1. What other benefits will CCS provide?
In addition to its potential to reduce CO2 emissions on a massive scale, CCS will also provide greater energy security – by making the burning of Europe’s abundant coal reserves more environmentally acceptable and reducing its dependency on imported natural gas. CCS could also facilitate the transition to a hydrogen economy through the production of large volumes of clean hydrogen which that could be used for electricity or transport fuel.
An EU Demonstration Programme on CCS will not only demonstrate the EU’s commitment to delivering on its own CO2 reduction targets, but spur other countries to do the same – especially large CO2 emitters, such as China, India and the US. As a global solution to combating climate change, CCS could therefore also give a major boost to the European economy – promoting technology leadership, European competitiveness and creating jobs.
2. Why are public funds needed for the CCS demonstration projects?
Currently, a CCS demonstration project would be a loss-making enterprise for industry, given the current price of implementing and using the technology; the current price of carbon; and uncertainty surrounding long-term viability and profitability. No shareholder can therefore be expected to fund it fully at this stage.
The typical cost of a demonstration project is likely to be in the range €60-90 per tonne of CO2 abated. Recent analyst estimates for Phase II of the European Union Emissions Trading Scheme (EU ETS) range from €30 to €48 per tonne of CO2 and, at this stage, similar levels are assumed beyond Phase II (up to 2030). In this range, the carbon price is insufficient for demonstration projects to be “stand-alone”, commercially viable.
Assuming that CCS demonstration projects would cost between €60 and €90 per tonne of CO2, and projecting a median carbon price of €35 per tonne of CO2, there is an “economic gap” of €25-€55 per tonne of CO2 per project. This corresponds to around €500 million - €1.1 billion, expressed as a Net Present Value (NPV) over the lifespan of a 300MW size power plant. The range depends on variations in specific project variables, such as capture technology and capex, transport distance and storage solutions.
3. The UK and the Netherlands are well on their way to implementing CCS demonstration projects – won’t these be enough to make the technology commercially viable?
As it is not yet known which CCS technologies will prove the most successful, it is vital that the full range is tested – including higher-risk technologies – optimised across projects and locations. As each region has its own challenges, local demonstration is also important in order to maximise public and political support.
As importantly, an EU-wide programme will ensure that cross-border projects – where CO2 is stored in a different country or region to where it is captured – are not excluded. As capture and storage locations are unevenly distributed throughout Europe, cross-border pipelines will play a crucial role in the wide-scale deployment of CCS and the development of clusters in major industrial areas as the next key step.
4. How much will it cost to retrofit CCS technology to existing power plants?
In general, retrofitting an existing power plant would lead to a higher cost for CCS, but these are highly dependent on specific site characteristics, including plant specifications, remaining economic life and overall site layout. For this reason, no generalisation or “reference case” would be meaningful.
There are four main factors likely to drive the cost increase for retrofits:
- The higher capex (capital costs) of the capture facility: the existing plant configuration and space constraints could make adaption to CCS more difficult than for a new build.
- The installation’s shorter lifespan: the power plant is already operating so where (for example) a new plant with CCS may run for 40 years, the capture facility of a 20 year-old plant is likely to have only a 20 year life, reducing the “efficiency” of the initial capex.
- There is a higher efficiency penalty, leading to a higher fuel cost when compared to a fully integrated, newly-built CCS plant.
- There is the “opportunity cost” of lost generating time, because the plant would be taken out of operation for a period to install the capture facility.
5. How can we accelerate the building of CCS projects?
Building a CCS project is a lengthy process: a fully integrated project can take 6.5-10 years before it becomes operational. However, Final Investment Decision can only be made once permits have been awarded across the entire value chain. In the case of CO2 storage, this can take as long as 6.5 years. In such a scenario, even a commercial project started as early as 2016 would not itself become operational until 2024.
Ideally, 10-12 CCS demonstration projects should be operational by 2015. The first early commercial projects should be operational by 2020, with the remaining demonstration projects sufficiently advanced for early commercial projects to be ordered from 2020 onwards. Some 80-120 large-scale CCS projects could therefore be operational in Europe by 2030.
There are several ways we can fast-track the building of CCS projects:
- Starting a commercial project as early as possible during the building of the demonstration project so that – for example – build can start after just one year of the demo being in operation.
- Accelerating feasibility studies etc.
- Making faster investment decisions
- Shortening the tender process
- Introducing special measures to shorten the permitting process.
Some projects, by their very nature, will of course be quicker to build than others, e.g. retrofitting existing power plants with CCS; using well-known oil and gas fields with infrastructure and seismic data already available; those with only a short distance from the power plant to the storage site, etc.
