Synergies between SMR vendor and carbon capture and storage market
The European Union has established ever more ambitious objectives for its climate goals. The European carbon credit system, the EU Emissions Trading System (EU ETS), was designed as a tool to incentivise industries to reduce their emissions. Carbon capture takes this one step further by removing carbon dioxide from the atmosphere, ideally at a lower cost than the price paid by an enterprise for emitting it—thus enabling industries to continue operating without releasing carbon into the atmosphere.
Carbon capture technologies are broadly divided into two main categories:
- Direct Air Capture (DAC)
- Post-combustion Carbon Capture
Both processes require electricity and heat, often in large amounts. It would be counterproductive to capture carbon while emitting it—such as when using fossil fuels to power the capture systems. In post-combustion capture, the efficiency of the process is highly dependent on the concentration of CO₂ in the exhaust gases, which varies significantly between industries. Some sectors emit exhaust with high CO₂ concentrations, making capture more efficient, while others do not.
This variability presents a real positioning and economic challenge, as the financial viability of combining SMRs with carbon capture and storage (CCS) depends largely on the cost of capturing one tonne of CO₂. The higher the CO₂ concentration, the “easier” and more cost-effective the capture becomes. However, it also raises questions about the scale and capacity of the power supply needed to support the extraction process.
Damona analysed the optimal intersection— the “sweet spot”—between cost, captured carbon, and appropriate technology.
A fundamental challenge lies in the misaligned incentives between SMR vendors and CCS developers:
- CCS developers aim to make the process as energy efficient as possible to reduce operational costs.
- SMR vendors, on the other hand, benefit from selling larger quantities of energy.
Therefore, the success of such partnerships depends on both parties’ ability to align their strategies—agreeing on how to scale projects and grow demand for energy and carbon capture as technology readiness levels increase. With careful planning, such collaboration can evolve into a mutually beneficial long-term synergy.
date: 6th of July 2024
