Several key issues for CCUS development in China targeting carbon neutrality

Abstract

Carbon capture, utilization, and storage (CCUS), as a technology with large-scale emission reduction potential, has been widely developed all over the world. In China, CCUS development achieved fruitful outcomes. CCUS gained further broad attention from the announcement of the carbon neutrality target by 2060, as CCUS is an indispensable important technology to realize carbon neutrality. It helps not only to build zero-emission and more resilient energy and industry systems but also provides negative emission potential. This paper discusses the new demand for carbon capture, utilization, and storage development brought by the carbon neutrality target analyzes the development status. As there remain various challenges of CCUS development, this paper focuses on several key issues for CCUS development in China targeting carbon neutrality: 1) how to reposition the role of CCUS under the carbon neutral target? 2) how shall we understand the technology development status and the costs? 3) what role shall utilization and storage play in future? 4) potential strategy applied to solve challenges of source-sink mismatch and resources constraints; and 5) new business model that suits large scale deployment of CCUS. This paper puts forward several policy suggestions that should be focused on now in China, especially to raise awareness under the vision of carbon neutrality that the role and contribution of CCUS are different, to accelerate the establishment of a comprehensive and systematic enabling environment for CCUS.

1 Introduction

Carbon neutrality, or net-zero CO₂ emissions, is achieved by balancing direct and indirect anthropogenic CO₂ emissions generated in a given subject with their removal over the course of a year [1, 2]. Carbon capture, utilization, and storage (CCUS) is an important part of achieving a worldwide net-zero future since it can serve as a solution for deep CO₂ reductions as well as a technical means with the potential for negative emissions Especially for countries that rely heavily on fossil fuels to guarantee national energy security while transitioning to a low-carbon economy, CCUS can be an unavoidable strategic choice [3].

The technical concept of capturing CO₂ and preventing its release into the atmosphere has been practiced and studied in the field of the oil and gas industry for a long time. As early as the 1920s, CO₂ capture technology was used to separate CO₂ from natural gas reservoirs from methane gas [4]. In the early 1970s, a natural gas treatment facility in Texas started delivering CO₂ captured via pipelines to a nearby oil field to improve oil recovery [5]. Since then, CO₂-enhanced oil recovery (CO₂-EOR) has been effectively validated and gradually commercialized. The whole chain prototype of CCUS is simultaneously evolving and maturing.

As the international community became more concerned about global warming, the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP) jointly established the Intergovernmental Panel on Climate Change (IPCC) in 1988 to provide scientific support for dealing with global climate change [6]. At the 1992 UN Conference on Environment and Development, the United Nations Framework Convention on Climate Change (UNFCC) was adopted [7], raising the world community’s expectations and enthusiasm for addressing climate change to unprecedented heights. Based on this backdrop, many well-known worldwide institutions created research projects centered on CCUS technology from 1990 to 1995, such as the CCS Technology Program at MIT and the IEA Greenhouse Gas R&D Programme. The Kyoto Protocol, which was signed in 1997, prompted people to think more deeply about the innovative technical concept of long-term CO₂ geological storage. Then, in the late 1990s, several major large-scale commercial carbon dioxide storage initiatives emerged, notably Norway’s Sleipner project, which began in 1996, and Canada’s Weyburn-Midale Carbon Dioxide Project, which began in 2000 [8].

However, the process of international cooperation on climate change has entered a long low tide due to the difficulties of uniting countries’ concerns about technical standards and responsibility-sharing for emissions reduction. It was not until the catalysis of a series of events that a new era of climate change governance began when the Paris Agreement was signed in 2015 [9]. The IPCC then issued a special report on global warming of 1.5 °C in 2018. According to the report, in order to meet the 1.5 °C targets, humanity must achieve net-zero emissions by 2050 [10]. Therefore, carbon removal is a critical strategy for achieving net-zero emissions and compensating for the net negative emissions required to keep global warming below 2 °C, and especially below 1.5 °C. This endeavour also requires the development of CCUS and negative emissions technologies (NETs), represented by BECCS and DAC, that eliminate greenhouse gas emissions [11]. During this time, the IPCC issued a special report on carbon dioxide capture and storage in 2005 [12], officially marking CCUS’s becoming a scientifically acknowledged technique [13]. In 2007, Elsevier Press launched the first journal on greenhouse gas (GHG) control, titled International Journal of Greenhouse Gas Control, which focuses on research on GHG capture and sequestration from large emission sources. Moreover, some international CCUS organizations have emerged throughout time, such as the Carbon Sequestration Leadership Forum (CSLF; 2003) and the Global Carbon Capture and Storage Institute (GCCSI; 2009). The international community has also sped up the implementation of CCUS demonstrations. At the end of 2020, there were 65 commercial CCUS projects around the world, with 26 projects in operation, capable of reducing approximately 40 million tons of CO₂ emissions annually [14]. Figure 1 summarizes the development process of CCUS technology within the framework of the global response to climate change.

Fig. 1

A brief history of Global CCUS Technology Development

Since China announced in September 2020 that it would achieve carbon neutrality by 2060, CCUS has received a lot of interest as an essential technology with large-scale emission-reduction potential. The government, corporations, and financial circles are all more aware of the role CCUS can play. However, there is still a lack of knowledge about CCUS, as well as gaps in understanding about the cost and safety of CCUS. With the strategic goal of carbon neutrality, CCUS development has entered a new phase. On the one hand, the concept of carbon neutrality puts forward new requirements for CCUS, such as emission reduction scale and negative emissions capacity. On the other hand, we should study the development strategy and plan for CCUS while pursuing carbon neutrality, taking into account historical CCUS development experience. This study summarizes the evolution of CCUS in China. On this basis, it analyzes several aspects that should receive more attention in the future development of CCUS, such as how to look upon the role and contribution of CCUS within the vision of carbon neutrality, technology development and cost-cutting strategies, and the establishment of a business model for CCUS-related infrastructures. Then, certain strategies to promote the CCUS development in China are proposed.

2 Status of CCUS development in China

The development of CCUS in China started in 2000. It is recognized as one of the most critical strategic technologies for China’s coal-dominated energy system to achieve low-carbon development. After nearly two decades of development, China has established a technical system for the development of CCUS, the policy support system has been enhanced, and the construction of demonstration projects has been fostered. After nearly two decades of development, China has initially built a technological foundation for CCUS, improved the policy support system, and made headway on the construction of demonstration projects.

