuel power plants and programs to update inefficient cook stoves and install LEDs.In other cases,the emission reduction requires physically storing the carbon whose emission was averted,for example,installing Carbon Capture and Storage(CCS)on indus

19、trial point sources or gas power stations.Paying someone to avoid damage to natural and semi-natural ecosystems,an offset class that 4 https:/www.smithschool.ox.ac.uk/sites/default/files/2022-01/Oxford-Offsetting-Principles-2020.pdf suffers from hard-to-prove additionality and concerns over carbon l

20、eakage,is technically a form of emission reduction in which carbon is stored in this case within the preserved ecosystem itself.In contrast,carbon removals are offsets generated by projects that remove carbon dioxide directly from the atmosphere.Examples include biological carbon sequestration(plant

21、ing trees,soil carbon enhancement,etc.),bioenergy with carbon capture and storage(BECCS),direct aircapture with geological storage(DACCS),or converting atmospheric carbon back into rock through remineralization.High-quality emission reductions have the same effect on the atmosphere as carbon removal

22、s in the near term.But carbon removals have a critical advantage over emission reductions because they are designed to scrub emissions from the atmosphere.As a result,they are expected to eventually play a hugely important role in stabilizing atmospheric concentrations of carbon dioxide,and potentia

23、lly even reducing them after net zero is achieved(see Exhibit 1,next page).”Taxonomy of carbon offsetsStrategy&|Carbon capture and storage6Forward-looking,counterfactualbaseline Renewable energy Cleaner cookstovesClearretrospectiveemissions data N2O abatement Methane abatement Avoided damage to ecos

24、ystems Changes to agricultural practices that retain already-stored carbon CCS on industrial facilities CCS on fossil-fuel power plant Afforestation and reforestation Soil carbon enhancement Ecosystem restoration Algae CCS Cement CCS DACCS Emission reductionCarbon removalIs carbon stored?YesYesNoLes

25、s permanentHigher risk of reversalMore permanentLower risk of reversalLess permanentHigher risk of reversalMore permanentLower risk of reversalHow is carbon stored?Emissions reduction with short-lived storageIIEmissions reduction with long-lived storageIIICarbon removal with short-lived storageIVCar

26、bon removal with long-lived storageVHow is the offset generated?Avoided emissions,or emission reduction without storageISource:https:/www.smithschool.ox.ac.uk/sites/default/files/2022-01/Oxford-Offsetting-Principles-2020.pdfEXHIBIT 1University of Oxford Carbon Offset TerminologyStrategy&|Carbon capt

27、ure and storage7Selecting the right long-term carbon removal technologyOur carbon removal framework focuses on the potential benefits for companies and investors of CCS technologies for long-lived carbon removals.Our framework provides a clear guide to how companies and investors can make a structur

28、ed,comprehensive assessment of four major long-lived CCS technologies(see Exhibit 2).SECTION 3123Environmental and social impact Community and human impact Ecosystem impact Climate impactProfitability and maturity Cost and revenue potential Technology investment requiredScalability Ability to scaleR

29、esource intensity Energy usage Water usage Land usagePerception Academia and scientific community NGOs and environmental activists General public perceptionBECCSApply exclusionary criteriaApply decision criteriaCreate strategy-based weighting schemeKey exclusionary criteriaCompany materiality matrix

30、Weighting schemeAdditionalityDouble countingPermanenceBECCSReforestationAll possible technologies and project investmentsMicroalgaeMicroalgaeDACCSDACCSImpact on factorsImpact on businessSustainable impactProfitability and maturityResource intensityPerceptionIllustrative exampleSource:Strategy&analys

31、isEXHIBIT 2Carbon removal framework focusing on the right technology and strategyCarbon dioxide removal are required to limit global warming to 1.5C.Investors have the opportunity now to take strategic investments into this emerging technology.”Dr.Peter Gassmann,Global Strategy&LeaderKey exclusionar

