3 questions to Allan Baker, Head of Energy+ Group for EMEA

What is Carbon Capture, Utilisation and Storage (CCUS) technology, and can you provide some insights into the expected return on investment and the associated risks?

CCUS technology, in my opinion, is a crucial tool for tackling CO₂ emissions as we seek to reach net-zero. It works by separating CO₂ from mixed gas streams from a range of industrial processes, including for example flue gas produced by power plants, and preventing its release into the atmosphere. The captured CO₂ is then either safely stored underground or potentially used to produce other products like aggregate, which lock in the carbon.
CCUS is particularly effective in power and industrial sectors, especially in hard to abate areas like cement, steel, and chemical production where there are limited alternatives for CO₂ reduction.

Currently, there are about 40 operating CCUS projects globally⁽¹⁾ that capture between 42 and 49 million metric tons of CO₂ annually. If all the projects under development are completed, we could potentially capture around 360 MtCO2/year, which is about 0.7% of global greenhouse gas emissions.

Investment in CCUS technologies offers significant potential due to the escalating need for climate change solutions. However, generalising on the return on investment is challenging as it depends on several factors, such as specific characteristics of the project, level of government support, and market adoption rates. It's also worth noting that these investments carry a certain level of risk which can vary from project to project and jurisdiction to jurisdiction, so returns are very project specific. Changes in government policy, lower than anticipated CO₂ volumes or a slowdown in technological progress, for instance, could negatively impact expected returns.

What is the role of CCUS technology, its current status, its potential utility in different sectors, and its contribution to the overall mitigation needed to meet global climate targets?

In recent years, there has been a global surge in interest and investment in CCUS technology. This has been boosted by the increasing realisation that CO₂ removal from existing fossil fuel-based technologies is essential to reach climate goals.

At present, CCUS technology captures about 0.1% of global CO₂ emissions, which equates to around 45 million metric tons of CO₂. However, projections by the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency suggest this could increase to around 1 billion metric tons of CO₂ by 2030 and several billions of tons by 2050⁽²⁾.

In my view, CCUS will likely play a crucial role globally in complimenting renewables, electrification and other technologies deployed to achieve net-zero targets. However, the exact contribution it will make and timing are still uncertain and depend on several variables, including the development of alternative decarbonisation solutions across various sectors, the pace of policy and regulatory developments, the level of financial support made available, and public sentiment in the coming years.

How does Societe Generale help in implementing more projects linked to CCUS technologies?

Well, we recently acted as exclusive financial adviser, MLA, DLA and hedging bank to both the Northern Endurance Partnership (NEP) and the Net Zero Teesside Power (NZT) projects, which are part of the UK’s East Coast Cluster (ECC). These projects are a critical part of the UKs decarbonisation strategy as they are pathfinder projects for the UK CCUS Business Models that will be used for future development projects. They also facilitate decarbonisation of one of the UK's most significant areas of industrial CO₂ emissions. With a combined debt financing of over £8bn, these are the largest project financings in the UK over the last several decades as well as being the first project financing of a full chain CCS project.

The NEP is a collaboration between BP, Equinor, and Total Energies and aims to provide CO2 transportation and storage infrastructure for ECC projects, with a storage capacity of up to 450 million tonnes. On the other hand, NZT Power, developed by BP and Equinor, is the first gas-fired power plant with carbon capture technology at this scale globally, capable of generating dispatchable low-carbon electricity for 1.3 million homes and capturing up to 2 million tonnes of CO2 annually. 

Our involvement in these projects demonstrates our commitment to large-scale projects that drive the transition to a low-carbon future and align with the UK government's net-zero strategy. We worked closely with the project sponsors and the UK Government to deliver these landmark projects. 
These projects not only play a key role in removing significant amounts of CO₂ emissions and creating thousands of new jobs, but they also create a template for future CCUS developments and position the UK at the forefront of the industry. Having taken a leading role in developing the UK business models. we are now building on this success to help develop CCS projects in other regions as the interest in the technology spreads.    

Societe Generale is a key player in the transition to a more sustainable future, leveraging our financial expertise to support and implement projects linked to CCUS technologies.