China Speeds Up CCUS Race, Challenging Global Competitiveness
China is making significant strides in carbon capture, utilization, and storage (CCUS) technology, with five coal CCUS projects currently under construction. This development comes as the EU's Carbon Border Adjustment Mechanism is set to take effect in 2026, potentially reshaping industrial competitiveness.
Despite the cancellation or delay of over 50% of announced CCUS capacity for power plants in the past decade, and only two commercial-scale projects operational globally, China's progress is notable. While details of the five Chinese projects are scarce, their early development and feasibility studies are driving CCUS market growth in the Asia-Pacific region.
The economics of CCUS projects can be challenging, especially as renewable energy forces thermal plants into flexible roles. However, Chinese state-owned enterprises claim to complete CCUS projects in just 18 months, twice as fast as their US and European counterparts. This speed, coupled with China's target CCUS costs of $30 to $40 per tonne of CO2, significantly lower than Europe's over $300, could give Chinese industries a competitive edge.
BP's NZT Power project in the UK serves as a beacon of success, being Europe's first commercially viable power CCUS venture with an estimated pre-tax IRR of 20.8% with government support. Meanwhile, bioenergy with carbon capture and storage (BECCS) shows promise, with internal rates of return of 16% to 23%, offering hope where fossil fuel CCUS struggles.
As CCUS technology continues to evolve, China's rapid development and cost-effective targets could significantly impact global industrial competitiveness. While challenges remain, successful projects like BP's NZT Power and the promise of BECCS suggest a future where CCUS plays a crucial role in decarbonization efforts.
