EU support for CCS
In March 2007, EU leaders signed up to a proposal by the European Commission to support the construction of 10-12 large-scale CCS demonstration plants by 2015. By 2020, they agreed that all new coal-fired plants should include CCS technology. Existing plants should be subsequently 'retrofitted' .
In January 2008, the Commission published an updated version of its environmental state aid rules, allowing EU countries to subsidise CCS as part of eligible environmental projects. The EU executive said it "will have a generally positive attitude towards state aid" for CCS projects, according to the revised guidelines, which entered into force on 1 April 2008.
On 7 October 2008, the European Parliament's environment committee backed a report on a proposed directive on CCS, authored by UK Liberal MEP Chris Davies (EURACTIV 08/10/08). MEPs called for the establishment of limits on the CO2 performance of power stations: after 2015, power plants' emissions cannot exceed 500 Kg of CO2 per kilowatt hour (Kwh).
The amendment, based on a similar measure introduced by California's governor Arnold Schwarzenegger, is designed to oblige power companies to install CCS equipment, particularly in their coal-fired power plants, which produce the highest amount of CO2. The report also recommended reserving 500 million allowances under the EU's cap-and-trade scheme for CO2 to support the construction of large-scale CCS demonstration plants.
In December 2008, EU leaders agreed that national governments would provide 300 million allowances from the EU's emissions trading scheme (see EURACTIV LinksDossier) to subsidise the construction of the 10-12 demonstration plants (EURACTIV 12/12/08). Under the deal, the allowances would be taken from a special pool of CO2 emission rights reserved for companies entering the ETS, the so-called 'New Entrants Reserve'. The Parliament signed off on the compromise a few days later (EURACTIV 18/12/08).
However, the level of funding available under this scheme may vary according to the level of CO2 prices on the EU's nascent carbon market. Given the level of carbon prices at the time of the summit deal, it was foreseen that the agreement would secure around 6-7 billion euros for CCS demonstration projects. But a subsequent drop in carbon prices could reduce this amount to much less (EURACTIV 9/02/09).
Getting costs down
The International Energy Agency (IEA) estimates today's cost of CCS "at between $40-90 per tonne of CO2 captured and stored depending on the power plant fuel and the technology used". The bulk of the cost is on the capture side. By 2030, costs could fall to below $25, according to the IEA.
In addition to high costs, CCS also decreases the average efficiency of power plants by up to 20%, making its use uneconomical. Using CCS with new power plants would increase electricity production costs by 2-3 US cents/kWh, according to the IEA.
According to a study by McKinsey & Company, published in September 2008, the cost of fitting CCS technology to coal-fired power stations could be reduced by 2030 to levels where it can compete with other low-carbon technologies, including renewable energies. "Our reference cases have shown that the costs for integrated CCS projects could come down to €30-45/tonne of CO2 abated for new coal-fired power by 2030," McKinsey notes. According to the report, this price range is "in line with expected carbon prices" under the EU's carbon emissions trading scheme (EU ETS) for that period.
But in the meantime, Europe will be left with an "economic gap" that needs to be filled if CCS technology is to take off. Early demonstration projects, which according to McKinsey are not expected before 2012-2015 "at the earliest", will typically cost €60-90/tonne, representing a gap of "0.5-1.1 billion euro per project".
For Europe as a whole, this 'economic gap' is estimated at "around 10 billion euro," according to Chris Davies, a British MEP in charge of steering an EU legislative proposal on CCS through the European Parliament.
According to the study, the main costs in early demonstration plants will mainly be absorbed by the CO2 capture phase, representing roughly two thirds of total costs. The remainder is divided between the transport phase - via existing pipeline networks - and the actual injection of CO2 into underground rock formations.
But both transport and storage costs could vary widely according to the ability to 'cherry pick' projects with favourable storage locations in order to minimise transportation distance, the study said. Long-distance transport to a suitable storage location "could increase the cost of transport significantly," it said, potentially adding 10-12 euro per tonne for distances of 200-300 kilometres.
But these costs are expected to go down as CCS technology moves from the demonstration phase to the early commercial scale (at the beginning of the 2020s "at the earliest," according to the study). Tomas Nauclér, a director at McKinsey's Stockholm office, told EURACTIV: "As you go from the demonstration phase to the first commercial full-scale phase, prices will come down pretty fast. Then, you will need a number of projects over the next 5-10 years in order to get down to the 30-45 euro price range we mentioned in the report."