32、y factors based on established carbon market standardsAdditionalityCarbon emission reductions are additional if they would not have occurred in the absence of a market for offset credits.Many carbon credit certifiers perform tests to ensure that greenhouse gas reductions would not have occurred with

33、out the certified project.Double countingDouble counting refers to a situation where a carbon offset is claimed twice,either by the same party or by two parties.This occurs most frequently when companies use carbon credits both for emission trading schemes and as part of their carbon“reductions”to r

34、each emissions targets.PermanenceRefers to how long carbon will be kept from being released into the atmosphere.A generally accepted definition of permanence does not exist yet.Strategy&|Carbon capture and storage8Strategy&|Carbon capture and storage9Sustainable impacts encompass the environmental i

35、mpact on topics including waste production,pollution,as well as the effectiveness of carbon removals.Furthermore,it includes the social impacts such as job creation and use of resources(e.g.,energy,water,land).Social impacts are increasingly being measured and scrutinized alongside environmental imp

36、acts.Perceptionconsiders how the public regards a certain long-lived carbon removal technology,considering the views of environmental NGOs,climate action groups,local community organizations,customers,and society at large.Resource intensity covers the amount and type of energy,water,and land require

37、d to capture and store each ton of carbon.Some technologies may use renewable energy or renewable resources such as biomass,while remaining less“resource effective”than other technologies which use a smaller amount of conventional energy.Resource efficiency criteria enable investors to consider the

38、risk associated with unavailable or uneco-nomical resource inputs.Profitability and maturity include the current maturity,expected costs of a technology and its scalability.Scalability ensures that long-lived car-bon removal investments are econom-ically feasible,focusing on the tech-nologys potenti

39、al to scale up to store as much carbon as possible.In this context,it is worth bearing in mind that some technologies may rely on carbon pricing or emissions trading schemes to ensure long-term profitability,while others may depend on public subsidies.Decision criteria for investmentOnce non-viable

40、technologies are excluded,companies and investors should consider both financial and non-financial factors to make their decisions.We have identified the following key factors to be considered(see below).In general,each of these factors should be aligned and weighted with a companys ESG strategy or

41、where available its decarbonization strategy.Strategy&|Carbon capture and storage10Comparison of different long-lived carbon removal technologiesDirect air and bioenergy carbon capture technologies both leverage industrial processes for removing carbon from the atmosphere.Capture methods include che

42、mical absorption,membrane separation,calcium or chemical looping,and physical separation.Transportation and storage of carbon dioxide can be far more difficult than capturing it,with most underground storage involving the injection of CO2 gas into geological formations.Other emerging methods include

43、 storing stabilized carbon in abandoned mines,salt deposits,the seabed,or capturing carbon for long-term storage in materials like concrete and cement.The following relatively mature technologies are already producing viable use cases with significant business and investment potential:SECTION 41Dire

44、ct air carbon capture and storage(DACCS)3Microalgae carbon capture and storage2Bioenergy with carbon capture and storage(BECCS)4Cement carbon capture and storageStrategy&|Carbon capture and storage11GroundwaterGeothermal power plantFresh airAmbient airConcentrated CO2Hot waterUnderground basaltic ro

45、ck formationCO2 turned into carbonate minerals800-2,000m undergroundSource:Strategy&analysis based on Climeworks,(2022)EXHIBIT 3How it works Direct air carbon capture and storage(DACCS)Direct air carbon capture and storage(DACCS)DACCS uses chemical processes to capture and separate CO2 from the air.

46、The CO2 is then injected into depleted natural gas reservoirs,coal beds that cannot be mined,or saline aquifers in permeable rocks that are saturated with saltwater.The carrier chemicals are reused to capture more carbon(see Exhibit 3).Since DACCS is an energy-intensive process it is critical that t

47、he energy used to power DACCS plants is renewable,to ensure total removal exceeds emissions created by the process.Case studyIn Iceland,Climeworks has built a DACCS plant in partnership with Carbfix,an Icelandic company.The plant captures around 4,000 tons of CO2 each year,equivalent to the average