2.1 Policy support

2.1.1 Policy before carbon neutrality declaration

CCUS was first mentioned in the ‘Outline of the National Medium and Long Term Science and Technology Development Program’ announced by the State Council in 2006 [15], where it was designated as cutting-edge technology. Following that, the Ministry of Science and Technology, the Ministry of Ecology and Environment, and the National Development and Reform Commission successively issued ‘Technology Roadmap Study on Carbon Capture, Utilization and Storage in China’, ‘Technical Guideline on Environmental Risk Assessment for Carbon Dioxide Capture, Utilization and Storage’, ‘the 12th Five-year National Special Plan for the Development of Carbon Capture, Utilization and Storage Technology’, ‘the 13th Five-year Plan to Control Greenhouse Gas Emissions’ and ‘Promoting Carbon Capture, Utilization and Storage Pilot Demonstrations’ [16,17,18]. These documents have made arrangements for science and technology policy, environmental regulation, and demonstration promotion. Additionally, CCUS has been included as an important emission reduction measure in the plans to cope with climate change issued by relevant departments. Some local governments have also established supporting policies and particular actions to aid in the growth of CCUS. For example, Guangdong Province has offered incentives for CCUS demonstration projects based on the electricity generation hours of power plants. While China’s policy advancement in the field of CCUS has demonstrated some worldwide leadership in the past, it is still insufficient to promote CCUS development on a large scale. Overall, due to the positioning of CCUS as a reserve emission reduction technology, most of China’s CCUS support policies are focused on R&D, rarely involving the field of large-scale diffusion and application. Most importantly, there is still a lack of economic incentive policies for CCUS.

2.1.2 CCUS listed in National top Planning in the new era

China has increased its focus on CCUS because of its indispensable role in future endeavors to achieve carbon neutrality. The 14th Five-Year Plan for national economic and social development, released in 2021, proposes ‘supporting the demonstration of important projects such as carbon capture, utilization, and storage’, marking the first time CCUS has been mentioned in a national five-year plan. CCUS has also received support from the national ‘1 + N’ policy framework on carbon peaking and carbon neutrality. In particular, the two newly released top-level policy design documents have highlighted the deployment of CCUS. One is a document titled ‘Working Guidance For Carbon Dioxide Peaking And Carbon Neutrality In Full And Faithful Implementation Of The New Development Philosophy’ jointly released by the Communist Party of China Central Committee and the State Council [19]. This guidance recommends encouraging CCUS technology research and development, large-scale demonstrations, and industrial applications. Another one is released by the State Council and titled ‘Action Plan for Carbon Dioxide Peaking Before 2030’, which lays out a comprehensive CCUS strategy that includes basic research, technology development, large-scale demonstration, and international collaboration [20]. More specific policy provisions for CCUS are constantly replenished in the follow-up action plans for carbon peaking and carbon neutrality in various fields. During the 14th Five-Year Plan, the government will continue to improve policy supply and coordination, as well as boost CCUS R&D demonstration and development.

2.1.3 Financial supports come into reality

There are many design fields and a long technical chain in the CCUS project. Because of these characteristics, the implementation of a CCUS project necessitates a heavy investment, which has always been a significant issue in the development of CCUS. Since last year, the Ministry of Ecology and Environment and the People’s Bank of China (PBOC) have strengthened the design of the investment and financing systems to support the development of CCUS. The Ministry of Ecology and Environment, in collaboration with other departments, issued ‘Guidance on Promoting Investment and Financing in Response to Climate Change’ in October 2020, instructing social capital to enter the field of climate change, and thus the scale of funds will increase significantly in the future [21]. In November 2021, PBOC launches a new tool to promote low-carbon financing, focusing on clean energy, energy conservation and environmental protection, and emissions reduction technology, the latter of which primarily supports CCUS and other technologies [22]. Only in the clean energy sector is it projected that the yearly size of carbon emission reduction support instruments that can be delivered is more than 300 billion yuan. If these three areas are taken into account, the yearly scale of financing tools that may be used should be greater than 500 billion yuan, providing considerable financial support for the expansion of CCUS projects. Simultaneously, a growing number of investment funds and other forms of social and enterprise capital are paying attention to and investing in CCUS as a sophisticated carbon neutrality technology. In addition, China has launched a national carbon market in 2021. Incorporating CCUS into the carbon market mechanism could help companies that adopt CCUS technology to gain some benefit from the carbon market to compensate for the current high costs. Specifically, qualified emitters could be allowed to offset their emission credits directly with CCUS, or approved emission reductions from CCUS projects could be allowed to enter the market for trading.

2.2 Technology development

Since 2006, CCUS has been recognized as cutting-edge technology in China’s medium and long-term technological development plans, and it has begun to get funding from national scientific research funds in order to achieve the goal of zero-emission of fossil fuel energy. Since then, the Chinese government has never stopped funding CCUS for research and development. It is geared toward various stages of free exploration, fundamental research, technology development, and engineering demonstration, covering the entire process technology chain with capture, transportation, utilization, and storage [23]. Synchronously, a large and stable CCUS research team has been developed.

In terms of the overall number of publications related to CCUS, China now ranks second in the world for achievements in science and technology. Between 2000 and 2019, 984 studies were published, with the number increasing each year. In 2016, China surpassed the United States as the country with the most annual publications, with over 170 articles published. Furthermore, China is the world’s leader in terms of the total number of patents. The overall number of patents issued from 1967 to 2018 was 1067, and the annual additions climbed year after year. In 2012, China surpassed the United States as the country with the most yearly patent applications, with over 220 each year. In China, invention patents account for 80% of all applications, while utility model patents account for 20%. The technology of CCUS has a bright future ahead of it [24].

CCUS must be implemented in accordance with carbon neutrality requirements, allowing the technology to contribute to the overall goal of carbon neutrality [25] (Fig. 2). Based on the type of CO₂ capture source, CCUS-related technologies can be classified into three main categories, namely fossil energy and carbon capture and storage (FECCS), biomass and carbon capture and storage (BECCS), and direct air carbon capture and storage (DACCS). The latter two types of these technologies exhibit negative emission characteristics.