Research on improving the technology
In 2005, the European Commission launched a European Technology Platform for Zero Emission Fossil Fuel Power Plants (ZEP). Its aim is to develop EU fossil fuel plants with zero CO2 emissions by 2020. The platform comprises 25 members from the Commission, government authorities, industry, NGOs, science and the environmental sector. In September 2006, it presented a strategic research agenda and a deployment strategy.
On 10 November 2008, ZEP presented its proposal for an EU demonstration project to bring forward the large-scale deployment of carbon capture and storage (CCS) by ten years. The plan foresees the setting-up of a total of 10 to 12 demonstration projects by 2015, using a variety of technologies, to "de-risk" CCS and make it commercially available by 2020.
In November 2008, ZEP published a proposal for an EU demonstration programme in response to the European leaders' commitment. It argued that 10-12 projects would be necessary to make the technology commercially available by 2020, requiring 7–12 billion euro of additional financing to cover the extra cost of CCS installations and lower plant efficiency (EURACTIV 12/11/08).
The Commission is also a member of the Carbon Sequestration Leadership Forum, an international framework for cooperation in research and development of CCS.
Novel capture methods tested in Norway
In Norway, state-owned company StatoilHydro has launched a European Carbon Dioxide Test Centre (TCM) in 2008. If successful, the facility could then be deployed to full-scale in 2014 as a second step.
The Mongstad TCM is a small gas-fired power station generating heat and electricity simultaneously, a process which is already more energy-efficient than conventional gas-fired plants. The new technology to be tested there involves separating the CO2 from the other fumes emitted when burning the gas, using a process called Chilled Ammonia.
But while it is more promising, the technique is considered riskier than an existing method using an amine solution to capture the CO2 after the gas is burned. "The risk lies in the fact that chilled ammonia is new and untested. On the other hand, the benefit could be very substantial if we succeed," says Egil Sael, vice-president for business development at StatoilHydro. "This method has the potential to capture carbon dioxide with a considerably lower consumption of energy. That would reduce costs sharply."
The Norwegian energy ministry has invited a number of other companies to join the government and StatoilHydro in sharing the costs of the plant. Shell and Vattenfall will be among the six participants to share the facilities and intellectual property generated from the test centre.
Preventing CO2 leakage
One of the biggest questions is whether the stored CO2 can be retained over long periods of time. Current storage projects such as the StatoilHydro Sleipner project have only stored CO2 since 1996 and therefore cannot as yet deliver proof that this kind of storage is safe in the long run.
However, there are also reasons to be optimistic. Since 1996, StatoilHydro says it has already buried about 10 million tonnes of carbon dioxide in a sandstone formation 1,000 metres beneath the seabed. No leakage has happened to date and first studies show the liquid CO2 has even tended to sink deeper underground rather than go back to the surface. The company claims to add about 1 million tonnes to this volume every year, or the equivalent of CO2 emissions from 300,000 cars.
Careful site selection with optimal verification procedures and monitoring instruments will be essential. In addtiion, more research is needed on the potential environmental effects of CO2 retention and seepage on marine and land environments.
Several international regimes related to marine protection and climate change (UNCLOS, London Protocol, OSPAR Convention, Kyoto and others) could pose major legal challenges for CCS. One important issue is whether stored CO2 should be considered as waste.
According to the European Commission, the amendment to the London Protocol on dumping waste at sea and the amendment of the annexes of the OSPAR Convention (on protecting the marine environment in the North-East Atlantic) were successful in resolving the treatment of CCS at international level. They are now not considered waste anymore.
But other legal problems could arise. Property rights and liability issues in particular are likely to figure among the most difficult challenges. Questions here relate to ownership of stored CO2 and responsibility in case of leakage.
Public confidence in CCS
Finally, public support for CCS will be essential if the technology is ever to be rolled out on a large scale. According to a UK study (Tyndall 2004), the public is poorly informed and therefore rather sceptical. CCS is also not favoured as much as wind, wave, tidal and solar energy, but preferred to nuclear.
In September 2007, the results of a Commission public consultation on low-carbon technologies revealed significant public scepticism about the potential contribution of CCS and similar technologies to the fight against climate change (EURACTIV 21/09/07).