48、annual carbon emissions of 600 Europeans.It runs alongside a geothermal power plant and uses low-grade heat,eliminating more CO2 than the power and the DACCS plant produce in total.The captured CO2 is injected 800-2,000m underground,where it reacts with basalt rock and naturally turns into stone wit

49、hin a few years.1Strategy&|Carbon capture and storage12How BECCS removes carbon from the atmosphereSustainably managed working forests absorb carbon dioxide(CO2)from the atmosphere as they growWood is used in industries such as constructionBiomass is used to generate carbon neutral electricity12Low-

50、grade,waste wood and residues from saw mills and forests are turned into biomass pellets3CO2 produced is captured,transported and stored permanently removing it from the carbon cycle 54Source:Strategy&analysisEXHIBIT 4How it works Bioenergy with carbon capture and storage Bioenergy with carbon captu

51、re and storage(BECCS)BECCS is a complex two-stage carbon removal technique.First,biomass(organic material)such as crops or residue from agriculture and forestry which have stored carbon from the atmosphere,is converted into heat,electricity,liquid,or gas fuels.Next,the carbon emissions from the bioe

52、nergy conversion are captured and stored in geological formations or embedded in long-lasting products.When sustainable bioenergy is combined with carbon capture and storage,it becomes a source of negative emissions.This approach however comes with the danger that growing,harvesting,transporting,and

53、 processing biomass emits more carbon than it saves.Using by-products from the agriculture and forestry industries is one way to avoid this issue(see Exhibit 4).Case studyDrax,a UK electricity generation company,is trialing BECCS at a Drax Power Station in North Yorkshire.Waste wood and residues fro

54、m sawmills and forests are currently turned into biomass pellets which are used to generate carbon-neutral electricity.The CO2 produced will be captured and stored permanently.The first BECCS unit at Drax is expected to be operational in 2027.2Strategy&|Carbon capture and storage13Microalgae carbon

55、capture and storageMicroalgae utilize photosynthesis to convert carbon dioxide,water,and sunlight into sugar and oxygen.Some microalgae are more efficient than trees at capturing CO2 as their growth increases more rapidly and can be more easily controlled in bioreactors.There are many uses for algae

56、 in addition to carbon capture and storage,such as conversion to fuel or food(see Exhibit 5).Case studyBrilliant Planet,a UK company,operates large open-air microalgae carbon capture basins in coastal deserts.Its largest project in Morocco will have the capacity to remove more than 40,000 tons of CO

57、2 per year.The plant uses seawater,which contains nutrients,with the algae harvested several weeks later.The dried algae are then buried one to three meters under the desert sand.The dry,saline composition of the sand prevents decomposition,effectively storing captured CO2.The AI software company Hy

58、pergiant is using microalgae to capture carbon emissions.It adapts to environmental factors such as levels of light,temperature,and pH levels,thus minimizing the need for labor and human intervention.The bioreactor creates algae outputs in the form of“carbon hockey pucks”,which can be used as fuel,f

59、ood or bio-plastics.The bioreactor is modular and can connect to other reactors to form farms.Products Livestock feed Fertiliser OtherHeatFeedstockHarvestBio Fuel BiodieselSource:Strategy&analysis based on Kandaveeti et al.(2020)EXHIBIT 5How it works Microalgae carbon capture3Strategy&|Carbon captur

60、e and storage14Cement carbon capture and storageConcrete is one of the most used materials in the world.Its main ingredient Portland cement accounts for close to 8 percent of global CO2 emissions5.One approach to reduce the carbon footprint from cement is to inject CO2 into a concrete mix where it i

61、s stored permanently in mineralized form,by reducing the volume of cement needed in each batch.Once injected,the CO2 reacts with calcium ions from cement to form a nano-sized mineral,calcium carbonate,which becomes embedded in the concrete.This makes the concrete stronger while capturing CO2(see Exh

62、ibit 6).Case studyCompanies operating in this space include Neustark,CarbonBuilt,and CarbonCure.Canada-based CarbonCure injects CO2 into a concrete mix,where it reacts with calcium ions from cement to form calcium carbonate.5 https:/www.chathamhouse.org/2018/06/making-concrete-change-innovation-low-