Fig. 2

CCUS Technology System for Carbon Neutrality

2.3 Pilot and demonstration projects

2.3.1 CCUS demonstration covers various fields

The new chapter of the domestic CO₂ capture project can be traced back to 2007. After long-term practice, CNPC Caoshe Oilfield in Jilin Oilfield first realized the industrialization of CCUS-EOR technology and established five types of CO₂ oil displacement and storage demonstration areas, with an annual CO₂ storage capacity of 350,000 tons [26]. In the same year, Caoshe Oilfield of Sinopec East China Branch completed a pilot test project with an annual CO₂ injection capacity of 40,000 tons, and a CO₂ recovery plant was built in the later stage with an annual treatment capacity of 20,000 tons [27].

In 2010, Sinopec Shengli Oilfield built the CCUS demonstration project for the first coal-fired power plant in China. The flue gas from the coal-fired power plant was taken as the source of CO₂, and the captured CO₂ was injected into the oil field for oil displacement by using the post-combustion capture technology, with an annual CO₂ capture capacity of 40,000 tons [28]. In 2011, Shenhua Ordos adopted the methanol absorption method to capture CO₂ from the tail gas of coal gasification hydrogen production project, and then injected CO₂ into the saline layer. This project was the first geological storage experimental project of a saline layer in China, with a construction scale of 100,000 t/a. In 2012, Yanchang Petroleum used CO₂ produced by the coal chemical industry and injected CO₂ into the oilfield after purification, pressurization and liquefaction by taking the low-temperature methanol washing technology, thereby reducing the crude oil viscosity, improving the crude oil recovery, and realizing the permanent storage of CO₂. The construction scale of this project was 50,000 t/a. In 2015, the CCUS project of tail gas from the oil refinery of Sinopec Zhongyuan Oilfield was completed. This project increased the oilfield recovery rate by 15% through CO₂ oil displacement of the almost abandoned oilfield. Currently, millions of tons of CO₂ have already been injected into the ground. In 2021, the 150,000 t/a CCS demonstration project passed the 168-h trial operation in CHN Energy Jinjie Co., Ltd., which is the largest demonstration project of the whole process of post-combustion CO₂ capture, oil displacement, and storage in China’s coal-fired power plant. During the trial operation, industrial-grade qualified liquid carbon dioxide products with a purity of 99.5% were continuously produced. The large-scale capture of CO₂ from the flue gas of coal-fired power plants is successfully realized [29].

In addition to the traditional CO₂ capture technology, new CO₂ recycling technology was also carried out in China and was applied in food, fine chemical engineering, and other industries [30]. In 2010, ENN Group used the microalgae carbon sequestration technology in Dalat Banner, Inner Mongolia to use some tail gas absorbed from the coal-to-methanol/dimethyl ether plant as biodiesel and some tail gas as production feed, with a treatment capacity of 20,000 t/a.

2.3.2 Projects scale

With the acceleration of industrialization, domestic research on CO₂ capture projects has also started. Compared with foreign countries, China’s CCUS project started late, and there is no megaton capture project. At present, the capture capacity of the domestic projects only reaches 100,000 tons [31,32,33]. The general development status of CCUS technology in China is shown in Table 1 and the domestic CCUS projects are shown in Table 2 in Appendix.

Table 1 Development status of carbon capture, utilization, and storage technology in China

Known from Table 2, the largest carbon capture demonstration project built in China is the 150,000 t/a CCS project of Jinjie Power Plant. 36% of the projects have a capture capacity of more than 100,000 tons, 39% of the projects have a capture capacity of more than 10,000 tons and 25% of the projects have a capture capacity of less than 10,000 tons. Compared with many foreign commercial operation projects of 1 million tons, CO₂ capture is still dominated by small-scale projects in China. Figure 3 is the bubble diagram of CCUS technology demonstration scale that has been carried out and is planned to be carried out in China. The bubble area is proportional to the capture scale of the demonstration plant. After the carbon neutrality target is put forward, the scale of projects to be built in the future will generally increase. For example, CHN Energy is preparing to build the 500,000 t/a carbon capture, utilization, and storage demonstration project in Taizhou Power Plant. The captured CO₂ will be used for food-grade sales and oilfield displacement, and it is expected to be put into production in 2023. Sinopec prioritized the CO₂ capture technology with its intellectual property rights to prepare high-concentration CO₂ by means of hydrogen, ethylene glycol, and coal chemical production equipment and recycle the flue gas from the owned power plant in the national carbon market. It is comprised of two parts, namely CO₂ capture by Qilu Petrochemical and CO₂ oil displacement and storage by Shengli Oilfield [34]. Qilu Petrochemical transported the captured CO₂ to Shengli Oilfield for oil displacement and storage, realizing the integrated application of CO₂ capture, oil displacement, and storage. This project is expected to be put into production by the end of 2021. In the next 15 years, it is expected that 10.68 million tons of CO₂ will be injected to realize the increased oil production of 2.965 million tons.

Fig. 3

Bubble chart of CCUS technology demonstration scale carried out and planned in China

2.3.3 Projects type and capacity

Known from Fig. 4, the majority of CO₂ carbon sources come from low-concentration emission sources, such as coal-fired power plants, accounting for 38%. 26% come from high-concentration emission sources such as the coal chemical industry, followed by the petrochemical industry, cement plant, and building materials industry, accounting for 18%, 15%, and 3% respectively. The demonstration of CCUS technology hasn’t been carried out in the iron and steel industry.

Fig. 4

The proportions of different carbon dioxide emission sources in CCUS demonstration projects carried out in China

Up to now, China has completed the capture of 2 million tons, with an annual capture capacity of 3 million tons and an accumulated CO₂ storage capacity of 2 million tons. As of 2020, there have been 66 large-scale CCUS integration projects worldwide, and 34 pilot and demonstration projects are running or under development. The CCUS facilities currently in operation worldwide can capture and permanently store approximately 40 million tons of carbon dioxide per year. Among the 17 newly increased CCUS projects in 2020, 12 projects are from the USA [35]. The CCUS facilities put in commercial operation in this region have an annual carbon capture capacity of over 30 million tons, much higher than the carbon capture capacity of our country. The completion of these new projects mainly benefits from the incentives from the 45Q tax credit and the Californian Low Carbon Fuel Standard. The development of CCUS in China, especially the large-scale commercial development, needs further effective incentive policies to solve the problems for the investors such as investment and financing channels, investment cost, and yield risk [36].

