Middle East needs stronger policies to expand carbon capture

Sabic

• Middle East aims for 43mpta by 2034
• More CCUS regulations required
• Western countries lead in funding

A lack of firm policy, regulatory frameworks and funding is limiting carbon capture capacity development in the Middle East and Africa, according to an industry expert.

Carbon capture, usage and storage (CCUS) involves separating out the carbon dioxide created in industrial processes, then treating it and using in other processes or storing it. 

Globally CCUS offers an investment opportunity of $196 billion by 2034, according to UK-based data analysis consultancy Wood Mackenzie.

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The Middle East plans to expand its total carbon capture capacity from 5 million tonnes per annum (mpta) in 2023 to 43 mpta by 2034, requiring an investment of around $12 billion. Nearly 40 percent of that will be developed in Saudi Arabia.

However Hetal Gandhi, CCUS lead for the Asia Pacific region at Wood Mackenzie, says that the region is lagging behind Western countries that have developed strong policies and regulations to support CCUS development. 

Regulations and government funding play a critical role in driving the first wave of CCUS investments, Gandhi says, and nearly $80 billion is directly committed to CCUS across five countries: the US, Canada, the UK, Denmark and Australia. 

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The US leads in funding at 50 percent, followed by the UK at 33 percent and Canada at 10 percent.

“We see [other] governments offering capex grants, opex subsidies, tax incentives, and contracts for differences for CCUS,” says Gandhi.

She adds that “none of the Middle East countries are in advanced stages of policy development” and they need to focus on “a relatively weak carbon market and a lack of incentives and appropriate regulatory frameworks”.

Adnoc Gas

Saudi Arabia and the UAE are leading CCUS development in the region.

“Targets and relatively better funding support enable these two countries to be at forefront,” Gandhi says.

The UAE’s Adnoc is developing the Habshan 1.5 mpta CCUS project, with a target of 10 mpta of carbon capture and storage by 2030.

Saudi Aramco has a target of 9 mpta of CCUS from 2027 at its Jubail site, with planned expansion to 44 mpta by 2035.

“We believe a number of recent developments across key companies in the region will enable a transition in the regulatory standing for CCUS for the hydrocarbon-heavy economy in the medium term,” says Gandhi.

However, despite a significant increase in projects, Wood Mackenzie forecasts that the global planned capacity is likely to fail to meet the demand. Carbon capture capacity is set to reach 440 mpta by 2034, while industries will need up to 640 mpta of carbon capture capacity to decarbonise.

“The projects expected to come into operation fall around 200 mpta short of that,” Gandhi says.