Despite the benefits of carbon capture and utilisation (CCU) to capture the emissions of industries such as chemicals and building materials, the number of planned projects covers just 6% of what is needed by 2040 to meet global climate targets.
According to a paper Defossilising Industry: Considerations for Scaling-up Carbon Capture and Utilisation Pathways published by the World Economic Forum (WEF) the absence of appropriate market frameworks means that CCU has yet to find a significant role in industrial production. The paper suggests that “the complexity of the integration into existing climate models, as well as the early-stage nature of many technologies involved,” may be impacting the deployment of CCU.
WEF said its analysis was based on insights from more than 30 industry leaders, CCU project developers, innovators and policy experts. It outlines steps to move CCU from pilot initiatives to practical and broader industrial decarbonisation strategies.
“Scaling CCU could be an economic opportunity while offering an additional path to abate carbon dioxide emissions,” said Fernando Gomez, head of the future of materials at the WEF. “With credible policy signals, long-term investment and cross-sector partnerships, carbon dioxide could mature from a liability into an asset creating new market value with accelerating industrial decarbonisation.”
The WEF paper points to three barriers that are delaying CCU technology deployment. It said policy frameworks that fragmented and inconsistent: "This makes it challenging for
first movers to see a reliable and significant market to support future scaling-up, deterring investment. Moreover, existing policies heavily favour sequestration over utilization and, in
some cases, effectively create disincentives to invest in CCU."
The report said CCU companies navigating the so-called innovation “valley of death” where companies with good ideas fail. "These are characterized by long development timelines, high capital
requirements and immature business models lacking well-defined routes to revenue. These factors create barriers to conventional earlystage investment forms, such as traditional venture capital," the report said.
It also warned of the need for unprecedented cross-sectoral collaboration for successful deployment of CCU but said: "However, the inherent complexity of testing small-scale, first-of-akind technical solutions within large, mature, industrial complexes can impede collaboration."
Looking at ways in which policy could support CCU, the paper says: “The core challenge for emerging pathways, particularly for fuels and chemicals, remains the substantial cost hurdles. Direct subsidies, carbon prices and consumption mandates could all play a role in offsetting cost and driving demand for carbon dioxide derived products.”
While calling for increased policy support, the paper notes that investment in CCU companies has increased sharply since 2020, with fuels, chemicals and intermediates having seen the greatest increase in investment across all pathways. However, the paper adds that CCU start-ups currently face financing challenges due to long development timelines, high capital requirements and an immature business model.
The paper notes: “At each stage of the innovation curve, the risk-return profile shifts, presenting unique barriers to capital access and misalignments with investor expectations. The result is a series of ‘valleys of death’ …Overcoming these requires patient, risk-tolerant capital and more strategic alignment between technology development and financial ecosystems.”
Efforts that could support these projects through their development cycles include the de-risking of supply chains with offtake agreements, establishing public sector procurement mandates and the development and expansion of both public and private patient capital vehicles which can help bridge early funding gaps for CCU companies.
Mitigating risks, financial and otherwise, is best achieved through cross-sectoral collaboration, the paper says. “Establishing the right collaborative partnership to test technologies in real world contexts can enable first deployments and scale-up. If successful these development partnerships can evolve over time into commercial relationships, although they may require further work to overcome practical and interorganisational challenges.”
Earlier this year, the Flue2Chem project, which brought together 17 collaborators from large scale chemical producers, startups, universities, and the non-profit sector, supported by £4.4 million of funding from Innovate UK, published its findings.
The three-year R&D project demonstrated that carbon captured from industrial emissions can be transformed into sustainable household products – marking a major step towards a circular economy. But it noted that more support is needed for projects which aim to help the chemical industry find more sustainable sources for the carbon it needs.
The WEF paper notes: “If CCU is incentivised, it could open up new markets, enhance industrial resilience and provide climate benefits. Through deployment at increasing scale, the evidence base for policy can be expanded, industries can identify value opportunities and financiers can better assess potential investments.”
Further reading on carbon capture, utilisation and storage
- CCUS: Carbon capture is growing but there’s still much to do
- CCUS: New carbon capture targets needed says report
- IEA database indicates that the pace of CCUS deployment is increasing
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