By Baroruchi Mishra, Group CEO, Nauvata Energy Transition [NET] Enterprise Private Limited
The premise for any discussion on carbon capture storage (CCS) is a belief that without a CCS pathway the journey to achieve net zero will not be possible. Sadly, this belief is not strong enough among the key stakeholders in India, who bear the responsibility for making it a reality.
For India, various studies estimate the amount of carbon dioxide (CO2) needed to be permanently stored in safe geological storages at 0.5-1 gigatonne (gt) per year by 2050. At present, about 0.4 gt per year (out of the total emissions of about 3.5 gt of CO2 per year) will need to be stored to achieve the net zero target. This will ensure a just transition, allowing the continued but limited use of fossil fuels to ensure energy security, equity and sustainability. Therefore, hard-to-abate sectors such as cement, steel and power can continue to contribute to the country’s GDP growth. However, against this requirement, the uptake of CCS remains negligent.
India has a significant opportunity for CCS. Studies estimate India’s unconstrained, theoretical CO2 storage potential at 400-600 gt (including oil and gas fields – 3.4 gt, saline aquifers – approximately 300 gt, basalts in the Deccan volcanic province and Rajasthan traps – 100-300 gt). Meanwhile, the potential for enhanced coal bed methane recovery using CO2 injection is estimated at around 5 gt. The unconstrained, theoretical potential is significantly reduced when social and technical constraints are imposed:
Social constraints: Population density (> 2,000 people per km), cropland, remoteness and accessibility, resistance among the population, not-in-my-backyard mindset, etc.
Technological constraints: Storage rock/reservoir properties – porosity, permeability, well density, zone contamination, trap effectiveness, salinity, geothermal gradients, pore pressures, thickness, fault density, dip, etc.
Even if the constrained potential was only 10-20 per cent of the unconstrained potential, India would still rank among the top 10 countries for safe geological storage. This would mean that India can not only store its own CO2 emissions but also offer storage space to other countries, thus creating a revenue stream that could fund its own CCS projects.
Another significant opportunity lies in the strong source-sink match in India. For example, the Cambay basin, with about 500 million tonnes (mt) of storage potential (mid-case) in saline aquifers, is located within 200-300 km of several CO2 emitters or sources (refineries, fertiliser plants, petrochemical facilities, steel mills, cement plants, etc.). These emitters are situated near potential sinks in the Cambay basin (Ankhlesharwar/Mehsana/Hazira/Bharuch/Baroda). A CCS hub or cluster based around a 25-50 mt firm CO2 geological storage in this area would help reduce transportation costs and overall project costs by distributing it among multiple users. This is the basis on which CCS projects are based in Europe, such as Porthos, Aramis, Acorn, Net Zero Teesside, etc.
The revenue generation opportunity from the cross-border import of CO2 for storage in local geological storages can be modelled on the Longship CCS Project, which is being executed by the Equinor-Shell-TOTALEnergies joint venture. The project aggregates CO2 from emitters across Europe (and from local cement plants), which ship their liquefied CO2 to the CCS facility at Naturgassparken in Norway through two purpose-built liquid CO2 carriers. CO2 is then transported to the Oseberg A offshore platform through a 100 km pipeline and subsequently injected into the Johansen Reservoir for storage through subsea wells.
The third great opportunity for India is its low-cost base. Typically, an India cost factor of 0.4-0.6 applies to projects executed in India compared to similar projects in the West. For example, the average CCS project cost in India could be $60-$80 per tonne of CO2, while in the West, it might be in the range of $120 to $160 per tonne of CO2 for similar scopes.
Finally, the benefits of increased production through CO2-enhanced oil recovery (EOR) make the CCS opportunity compelling for India. In 2021, the US was injecting about 3 billion cubic feet per day of CO2 across 142 CO2-EOR projects, leading to an increase of around 273,000 barrels of oil per day (source: EOR Institute). The debate on whether CO2-EOR is CO2 storage in a true sense may not be relevant for India, whose immediate need is to reduce CO2 emissions and increase oil and gas production.
