Carbon Capture Markets To Increase Up To 2030 & Beyond

13th May 2024

Carbon Capture and Storage (CCS) is emerging as a crucial technology for climate mitigation. Prominent analyses by the IEA, IPCC, and the Energy Transition Commission (ETC) all project that by 2050, large-scale deployment of CCS in the gigatonne range will be necessary. However, despite its pivotal role, current deployment levels fall well short of what is necessary to fully realise the technology's potential. Both governments and the private sector face significant challenges in financing and scaling CCS projects.

A carbon capture market refers to an economic system where entities can buy and sell carbon capture and storage (CCS) services or carbon credits. Carbon capture involves capturing carbon dioxide (CO₂) emissions from industrial processes or power generation facilities before they are released into the atmosphere. These captured emissions are then typically transported to storage sites, such as geological formations underground, where they are securely stored, preventing them from contributing to climate change.

In a carbon capture market, companies that emit CO₂ can purchase carbon capture services or carbon credits from other entities that have implemented carbon capture technologies and reduced their emissions. This creates a financial incentive for industries to invest in carbon capture technologies and reduce their carbon footprint.

Carbon capture markets can be part of broader carbon trading systems, such as cap-and-trade programs, where a cap is placed on total emissions and companies can buy and sell permits to emit CO₂ within that cap. Alternatively, carbon capture markets can operate independently, allowing companies to voluntarily offset their emissions by purchasing carbon capture services or credits.

Overall, carbon capture markets play a crucial role in incentivising the deployment of carbon capture technologies and helping to mitigate climate change by reducing CO₂ emissions. The UK is looking to be a global leader in CCS with other G20 nations all looking to implement significant investment in both public and private sector projects.

The European Union pioneered the world's inaugural international Emissions Trading System (ETS) in 2005. Subsequently, in 2021, China introduced the world’s largest ETS, projected to encompass approximately one-seventh of global carbon emissions resulting from fossil fuel combustion. Numerous additional national and subnational ETS initiatives are currently operational or in various stages of development.

There are generally two main categories of carbon markets: compliance and voluntary. Compliance markets are established in response to national, regional, or international policies or regulations. Voluntary carbon markets, whether domestic or international, involve the issuance, purchase, and sale of carbon credits on a voluntary basis. Currently, the majority of voluntary carbon credits are supplied by private entities or governments that implement carbon projects or programs certified by carbon standards, resulting in emissions reductions and/or removals. Protea has a complete section on its website found at https://www.protea.ltd.uk/carbon-capture-and-storage-ccs offering more information on our range of CCS solutions.

Demand for these credits comes from individuals seeking to offset their carbon footprints, corporations with sustainability objectives, and other entities looking to trade credits for potential profit.

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