6. How much CO2 can be captured using CCS?
One 900 MW CCS coal-fired power plant can abate around 5 million tonnes of CO2 a year. If, as projected, 80-120 commercial CCS projects are operating in Europe by 2030, they would abate some 400 million tonnes of CO2 per year.
By 2050, CCS could reduce annual CO2 emissions by 0.6 to 1.7 billion tonnes in the EU and by 9 to 16 billion tonnes worldwide. The upper end of this range would require its application to all fossil fuel power plants and to almost all other large industrial emitters – with the large volumes of hydrogen produced used for transport fuel.
7. Isn’t more energy utilised where CCS is implemented?
The absolute efficiency penalty, estimated at around 10% for the reference case (meaning plant efficiency drops from 50% to around 40%), drives an increase in fuel consumption and does require an over-sizing of the plant to ensure the same net electricity output.
However, next-generation technology - such as ultra-supercritical 700°C technology for boilers, coupled with drying in the case of lignite - will achieve a 50% level of overall plant efficiency. While this technology is not currently available, it is expected to be when early commercial CCS projects are built around 2020.
8. Where will CO2 be stored?
The regional distribution and cost of storage in Europe will play an important role in any roll-out of CCS. Most experts agree that depleted oil and gas fields and deep saline aquifers have the largest storage potential.
Depleted oil and gas fields
Depleted oil and gas fields are well understood and around a third of total oil and gas field capacity in Europe is estimated to be economically useable for CO2 storage. With an estimated capacity for 10 to 15 billion tonnes of CO2, this is sufficient for the lifetime of around 50 to 60 CCS projects. However, most of these fields are located offshore in northern Europe and the transportation to and storage of CO2 in these fields (excluding capture) is around twice as costly as onshore fields.
Deep saline aquifers
While much less work has been done to map and define deep saline aquifers, most sources indicate that their capacity should be sufficient for European needs overall. Preliminary conservative estimates by EU GeoCapacity indicate that Europe can store some 136 billion tonnes of CO2 - equivalent to around 70 years of current CO2 emissions from the EU’s power plants and heavy industry. At the higher end of these estimations, EU GeoCapacity estimates some 380 billion tonnes of CO2 could be stored in Europe alone.
9. Storing enormous quantities of CO2 underground must present some risk?
The geological formations that would be used to store CO2 diffuse it, making massive releases extremely unlikely. Indeed, because the CO2 becomes trapped in the tiny pores of rocks, any leakage through the geological layers would be extremely slow, allowing plenty of time for it to be detected and dealt with. In fact, it would not raise local CO2 concentrations much above normal atmospheric levels.
Higher concentration leaks could come from man-made wells, but the oil and gas industry already has decades of experience in monitoring wells and keeping them secure. Storage sites will not, of course, be located in volcanic areas.
10. But won’t CO2 storage increase the likelihood of seismic activity?
A detailed survey takes place to identify any potential leakage pathways before a CO2 storage site is selected. If these are discovered, then the site will not be selected. In areas where some natural seismic activity is already taking place, we can ensure that the pressure on the CO2 does not exceed the strength of the rock by making the volume of CO2 stored relative to that of the storage site. CO2 storage has even proved to be robust in volcanic areas: in 2004, a storage site in Japan endured a 6.8 magnitude earthquake with no damage to its boreholes and no CO2 leakage. But then CO2 has remained undisturbed underground for millions of years – despite thousands of earthquakes.
11. How will we know if the CO2 is leaking?
Before a CO2 storage site is chosen, a detailed survey takes place to identify any potential leakage pathways. If these are found to exist then the site will not be selected. In Europe, underground gas storage (natural gas and hydrogen) has an excellent safety record, with sophisticated monitoring techniques that are easily adaptable to CCS. On the surface, air and soil sampling can be used to detect potential CO2 leakage, whilst changes underground can be monitored by detecting sound (seismic), electromagnetic, gravity or density changes within the geological formations.
The risk of leakage through man-made wells is expected to be minimal because they can easily be monitored and fixed, while CO2 leaking through faults or fractures would be localised and simply withdrawn; and, if necessary, the well closed.
12. Who will be liable for CO2 storage sites over the long-term?
As the CO2 will remain stored underground indefinitely, long-term liability will follow the example set by the petroleum industry, whereby the state assumes liability after a regulated abandonment process. Indeed, EU law governing the safe and permanent storage of CO2 has already been approved and is currently being implemented at national level.