Carbon Capture and Storage: Extending the Role of Natural Gas in a Low-Carbon Future

Introduction

As the global energy system transitions toward lower carbon intensity, natural gas faces both challenges and opportunities. While gas offers significant emissions advantages over coal and oil, its long-term role in a deeply decarbonized energy system hinges on managing its remaining carbon footprint. Carbon capture and storage (CCS) technologies present a pathway for natural gas to maintain relevance in an increasingly carbon-constrained world, enabling continued utilization while dramatically reducing associated greenhouse gas emissions.

This article examines the evolving landscape of carbon capture technologies, their application across the natural gas value chain, and the technological, economic, and policy factors shaping their deployment. As climate policies strengthen and low-carbon investment accelerates, understanding the potential and limitations of CCS becomes essential for strategic planning in the gas industry.

Carbon Capture Technologies: State of Play

Carbon capture technologies have advanced significantly in recent years, with multiple approaches now deployed at commercial scale.

Post-Combustion Capture

Post-combustion capture extracts CO2 from flue gases after fuel combustion. Key technologies include:

Amine-Based Chemical Absorption: The most mature and widely deployed approach, using liquid solvents (typically amines) to selectively absorb CO2 from flue gas streams. The solvent is then regenerated through heating, releasing concentrated CO2 for compression and transport. Commercial examples include the Boundary Dam power plant in Canada and the Petra Nova facility in Texas (though the latter is currently mothballed).

Membrane Separation: Using selective membranes that allow CO2 to pass through while blocking other gases. While less mature than amine systems, membrane technologies offer potential advantages in energy efficiency and system footprint.

Solid Sorbents: Utilizing solid materials that selectively adsorb CO2, with subsequent regeneration through pressure or temperature swing processes. These approaches potentially offer lower energy penalties than traditional liquid solvents.

Pre-Combustion Capture

Pre-combustion capture involves converting fuel into a mixture of hydrogen and CO2 before combustion, allowing relatively easy separation of the carbon dioxide:

Autothermal Reforming (ATR): A process that converts methane and oxygen into syngas (CO and H2), followed by the water-gas shift reaction to convert CO to CO2, which is then separated from hydrogen. The resulting hydrogen can be used for power generation, industrial processes, or as a clean fuel.

Integrated Gasification Combined Cycle (IGCC): While primarily associated with coal, IGCC can also process natural gas, converting it into syngas for pre-combustion carbon capture.

Pre-combustion technologies are central to "blue hydrogen" production, where natural gas is converted to hydrogen with carbon capture, creating a low-carbon fuel that can utilize existing gas infrastructure with minimal downstream modifications.

Oxy-Fuel Combustion

Oxy-fuel approaches burn natural gas in pure oxygen rather than air, resulting in flue gases consisting primarily of CO2 and water vapor. After water condensation, this yields a relatively pure CO2 stream without complex separation processes. The NET Power demonstration plant in Texas exemplifies this approach, using the Allam-Fetvedt cycle—a novel oxy-fuel, supercritical CO2 power cycle that inherently captures carbon dioxide while generating electricity.

Direct Air Capture (DAC)

While not directly tied to natural gas use, direct air capture—which extracts CO2 directly from ambient air—represents a complementary technology that could enable carbon-neutral or carbon-negative gas utilization through offsetting. Companies like Carbon Engineering, Climeworks, and Global Thermostat are scaling up DAC technologies, though costs remain significantly higher than point-source capture from concentrated streams like power plant emissions.

Applications Across the Natural Gas Value Chain

Carbon capture technologies can be applied at multiple points in the natural gas value chain, each with distinct characteristics and considerations.

Gas Processing

Natural gas processing facilities, which remove impurities from raw gas before pipeline transportation, often already separate CO2 as part of normal operations. This presents a relatively low-cost opportunity for carbon capture:

Existing Operations: Many gas processing plants already separate CO2 using amine systems or membranes but typically vent the captured carbon dioxide to the atmosphere. Adding compression, transportation, and storage capabilities can convert these facilities to CCS operations with minimal additional process changes.

