Limited business case for CO2 infrastructure investment. Developing CO2 transport and storage infrastructure for the sole purpose of removing and disposing of CO2 emissions is a relatively new commercial proposition, and one that would only be viable in the context of a strong climate policy response. These investments bring additional complexity due to the nature of the infrastructure, which involves sub-surface risks and uncertainties, long-term liability considerations and the need to co-ordinate and align CO2 supply with storage development (a “chicken and egg” problem). Public–private partnerships have been proposed to develop CO2 storage and build and operate related transport infrastructure in order to overcome some of these challenges in the early deployment phase.

Legal and regulatory uncertainty. Stable and transparent legal and regulatory frameworks are crucial to enable commercial investment in CO2 storage. Countries such as Australia, Canada and the United States, and the European Commission, have introduced comprehensive legal and regulatory frameworks, but in some regions uncertainty around long-term liability and ownership of the stored CO2 remains a barrier to commercial investment. A lingering legal impediment to offshore CO2 storage is the failure of countries to ratify the amendment to the London Protocol to the Convention on the Prevention of Marine Pollution, which would allow for the transport of CO2 across borders for offshore geological storage.

Public acceptance. Social and political acceptance could restrict the availability of CO2 storage resources, particularly for onshore sites. In the past, CCS projects in Germany, Denmark and Poland, for example, have failed in part due to local opposition to CO2 storage.

Exploring the implications of limiting CO2 storage

The LCS would limit the available CO2 storage to less than 10 Gt CO2, or 9% of the cumulative CO2 stored in the CTS (Figure 19). The industrial sector would absorb the largest share of the available storage, with 4.9 Gt CO2 stored in the period to 2060, with fuel transformation having 4.4 Gt CO2 and the power sector only 0.4 Gt CO2.

Figure 19. CO2 stored by sector in the CTS and LCS

changes to the built environment, efficient technologies and behaviour. These are not pursued to the same high extent in the CTS, as the level of deployment reached exhibits higher costs and political, social and practical challenges than CO2 storage.

Figure 21. Global CO2 emissions and cumulative emissions by sector in the CTS and LCS

IEA 2019. All rights reserved.

Note: Analysis above uses the Energy Technology Perspectives modelling framework.

Overall emissions reductions in the LCS would equal those in the CTS; however, the sectoral contributions would change.

A sharp(er) decline in fossil fuel use

Global primary energy demand for oil, coal and natural gas would be reduced by 25% in the LCS compared to the CTS in 2060 (Figure 22). Coal demand would be most affected, with its consumption more than halved in 2060 compared to the CTS – a reduction equivalent to the combined coal consumption of India and all of Latin America in 2017. This would be primarily driven by lower coal consumption in some industrial sectors, such as iron and steel making, and the complete phase-out of coal in power generation just before 2050. Overall, the 2060 share of fossil fuels in the global primary energy mix would fall from 35% in the CTS to 28% in the LCS, while the use of renewables, mainly for power generation, would increase driven by the need for more low-carbon electricity in various parts of the energy system. The transport sector’s oil demand in 2060 would fall by 12%, as transport patterns shift away from personal vehicle use towards public and multiple-user modes of transport.

The more rapid decline in fossil fuel demand, and decline in total primary energy demand, compared to the CTS would be driven by the types of ambitious policies that compel significant changes to the built environment, such as the structure of urban areas, and behavioural changes in the transport and residential sectors. These would result in reduced energy and service demand, and the accelerated rollout of energy efficiency measures. For example, the more stringent emissions reduction needed in the transport sector to account for the increased emissions in the other sectors in the LCS would result in passenger activity (measured in passenger kilometres [pkm]) in cars falling by 1% in 2060 relative to the CTS, and a shift to public transport, with a combined 7% higher passenger activity (in pkm) on trains and buses (Figure 23).

fuels, but in particular through substitution by electricity. Global final electricity demand in 2060 would increase by 900 TWh (or 2%) in the LCS relative to the CTS. This shift towards electrification in the LCS would be largely driven by industry, accounting for 80% of the demand growth in industry and transport, whereas buildings’ electricity consumption would be reduced by 9% through energy efficiency measures. In the LCS, electricity would account for 39% of all final energy demand in the global industrial sector in 2060, an increase of two percentage points compared with the level achieved in the CTS. This growth in electricity demand would be primarily driven by indirect electrification to produce hydrogen through electrolysis. This hydrogen would be then used, for example, as a reducing agent in the iron and steel sector, or as feedstock in the chemical industry for ammonia production or in combination with captured CO2 for producing methanol.

Figure 24. Global final energy demand changes in the LCS relative to the CTS, 2060