| Carbon capture and storage Photo: KBR
This and photo below: Tangguh LNG facility, Indonesia
Thus, setting clear targets and priorities over the short-, medium- and long-term, including legally binding policy and regulatory frameworks, will be crucial to minimise policy uncertainty. At the same time, policy efforts should centre around the introduction of de- risking mechanisms and incentives that support green growth and foster green investment. This is especially pertinent for technologies and infrastructure, such as CCUS, which stand at a risky point of their deployment curve. This can be achieved through a wide range of instruments and approaches, including innovation funding, carbon pricing instruments, carbon credits, tax incentives, guarantees, and low interest loans, among others. Forward looking policy developments in the US, such as the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, have driven investment in clean energy technologies. While the upcoming change of leadership creates some uncertainty in the direction of travel, most commentators agree that the incoming administration is unlikely to pursue a complete repeal of the IRA, particularly given strong Republican support for carbon capture initiatives and the oil and gas industry’s backing of CCS credits. There is cautious optimism that some modifications to implementation rules and permitting processes may occur, potentially streamlining CCS project approvals through state-level oversight. The Treasury Department under the new administration could also make claiming CCS tax credits more straightforward. At the same time, as the UK envisions becoming a global CCUS technology leader, the government has announced funding of some £20 billion to support the initial deployment of projects, aiming to unlock further investment from the private sector as it provides the much-needed certainty for investors. This commitment is already bearing fruit, with contract agreements recently achieved for the Net Zero Teesside Power plant and Northern Endurance Partnership’s transport and storage infrastructure projects.
Schematic of Tangguh CCUS project. Image: BP The path forward
Securing the financial resources needed for the energy transition will require a delicate interplay of strategic initiatives. Success hinges on the co- ordination of policy design, financial mechanisms, and technological innovation – all working in concert to lower investment barriers, expand capital access, and establish the economic viability of clean energy solutions. The oil & gas sector must embrace its key role by deploying its knowledge base, existing facilities, and monetary strength to accelerate CCUS deployment and other emission-reducing technologies. While the journey toward energy sustainability presents formidable obstacles, it also holds promising possibilities. Through the strategic alignment of regulatory frameworks, technological advancement, and financial instruments, we can unlock green investment potential and speed up our transition to a low-carbon economy. Though past policy shifts in America and Europe have signalled growing momentum, substantial additional effort remains essential to achieve our climate objectives. Governments must continue to lead the way, and the private sector needs to step up and embrace its role as an enabler of change.
Photo: KBR
www.modernpowersystems.com | January/February 2025 | 27
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