Commercial Examples: The Sleipner and Snøhvit projects in Norway capture CO2 from natural gas processing and store it in subsea geological formations. Similar projects operate in the U.S., Brazil, and Algeria.

Power Generation

Natural gas power plants represent a significant source of CO2 emissions but also offer several advantages for carbon capture implementation:

Combined Cycle Gas Turbine (CCGT) Plants: Modern CCGT facilities can be retrofitted with post-combustion capture technologies, though this involves significant capital investment and reduces net power output. Several demonstration projects have validated this approach, though few commercial-scale implementations exist to date.

Next-Generation Gas Power: Novel power cycles like the Allam-Fetvedt cycle integrate carbon capture into the core power generation process rather than treating it as an add-on. These approaches promise lower costs and higher efficiencies but remain at earlier deployment stages.

Hydrogen-Ready Plants: Some new gas power plants are designed to be "hydrogen-ready," capable of transitioning to hydrogen fuel produced from natural gas with CCS (blue hydrogen) as carbon constraints increase.

Industrial Applications

Natural gas serves as both fuel and feedstock for various industrial processes, with different carbon capture approaches applicable in each context:

Hydrogen Production: Steam methane reforming (SMR) for hydrogen production represents one of the most economical carbon capture opportunities, as the process naturally produces relatively concentrated CO2 streams. Blue hydrogen production facilities are being developed in multiple regions, including the H2H Saltend project in the UK and the Air Products Louisiana project in the U.S.

Industrial Heating: Natural gas used for process heat in industries like cement, steel, and chemicals can be paired with post-combustion capture technologies, though the diverse and distributed nature of these applications presents integration challenges.

Feedstock Applications: When natural gas serves as a chemical feedstock, carbon capture approaches vary based on the specific process. Ammonia production, for example, already separates CO2 during production and presents similar opportunities to gas processing facilities.

CO2 Transportation and Storage

Capturing carbon dioxide solves only part of the challenge; the captured CO2 must be transported to suitable locations and securely stored for the long term.

Transportation Infrastructure

CO2 transportation options include:

Pipelines: The most economical option for large volumes and established routes, CO2 pipelines operate commercially in several regions, primarily serving enhanced oil recovery (EOR) operations. The U.S. has approximately 5,000 km of CO2 pipelines, demonstrating the technical feasibility of large-scale CO2 transport.

Shipping: Liquefied CO2 can be transported by ship, offering flexibility for offshore storage sites or regions without pipeline infrastructure. This approach is being developed for projects like Northern Lights in Norway, which will eventually receive CO2 from multiple European countries.

Truck and Rail: For smaller volumes or initial project phases, truck and rail transportation provides flexibility, though at higher cost per tonne than pipeline transport.

Geological Storage

Long-term CO2 storage options include:

Saline Aquifers: Deep, porous rock formations filled with brine offer the largest potential storage capacity globally. Major projects storing in saline formations include Sleipner (Norway), Quest (Canada), and Illinois Industrial Carbon Capture and Storage (U.S.).

Depleted Oil and Gas Reservoirs: These formations have demonstrated capacity to trap hydrocarbons over geological timeframes and offer well-understood characteristics. Their storage capacity is smaller than saline aquifers but still significant.

Enhanced Oil Recovery (EOR): Injecting CO2 into oil reservoirs can increase recovery rates while storing carbon dioxide. This creates an economic use case for captured CO2 but raises questions about net climate benefits depending on how the additional oil production is counted.

Other Options: Emerging approaches include mineral carbonation (converting CO2 to stable carbonate minerals) and basalt formations, which can rapidly transform CO2 into solid minerals through natural reactions.

Storage Capacity and Monitoring

Global CO2 storage capacity is estimated to exceed 8,000 gigatonnes, sufficient for centuries of emissions at current rates. However, capacity varies significantly by region, and detailed site characterization is required to confirm suitability.

