20210726-Credit_Suisse-Global_Infrastructure_Research_Compelling_Carbon_Capture_Considerations_72页_2mb

Global Infrastructure Research: Carbon Capture Considerations Summary

Core Content

This report from Credit Suisse's Global Infrastructure Research Team explores the role of carbon capture, utilization, and storage (CCS/CCUS) in global emission reduction efforts, particularly in the context of countries and regions accelerating their net zero 2050 objectives and the potential for global carbon pricing.

Main Points

• CCS/CCUS as a Critical Tool: Carbon capture is considered a key component of emission reduction strategies, especially with the advancement of carbon pricing mechanisms and the need for decarbonization.
• Market Potential:
  • A total addressable market (TAM) of $2 trillion by 2040 is projected.
  • ~2,000 new CCS facilities are expected to be built by 2040 to meet the IEA's Sustainable Development Scenario (SDS) goals.
  • Current operational facilities are limited to 19 large-scale CCS facilities, with 32 in development.
  • These facilities could capture and store ~100 million tonnes of CO₂ annually by 2040, compared to ~40 million tonnes today.
• Economic Viability:
  • CCS is technologically feasible and can offer attractive returns.
  • The economic viability of CCS is influenced by carbon prices and other incentives.
  • In the Base Case (carbon price of $50/tonne with $10 annual escalation), NPV is $485.0 and IRR is 29%.
  • In the High Carbon Price Case (carbon price of $100/tonne), NPV is $893.4 and IRR is 47%.
• Carbon Reduction Goals:
  • To limit global warming to 1.5°C or 2°C, CO₂ intensity of energy must decline by ~50% by 2040.
  • Energy efficiency gains must double to achieve these goals.
• Regional Focus:
  • 26 countries have long-term carbon neutrality goals, while 23 are contemplating them.
  • The report includes country-specific initiatives and project economics across various regions.

Key Industries and Applications

• Energy: Includes companies like ExxonMobil, PetroChina, TotalEnergies, and Valero Energy Corp.
• Chemicals and Heavy Industries: Companies such as Air Liquide, Air Products, and Green Plains Inc. are highlighted for potential CCS integration.
• Utilities and Infrastructure: Companies like Enbridge, Capital Power, and Kinder Morgan are identified as having significant exposure to CCS.
• Private CCS Companies: Highlighted include Carbon Cure Technologies, Climeworks, and Storegga, among others.

Project Economics and Challenges

• CO₂ Reductions by Source:
  • CCS is most economically viable for high concentration industries.
  • Project economics vary by source and application, as shown in Figure 12.
• Capital Intensity:
  • Capital expenditures (Capex) are a major variable in the NPV analysis.
  • Some industries may require additional incentives or regulation to make CCS economically feasible.
• Global Carbon Pricing:
  • Escalating carbon prices are expected to increase the economic attractiveness of CCS.
  • The report anticipates greater clarity on global carbon pricing in the coming quarters, which could lead to increased capital deployment.

Stock Implications

• Public Companies with CCS Exposure:
  • Highlighted include Advantage Energy, Aemetis, Bloom Energy, and others.
• Public Companies with Potential CCS Exposure:
  • Includes Air Liquide, AltaGas, and Drax, among others.
• Private CCS Companies:
  • Includes Carbon Engineering, Climeworks, and Alberta Carbon Trunk Line.

Regional Round-up

• ASEAN, Australia, Brazil, and Canada are highlighted for their CCS initiatives.
• Malaysia's Petronas is deploying CCS at the Kasawari development with 1st injection in 2025.
• Australia's Santos and Beach Energy are involved in the Moomba CCS project.
• Canada's Advantage Energy and Alberta Carbon Trunk Line are central to CCS infrastructure.
• Brazil's Petrobras has committed to re-injecting 40MM ton of CO₂ through CCUS projects over the next five years.

Valuation Comparison Table

• The report includes a valuation table with P/E, Dividend Yield, and EV/EBITDA for key stocks.
• Valuation metrics vary significantly across companies, reflecting their CCS exposure and relevance.
• Some companies, such as New Fortress Energy and General Electric, show high valuations and potential upside with CCS integration.

Conclusion

• CCS/CCUS is seen as a multi-trillion dollar market with clear potential for capital deployment.
• Political and economic support for carbon pricing and incentives will be crucial for scaling CCS projects.
• Infrastructure companies are well-positioned to benefit from CCS investments, with some already in planning stages.
• Private companies are also playing a significant role in innovating and deploying CCS technology.