The value of CCUS in transitions to net-zero emissions

The majority of global-scale energy system models find that deep decarbonization to limit anthropogenic global warming to well below 2 °C is infeasible or significantly more costly without carbon capture, utilization and storage (CCUS). Yet, there is some dissent amongst academics, businesses, and policymakers regarding the role CCUS can or should play in a low-carbon future. This article explores the value that CCUS provides in time-bound, economy-wide transitions to net-zero emissions (NZE). We consider value on three levels: (a) threshold value, i.e. whether or not CCUS is necessary in economy-wide pathways to NZE; (b) commercial value, i.e. the role of CCUS in minimum-cost pathways to NZE; and (c) option value, i.e. whether or not the inclusion of CCUS in a mitigation portfolio reduces the risk of not meeting NZE given socio-technical uncertainties facing alternative pathways. We review recent global-scale techno-economic modeling studies that describe pathways to NZE by mid-century, and Princeton University's recent Net-Zero America (NZA) study which provided a granular downscaling of modeled pathways to NZE by 2050 for the lower 48 U.S. states. These complementary studies indicate that getting to NZE without CCUS is costlier, more difficult, and likely not possible in at least some major economies, without breakthrough advances in mitigating hard-to-abate sectors and/or natural climate solutions. CCUS therefore holds both threshold and commercialvalue for NZE transitions. Leveraging the granular results from NZA, we show that CCUS also provides option value in a technology portfolio even when the planned pathway to NZE either does not include or only includes a limited amount of CCUS. The option value exists by providing a hedge against plausible (but hard to anticipate) real-world execution challenges for certain low-cost mitigation pathways, including those related to: capital mobilization; supply chains; siting and permitting; and potential public and political opposition owing to land-use impacts or disaffected industries. Such challenges are plausible for renewables-heavy pathways, which present unprecedented infrastructure pace and scale demands and the potential for social disruption at the community-level for fossil fuel-dependent economies. Finally, we consider what it would take to assure CCUS as a real option for commercial deployment when needed in NZE transitions. Recommendations are provided for how governments might de-risk CCUS value chains and backstop CCUS counterparty risks.