THE INVESTMENT CASE FOR CCS - SELIM CEVIKEL – PRINCIPAL FINANCE

November 2022 NOVEMBER 2023 THE INVESTMENT CASE FOR CCS SELIM CEVIKEL – PRINCIPAL FINANCE JERRAD THOMAS – DEPUTY PRINCIPAL CONSULTANT – CAPTURE TECHNOLOGIES KEY TAKEAWAYS • Policy and regulation are the only drivers of the economic value of CCS • Recent policy drive enables attractive returns • Effective (implicit) carbon price range: $100 to $200 • Case studies in this report: • Clean hydrogen/am. [...] • CCS LIKE ALL INFRASTRUCTURE IS CAPITAL INTENSIVE • Economies of scale • High capture rate and high-capacity utilization = lower unit cost ECONOMIC VALUE OF CCS Positive when and if MCemissions > MCabatement Equation can only be changed through policy and regulation POLICY TOOLBOX THE UNITED STATES • Policy tool: production tax credits and low-cost loans • 2021: IIJA (Bipartisan Infrastructure La. [...] • Clean hydrogen/ammonia: critically important component of energy transition • Revenue streams (US): 45Q or 45V production tax credits • Revenue streams (International): Carbon pricing in the EU, subsidies in Japan and South Korea on the demand side add to returns • Total carbon price tantamount to close to $200 through stacking • Currently, there is no domestic demand; all projects are for expor. [...] Drivers for project economics • Abundant and cheap natural gas • Suitable geology for CCS • Pipeline infrastructure • Export infrastructure • Export demand • Policy support and conviction CLEAN AMMONIA IN THE U. [...] Announced projects (capital costs range from $1,400 to $2,100 per tonne of NH3 MIDWEST CO2 HUBS • Business model: CCS as a service • Multiple revenue streams (45Z, 45Q, and LCFS) • Ethanol creates a gateway for CO2 pipelines • Long-term vision is to serve industrial and power emitters • Risk factors: Potential cost overruns and permitting delays • Lack of firm CO2 volume guarantees by investment-g.