Comprehensive monitoring systems track CO2 behavior after injection to ensure containment and verify storage quantities. Technologies include:

• Seismic monitoring to track CO2 plume movement
• Pressure and temperature sensors in wells
• Atmospheric and near-surface monitoring for leak detection
• Geochemical sampling to track subsurface reactions

Economics and Cost Trajectories

The economic viability of carbon capture projects depends on multiple factors, including technology costs, energy prices, carbon pricing, and policy support mechanisms.

Current Cost Structure

The full cost of carbon capture, transport, and storage varies significantly by application:

Natural Gas Processing: $20-40 per tonne CO2, representing the lowest-cost applications due to relatively pure CO2 streams and existing separation processes.

Blue Hydrogen Production: $40-70 per tonne CO2, with costs varying based on facility scale and capture technology.

Gas-Fired Power Generation: $50-120 per tonne CO2, with the wide range reflecting different plant configurations, capture technologies, and local factors.

Direct Air Capture: $250-600 per tonne CO2, though costs are expected to decline significantly with technological maturation and scale.

Total costs include capture (typically 70-80% of the total), compression (5-10%), transportation (5-15%), and storage (10-20%), though these proportions vary by project.

Cost Reduction Pathways

Several factors are expected to drive down carbon capture costs:

Technology Learning: As deployment expands, learning-by-doing effects are expected to reduce capital and operating costs. Historical experience with analogous technologies suggests potential cost reductions of 10-15% for each doubling of installed capacity.

Scale Economies: Larger facilities and shared infrastructure can reduce per-tonne costs through economies of scale. Industrial clusters with multiple capture sources sharing transportation and storage infrastructure demonstrate this approach.

Next-Generation Technologies: Advanced solvents, sorbents, membranes, and novel system configurations promise lower energy penalties and capital costs. The U.S. Department of Energy targets capture costs below $30/tonne for next-generation technologies.

Standardization and Modularization: Standardized designs and modular construction approaches can reduce engineering costs and accelerate deployment.

Policy and Regulatory Landscape

Government policy and regulatory frameworks play a crucial role in enabling carbon capture deployment, particularly given the limited market incentives for emissions reduction in many regions.

Financial Incentives

Key policy mechanisms supporting CCS projects include:

Tax Credits: The U.S. Section 45Q tax credit provides $50-85 per tonne for CO2 storage (depending on capture method and storage approach), creating a significant financial incentive for projects. The Inflation Reduction Act expanded and enhanced these credits.

Grants and Subsidies: Direct government funding supports project development and deployment, such as the EU Innovation Fund and various national programs.

Carbon Contracts for Difference: These mechanisms guarantee a fixed carbon price for project developers, reducing market risk. The UK's CCS business models incorporate this approach.

Carbon Pricing: Carbon taxes and cap-and-trade systems create broad economic incentives for emissions reduction, though current prices in most systems remain below CCS costs.

Regulatory Frameworks

Beyond financial incentives, clear regulatory frameworks are essential:

Storage Regulations: Legal frameworks for CO2 storage address permitting, monitoring requirements, and long-term liability. The EU's CCS Directive and U.S. EPA's Class VI well regulations provide examples of comprehensive approaches.

Transport Regulations: Regulatory clarity for CO2 pipeline safety, siting, and operations supports infrastructure development.

Cross-Border Frameworks: For regions where CO2 will cross national boundaries, international agreements are necessary to enable transport and storage. The London Protocol amendment allowing cross-border CO2 transport for storage purposes represents progress in this area.

Policy Design Considerations

Effective policy frameworks for CCS share several characteristics:

Long-Term Certainty: Given the capital-intensive nature and long operational lifetimes of CCS projects, policy stability over decades rather than years is crucial for investment decisions.

Comprehensive Approach: Policies addressing the full value chain—from capture through transport to storage—avoid bottlenecks and coordination problems.

Technology-Neutral Design: Focusing on outcomes (CO2 captured and stored) rather than specific technological approaches encourages innovation and cost-effective solutions.

Integration with Broader Climate Policy: Aligning CCS support with carbon pricing, renewable energy policies, and industrial strategies creates a coherent overall framework.