63、carbon-cement-and-concrete-0/executive-summaryEXHIBIT 6Comparison of CCS technologies Framework FactorAir carbon capture and storage (DACCS)Bioenergy with carbon capture and storage(BECCS)Microalgae carbon captureInjecting CO2 into concreteCurrent projected cost(per ton of CO2)High$500$1,000Medium$1

64、00$500 High$500$1,000 Low$50$100 MaturityMediumBasics well understoodNot yet commercially scaledMediumBasics well understoodNot yet commercially scaledMediumBasics well understood Not yet commercially scaledMediumBasics well understoodNot yet commercially scaledScalabilityHighSmallest land and water

65、 usageMediumRestricted by available biomassHighPlentiful available flat,coastal desert MediumConcrete is the most widely used building material Sustainability considerationsConcerns about CO2 leakage,seismic activity,water pollutionConcerns about food security,loss of biodiversity Concerns about tox

66、ic blooms threatening marine life as well as land requirementsConcerns about amount of energy still used to produce concreteSustainability benefitsLow land usageSocio-economic benefits for farmers/loggersRemoval of excess nutrients from water sourcesCreation of sustainable,strong building materialRe

67、source intensity High energy demandHigh water demand,potentially high land demandMedium water demandHigh water and energy demandSources:Strategy&analysis,CCS company websites,Bloomberg(2021),US department of the Interior(2019),IPCC(2022),Nature(2018)4Strategy&|Carbon capture and storage15Conclusion6

68、 https:/www.iea.org/fuels-and-technologies/carbon-capture-utilisation-and-storageDespite some controversial discussions in the past,carbon capture and carbon removals will be a required part of the equation for organizations to reach net zero targets.Our report introduces a framework to assess their

69、 risks and benefits and highlights its use across four major carbon removal technologies.Costs are currently still high,but with increasing investment,innovation,and scale,the costs should decrease.Private investors and governments will play a crucial role in the financing and roll-out of these tech

70、nologies.Our framework serves as a guide for decision makers to identify promising CCS technologies based on emerging sustainability criteria.With a new wave of political and industrial backing,the International Energy Agency mentions up to 200 newly announced capture facilities in various stages of

71、 development by 2030.However,it is not clear how many of those will actually be constructed,and even at this level,CCS would not be sufficient to achieve a net zero scenario6.Companies across all sectors will need to consider long-term investment into carbon removal technologies.Creating a carbon re

72、moval strategy today and investing wisely can help companies meet their net zero goals in a cost effective manner.Furthermore,governments need to ensure proper incentives for carbon removal technology to foster sufficient investment into sustainable technologies in order to reach 1.5C 2022 PwC.All r

73、ights reserved.PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity.Please see for further details.Mentions of Strategy&refer to the global team of practical strategists that is integrated withinthe PwC network of firms.For more about Strategy

74、&,see .No reproduction is permitted in whole or part without written permission of PwC.Disclaimer:This content is for general purposes only,and should not be used as a substitute for consultation with professional advisors.Stay up to date Sign up here to receive the latest Strategy&thought leadershi

75、p and industry trendsStrategy&Strategy&is a global strategy consulting business uniquely positioned to help deliver your bestfuture:one that is built on differentiation from the inside out and tailored exactly to you.Aspart of PwC,every day were building the winning systems that are at the heart of

76、growth.We combine our powerful foresight with this tangible know-how,technology,and scale to help you create a better,more transformative strategy from day one.As the only at-scale strategy business thats part of a global professional services network,we embed our strategy capabilities with frontlin

77、e teams across PwC to show you where you need to go,the choices youll need to make to get there,and how to get it right.The result is an authentic strategy process powerful enough to capture possibility,while pragmatic enough to ensure effective delivery.Its the strategy that gets an organization through the changes of today and drives results that redefine tomorrow.Its the strategy thatturns vision into reality.Its strategy,made real.