1. What is CCS?
Carbon Capture and Storage (CCS), sometimes also called carbon capture and sequestration prevents huge amounts of carbon dioxide (CO2) from being released into the atmosphere. The technology involves capturing CO2 from large power and industrial plants, compressing it for transportation and injecting it deep into a carefully selected rock formation – up to 5,000 m underground – where it is permanently stored.
CCS involves three key steps:
- Capture: CO2 is separated from other gases produced at large industrial process facilities such as coal and natural gas power plants, oil and gas plants, iron and steel mills, and cement plants.
- Transport: The CO2 is then compressed and transported via pipelines, trucks or ships to a suitable site for geological storage. Pipelines have been carrying CO2 for over 40 years and over 5,000 km of CO2 pipelines exist in the U.S. alone.
- Storage: Finally, the CO2 is injected into rock formations (depleted oil and gas reservoirs or saline aquifers) deep underground or under sea, at depths of 800 m to 5,000 m. Storage sites are carefully selected and monitored at every step and after injection is completed.
2. What are the benefits of CCS?
CCS is an essential climate technology for the mitigation of CO2 emissions from large-scale fossil fuel use and is also the only decarbonisation option available for many industrial sectors. CCS is therefore also essential for competitiveness, job retention and job creation in Europe.
CCS is a proven technology and the capture, transport and storage of CO2 has been taking place successfully for over three decades. CCS is the only proven technology that can capture at least 90% of CO2 emissions from the world’s largest emitters. In Europe, provided transitional support measures and a level playing field with other low-carbon technologies, CCS could cost-effectively deliver at least 4% of the agreed GHG reduction on 1990 levels, equal to a contribution from CCS to a reduction of around 222 Mt CO2 in the year 2030. ¾ of this would come from the power sector (around 40 GW) and the other ¼ from energy-intensive industries.
An ambitious EU-wide CCS programme for power and industry has potentially enormous economic growth, job-creation, skills and fiscal benefits. For example, in the UK alone, according to a joint study by the TUC and the Carbon Capture and Storage Association (CCSA), CCS could bring a 15% reduction in the wholesale price of electricity and create between 15,000-30,000 jobs by 2030.
ZEP’s modelling shows that, across Europe 330,000 jobs could be created and secured in fuel supply, CCS equipment manufacture, plant operation and CO2 storage facility operation. CCS infrastructure can also be used by energy-intensive industries, which currently employ 1.3 million people in Europe.
3. How much CO2 can be captured?
One 900 MW CCS coal-fired power plant can abate around 5 million tonnes of CO2 a year. If, as possible, 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 CCS application to all fossil fuel power plants and to almost all other large industrial emitters.
4. 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 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. Most of these fields are located offshore in northern Europe and the transportation to these fields is around twice as costly as onshore fields.
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, a 3 year project to assess European capacity for CO2 storage, 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 their projections, EU GeoCapacity estimates some 380 billion tonnes of CO2 could be stored in Europe alone.
5. Is it safe to store CO2 underground?
Existing CCS projects have already safely captured and stored millions of tonnes of CO2; it is a proven and effective process.
The geological formations used for storage diffuses the CO2, making concentrated 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 time for it to be detected and managed. Studies have demonstrated that such minor leaks would disperse and not raise local CO2 concentrations much above normal atmospheric levels.
6. 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, scientists 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. New storage sites located in volcanic areas can, of course, be avoided.
7. 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 localized and simply withdrawn; and, if necessary, the well closed.
8. 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.
9. Is CCS the most cost effective way to tackle climate change?
In a context where fossil fuels are currently meeting 80% of global energy demand, even if countries made good on all current policy commitments to tackle climate change and other energy-related challenges, global energy demand in 2035 is projected to rise by 40% – with fossil fuels still contributing 75%.
So as fossil fuels are to remain our principle source of energy for decades to come, the strategy for reducing global CO2-emissions must be a combination of (1) increased energy efficiency, (2) renewable energy production, and (3) a wide implementation of CCS.
To achieve Europe’s climate objectives, CCS needs to be applied not only to coal- and gas-fired power plants, but energy-intensive industries such as iron, steel and cement, which largely consume coal and for which CCS is the only available option to ensure large-scale decarbonisation. Indeed CCS technology can, in principle, reduce full life-cycle CO2 emissions from fossil-fuel combustion at power stations and industrial sites by 65-85%.
In the power sector alone, CCS must account for 19-32% of the EU’s total emissions reductions by 2050, while industrial applications are expected to deliver half of the global emissions reductions required by 2050 from CCS.
Failing to drive down CO2 emissions could bring huge environmental and economic costs. A 10 year delay in CCS deployment would increase the world wide cost of power sector decarbonisation by €750 billion and result in lost revenues for coal producers (c. €460 billion), gas producers (c. €315 billion) and oil producers.
10. Won't developing CCS keep us locked in using fossil fuels?
The key point is that a portfolio of technologies will be needed to achieve decarbonisation; CCS is an essential complement to renewables and energy efficiency. But CCS must benefit from a level playing field with other low-carbon energy technologies.
