Adopting carbon capture, utilization and storage (CCUS) to decarbonize the Energy-Intensive Industry (EII) is necessary to respond to climate change mitigation targets. However, and while necessary, CCUS is also a challenging technological choice. CCUS comes with uncertainties regarding high upfront investments, monetization challenges, cost avoidance business models conditioning, its commercial readiness, technological lock-in, the liability of CO2 captured, risks involved in failing to accomplish emissions reduction targets, and the availability of effective policy instruments helping to support its adoption (see discussions in (Nilsson et al., 2021)). On a similar note, ‘Muslemani et al. (2020) consider CCUS as a new technology for which there is no existing business model. For a business model to be viable, the cumulative revenues must go beyond aggregated costs that occurred during the creation and delivery of value to the customers.’ (Janipour et al, forthcoming). As previously identified in Deliverable 6.3 and observed in the literature, the lack of viable business models has been proposed as one of the main reasons hindering the adoption of CCUS in the industry sector (Element Energy, 2018; Janipour et al forthcoming; Muslemani et al., 2020).
This report aims to offer a Business Model Innovation (BMI) framework and potential scenarios of change. The objective of the deliverable is twofold. First, a framework is developed and validated to describe the development of the business model configuration of elements and their interrelationships to enable the adoption of Capture Utilization and Storage (CCUS) technologies. Second, it offers a Scenario-analysis which is used to forecast potential economic, technological, and socio-political developments that may make an alternative business model more feasible to unfold by 2032 to adopt Carbon Capture Utilization and Storage (CCUS) by industrial emitters. The report concludes by providing a set of innovation descriptions, potential investment funding strategies, revenue models, cash flow structures, and risk analysis, all part of the Business Models (BM) that enable the adoption of CCUS.
Thus, this deliverable aims at shedding light on the potential long-term futures to which the business model might unfold – a general goal of Work Package 6. In doing so, novel business models and scenarios were formulated in close consultations with stakeholders in the North Sea Port CCUS cluster. Key elements discussed during the consultations include the assessment of risks and barriers to the deployment of industrial carbon capture and transport and storage infrastructure, cash flow, risk management instruments, appropriate funding sources, capital financing, and ownership structure.
