Global energy consultancy group Wood Mackenzie highlighted the momentum behind carbon capture, utilisation and storage (CCUS) and low-carbon hydrogen in 2021 in its latest report, "CCUS and hydrogen: 5 Things to Look for in 2022."
In 2021, new projects were announced, favorable policies formulated and investments made as the COP26 spurred the net-zero targets of various firms. The project pipeline for CCUS and low-carbon hydrogen saw record growth in the year.
The CCUS project pipeline grew 7-fold, with 50 new projects worldwide. The low-carbon hydrogen pipeline doubled and green hydrogen projects represented 75% of the new projects. More than $66 billion was invested in hydrogen projects in 2021.
However, Mhairidh Evans, principal analyst, CCUS and Emerging Technologies, and co-author of the report said that the same momentum is not expected in 2022.
Evans explained, “The coming year will be about maturing projects and securing funding. About 75% of the CCUS pipeline is in early development. For hydrogen, almost 40% of the project pipeline does not have an estimated date of operation and 25% does not have an estimated capacity. A mark of success for 2022 will be more projects in advanced development or under construction.”
A total of 15 CCUS projects are expected to reach the FID stage this year. Hydrogen projects will require more capital flow and so the need for an increase in off-take agreements. This may bring in the $3.5 billion to $22 billion that is needed for the hydrogen projects to reach FID this year.
Meanwhile, if the 15 CCUS projects to reach FID this year are developed successfully, they will add approximately 35 Mtpa of new CO2 capture or storage capacity. These projects will need an investment of approximately $18 billion.
The report also stated that significant investment depends on the U.S. Build Back Better Act passing Congress.
Technology scale-up will be needed to maintain and build momentum for these projects. Green ammonia is one of the cheapest paths to transport green hydrogen but there are challenges to it. The consultancy expects more technological solutions for storage and chemical plant design in 2022.
While investments are made, large volumes of CCUS are not expected to come online this year. A total of 33 projects, mainly in Europe and Asia, will begin operation and 0.1 Mtpa of low carbon hydrogen and 50 ktpa of green ammonia will enter the market.
Flor Lucia De La Cruz, senior research analyst, Hydrogen & Emerging Technologies, and co-author of the report said: “2021 was a big year for policy announcements in CCUS and low-carbon hydrogen.
“We see 2022 as an important year for translating policy into reality, but it’s a tough political ask in some countries and we expect drawn-out negotiations to mean delays.