3 Key issues to boost CCUS in China

3.1 Role and contribution of CCUS to carbon neutrality

The widespread use of CCUS is an inevitable technical choice for achieving global net-zero emissions, China’s carbon neutrality target, and ensuring energy security and high-quality economic development in developing countries in the future [37]. It will play a critical part in the transition to a low-carbon, multi-energy supply system. To achieve carbon neutrality, two directions need to be worked on. One is to mitigate carbon dioxide emissions through measures such as energy and economic structure optimization, energy conservation, and technological upgrading [38]. However, because of technical levels or cost-effectiveness constraints, some CO₂ emissions cannot be completely offset. The other effort required is to use negative emission technology to counteract this portion of the emissions. CCUS will be critical in each of these areas. According to different net-zero emission pathways studied by Chinese research institutions, CCUS technology is essential to attaining carbon neutrality in 2060, with a contribution to emissions reductions of 0.6–1.6 billion tons in 2050 [39].

3.1.1 Providing negative emission potential

In addition to reducing emissions, CCUS has the potential for negative emissions. The derived technologies based on CCUS, such as BECCS and DACCS, can be further combined with renewable energy and are also negative emission options with bright prospects. Agriculture and forestry systems are currently the most important carbon sinks in terms of negative emission potential, but their capacity in China is often limited to around 1 billion tons of CO₂ [40]. As a result, negative emission technologies such as BECCS and DACCS will provide the majority of the additional negative emission potential required in the future. If existing power plants are retrofitted to coal-biomass co-fired power generation units, the negative emission potential of BECCS in China is estimated to be around 360 million tons/a [41]. This fraction of the potential is only tied to retrofitting some existing coal-fired power plants; China’s entire BECCS potential will be substantially greater. Without considering the cost, DACCS has a significant negative emission potential [42]. While DACCS is currently in its early phases of development, its cost will decrease as technology advances.

3.1.2 Deep decarbonization for hard-to-abate sectors

In 2018, industry accounted for roughly 28% of China’s total carbon emissions [43]. Because of the enormous energy input, industries emit a lot of CO₂, especially in the iron and steel, chemical, and cement sectors. The iron and steel industries release nearly 1.8 billion tons of CO₂ per year, making them the largest industrial emitters, accounting for roughly 15% of total national CO₂ emissions and approximately 24% of industrial CO₂ emissions [44]. The cement sector emits more than 1.2 billion tons of CO₂ annually. Since the production energy structure is complex, the consumption forms are diverse, and the sources of CO₂ emissions are various, the process-based emissions in the industry are complex. Because of the aforementioned characteristics, industries such as steel and cement will find it difficult to meet carbon emission reduction targets solely through capacity adjustments, energy savings, and efficiency improvements, indicating that CCUS is required for the deep decarbonization of industrial sectors in certain sectors.

3.1.3 Zero carbon power system

China’s energy resource endowments are characterized by rich coal, poor oil, and lean gas. Coal and other fossil fuels are not only the primary energy sources for Chinese consumer goods but also essential industrial raw materials. Additionally, widespread adoption of new technologies such as renewable energy substitution will take time due to limitations in technology maturity, stability, and economic cost in the power industry. Affected by the remaining operating life of China’s active coal-fired units (about 15–35 years), the direct withdrawal of coal-fired power will cause huge economic losses to China [45]. To a certain extent, CCUS can provide important technical guarantees for the coal-based energy industry to avoid the “carbon lock” restriction, so as to avoid the “depreciation” of fossil energy assets caused by emissions reduction, and can also support relevant industries to continue to use the high cost of infrastructure built in the early stages while meeting the “hard constraints” of low-carbon transformation [46]. China will build a power system dominated by renewable energy in the future, and coal power will be greatly reduced. However, a certain amount of fossil fuel power is needed to ensure the flexibility and security of the power grid. CCUS can solve the emission of this part of fossil fuel power.

3.1.4 New tech-economic paradigm for the circular carbon economy

Following many nations’ commitments to a carbon-neutral future, the combination of CCUS and related energy systems has emerged as a hotspot, with the potential to promote a new technical and economic paradigm for CCUS development. Integrating CCUS and hydrogen energy production can not only convert high carbon energy into zero-emission hydrogen energy but also incorporate CCUS with low power consumption and low cost in the conversion process, resulting in energy conservation and emission reduction at the fuel source [47]. Integrating CCUS with renewable energy and energy storage systems, likewise, is a viable option for assuring the long-term stability and sustainability of multi-energy supply systems. In addition, CO₂ utilization technologies attract extensive attention for their potential to recycle CO₂, especially in the field of CO₂ hydrogenation to liquid fuels, which can offer a systematic solution for emission reduction in long-distance and heavy-haul transportation. As climate governance improves, the usage of fossil fuels decreases, limiting the amount of carbon that may be used in the industrial sector. Under the circular carbon economy paradigm, utilization technology innovation is gaining traction, with innovative technologies continuing to develop in the future.

3.2 Technology and costs

Each link of the CCUS technology chain in China has certain research and development and demonstration foundation, however, the technology development of each link is unbalanced, and there is still a great gap between large-scale and whole-process demonstration applications. China has built 100,000 t/a pre-combustion and post-combustion CO₂ capture demonstration projects, but there is no 1000,000 t/a CO₂ capture demonstration project. China lacks engineering experience in large-scale system integration transformation. At present, the overseas CO₂ oil displacement (EOR) and storage technology are relatively mature, and more than 10 large-scale projects have realized commercial operation; although the whole-process oil displacement and storage demonstration projects of different scales have been put into operation in China, the long-term effective monitoring of CO₂ migration has not been carried out. CO₂ CBM displacement technology is still in the early exploratory stage, and the evaluation of site selection and the monitoring of deep well with CO₂ still have a great gap from foreign countries; CO₂ chemical conversion and bio-utilization technologies are mostly in the research and development stage.

In addition, under the current conditions of CCUS technology, the deployment of CCUS will increase the primary energy consumption by 10% to 20%, resulting in a large loss of efficiency, which is also one of the main obstacles to the widespread application of CCUS technology [48, 49].

