New Report: USD 30 Billion of Public Money Wasted on Failing Carbon Capture and Fossil Hydrogen Projects. Hundreds of Billions More to Come.

Introduction

Carbon capture and storage (CCS), a technology used to capture and store carbon dioxide, and fossil hydrogen projects have gained significant attention as potential solutions to reduce greenhouse gas emissions. However, a recent report by the Institute for Energy Economics and Financial Analysis (IEEFA) highlights significant concerns about the efficacy and financial viability of these projects.

Key Findings of the Report

The IEEFA report analyzed 28 CCS and fossil hydrogen projects globally, revealing striking inefficiencies and questionable economic returns: - **USD 30 Billion Wasted:** The report found that approximately USD 30 billion of public funding has been misdirected towards CCS and fossil hydrogen projects that have failed to meet their targets or are experiencing significant delays. - **Hundreds of Billions More at Risk:** The report estimates that hundreds of billions of dollars more will likely be wasted on similar projects in the future, with negligible environmental benefits and potential long-term economic risks.

Underlying Causes of Failure

The report identifies several key factors contributing to the failure of CCS and fossil hydrogen projects: - **Technical Challenges:** CCS projects have faced significant technical hurdles, including difficulties predicting geological storage capacity, managing leaks, and ensuring the permanence of stored carbon dioxide. Fossil hydrogen production processes also pose technical challenges and uncertainties. - **High Costs:** CCS and fossil hydrogen projects are extremely capital intensive, facing cost overruns and project delays due to unforeseen complications. These high costs can make them economically unfeasible compared to alternative low-carbon solutions. - **Unfavorable Economics:** The commercial viability of CCS and fossil hydrogen projects relies heavily on government subsidies and policy support. However, in many cases, these projects fail to generate sufficient revenue or reduce emissions as promised, making them poor investments for both taxpayers and investors.

Environmental Concerns

Beyond the financial concerns, the report also raises environmental concerns about CCS and fossil hydrogen projects: - **Limited Carbon Capture:** Despite the substantial investments, CCS projects have captured only a small fraction of the targeted emissions, falling short of their intended climate change mitigation goals. - **Risks to Storage Sites:** Storing large volumes of carbon dioxide underground poses risks of potential leakage, groundwater contamination, and other environmental hazards, requiring long-term monitoring and maintenance efforts. - **Fossil Fuel Lock-In:** Investments in fossil hydrogen projects may prolong the use of fossil fuels, delaying the transition to clean energy sources and potentially undermining efforts to address climate change.

Recommendations

The IEEFA report concludes with several recommendations for policymakers and investors: - **Reassess CCS and Fossil Hydrogen Investments:** Governments and investors should critically evaluate the viability of these technologies before allocating further public funds. - **Focus on Alternative Solutions:** Instead of supporting CCS and fossil hydrogen projects, funding should be directed towards more effective and cost-efficient low-carbon solutions, such as renewable energy, energy efficiency, and electrification. - **Strengthen Regulation:** Policymakers must establish robust regulations and monitoring mechanisms to prevent further waste of public resources and protect the environment from potential risks associated with these projects.

Conclusion

The IEEFA report provides valuable insights into the inefficiencies and financial pitfalls of CCS and fossil hydrogen projects. By understanding the underlying causes of failure and addressing the environmental concerns, policymakers and investors can make informed decisions to allocate resources more effectively and support genuine low-carbon solutions for a sustainable future.