The development of carbon-capture clusters, where there are concentrations of industry and nearby storage opportunities, can drive the take-up of CCUS by helping to mitigate these risks and keep costs lower.
Regulatory support required to drive development
Moreover, CCUS requires considerable regulatory support, namely land-use permissions, streamlined permitting procedures and risk-mitigation measures, especially in relation to long-term liabilities for the security of carbon storage facilities.
Gaining government approval for sequestration permits, rights of way for pipelines and land-use permissions is another potential hurdle.
In the U.S., only two states – North Dakota and Wyoming – currently have primacy for Class VI wells, meaning they have been authorised to permit CCUS projects. The Environmental Protection Agency is responsible for permission in other states.
However, governments are counterbalancing these challenges by offering incentives to encourage more private investment, typically in the form of tax breaks, subsidies and other guarantees.
In Australia, for example, CCUS projects that meet prescribed requirements can qualify for carbon credits. In the U.S., the newly passed Inflation Reduction Act provides significant financial support for CCUS projects, for example, by extending and increasing the value of the current Section 45Q tax credit to any project that begins construction in the next 10 years.