Carbon Capture: Why It Matters for Saudi Arabia's Industrial Future
Climate, Energy & Utilities Focus
Carbon capture serves as a crucial safeguard for our planet, offering a sophisticated and proven technology to mitigate greenhouse gas emissions from industrial processes by capturing carbon dioxide (CO2) before it dissipates into the atmosphere.
Law Update: Issue 372 - Climate, Energy & Utilities Focus
Francis Patalong Senior Counsel, Corporate Commercial
Carbon capture serves as a crucial safeguard for our planet, offering a sophisticated and proven technology to mitigate greenhouse gas emissions from industrial processes and power plants by capturing carbon dioxide (CO2) before it dissipates into the atmosphere. This technology can also extract CO2 directly from the air or from biomass-utilizing sources, such as ethanol production or waste incineration. The captured CO2 can be sequestered underground, used in enhanced oil recovery or repurposed for creating fuels, chemicals, or building materials, known as carbon capture and storage (CCS) or carbon capture and utilization (CCU), respectively. If implementing carbon capture technologies entails substantial upfront investments in capture, transport, and storage infrastructure, the benefits are manifold. These include significant emission reductions, enhanced energy security, and the creation of new economic opportunities through the development of low-carbon products and markets.
Carbon capture projects can leverage both compliance and voluntary markets. Compliance markets, exemplified by the EU Emissions Trading System (ETS), are government-regulated and mandate companies (usually high emitters) to meet emission reduction targets, facilitating the trading of certified emission reduction certificates or credits. Voluntary markets (such as the Saudi scheme) allow companies and individuals to purchase carbon credits to offset their emissions voluntarily, driven by corporate social responsibility goals or consumer demand for greener products. Both markets offer financial incentives that enhance the economic viability of carbon capture projects.
Carbon capture is indispensable for future industrial projects, either directly or indirectly, as it facilitates the attainment of net-zero emissions—balancing the CO2 emitted with the amount removed from the atmosphere. Achieving net-zero emissions is crucial to limiting global warming to 1.5 degrees Celsius, as stipulated by the Paris Agreement, a global treaty to combat climate change under which nations set their own Nationally Determined Contributions (NDCs). Failure to reach net-zero emissions by 2050 will result in more severe and more frequent adverse climate impacts, including extreme weather events, sea level rise, biodiversity loss, and food insecurity. The repercussions of not implementing carbon capture and failing to achieve net-zero emissions could be far more severe, encompassing economic losses from climate-related disasters, health costs due to pollution, and the loss of biodiversity and ecosystem services.
Carbon capture can also assist industries in reducing their Scope 3 emissions, which are indirect emissions occurring within their value chain, such as from the use of their products or services by customers, suppliers, or contractors. For instance, a cement company can mitigate its Scope 3 emissions by capturing CO2 from its production process and utilizing it to produce low-carbon cement or concrete. Similarly, a steel company can capture CO2 from its blast furnaces to create low-carbon steel or synthetic fuels. A power company can capture CO2 from its gas-fired plants to generate low-carbon hydrogen or ammonia. Many existing industrial projects will have to be retrofitted to accommodate the new technology and new projects are designed to be carbon capture ready.
The initiative is necessarily global in scale. Countries with significant CCUS initiatives include:
Norway: Norway has over 28 years of operational CCUS experience with around 22 million tonnes of CO2 stored so far, driven by projects like Sleipner and Snohvit.
United States: The US leads the world in CCS facility deployment, with 19 projects in operation, supported by strategic and durable policy support from the federal government.
China: China continues to scale its CCUS projects, with the first integrated 1 mtpa Qilu Petrochemical - Shengli Oilfield CCUS Project coming into operation in 2022
United Kingdom: The UK government has committed up to £21.7 billion for two CCS clusters over the next 25 years, highlighting its ambition to make CCS a high-value national asset.
United Arab Emirates: The UAE's ADNOC aims to capture and store 10 Mtpa of CO2 by 2030, with projects like the Al Reyadah and Habshan CCUS initiatives (Global CCS Institute, 2024).
As a major oil and gas producer and exporter, Saudi Arabia has a significant role and responsibility in reducing emissions and contributing to the global net-zero goal. The Kingdom is also a regional and global leader in developing and deploying carbon capture technologies, aligning with its vision to diversify the economy, enhance energy security, and create new opportunities for growth and innovation. Saudi Arabia boasts several carbon capture projects in operation, construction, or development, spanning various sectors and applications. Some of the key initial carbon capture projects in Saudi Arabia are:
The Uthmaniyah project, which captures 0.8 million tonnes per year (Mtpa) of CO2 from a natural gas processing plant and uses it for enhanced oil recovery (EOR) in the Ghawar oil field, increasing oil production by up to 20%.
The Al Jubail CCUS hub, which aims to capture up to 9 Mtpa of CO2 from various industrial sources, such as refineries, petrochemicals, and power plants, and use it for EOR, low-carbon hydrogen, and ammonia production, as well as store it in geological formations.
The Rabigh project, which captures 0.5 Mtpa of CO2 from a mono-ethylene glycol (MEG) plant and uses it for EOR in the Safaniya oil field, as well as for making low-carbon methanol and urea.
The Aramco-Siemens-Spiritus project, which plans to build a direct air capture (DAC) facility that can remove 1 Mtpa of CO2 from the ambient air and use it for EOR, low-carbon fuels, and carbon-neutral aviation fuels.
The Aramco-ENOWA project, which intends to demonstrate the technical and commercial feasibility of a synthetic e-fuel facility that can produce 35 barrels per day of low-carbon, synthetic gasoline from renewable-based hydrogen and captured CO2.
These projects demonstrate that carbon capture can yield multiple benefits for Saudi Arabia, including enhanced oil recovery and value, the development of new low-carbon products and markets, reduced emissions and environmental footprint, and the advancement of technological and industrial capabilities. Carbon capture also supports Saudi Arabia's circular carbon economy (CCE) initiative, which promotes the efficient use, reuse, recycling, and removal of carbon in a holistic and integrated manner. Endorsed by G20 leaders in 2020, the CCE initiative represents a pragmatic and inclusive approach to addressing climate change and fostering sustainable development.
Carbon capture is not a panacea, but it is a vital component of the solution to achieve net-zero emissions and avert the worst effects of climate change. It is one of a suite of climate change measures that must be implemented collectively to effectively address this global challenge. While it plays a crucial role, it should not be viewed as a standalone solution. Saudi Arabia possesses the potential and ambition to be a global leader in carbon capture, leveraging its abundant natural resources, industrial infrastructure, and human capital to forge a more resilient, diversified, and prosperous future. The institutional capacity, technical competence and investment capital of the oil and gas sector will be pivotal in this endeavour. Carbon capture is not merely a necessity but an opportunity for Saudi Arabia's industrial future. The UAE Consensus, born at COP28 in Dubai, promises that 1.5C will remain a “north star” for the parties to the Paris Agreement. Carbon capture has a significant role in delivering on that promise.
For further information,please contact Francis Patalong.
Published in December 2024
