Carbon capture and storage is the process of capturing and storing carbon dioxide before it is released into the atmosphere. Almost all of the carbon dioxide that is released and captured is then compressed into liquid state and transported by pipeline, ship, or road tanker to be stored underground or used to produce commercially marketable products. With the rise of COVID and domination of major oil companies around the world, this process of carbon capturing and storage has been dominated by the big boys.
According to UK-based data analytics and consulting agency, GlobalData, the oil and gas playing field will become increasingly difficult for small and medium sized producers, as the world is pushing towards energy transition. Smaller operators will need government intervention to incentivise carbon capture to promote investments, because these companies will have to expend relatively more resources to lower their emissions as compared to oil giants.
“Carbon capture requires additional cost and therefore does not sit well with many smaller operators who prioritise free cash flow and minimise capital spending, especially without an incentive or a penalty applicable to the whole sector. These companies do not have the same infrastructure advantages as major companies and are generally not incentivised to introduce a carbon capture scheme into their operation solely based on having environmental-related targets,” says Steven Ho, Upstream Oil & Gas Analyst at GlobalData.
This lack of regulation to the larger industry is demotivating smaller companies to implement a more comprehensive approach to reduce carbon.
At the other end of the spectrum, oil giants such as ExxonMobil already have the infrastructure built for advancing carbon capture and storage (CCS) technology and to which they will in the future turn a profit from capturing and storing carbon.
Steven Ho adds: “Even if clean alternative energy overtakes fossil fuel as the main source for power generation or clean vehicles, CCS can become a prominent technology to remove the carbon emitted and deliver a net-zero carbon energy system. Exxon’s proposal for a CCS hub will be the first major step towards decarbonisation and hopefully set an example for the rest of US producers to take on a more proactive role in carbon capture.
“The US is run by approximately 40% of clean energy on the grid, and the rest by fossil fuels, mainly natural gas. If fossil fuels continue to play a role as a source of energy in the future, oil and gas producers would need a way to achieve net-zero production and carbon capture seems inevitable.”
With the whole world turning towards greener energy sources, CCS is the only technology that can help reduce emissions from large industrial installations which makes it an essential tool for tackling global climate change.
