Support carbon capture, utilization and storage projects and infrastructure and other carbon removal technologies

Electricity market design should evolve to enable and encourage consumers to provide flexibility, which can offset the need to build new power assets and grid infrastructure. Utilities and retailers can provide incentives like bill reductions in exchange for a consumer changing its energy consumption behavior or activating a resource like a battery on site. Wholesale markets can also create rules to enable 'virtual power plants', in which a company aggregates many smaller individual assets or sites that can shift demand, which it can then bid into the specific market services like energy, capacity and ancillary services. Examples of how consumers can help the grid include adjusting energy consumption at specific times of day, both during peak demand events like very hot summer days or more regularly and using technologies like batteries, electric vehicle charging or adjusting temperature controls.

Another cross-cutting solution needed to reach net zero by mid-century is carbon capture, utilization and storage, or CCUS, which usually refers to the retrofits made to fossil energy or industrial materials production to decarbonize operations by capturing the carbon at the point source of emissions. With broad applications in industry, the power sector and hydrogen production, CCUS plays a key role in BNEF’s Net Zero Scenario, as do carbon removal technologies such as direct air capture, which captures carbon from the air. Without these solutions, all things being equal, the world would be on track for 1.9C of warming by 2050 compared to a 1.75C outcome, based on BNEF analysis. Governments therefore need to provide support for CCUS projects and infrastructure and carbon removal technologies to tackle one of the biggest barriers to their deployment – the upfront costs for building such projects. Such support could include tax credits, contracts for difference, grants and/or carbon pricing (see Pillar 3: Crosscutting). Governments must also ensure that these projects have easy access to the infrastructure needed to transport and store the CO2.