3.2.1 Capture

The carbon capture technology is to obtain high-concentration CO₂ through CO₂ enrichment, compression, and purification. At present, there are three common carbon capture technologies, namely pre-combustion capture, in-combustion capture, and post-combustion capture [50]. At present, post-combustion capture technology is the most mature capture technology and can be used for decarburization transformation of most thermal power plants. The pre-combustion capture system is relatively complex, and the integrated coal gasification combined cycle technology is a typical technology. The oxygen-enriched combustion technology is one of the most promising technologies for large-scale carbon capture in coal-fired power plants. The CO₂ produced has a higher concentration (90% ~ 95%) and thus is easier to capture. It can be used in new coal-fired power plants and some transformed thermal power plants.

However, the CO₂ capture technology has the following problems such as high heat consumption of absorbent regeneration, high system complexity, and difficult integration. It is necessary to develop high-performance absorbent, master the technology with the strengthened process, matched energy coupling and power plant integration and control, etc., reduce capture energy consumption and realize organic integration of capture system and power generation system, thereby minimizing the impact of CO₂ capture on power generation efficiency. There is little experience in the construction of efficient and practical CO₂ adsorption and membrane separation systems. It is necessary to master the industrial-scale preparation technology of high-performance and low-energy adsorbent and membrane materials and form the CO₂ capture technology with efficient and low-energy adsorption and membrane separation. The main problem of CO₂ capture in the chemical process is to optimize the capture process, shorten the process flow, reduce the construction investment and reduce the operation energy consumption. At present, China has deployed relevant scientific and technological research and development tasks, mainly focusing on key technologies for high energy consumption of CO₂ capture, and is committed to developing high-performance CO₂ capture materials, breaking through key technologies for large-scale CO₂ capture, and realizing industrial demonstration of low-energy 500,000 to 1000,000 CO₂ capture. When the relevant technology gets mature, the energy consumption and cost will be decreased by more than 30% than the existing technology, and it is expected to be widely applied around 2035 [51].

3.2.2 Utilization and storage

China has developed and formed a number of key technologies for CO₂ capture, oil displacement, and storage, including the CO₂ drive development and experimental analysis technology for the phase state analysis of gas drive reservoir fluid, CO₂ drive reservoir engineering design technology centered on the prediction of production indicators such as injection and recovery, CO₂ drive injection and recovery technology dominated by alternate injection process of water and gas and multi-phase fluid lifting technology, and CO₂ drive safety prevention and control technology for the integrated safety monitoring and warning of “space-sky – near-surface – oil-gas well - geological mass - receptor” [52]. Through the practical development of CO₂ oil displacement and storage in the past ten years, the CO₂ enhanced oil production technology is in the industrial demonstration stage, the CO₂ saline water storage technology has completed the pilot test study, the CO₂ CBM displacement technology has completed the pilot test stage, and the mineralized utilization is in the industrial test stage. The CO₂ enhanced natural gas and shale gas production technology are still in the basic research stage. There are still some practical conditions such as immature carbon market, imperfect gas supply system, high CO₂ oil change rate (gas consumption per ton), and low recovery factor, which will affect the economical efficiency of CCUS projects to varying degrees and further affect the sustainable development of CCUS technology in China [53].

The continental sedimentary low permeability reservoirs in China are characterized by strong heterogeneity, intertwined natural and artificial fractures, large burial depth, and large crude oil viscosity, which pose challenges to the success and benefits of CO₂ oil displacement and storage projects. In addition, China has not yet formed a CO₂ gas source market with a relatively reasonable price and stable supply for the application of CO₂ oil displacement and storage technology. Therefore, there are still a number of technical problems that need to be solved or improved in China’s CO₂ oil displacement technology, such as how to further reduce the investment per unit capacity of CO₂ flooding, how to improve the management level of CO₂ drive reservoir, especially to delay gas channeling and avoid the phenomenon of “no blending”, and continuously improve the effectiveness of gas injection [54].

In terms of CO₂ utilization, mineralization technology is very suitable for flue gas purification treatment without desulfurization in coal-fired power generation and energy-consuming steel, cement, and other important processes. The fixation of CO₂ through direct mineralization and by using waste materials such as coal cinder, coal ash, steel slag, and tailings will greatly improve the process emission reduction capacity and reduce the CO₂ capture cost. However, major issues, such as common principles of mineralization process, key technologies and equipment, and integrated technology of capture and mineralization process, need to be further studied to improve the carbon sequestration efficiency and economical efficiency of the whole process and to form the key technologies for CO₂ emission reduction and integrated mineral processing or slag treatment. The key problem of CO₂ conversion and utilization technology is to improve the efficiency of directional synthesis of high-value fuels/chemicals and the carbon sequestration capacity. Among more than ten chemical and biological transformation technologies, some of them have shown demonstration ability. However, restricted by material performance factors, such as low catalyst activity, short life, poor directional selectivity, poor carbon sequestration efficiency and patience of algae strains, and low CO₂ conversion and utilization efficiency, it is necessary to research and develop a number of cutting-edge technologies for CO₂ conversion and utilization. The high-efficiency catalyst for CO₂ directional conversion has been developed and produced and applied on a large scale to realize the large-scale carbon sequestration of algae strains.

3.2.3 Transportation

CO₂ transportation is an important link in the application of CCUS technology. At present, there are mainly four transportation modes: pipeline, ship, road tanker, and railway tanker [55]. Transportation by road tanker and railway tanker is difficult to be adopted on a large scale because of the small transportation volume and high cost. Transportation by ship is suitable for low-volume and long-distance CO₂ transportation at sea, and transportation by pipeline has been adopted on a large scale due to the large transportation volume and low cost. There are few CO₂ gas sources near the main oil-producing areas in China, so it is very necessary to collect gas from other places and transport it to the designated land through pipelines. However, the domestic research on CO₂ pipeline technology started late and is currently in the stage of theoretical research and experiment, but the engineering practice construction has been planned, The million ton CO₂ project of Shengli Power Plant is planned to be the largest CO₂ transmission pipeline in China. There is currently one large-scale CCUS project operating in China-the China National Petroleum Corporation Jilin project, which captures some 600 ktCO₂ per year from a natural gas processing plant for transportation via a 10 km pipeline to an oil reservoir for enhanced oil recovery. In the technological development level of each link of CCUS in China, the pipeline transportation technology is the weakest, which is related to the immature design of the pipe network system and the lack of standard specifications for the transportation process. China has a large land area, and the distance between CO₂ emission sources and storage sites is large, so the large-scale long-distance pipeline transportation of CO₂ becomes an efficient and feasible option. The natural gas pipeline transportation technology is relatively mature and the CO₂ pipeline transportation is similar to the natural gas pipeline, but CO₂ captured by flue gas is often accompanied by N2, O2, H2S, water vapor, alkane, and other impurities. Therefore, the transportation of CO₂ with different purity poses new challenges to the design of the pipeline operation process [56]. Based on experience, the large-scale CO₂ pipeline transportation in a supercritical mode has a low operating cost and high efficiency. However, the application of CO₂ pipeline transportation engineering in China is still in the stage of low-pressure gas transportation, and the high-pressure, low-temperature and supercritical transportation have just started. The large-scale CCUS projects require the construction of a CO₂ transportation pipeline and the research on CO₂ pipeline transportation safety and safety monitoring and control technology.

