Over 50 senior figures from government, industry, and financial sectors convened at the International Energy Agency's (IEA) headquarters in Paris to explore avenues for harnessing private sector investments in carbon capture, utilization, and storage (CCUS) initiatives.
The session, a thematic event conducted alongside the regular gathering of the IEA's Committee on Energy Research and Technology (CERT), featured major banks, project developers, and policymakers sharing insights into the financial viability of CCUS projects.
Discussions addressed historical successes in securing final investment decisions (FIDs) and highlighted necessary policy interventions for risk mitigation and unlocking private capital.
Insights from the IEA CCUS Projects Database
An updated IEA CCUS Projects Database indicates a sustained global push for CCUS
An updated IEA CCUS Projects Database indicates a sustained global push for CCUS, with a construction phase capture capacity paralleling current operational levels. This surge suggests that, with upcoming completions, operational capacity could potentially double.
While government funding has significantly underpinned these developments, with approximately $50 billion committed in the last two years, the perpetuation of such funding levels seems uncertain.
Consequently, there's a pressing need for private capital, although investors exhibit caution due to ongoing concerns about offtake, policy frameworks, technological reliability, and market volatility.
Addressing Investment Risks
The Paris workshop zeroed in on strategies where government intervention can mitigate risks to entice private sector participation. One critical area discussed was the coordination of CO2 transport and storage infrastructure, with emphasis on balancing risks and responsibilities over diverse stakeholders and timelines.
Participants deliberated on governmental roles in de-risking infrastructure through stakeholder alignment and international collaboration.
Boosting Market Demand
Another focal point was overcoming offtake risks, a significant investment barrier as developers often struggle with uncertain long-term revenue from captured CO2 and potential demand for low-emission products.
Discussions highlighted how governments might stimulate market growth through public procurement, incentives, and frameworks supporting voluntary and compliance markets. The CERT aims to steer the development and dissemination of pivotal energy technologies.
Previous CERT-adjacent workshops have examined pivotal topics, including the implications of energy innovation policies, the prospects and challenges of direct air capture technology, and the current status and future possibilities of fusion energy.
More than 50 senior representatives from government, industry and financial institutions recently gathered at the IEA’s headquarters in Paris to discuss how to leverage lending and investment from the private sector for carbon capture, utilization and storage (CCUS) projects.
Organized as a special thematic event on the margins of the regular meeting of the IEA’s Committee on Energy Research and Technology (CERT), the workshop convened major banks, project developers and policy makers to offer insights on the bankability of CCUS projects – considering what has worked to date to secure final investment decisions (FIDs), as well as what is needed from a policy perspective to reduce risks and unlock private capital.
IEA CCUS Projects Database
A recent update of the IEA CCUS Projects Database shows continued global momentum for CCUS
A recent update of the IEA CCUS Projects Database shows continued global momentum for CCUS as developers around the world move projects forward. In fact, the amount of carbon dioxide (CO2) capture capacity under construction is roughly equivalent to the amount currently operating.
As a result, as projects are completed in the coming years, operational capacity could double. Public funding has played a crucial role in project development so far, and over the past two years, governments have earmarked around $50 billion in support.
However, it appears unlikely this historically high level of public funding will continue, leaving a greater role for private capital – though investors and lenders have remained cautious as perceived offtake, policy, technology, and market risks remain high.
Mitigating risks
In this context, the workshop focused on two areas where governments can play a role in mitigating risks and spurring private sector involvement:
- Coordinating CO2 transport and storage infrastructure: Managing risks and responsibilities associated with CO2 transport and storage over multiple stakeholders and over time is a major concern for project developers and investors. Workshop participants explored how governments can de-risk infrastructure development, including through stakeholder coordination and cross-border collaboration.
- Supporting demand in nascent markets: Offtake risks remain one of the biggest barriers to investment in CCUS, as developers often lack visibility on long-term revenue streams for captured CO₂ or future demand for low-emissions products.
Deployment of important energy technologies
Participants discussed how governments can help catalyze market formation through public procurement, incentives, and frameworks for voluntary and compliance markets.
The Committee on Energy Research and Technology (CERT) coordinates and promotes the development, demonstration, and deployment of important energy technologies.
Previous workshops held alongside CERT meetings have covered topics such as the impacts of energy innovation policies, challenges and opportunities associated with direct air capture technologies, and the state of play of fusion energy and its future prospects.
