McKinsey: Carbon storage ‘viable’ by 2030


By 2030, the cost of capturing and storing CO2 emissions from heavy-polluting coal power plants could be reduced to a level where it can compete with other low-carbon technologies, according to a study by McKinsey & Company. Tomas Nauclér, a director at the company’s Stockholm office, told EURACTIV why in an interview.

Tomas Nauclér is a director at McKinsey’s Stockholm office.

In its study on the economics of CCS  (EURACTIV 24/09/08), McKinsey says the cost of the technology, although quite high at the moment – between 60 and 90 euros per tonne of CO2 buried – will fall fast. Why is that?

What we’re saying is that as you go from the demonstration phase to the first full-scale commercial phase, it will come down pretty fast. Then, we will need a number of projects over the following 5-10 years in order to get down to the number of 30 to 45 euro per tonne that you saw in the report for a possible 2030 timeframe.

So how is it achieved? Is it mainly through economies of scale?

In the first phase, you go from coal power plants of 300 megawatts to 900mw, so you triple the scale and therefore you get a lot of costs down. From that phase, from the first early commercial phase as we call it, to the full commercial phase, two things are going to happen: first, there is going to be a learning curve effect on the capture side and second, we also expect an increase in cost from storage and transport as we will start to have worsening conditions on that side.

On the time frame, how do you see the transition happening from demonstration to commercially-viable plants?

We put out three scenarios of how this can happen and in the base case we have the early commercial full-scale plants by 2023. And that is driven by the long-lead times of six to nine years from the demonstration plants which could be deployed around 2012-2015. And if you add that up, you get to 2023.

Then there is a more aggressive path that may or may not be possible to follow, which would yield earlier full-size commercial plants of 900 megawatts. 

From the climate change and CO2 abatement perspective, the bigger challenge actually lies outside Europe, in China and the US in particular. What are McKinsey’s initial findings on this? Could CCS become significantly cheaper if it was rolled out to more countries?

What we said is that the learning effect of having more countries driving this faster would be somewhere around five euros per tonne in respect to 20 to 30. So there is clearly a big effect that is possible through China, India, US actually having large-scale plans happening on the capture side.

And that would be after 2020?

Yes, we believe so, but there is perhaps one scenario that should not be underestimated. If China decided to develop CCS on a large scale, they could have shorter building times than they’ve had for other technologies. But it is pure speculation, as it is difficult to foresee what will happen in the other parts of the world at this time.

As you probably know, we did the global cost curve – we’ve done national cost curves, a cost curve for the US and other countries in Europe. We’re currently doing it one for China, India and in some other developing markets. And we’re also coming out with a global cost curve update by the end of the year, beginning of next year.

So from your understanding, the roll-out of CCS to those countries is something which is also very much on the cards?

I am not going to predict what the politicians or what the discussions are in those countries. One can take a step back and say they have a much larger base for coal in some of them. Many are also building more coal power plants as we speak and projections from the IEA see them continuing to grow. This makes CCS perhaps more important for those countries.

To summarise, you believe the economics of CCS are sound…

By 2030, we get into sound economics in terms of stand-alone, commercially-viable projects. In the short term, the reference plan would be 60-90 euros per tonne avoided and there will be an economic gap that needs to be closed in a private-public type of cooperation. And thirdly, the learning curve could come down fast thanks to global deployment of the technology and contribute towards lower cost.

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