While the opportunities are compelling, the challenges to de-risking these opportunities and realising value need to be tackled. Despite a plethora of seminars, committees and subcommittees on carbon capture, utilisation and storage (CCUS), India has yet to see the development of a pilot CCS project. Oil India Limited has awarded a feasibility study for a CCS project in the Jaisalmer gas fields; however, its implementation will take time. Their pilots in Assam have not yielded significant results. Oil and Natural Gas Corporation Limited (ONGC) has been working on the Gandhar CO2-EOR pilot project for some time, using CO2 captured from the Koyali refinery of Indian Oil Corporation Limited, located 110 km from the Gandhar field; however, implementation is still not in sight. It is now time to implement scalable pilots.
The multiple challenges hindering the uptake of CCS in India need to be addressed. Some of these challenges are outlined below.
Lack of a felt need: Solar and wind energy, and to some extent, biofuels, are the primary focus in India’s decarbonisation journey. Decision-makers still believe that CCS is too abstract a concept for implementation in the country, and that its time has not yet come.
Lack of a clear policy landscape: Clear policy formulation in the West is helping bridge the funding gap for CCS projects and spending on innovation to reduce the cost of CCS projects. The Inflation Reduction Act in the US is a key example. The Netherlands has a subsidy fund for CCS, and support for CCS projects includes $1.48 billion out of a total of $2.21 billion (both capex and opex) for the Longship CCS Project, which is being borne by the Norwegian government. The UK has a £20 billion long-term funding package for CCUS in the UK, and TEN-E (Trans-European Networks for Energy) facilitates cross-border CO2 transport and storage between the EU and neighbouring third countries.
CCS projects are net present value negative without government support. Unfunded subsidies, in the absence of carbon pricing/carbon tax, make it difficult for the government to support CCS projects. Additionally, it does little to change the CO2 emitting behaviours of the industry if there are no disincentives in the form of carbon tax/cap on CO2 emissions. A policy for a carbon pricing mechanism in India will help solve some of these issues.
Fear of unlimited liabilities: Project developers must bear the liability for a CCS project indefinitely. This is a nonstarter. After an appropriate period, when the injection life cycle has been completed, the responsibility for measurement, monitoring, and verification for CCS locations should be taken over by the government/regulator; beyond this period, all liabilities of the project developer should be extinguished.
Lack of detailed project reports: The absence of detailed studies to prove geological storage, around which a CCS project can be structured, is another challenge. ONGC and Shell have signed an MoU and are in the process of working out some detailed project-level geological storage in the Cambay basin. More needs to be done to cover all Category 1 sedimentary basins in India. This should include creating a CCS atlas for India, featuring source-sink mapping.
The bogey of new unproven technology: While all technologies applied for CCS – carbon capture, compression, transportation, reservoir/zone selection, well and injection design – are proven globally, decision-makers often brand some of these technologies as exotic and thus delay decision-making. All that CCS projects need is a detailed understanding of the risks and the establishment of preventative and control barriers around these risks. This bow-tie approach to managing risks on CCS projects is well established.
Concerns of limited skill set: The lack of local CCS project delivery competencies could be a valid concern, but the gap can be easily filled by support from global experts and/or by engaging in-country experts with global exposure to CCS projects.
Lack of effective collaborations: Collaborations help spread the risks. While some MoUs have been signed for collaboration on CCS between PSUs, there has been little progress. An integrated project team between partners, with clearly defined roles and responsibilities, has to be created to deliver a CCS project. This is the case for all global CCS projects.
Challenges around delivery contracting strategies for CCS projects: Typical projects delivered in India by PSUs are in the engineering, procurement and construction lump-sum turnkey mode. For CCS projects, with multiple risks and unconnected scopes, this mode becomes a challenge. Oftentimes, the fear of audits among PSUs prevents them from exploring other contracting strategies or appropriately allocating contractual risks between the contractor and the client. This inflexibility makes CCS project delivery highly challenging in the Indian context, especially for PSUs, who are most suited to deliver these projects from a cost perspective.
Finally, let me end with an adage that best fits the status of CCS in India – wisdom lies in knowing what to do, skill lies in knowing how to do it, but the real virtue lies in actually doing it!