Today, renewables provide 13% of our energy. But the fact is, in a world where renewable energy is going to play an important role and electricity will be more intermittent - power plants equipped with CCS can provide flexible electricity, vital to balance the system and complement other low-carbon and renewable energy technologies. This need was recognised by the European Commission in their recent Communication on the 2030 Energy and Climate framework.
11. Is CCS commercially viable?
If Europe is to achieve its decarbonisation goals we must ensure that CCS is deployed in a timely manner. If we act now, with the right investment framework and support measures, CCS can become commercially available post 2030. ZEP has developed a timeline in three stages for successful CCS deployment in Europe by 2050.
- Demonstration phase (2015-2020): A small set of demonstration projects to show that CCS is technically and operationally feasible and to test the regulatory framework and gain public acceptance. This set of projects must be carefully chosen preferably such that different CO2 emissions source types (coal, gas power, industry sources, pre- and post-combustion and oxy-fuel capture etc.) and different types of storage (deep saline aquifers, depleted oil and gas fields, enhanced oil recovery through CO2) are tested.
- Pre-commercial deployment (2020-2030): A period of wider deployment in the power and energy-intensive industries (e.g. refining, steel, cement). This involves a larger set of early commercial projects to build the CCS industry, with several years of operations to include the learning from 2026 onwards in the design of commercial projects to be operational by 2030.
- Commercial deployment (2030-2050): In this phase, CCS is deployed at full scale and deployment is rapidly increasing within the power and energy-intensive industries, when CCS technology has become fully proven at commercial scale and the supply chain has matured.
12. What support measures are needed to achieve commercial viability?
The lowest-cost route to decarbonising European power lies in the use of a combination of hydro, wind and solar (and nuclear in specific states) – and the progressive use of lignite, coal, gas and biomass with CCS between 2030 and 2050 – driven by the EU Emission Trading System (ETS).
But in the 2020s the price of the emissions allowances (EUA) are likely to remain too low. Therefore, transitional support measures for CCS are vital to cover the incremental costs of demonstration and early deployment projects. The goal should be to provide a robust, predictable revenue stream and an appropriate level of return for investors – over the lifetime of the project.
- Public grants need to cover both capital and operational costs since capital grants alone are not sufficient to incentivise CCS ‘first movers’. This is because they do not ensure that the power plant will dispatch and operate over the lifetime of the project so that the return on the investment is realised. In addition incremental operating costs for CCS will not be covered at low CO2 price levels. We are therefore calling for a CCS fund large enough to support EU demonstration projects in the power and industrial sectors, and also take into account the lessons learnt from recent EU funding schemes.
- Feed-in-premia offer investors the greatest security of income. It is clear that well-designed FiPs lead to power plants having access to the electricity grid in a way which reduces both price and revenue risk – and leads to lower capital costs. Investors therefore only need to deal with the technological risks.
- CCS certificates are a potential option, if carefully designed for a defined volume and a transitional period of time. Disadvantages could be high transaction costs and the expected unbalanced market between demand and supply.
- An Emission performance standard will not incentivise CCS in Europe in the short term and might only become effective after 2030, i.e. from the commercial phase but not during the demonstration phases.
13. What is the right framework of policies to achieve wide-spread CCS deployment?
ZEP believes that five key actions will be needed:
- In 2030, CCS could cost-effectively deliver at least 4% of EU GHG reductions compared with 1990 levels provided transitional support measures and a level playing field with other low carbon technologies. But CCS must be embedded into the upcoming legislative proposals for the EU 2030 energy and climate framework to give a long-term signal to investors. CCS must be included in credible decarbonisation pathways by Member States for 2030 and beyond. The EU should also support the inclusion of CCS in any global agreement i.e. at the global climate agreement in Paris in 2015.
- In the EU, the Emission Trading System (ETS) should remain the central tool of EU climate policy, providing a predictable, meaningful and robust carbon price and a long-term driver for CCS. But the carbon price is currently too low and will likely remain so through the 2020s. ZEP therefore welcomes the legislative proposal for a Market Stability Reserve and the concept of linking supply and demand of allowances to strengthen the EU ETS. However, we would strongly support timely action on additional measures to deal with the surplus in the system to further strengthen the scheme.
- Transitional support measures for CCS are vital to cover the incremental costs of demonstration and early deployment projects. We are therefore calling for EU institutions and Member States to consider the mechanisms we have mentioned above. These include a CCS fund, Feed in Premia and carefully designed CCS Certificates. We would recommend that Member State national plans consider all of these options and lay out clear revenue streams.
- Legal barriers and other blockers need to be resolved. For example, through a robust review of the EU CCS Directive that removes unnecessary burdens, risks and uncertainties on storage providers, and uncertainty over CCS-readiness, which is hampering investment. ZEP has written to key stakeholders to call for the London Protocol to be ratified as a matter of urgency in order to allow cross-border CO2 transport and subsea storage for relevant Member States. EU State Aid guidelines must be clarified to ensure CCS is eligible for state aid both for investment and operation.
- And last but not least, development of transport and storage infrastructure needs to start now. Effective business models need to be developed and the process of setting up infrastructure put in motion. We need to make sure that up to six storage pilots are in place by 2020, to test the storage sites and build public confidence. One exciting opportunity is to develop a hub in the North Sea, which could store 100 million tonnes of CO2 a year by 2030. In this area, EU Horizon2020 funding will be key.