3.2.4 Costs

The CCUS demonstration projects in China are characterized by the small overall scale and high cost, and the cost of CCUS mainly includes economic cost and environmental cost. Economic cost includes fixed cost and operating cost, while environmental cost includes environmental risk and energy consumption emission. The operating cost mainly involves capture, transportation, storage, and utilization. It is estimated that the CO₂ capture cost will be RMB 90–390/ton in 2030 and RMB 20–130 /ton in 2060; and the CO₂ pipeline transportation will be the main transportation mode for large-scale demonstration projects in the future. It is estimated that the pipeline transportation cost will be RMB 0.5 /ton • km in 2030 and RMB 0.3 /ton • km in 2060. It is estimated that the CO₂ sequestration cost will be RMB 40 ~ 50 /ton in 2030 and RMB 20 ~ 25 /ton in 2060 [57]. Under the existing technologies, the introduction of carbon capture will increase the extra operating cost of RMB 200–300/ton. For example, the power generation cost of the Shanghai Shidongkou capture demonstration project of China Huaneng Group has increased from about RMB 0.26 /KWH to RMB 0.5 /KWH [58]. The operating cost of the CCS demonstration project of Jinjie Power Plant of CHN Energy Group is about RMB 280 /tCO₂, while the operating cost of the 500,000 t/a carbon capture demonstration project of Taizhou Power Plant under construction is expected to be about RMB 240 /tCO₂.

Seen from the overall cost of the CCUS project shown in Fig. 5, the capture cost is a major part, approximately accounting for 60–80% of the total cost. The carbon capture cost mainly includes fixed costs and operating costs. Fixed cost refers to the initial investment of carbon capture technology, such as equipment installation and land investment, etc. By taking thermal power as an example, the fixed cost investment of carbon capture devices is about RMB 800 to 1000 / tCO₂. Based on the depreciation period of 15 years, the depreciation cost accounts for about 16% [59, 60]. The operating cost includes the consumption of water, electricity, steam, and chemicals in the operation process of the carbon capture device, maintenance cost, and operation personnel’s salary. Its reduced proportion is about 84%, in which the steam cost accounts for 27%, the electricity cost accounts for 32%, the amine liquid consumption cost accounts for 12%, the financial cost accounts for 6%, the repair cost accounts for 4% and the operating personnel’s salary and welfare expenses account for 3%.

Fig. 5

Typical costs structure of power plant capture

Measures for reducing the costs mainly include (1) Novel capture technology, with 30% reduction potential focusing on the development of new absorbent (such as two-phase waterless ionic liquid) to reduce the steam cost, the application of new efficient energy-saving equipment to reduce the power consumption cost, the development of new amine recovery device to reduce the amine liquid consumption cost, (2) Scale effect, with 30% reduction potential focusing on the expansion of scale (2 million tons) to reduce the composite cost by about 30%. (3) New business model to reduce comprehensive costs.

3.3 Role of utilization and storage in the coordinated development of industrial chain

The gas source and supply are the main problems for the demonstration projects due to few whole-process demonstration projects in China, bad docking of upstream and downstream of the industrial chain, and lack of cross-industry and cross-sector cooperation model [61].

At present, the front-end enterprises implementing the capture project, mainly focus on the conversion and application of CO₂; and the rear-end enterprises implementing the storage and utilization project, have outstanding problems in the supply of abundant and economic carbon sources in a distance of 200 km or closed due to small scale of available carbon source and scattered carbon source. In addition, the lack of a matching bridge (transportation network) between oilfield and carbon source leads to that plenty of high-concentration CO₂ gas sources cannot be converted into oil displacement resources and transported to the oilfield, and also makes it difficult for petroleum companies to start the large CO₂ oil displacement and storage projects. The construction and operation of the CO₂ transportation network involve not only the cross-industry upstream and downstream enterprises but also the relationship between local governments and local enterprises, which is difficult to be accomplished overnight. The pain point for both sides is how to find an economical and suitable partner.

In addition to oil displacement utilization and storage, the resource utilization of carbon dioxide is another form of the downstream industrial chain, including production of chemicals or fuels by using CO₂ as raw material, bioconversion by using microalgae, use as a concrete building material, and CO₂ enhanced oilfield regeneration, etc. At present, only a few technologies are economically feasible and scalable for industrial amplification. The largest chemical utilization way is to produce urea. Currently, 140 million tons of carbon dioxide are used to produce 200 million tons of urea in China every year. The fuel production in the future may consume several hundred million tons of carbon dioxide, which is promising yet still uncertain. The existing CO₂ resource utilization projects generally have a small scale. For example, the CO₂ capture and oil displacement project of Sinopec Shengli Oilfield is expected to reduce emissions by over 30,000 tons each year. Huaneng Beijing Gaobeidian Thermal Power Plant sells the captured CO₂ to food stores, recycling only 3000 tons of carbon dioxide each year [62]; Shandong Energy uses carbon dioxide produced by chemical units to prepare high-value chemicals, reducing 35, 000 tons of carbon each year. There is no market for captured CO₂, and the lack of consumer demand leads to these CO₂ capture projects aren’t put into operation after completion, and most of them are currently out of service.

