Technology company SLB sees a significant growth opportunity in the market for CCS to abate gas-fired power plants as electrification and the rise of hyper-scaled datacentres drive up demand for low-carbon energy.
“A gas-fired power plant with CCS is one of the avenues for hyper-scalers to secure low-carbon power: interest around this has increased significantly,” said Frederik Majkut, SVP of industrial decarbonisation at SLB. “We see this as a material opportunity for us,” he told Carbon Economist in an interview.
US oil and gas majors ExxonMobil and Chevron have both recently unveiled plans to develop large-scale gas-fired generation with CCS, aimed at rising datacentre power demand.
Datacentres consumed about 4.4% of total US electricity in 2023, according to a recent report by Lawrence Berkeley National Laboratory. This share is expected to rise to 6.7–12% by 2028. Total datacentre electricity use climbed from 58TWh in 2014 to 176TWh in 2023, with estimates implying an increase to 325–580TWh by 2028, the report said. A recent report from the IEA forecast a compound annual growth rate of 13–27% between 2023 and 2028 for datacentre power demand.
Nuclear and geothermal are also expected to play a role in meeting this demand, but Majkut said he expected significant new gas-fired generation—running into gigawatts—to emerge in the near term.
Not all the new gas-fired capacity will initially be fitted with CCS, as datacentres look to secure power supplies as a matter of urgency. “But I think the companies running datacentres all have binding commitments when it comes to abating their operational emissions and therefore the mid-to-long term plans for all of them is to secure low-carbon power. So that gas-fired capacity would have to be abated at some point in time,” said Majkut.
US policy review
Despite the bullish outlook, the US market for CCS is expected to slow in the near term as developers wait on clarity on the Trump administration’s policy on tax credits and federal grants for the sector. One of Trump’s first actions on taking office in January was to issue executive orders pausing federal funding under the Inflation Reduction Act and the Infrastructure Investment and Jobs Act for a 90-day review period. The move created some “turmoil” in the CCS market, Majkut said, but he was confident the sector will resume its recent growth once the policy is settled.
“Fundamentally, the CCS projects that are sound, that are technically and economically viable will still go ahead,” he said. “There will be a little bit of a slowdown until that clarity comes, but I think fundamentally the industrial sectors that have a rational and a business case to decarbonise their operations will still go ahead and proceed.”
SLB’s expectation is that the IRA tax credits for CCS and direct air capture—which have been instrumental in driving investment in those technologies—will remain place. The tax credits supported the scaling up of CCS in several US states, in turn supporting job creation. “These policies have been very conducive to the America first agenda,” Majkut said.
Europe
Turning to Europe, Majkut said EU ETS allowance prices remain below the levels needed to drive investment in CCS in the region. Prices briefly touched record highs around €100/t ($104.6/t) in 2023 before pulling back sharply towards €50/t. Since the start of this year, prices have risen to about €80/t.
SLB expects prices to rise later this decade as free allocations of allowances are reduced fade and the EU’s carbon border adjustment mechanism kicks in.
“Our view is that the EU ETS price will be north of €100/t by later this decade and by then I think the economic viability of CCS will make sense across a larger number of sectors,” Majkut said.
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