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Carbon capture: still waiting for the revolution

Fossil fuels can play a crucial part in the global energy mix for decades to come, if the cheap and abundant energy they provide can be combined with carbon emissions reduction technology.

However, there are growing concerns that the power industry is failing to embrace technologies such as carbon capture and storage (CCS) fast enough.

Building CCS into a new power project could make coal-fired power competitive with most forms of renewable energy in the future, proponents say. But it can also add tens of millions of dollars to costs and it is a pioneering technology that has yet to be proved on a commercial scale. So, with sizeable financial incentives available in just a few places around the world and environmental regulation still patchy, carbon capture is in danger of being left on the back burner.

“Adding CCS is a massive parasitic load on your power plant. It steals capacity, so it steals heat and it steals power,” Guy Doyle, chief energy economist at engineering consultancy Mott Macdonald said at the recent Coaltrans World Coal conference in Madrid.

However, he said that ignoring emissions reduction technology now would be a mistake for firms developing new capacity, as plants being planned today would still be operating in two or three decades’ time, when carbon emissions regulations were likely to be considerably tougher. Effectively, firms fitting CCS technology now will be saving money later on, if that avoids having to close plants prematurely or doing an expensive retrofit of CCS on an existing plant.

The International Energy Agency has estimated that 100 large-scale CCS projects need to be operational by 2020 and 3,000 in 40 years’ time, if the technology is to make a significant contribution to efforts to fight climate change. But getting companies and governments to make the necessary investment is easier said than done, especially in emerging markets, which account for most of the current rise in carbon emissions.

“Developing nations look at carbon capture technology with a jaundiced eye and say they have more important priorities,” Derek Taylor of the Global CCS Institute, a body funded by the Australian government, told the Coaltrans conference.

Big investments needed

The scale of investments and incentives needed are clear in countries where efforts are now being made to promote CCS. The Canadian province of Alberta announced funding of $2bn in 2008 with the objective of promoting the sequestration – or burial – of 5m tonnes of CO2 annually from commercial scale projects starting in 2015.

Rob Bioletti of Alberta Energy, which manages the province’s energy resources, told Coaltrans that three out of four planned agreements to sequester CO2 had been signed to date. Alberta generates 60 percent of its electricity from coal and holds some 70 percent of Canada’s coal reserves, so it is keen to promote CCS to reduce its carbon emissions. As a large region, much of which is sparsely populated, the province has been able to find underground areas suitable for CO2 burial relatively easily.

Elsewhere, finding suitable sites on land to bury CO2 can be more difficult, especially if the local population objects. One solution is to use storage under the seabed, for example in depleted oil and gas production areas. Norway’s Statoil has shown how this can be done, capturing one million tonnes of CO2 a year from natural gas production at its Sleipner field in the North Sea since 1996 and storing it in an aquifer more than 800 metres below the seabed.

However, burying CO2 from power plants at sea is likely to add costs to an already expensive technology. And for coal users, there is the further problem that applying CCS to coal-fired plants is likely to prove more expensive overall than fitting it at gas-fired power stations, which already produce lower carbon emissions.

Mott Macdonald’s Doyle said several studies had shown that CCS costs were higher for coal due to the greater amount of CO2 to be transported and stored, and that gas-fired plants fitted with CCS would require lower front-end investment and have a lower overall levelised cost of generation than coal.

Persuading the first movers

There are just a handful of large CCS projects in operation at present, including Algeria’s In Salah project, Sleipner and Snøhvit in Norway and Weyburn-Midale in Canada. But none of these involves the industrial-scale capture of CO2 from a power plant.

Perhaps the biggest challenge is to persuade the first movers to take the lead from such projects and develop commercial-scale CCS. Jeff Chapman, chief executive of the Carbon Capture and Storage Association, which promotes the technology, says there is little incentive for firms to make the leap. That is because pioneering engineering projects tend to cost more than those that follow, as the latter can build on the lessons learned and benefit from economies of scale. “Being an early mover is not an advantage in CCS, whereas being a second mover is, so it’s hard to get underway,” he told Coaltrans,

In practice, incentives to develop CCS will need to be enhanced. One way that might be achieved would be if emissions trading – currently restricted to the European Union and handful of smaller regions – catches on globally and the carbon price becomes sufficiently high to warrant increased CCS investment. That looks unlikely in the near term, given the rifts evident in global climate change talks.

However, that does not preclude the introduction of a tougher regulatory environment – the EU is already considering introducing laws compelling new power stations to include CCS technology. The message from the Coaltrans conference was that power companies need to be prepared for that eventuality to occur sooner rather than later.

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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