The coordinated development of the industrial chain needs the support of policy and legal system, otherwise, it is difficult to promote the sound development and improvement of the CCUS industrial chain. First, the Chinese government has put forward the "3060" carbon peaking and carbon neutrality goals, but there is no specific quantitative constraint index for enterprises except for the power industry. Therefore, enterprises mostly take a wait-and-see attitude towards CCUS and have not really taken CCUS as an important choice for the low-carbon transformation of enterprises. Second, China has not yet established a national development strategy for CCUS, and the existing policies mainly focus on flexible guidance and encouragement, lacking clear policy incentives for CCUS, while CCUS is often related to the major long-term development strategy of enterprises. Without stable policy expectations, enterprises are difficult to make investment decisions. Third, China has not yet established a normative system and standard system for the whole-process CCUS demonstration project. Both the governments and enterprises are worried about the potential environmental and security risks in the implementation of the CCUS project, thus affecting the enthusiasm of enterprises to develop CCUS.

In addition, a cross-departmental and cross-regional coordination mechanism has not yet been established, which will affect the actual promotion of the CCUS project. On the one hand, the CCUS project tends to be cross-departmental and cross-regional. In the process of the project application, approval and implementation, multiple localities and departments will be involved. In the absence of clear existing regulations and effective communication and coordination, the increase of transaction costs will lead to the difficult promotion of the CCUS project. On the other hand, as the whole-process CCUS demonstration project involves different enterprises in multiple industrial chains, all stakeholders of the project face the difficulties such as benefit-sharing, responsibility-sharing, and risk-sharing. If effective coordination mechanisms or industry standards cannot be established, it will be difficult to establish a fair and long-term cooperation model, greatly affecting the promotion of the CCUS project.

3.4 Regional source-sink matching and resources constraints

Source sink matching is an important factor in CCUS application and plays a decisive role in the feasibility and economy of the CCUS project. From the matching of emission sources and storage sites in China, there is good source-sink matching potential in some areas, such as Ordos Basin, Songliao Basin, Xinjiang, and so on. However, on the whole, the emission sources are mostly in the central and eastern regions, and the potential areas of storage sites are mostly in the central and western regions. Especially for the eastern coastal areas, the potential of land storage is small, and the potential of marine storage needs to be explored.

From the perspective of negative emission potential, BECCS technology is one of the most likely negative emission technologies to be rapidly applied at present, and it is also one of the most potential technologies to realize negative emission contribution through the transformation of coal-fired power plants. The potential of biomass resource recycling in China is huge. At present, it is not fully utilized, but the carbon neutralization target needs more biomass energy supply.

According to the current data of the total biomass and the stock of coal-fired power plants in China, the negative emission potential that can be realized by the transformation of existing coal-fired power plants in China is 1.8–2.9 billion tons of CO₂, and the potential supply of biomass energy in China can provide only 0.7–2 billion tons of CO₂. The probability is that the existing biomass energy can not meet the BECCS transformation needs of large-scale coal-fired power plants, One of the important challenges facing the large-scale development of BECCS is the need to expand the source of biomass energy.

The growth of large-scale bioenergy required by BECCS is significantly dependent on water resources. At the same time, the fate of CO₂ also makes it more possible for coal-fired power plants in areas with storage resources to carry out BECCS technology deployment.

Through the case study of Songliao Basin in the three eastern provinces, if the local coal-fired power plant implements BECCS technical transformation, the agricultural and forestry wastes around it can meet the demand of biomass combustion of the power plant and provide about 30 million tons/year of negative CO₂ emission.

Large-scale cultivation of energy crops may be necessary to achieve a larger scale of negative emission contribution, but water resource constraints are very important constraints, and the technical and economic feasibility is not clear.

On the one hand, it is necessary to expand bioenergy sources, which will lead to huge water demand, which is feasible in the South; At the same time, bioenergy and CO₂ transportation will also become constraints that can not be ignored. Transportation cost will become an important factor in the selection, optimization, and configuration of coal-fired power plant transformation, bioenergy supply, and CO₂ transportation and storage. Although this factor is mentioned in this study, no in-depth research has been done, especially the technical implementation and economic feasibility, which need to be discussed in the future.

3.5 Business model and infrastructure

3.5.1 Definition of CCUS business model

In management science, the business model generally refers to the mode in which a single enterprise produces and sells products and does not involve other enterprises [63]. The business model of CCUS technology is quite different from that of a single enterprise, which is determined by the characteristics and development stage of CCUS technology itself. From a technology perspective, a CCUS project has a long technology chain, which inevitably includes more upstream and downstream enterprises. Therefore, the business model of CCUS referred to broadly in the past mainly discusses how all relevant parties of CCUS cooperate in a whole chain project so that the project can be constructed and implemented with low risk and high efficiency.

However, given the current status of CCUS development and its technological characteristics, the future of CCUS is also determined by various stakeholders which should be included in the business model. For example, CCUS technology is still in the early stage of large-scale application, in the absence of government support, the industrial sector alone can not afford the large-scale construction and operation of CCUS projects. So the government will play a critical role in the commercialization and large-scale promotion and is an indispensable important stakeholder in the business model.

In view of the characteristics and current stage of the CCUS project, this paper defines the business model of CCUS as “the organizational mode, business process, relevant policies and mechanism arrangement of all stakeholders to promote the construction and implementation of the project in order to promote the smooth implementation of CCUS project.”

3.5.2 Challenges for existing business model

Currently, the existing CCUS business model is usually aimed at projects with a single business chain between the emission source and the storage site. This decentralized business model is mainly designed at the project level, and its goal is to promote the implementation of the project. Consideration of the economy and other facts are often not included in the project decision. With the increase of the implementation of the CCUS project, some disadvantages and challenges of this business model gradually emerge after the technical effectiveness and other aspects have been verified.

Projects from a single emission source to a single sequestration site may face the challenge of a mismatch between supply and demand for CO₂ in technical operations. Taking the current realistic CCUS full chain project (power plant capture with EOR) as an example, the carbon dioxide emission characteristics of the power plant do not match the carbon dioxide utilization in EOR [64]. Emission sources tend to produce carbon dioxide at a relatively constant rate unless the plant is closed for maintenance or shutdown. By contrast, the amount of carbon dioxide required for CO₂-intensive flooding projects varies throughout the life of the project. Initial reservoir assessment requires only a relatively small amount of carbon dioxide to test its adaptability to CO₂-EOR. After that, large amounts of carbon dioxide are injected into the reservoir. After several years of injection, depending on the specific reservoir characteristics, the oil produced will contain carbon dioxide, which must be separated and injected back into the field. As a result, the amount of carbon dioxide required gradually declines. These fluctuating demands pose a huge challenge to a point-to-point model like a power plant to an oilfield.

