Putting CO2 to Use: Creating Value from Emissions |
Technical analysis |
Who is currently investing in CO2 use, and why?
The increasing interest in CO2 conversion technologies is reflected in the growing amount of private and public funding that has been channelled to companies in this field. Over the last decade, global private funding for CO2 use start-ups has reached nearly USD 1 billion, primarily in the form of venture capital and growth equity (Cleantech Group, 2018). Investment in CO2 use applications within corporate R&D departments and other partnerships is harder to quantify. In addition to private investment, governments have allocated resources to deployment or have pledged to do so in the future. For example, the UK government plans to deliver a GBP 20 million Carbon Capture and Utilisation (CCU) Demonstration Programme by 2021 to fund design and construction of CCU demonstration plants in the United Kingdom (BEIS, 2018). Even with these developments, total public and private spending on CO2 use applications is small compared to investments in other clean technologies, such as electric vehicles and batteries. Most projects in operation today involve public-private partnerships and are located in Europe and North America.
Even though most of the private investment in technology start-ups comes from traditional venture capital firms, corporate funding makes up a large share of the total sum (Figure 14). This indicates that companies that are looking to reduce their emissions see opportunities in CO2 conversion technologies. For example, oil and gas firms have invested in various CO2 use companies operating on a small scale, including those making products for sectors other than the oil and gas industry, such as concrete and cement. Other large corporate investors are chemical companies and utilities. Overall, the large share of corporate investment indicates strategic interest from companies facing long-term technology challenges.
Figure 14. Breakdown of global investment in CO2 use start-ups by type of investor, 2008-18
Utilities
5%
Chemicals
10%
Oil & gas 17%
Non-corporate investors 68%
Notes: In the absence of detailed information, values are split equally between investors when there is more than one investor in the deal. Only deals with known transaction values are included.
Source: Cleantech Group (2018), i3 Database; IEA (2018b), World Energy Investment 2018.
Most private funding in CO2 use start-ups stems from traditional venture capital firms, followed by corporate funding.
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Putting CO2 to Use: Creating Value from Emissions |
Technical analysis |
How can CO2-derived products and services deliver climate benefits?
The amount of CO2 used in a product or service is not the same as the amount of CO2 emissions avoided. In fact, using CO2 in products or services does not necessarily reduce emissions. The climate benefits associated with a CO2-derived product or service primarily arise from displacing an equivalent product or service with higher life-cycle CO2 emissions, such as fossil-based fuels, chemicals or conventional building materials. Unlike CCS, most CO2 use applications ultimately release the CO2 to the atmosphere (Figure 15).
There are five key considerations in assessing the climate benefits of CO2 use:
the source of CO2 (from natural deposits, fossil fuels, industrial processes, biomass or air)
the type of product or service the CO2-based product or service is displacing
how much and what form of energy is used to convert the CO2
how long the carbon is retained in the product (temporary or permanent)
the scale of the opportunity for CO2 use.
Understanding the potential emissions reductions associated with displacement can be particularly difficult as this can differ depending on location and may change over time (for example, as the transport fuel mix becomes less dominated by fossil fuels). The carbon retention time can also vary per product; in general, the carbon is either permanently stored in the product (building materials) or ultimately released to the atmosphere as CO2 (fuels, chemicals). To provide climate benefits, the use of low-carbon energy is critical and the potential of CO2 use to contribute to climate goals will also depend on how far, and how fast, opportunities can be scaled up.
Over time, if global emissions are to reach net-zero, the CO2 used must increasingly be sourced from biomass or through DAC. Such CO2 sources can support a carbon-neutral life cycle for some CO2 use applications and could deliver negative emissions in applications where carbon is permanently stored, such as in building materials. However, in general, these opportunities are likely very limited and must be considered in the context of the product’s entire life cycle.
The challenges of quantifying the climate benefits of CO2 use are discussed in further detail in the next section.
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Putting CO2 to Use: Creating Value from Emissions |
Technical analysis |
Figure 15. Systems perspective of carbon capture and storage and CO2 use
CO2 use
IEA 2019. All rights reserved.
CCS results in permanent storage of CO2, while CO2 use involves either permanent storage in building materials or temporary storage in fuels and chemicals.
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