Industry Initiatives and Major Projects

The natural gas industry is increasingly engaging with carbon capture through various initiatives and projects.

Major Gas Industry CCS Projects

Significant projects include:

Northern Lights (Norway): This project, developed by Equinor, Shell, and TotalEnergies, will transport and store CO2 from multiple industrial sources in a subsea reservoir. Phase 1 will store up to 1.5 million tonnes annually, with capacity expanding in later phases.

Net Zero Teesside (UK): A consortium including BP, Equinor, Shell, and TotalEnergies is developing an integrated power and industrial CCS cluster in northeast England, with CO2 storage beneath the North Sea.

Quest (Canada): Operated by Shell, this project captures over one million tonnes of CO2 annually from hydrogen production at the Scotford upgrader and stores it in a deep saline formation.

Santos Moomba CCS (Australia): This project will capture CO2 from natural gas processing and store it in depleted gas reservoirs in the Cooper Basin, with potential capacity of 1.7 million tonnes annually.

Gulf Coast Projects (US): Multiple projects along the U.S. Gulf Coast leverage existing CO2 pipeline infrastructure and geological storage capacity, including initiatives by ExxonMobil, Occidental, and Chevron.

Industry Collaborations and Initiatives

Beyond individual projects, industry collaborations advance CCS development:

Oil and Gas Climate Initiative (OGCI): This CEO-led consortium of major oil and gas companies has established a $1 billion+ investment fund focusing partly on CCUS technologies and projects.

Zero Carbon Humber (UK): This partnership of energy and industrial companies aims to establish the world's first net-zero industrial cluster, incorporating blue hydrogen production, power generation with CCS, and industrial carbon capture.

Clean Energy Ministerial CCUS Initiative: This government-industry collaboration accelerates CCUS deployment through policy development, knowledge sharing, and project support.

Blue Hydrogen Developments

Blue hydrogen represents a significant growth area for natural gas with CCS:

H2H Saltend (UK): Developed by Equinor, this project will produce hydrogen from natural gas with carbon capture, initially capturing 900,000 tonnes of CO2 annually while supplying low-carbon hydrogen to industrial customers.

Air Products Louisiana (US): This $4.5 billion project will produce blue hydrogen for the global market while capturing over 5 million tonnes of CO2 annually for permanent sequestration.

HyNet North West (UK): This integrated project will produce blue hydrogen for industrial use, power generation, and home heating, with associated carbon capture and storage infrastructure.

Challenges and Limitations

Despite significant progress, carbon capture faces several challenges that may limit its application in some contexts.

Technical Challenges

Remaining technical issues include:

Energy Penalties: Current capture technologies impose significant energy penalties, reducing efficiency and increasing fuel consumption. While advances are reducing these penalties, they remain a fundamental challenge, particularly for power applications.

Integration Complexities: Retrofitting existing facilities with carbon capture systems presents space constraints, operational challenges, and potential reliability impacts that must be carefully managed.

Storage Monitoring: While geological storage has been demonstrated as secure, long-term monitoring requirements and associated costs create ongoing obligations that must be factored into project economics.

Economic and Market Challenges

Economic barriers include:

Cost Gap: Despite declining costs, most carbon capture applications remain more expensive than the prevailing carbon price in most jurisdictions, creating a significant financing challenge.

Infrastructure Coordination: The interdependent nature of capture, transport, and storage components creates chicken-and-egg problems that complicate project development and financing.

First-Mover Disadvantages: Early projects bear higher costs and risks than later followers, creating potential incentives to delay investment.

Public Acceptance and Perception

Social considerations include:

Storage Safety Concerns: Public concerns about CO2 storage safety, despite the strong safety record of existing projects, can create opposition to storage site development.

Competing Narratives: Some environmental organizations view CCS as prolonging fossil fuel use rather than facilitating transition, potentially limiting political support.

Just Transition Considerations: The distribution of costs and benefits from CCS deployment raises equity concerns that must be addressed in project development.

