The Role of Carbon Capture and Storage (CCS) for Climate Change Mitigation

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Summary

CCS could reconcile the continued use of fossil fuels over the medium to long term with the need for deep cuts in CO2 emissions. A demonstration program of commercial scale CCS projects would allow to prove the various CCS technologies at large scale, to identify risks and to achieve public and industry confidence in CCS. Regulatory issues, particularly around storage liability and the legality of storage will need to be resolved, and funding found to support the demonstration project phase.

Analysis

NOTE: I'm summarizing in a series of analysis the report I'll be presenting next week in Brussels at the the High-Level Workshop on Living in a Low-Carbon Society.

Differently from energy efficiency and renewable energy technologies, Carbon Capture and Storage (CCS) is the only technology whose only purpose for being deployed at large scale is dealing with reducing carbon emissions. The reason for the attention devoted to CCS is that no single technology or process alone will deliver the emission reductions needed to keep climate change within the 2ºC targeted limits. Hence, CCS could help reduce emissions from the flood of new coal-fired power stations planned over the next decades, especially in India and China.

CCS is a three-step process that includes capture and compression of CO2 from power plants or industrial sources; transport of the captured CO2 (usually in pipelines); and storage of that CO2 in geologic formations, such as deep saline formations, oil and gas reservoirs, and unmineable coal seams. Technologies exist for all three components of CCS, but “scaling up” these existing processes and integrating them with coal-based power generation poses technical, economic, and regulatory challenges. Research, development, and demonstration (RD&D) programs can help reduce project uncertainty and improve technology cost and performance. The focus of CCS RD&D is twofold:

1. to demonstrate the operation of current CCS technologies integrated at an appropriate scale to prove safe and reliable capture and storage; and

2. to develop improved CO2 capture component technologies and advanced power generation technologies to significantly reduce the cost of CCS, to facilitate widespread cost-effective deployment.

The IPCC Special Report Carbon Dioxide Capture and Storage (2005) suggests that it could provide between 15% and 55% of the cumulative mitigation effort until 2100.

The main benefit provided by CCS technologies is clear; their large-scale deployment could reconcile the continued use of fossil fuels over the medium to long term with the need for deep cuts in emissions. This is very important since, according to the IEA’s World Energy Outlook 2009, fossil fuels will remain the dominant sources of energy worldwide, accounting for 77% of the demand increase in 2007-2030. In this period, oil demand is expected to increase by 24%, demand for coal by 53%, and demand for natural gas by 42%. Hence, successfully stabilizing emissions without CCS technology would require dramatic growth in other low-carbon technologies, which would lead costs to grow also dramatically.

IEA modeling shows that, without CCS, CO2 marginal abatement costs would rise from $25 to $43 per ton in Europe, and from $25 to $40 per ton in China, while global emissions are10% to 14% higher. This highlights the crucial role CCS is expected to play, which in most scenario studies increases over the course of the century.

CCS can also be considered to contribute to energy security. This is because many major energy-using countries have abundant domestic coal supplies, and hence see coal as having an important role in enhancing energy security. Therefore, extensive deployment of CCS can reconcile the use of these coal supplies with the emission reductions necessary for stabilizing GHG in the atmosphere.

Although it is technically possible to capture emissions from almost any source, the economics of CCS favors capturing emissions from large sources producing concentrated CO2 emissions to capture scale economies, and where it is possible to store the CO2 close to the emission and capture point, to reduce transportation costs. Therefore, the ideal sites for CCS would be close to sources such as power stations, and cement, steel and petrochemical plants.

Employing CCS technology adds to the overall costs of power generation. But there is a wide range of estimates, partly reflecting the relatively untried nature of the technology and variety of possible methods and emission sources. The IPCC quotes a full range from zero to $270 per ton of CO2. A range of central estimates from the IPCC and other sources show the costs of coal-based CCS employment ranging from $19 to $49 per ton of CO2, with a range from $22 to $40 per ton if lower-carbon gas is used. The range of cost estimates will narrow when CCS technologies have been demonstrated but, until this occurs, the estimates remain speculative.

According to the IPCC Special Report on CCS, in most CCS systems, the cost of capture (including compression) is the largest cost component. Some of this cost could be offset by the use of CO2 for enhanced oil recovery (EOR) for which there is an existing market, but EOR options may not be available for many projects. Since the 1970s, engineered injection of CO2 into geologic reservoirs has taken place for purposes of EOR, resulting in the development of many aspects of reservoir management and operation needed for safe large-scale injection and geologic storage of CO2. Costs for the various components of a CCS system vary widely, depending on the reference plant and the wide range in CO2 source, transport and storage situations. Over the next decade, the cost of capture could be reduced by 20–30%, and more should be achievable by new technologies that are still in the research or demonstration phase. The costs of transport and storage of CO2 could decrease slowly as the technology matures further and the scale increases.

Energy and economic models indicate that the CCS system’s major contribution to climate change mitigation would come from deployment in the electricity sector. Most modeling as assessed in the IPCC Special Report on CCS suggests that CCS systems begin to deploy at a significant level when CO2 prices begin to reach approximately 25–30 US$/tCO2. This means that when the market price for CO2 emissions, such as the price of the EU Emissions Trading System, reaches this level, CCS will become an economically viable option to abate CO2 emissions. As prices increase further, CCS projects will become increasingly attractive. In the meantime, it is essential to gain experience with real projects that bring the costs down through the learning curve. Early demonstration projects are expected to be costly (probably between 60-90 US$/tCO2), due to their small scale and efficiency.

A demonstration program of commercial scale, integrated CCS projects would allow to prove the various CCS technologies at large scale, to identify risks and to achieve public and industry confidence in CCS. A sufficient number of such projects would be required to test different capture technologies and different storage geologies across a range of fuel applications and geographies. The first commercial projects would have to be started shortly after the demonstration phase. Otherwise, CCS could struggle to reach large scale in 2030. Regulatory issues, particularly around storage liability and the legality of storage will need to be resolved, and funding solutions found to support the demonstration project phase. Finally, public awareness in and support for CCS must also be realized.