Inside Infrastructure: Stocktake on CCUS

Welcome back to everyone after summer.  We hope you got to enjoy some downtime over the summer months as not only has the weather turned truly autumnal, but “mega deals are back!”.  As presaged by our own Natascha Doll, coming off the back of her advising Partners Group, La Caisse and Ontario Teachers Pension Plan on their Euro 6.7bn sale of Techem (announced in July) it has indeed been a busy summer.  Jessamy, Stephen Hewes, Egor Marasin and a much wider team caught the last of the summer sun announcing the Teck / Anglo American $50bn mega merger of equals in early September, while a team led by Richard Johnson steered Ontario Teachers’ Pension Plan towards a successful landing on the sale of its stakes in Birmingham, Bristol, Brussels and London City airports. Simone Bono and Rick van Aerssen were busy advising RWE on its $2bn dual-tranche green bond, meanwhile Samira Afrasiabi, Alon Gordon and Martha Davis took a detour to more tropical latitudes assisting South32 on the sale of its Colombian nickel operations.

Further late summer action was seen by James Chapman and Andreas Ruthemeyer, who were panellists at the Carbon Capture Global Summit held in London earlier this month. Here, they share their thoughts on:

CCUS: Progress, Headwinds, and the Path Forward

Carbon Capture, Utilisation and Storage (CCUS) is key technology for the decarbonisation of heavy industry and is anticipated to play a critical part in the global transition towards net zero, offering one of the few viable pathways to mitigate the climate impact of key industrial sectors. Despite growing momentum over the last decade, the global CCUS landscape remains complex and early promise has been tempered by regulatory delays, market uncertainty and technical concerns. 

Some jurisdictions have seen some notable successes, with projects like the UK’s Net Zero Teesside and Northern Endurance Partnership and Denmark's Greensand Future Project reaching Financial Close in 2024 and the transport and storage network for the UK’s HyNet cluster reaching Final Investment Decision (FID) earlier this year, and the Northern Lights project in Norway targeting expansion. While these represent breakthroughs, many other initiatives and value chains have struggled to achieve the same progress without the benefit of government funding or coordination.

What’s driving these trends? 

Large-scale pathfinder projects have concentrated government attention and resources, but have not yet created the foundations of a broader and more mature multi-node ecosystem. Without a robust pipeline of development at every stage of the value chain across jurisdictions, there are high barriers to participation and early investment in CCUS may seem challenging.

Technical uncertainties such as capture efficiency/performance, leakage risks and long-term storage site suitability, combined with high upfront costs, limited network capacity, and regulatory complexity, can make it difficult for emitters and investors to confidently back large-scale projects without significant efforts to de-risk exposure.

Public and political support for geologic carbon storage has also been inconsistent, with restrictions still in place in many jurisdictions. 

Co-ordination between value chain participants remains a challenge, especially outside of more highly regulated markets like the UK’s cluster regime. Agreeing risk allocation along a greenfield multi-project chain is always a complex exercise in diligence, compromise and mitigation but the nascency of the industry, as well as many participants coming to these risks for the first time, has had a tendency to increase the scale of the challenge.

Without clear economic and policy signals, wider deployment of transport infrastructure, and the availability of scalable, low-risk technologies, many industries and investors may worry that CCUS will remain a high-risk and low-return investment that is not yet at an adequately mature stage, and therefore struggle to attract both (i) strategic deployment and (ii) investment from private capital and debt providers. 

Key learnings: The value of early projects

Despite these challenges, early CCUS projects and value chains are proving invaluable in building technical know-how and market intelligence, as well as forming the early nodes of a future ecosystem. Much like industries such as LNG, these green shoots are helping stakeholders and investors better understand (i) the dynamics of the technological asset class and (ii) the risk appetite of different participants in the value chain, allowing standardisation over time and with it comfort that allows for investment, M&A and a broader range of finance available. As more projects and value chains are commissioned and demonstrate integrated operational success, the commercial viability of CCUS will become clearer and confidence will continue to grow with deployment and experience. 

The insurance industry is also adapting to the evolving CCUS landscape. Leading insurance providers are creating new purpose-built policies and tailoring existing policies such as environmental impairment liability and business interruption insurance to CCUS value chains, providing opportunities for stakeholders to de-risk their various exposures.

The future

While early successes and growing technical expertise have laid a strong foundation, the sector’s long-term viability depends on its ability to evolve beyond isolated flagship projects. To unlock its full potential, CCUS will need to transition into a scalable, investable ecosystem - one that balances innovation with replicability, and ambition with pragmatism. This requires coordinated policy reform and sustainable support, streamlined regulation, and financial and insurance instruments that can de-risk exposure. With continued collaboration between key stakeholders, CCUS retains the potential to be a significant contributor to the global net-zero journey.

And finally, welcome back to….

Real Asset or Fake News?

Congratulations to everyone who spotted that solar panels being powered by moonshine was pure….. moonshine from the last round of our quiz.This week we look at energy innovation in the transport sector. Things are moving fast, but which of these “facts” is stuck at the station? 

Slow it down to speed it up: Regenerative braking in London Underground trains recovers enough energy to power a station for two days each week.

Red light, green light: In Sweden, some electric buses are able to charge their batteries wirelessly when stopped at red lights through coils imbedded in the road.

Norway’s silent streets: Norway leads the world in EV adoption, with over 80% of new car sales now fully electric.

Hyper-hearing: Hyperloop test pods have already hit speeds so fast that they have broken the sound barrier.

Wind-trains:   The Netherlands powers its entire national railway network using  renewable wind energy.

We will be back next week with the answer, but if you think you have spotted the fantasy among the facts please reach out and let us know.