We continue to believe that the US has a cost advantage in CCS versus many of the other regions of the world and that when coupled with low natural gas prices the US should be able to take a lead in developing low carbon chemicals. CF is pushing the idea of both blue ammonia in the US as well as green ammonia, and while the company has yet to announce sequestration plans for the CO2 it is working to purify – see Exhibit - once dehydrated and compressed the incremental cost of storage should be low.
Source: CF Industries – 4Q21 Earnings Release Presentation, February 2022
The carbon intensity crude oil map below shows the US in relatively good shape offshore but with some challenges on-shore. Here again, there is an opportunity to exploit some relatively low-cost CCS options. We also note that the European CO2 price is off its highs this week but remains elevated and reflects some of the tough energy choices that Europe faces today. The whole point of the European carbon market is for prices to drive behavior to curtail CO2 emissions and the calls for intervention completely defeat this objective. With prices above $100 per ton, companies should be looking at investments to limit emissions or capture them – any intervention to bring down the price could cause projects to be delayed. See today's ESG and Climate report for more.
Source: S&P Global Platts Analytics, February 2022