Scale and Timing Challenges

Deployment at the necessary scale presents challenges:

Current Deployment Gap: Despite decades of development, global CCS capacity remains below 50 million tonnes annually—far below the gigatonne-scale deployment needed for meaningful climate impact.

Growth Rate Requirements: Achieving climate targets would require capacity growth of 100-200 times current levels by 2050, an unprecedented scaling challenge.

Development Timeframes: CCS projects typically require 5-10 years from concept to operation, creating urgency for near-term investment decisions.

Future Outlook and Strategic Implications

Looking ahead, several key trends will shape the role of carbon capture in extending natural gas's relevance in a low-carbon future.

Technology Evolution

Key technological developments include:

Next-Generation Capture: Advanced materials and process designs promise 30-50% cost reductions for second-generation capture technologies expected to reach commercial deployment in the 2025-2030 timeframe.

Integrated System Designs: Rather than treating carbon capture as an add-on, new facilities will increasingly integrate CO2 management into core system design, as exemplified by the Allam-Fetvedt cycle for power generation.

Digitalization and AI: Advanced analytics, machine learning, and process optimization will enhance performance and reduce costs across the carbon capture value chain.

Market and Business Model Evolution

Evolving commercial approaches include:

Capture-as-a-Service: Specialized firms offering turnkey carbon capture solutions to facility operators could reduce complexity and accelerate deployment.

Transport and Storage Networks: Open-access CO2 transport and storage infrastructure, similar to natural gas networks, would enable multiple capture projects to share economies of scale.

Carbon Utilization Markets: Expanding markets for captured CO2 in concrete, chemicals, synthetic fuels, and other products could create additional revenue streams, though total demand remains limited compared to emissions volumes.

Policy and Regulatory Evolution

The policy landscape continues to develop:

Carbon Pricing Maturation: As carbon pricing systems mature and price levels increase, the economic case for CCS will strengthen across more applications.

Sectoral Mandates: Beyond broad carbon pricing, sector-specific requirements for emissions reduction or CCS implementation may emerge, particularly for harder-to-abate sectors.

International Coordination: Enhanced international frameworks for CO2 transport, storage accounting, and cross-border project development will facilitate larger-scale deployment.

Strategic Implications for Gas Industry Stakeholders

For natural gas industry participants, these developments suggest several strategic considerations:

Portfolio Positioning: Evaluating which assets and operations are most suitable for carbon capture integration, considering factors like technical compatibility, remaining operational life, and proximity to storage resources.

Value Chain Extension: Assessing opportunities to extend into CO2 transport and storage services, leveraging existing capabilities in gas handling and subsurface management.

Blue Hydrogen Strategy: Developing positions in blue hydrogen production and infrastructure as a growth pathway that leverages natural gas resources while addressing carbon constraints.

Partnership Development: Building relationships with technology providers, industrial CO2 sources, storage operators, and policymakers to create integrated CCS networks and clusters.

Regulatory Engagement: Actively participating in the development of CCS regulatory frameworks and support mechanisms to ensure practical, effective approaches.

Conclusion

Carbon capture and storage technologies offer a pathway for natural gas to maintain relevance in an increasingly carbon-constrained energy system. By dramatically reducing CO2 emissions from gas-fired power generation, industrial processes, and hydrogen production, CCS enables continued utilization of natural gas resources and infrastructure while supporting climate objectives.

The technology foundations for this approach are largely established, with commercial-scale projects operating across multiple applications and geographies. However, widespread deployment faces economic and coordination challenges that require supportive policy frameworks, innovative business models, and strategic industry leadership to overcome.

The coming decade represents a critical period for scaling carbon capture infrastructure. Projects entering development now will define whether CCS fulfills its potential as a significant climate solution and whether natural gas successfully navigates the energy transition with a sustained role in the future energy mix.

For gas industry stakeholders, carbon capture represents both an insurance policy for existing assets and a platform for new growth opportunities. By engaging proactively with this technology pathway—through project development, strategic partnerships, and policy engagement—forward-looking companies can position themselves for success in a low-carbon energy future while contributing to global climate goals.