Each project needs to overcome these challenges of a mismatch between supply and demand for carbon dioxide. In this decomposed business model, all members of the value chain have significant cross-chain risks. For example, if industrial sources of carbon dioxide stopped operating, both pipeline operators and storage operators would have no customers and no revenue. This risk is a major barrier to investment and ultimately manifests itself in higher capital costs and higher project costs. This, in turn, makes CCUS projects appear less economic, further reducing the attractiveness of CCUS implementation.

3.5.3 Regional CCUS hub as a basic business model

CCUS development must address two challenges, namely, stimulating economies of scale and diversifying risk. One is regarding the scale effect. At present, the overall cost of CCUS is still high. Although technological progress will further reduce the cost, we should not only rely on technological progress to reduce the cost. Economies of scale are another important way to reduce costs, which in turn tend to drive technology further and increase the slope of the learning curve. The other challenge is risk diversification. Both theoretical research and engineering practice have shown the importance of risk reduction to the success of the CCUS project. The basic goal of CCUS business model optimization is how to disperse and reduce project risks. For a project with a long industrial chain and involving many stakeholders, it is hard to imagine that a project with risks concentrated on a few stakeholders will achieve success. On the contrary, such projects are often difficult to enter the feasibility stage from the very beginning.

Based on the above understanding, the following considerations should be included in the design of the CCUS business model: (1) we should systematically consider the overall business model of CCUS and give a systematic solution, instead of circling on the business model of a single project, when we solve the problem plaguing the basis for the development of CCUS commercial, (2) the current CCUS project is independent projects, the development of each project did not provide the infrastructure for the next new project basis, that is because there is no considering the project as the inheritance of infrastructure, every new project must start from scratch, it is also a huge waste. Therefore, the design of the business model also needs to consider the extensibility and inheritance that the project should provide as the infrastructure. (3) Since CCUS can be regarded as the provider of basic public goods, the role of the government is natural, and it is also appropriate for the government to support the development of CCUS. However, in the current project, government support is still limited to the support of a single project and does not play the role of extension and publicity. Therefore, in the design of the CCUS business model, we should consider more from a systematic and long-term perspective, not just for the design of a single project.

Full-chain CCUS demonstration projects are necessary stages for the commercialization of CCUS technology. In areas with great potential of CCUS, building a backbone pipeline or CCUS-hub will be attractive for large-scale development of CCUS, and there are already 15 CCUS Hub projects announced [65]. This is especially cost-effective to build a large-scale backbone pipeline to minimize the transportation cost and form a CCUS hub. Early-stage low-cost demonstration projects are suggested to link CO₂ capture from high-concentration emission sources to enhanced oil recovery. The full-chain system integration and demonstration of CCUS require enormous capital investment, strong dependency on on-site conditions, long technological chains with high technological densities, and diverse process combinations. Therefore, it is necessary to accurately evaluate the potential and source-sink conditions of CCUS in key regions in China to promote CCUS-integrated project demonstrations in accordance with local conditions. Based on the regional features and CO₂ source-sink mapping, several regions like the Ordos basin have favorable conditions for CCUS clusters or CCUS-hub.

4 Policy recommendations

Since the announcement of carbon neutrality of China, more attention has been paid to CCUS from various stakeholders. However, consensus among stakeholders has not been achieved about the role, contribution and roadmap. From now on, more efforts should be carried out to promote the take-off of CCUS. Following recommendations are proposed for the near term development of CCUS in China.

4.1 Raising awareness and capacity building

In the past decades, CCUS has seemed like an alternative option for mitigating CO₂, so the policy, R&D, and investment are based on such circumstances. While under the vision of carbon neutrality, the role and contribution of CCUS should be reoriented. To make all the stakeholders share the same vision and repositioning for CCUS is not easy. Awareness-raising and capacity building are essential for the further development of CCUS.

Some key fields for awareness-raising include: 1) CCUS is an indispensable key technology for carbon neutrality, without which we would not have enough mitigating and negative potential to realize the target; 2) Costs of CCUS should be evaluated from a dynamic angle. The point that CCUS is expensive is not the whole story; 3) CCUS especially the utilization technology can bring novel tech-economic paradigms like circular carbon economy, and some of the technologies have proven their promising potential to link different sectors together.

For capacity building, on the technology side, we need to disseminate technology details to various potential application sectors, like steel, cement, and chemistry, because most of the technicians in these sectors do not know CCUS and how to apply CCUS in their fields. On the CCUS side, it is very important to provide information on comprehensive technical solutions to sectors, especially the solution of utilization and storage for CO₂ captured. And linking CCUS to the financial industry is also important.

4.2 Comprehensive policy and enabling environment

Now the supporting policy is not systematic enough and a coordinated policy system has not been formed. The policy design needs not only to strengthen the systematic construction but also needs to pay attention to finding the right impetus. A large investment for CCUS development should attract social capital by establishing financial incentives. Policy signals should be clearly disseminated to alleviate uncertainty for investing in CCUS as it is capital intensive. For example, if CCUS could be linked to the carbon market, it would be an important impetus for investors.

4.3 Towards large scale commercial projects

Most of the demonstration projects in China now are aimed at verifying the technical feasibility, and the scale is relatively small. At present, most of them are at the level of 100 thousand tons. More large-scale projects aimed at commercialization need to be deployed to give full play to the scale benefit advantage of CCUS.

4.4 Technology and business model innovation

Technology and business model innovation need to be further upgraded, especially by strengthening technology integration, improving technical and economic benefits, innovating CCUS investment and financing mechanism, and optimizing the business model. A diversified partnership including various stakeholders should be established. As the whole process development of CCUS involves mutual cooperation among multiple stakeholders, by setting up a perfect coordination and communication mechanism, realizing the cooperation and coordination among regions, institutions, and industries, and promoting the smooth development of breakthrough and demonstration of CCUS key technologies, we can build a broad CCUS union. We also need to design a reasonable cost, benefit, and responsibility-sharing mechanism to reasonably share and distribute the social responsibility, economic benefits, and social benefits generated by the whole industrial chain CCUS among the relevant enterprise.

Appendix

Table 2 CCUS demonstration projects completed and under construction in china