Defossilizing Industry Scaling-up CCU 2025

State of play Emerging CCU pathways have the potential to improve the sustainability of industrial activities while creating new value opportunities. The role of carbon capture and utilization 1.1 Carbon capture and utilization (CCU) has the potential to become a valuable lever in wider efforts to transition towards sustainable and circular economies. By converting captured CO2 and other carbon emissions into carbon-based products, CCU can generate value from waste streams and potentially contribute emissions benefits. However, CCU pathways face significant barriers in the form of high costs, limited infrastructure and underdeveloped market frameworks. With the exception of a few leading initiatives, CCU pathways currently receive limited policy support. In contrast, technologies that capture and permanently store carbon, such as carbon capture and storage (CCS), are attracting more policy and private sector investment. This can be explained in part by the relative simplicity of modelling CCS compared to CCU. Current climate models are unable to address the granularity of CCU, given the diversity of sectoral and geographical contexts, as well as the specific technologies, energy and feedstocks used.1 This paper follows the Intergovernmental Panel on Climate Change (IPCC) definition of CCU which describes it as carbon utilization within a product.2 The paper also emphasizes CCU approaches that have yet to emerge at scale. Consequently, the role of CCU in enhanced hydrocarbon/oil recovery (EOR) or urea production is not discussed.Note: technical terms used in this report are defined in a Glossary of terms at the end of this paper. Theoretical net emissions benefits under CCU scenarios FIGURE 1CO2 utilization product end-use CO2 capture sourceStored long-term Combustion/decomposition Fossil point source / process emissions Biogenic / direct air capture (DAC)Reduction of emissions from point sources Varies depending on efficiency of capture and storageRemoval of atmospheric emissions Negative emissions Avoided new fossil emissions Up to 50% reduction compared to baselineNeutral impact on atmospheric emissions No additional CO2 added to circulation CARBON REDUCTION CARBON REMOVAL CARBON NEUTRAL CARBON AVOIDANCE Notes: – Final emissions benefit will be dependent on full life-cycle emissions, including the emissions intensity of associated hydrogen and other co- feedstocks, processing emissions and product end-use. – The two upper “stored long-term” categories are broadly equivalent to CCS. Source: Wood Mackenzie analysis.31 Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways 5