Abby L. Harvey
GHG Monitor
11/7/2014
While great progress has been made in the carbon capture and storage industry with 22 large-scale CCS projects in operation or under construction globally, momentum must continue in various neglected areas of focus to keep progress moving forward, according to the Global Status of CCS 2014 report, released by the Global CCS Institute this week. Key areas where efforts must be increased include policy and the deployment of CCS on industrial sources. “We’re at a stage now where we’ve got fantastic momentum building through on the numbers of projects that are operating and under construction and those that are close to final investment decisions, but they’re the result of visionary policies and investment decisions five and 10 years ago,” GCCSI CEO Brad Page told GHG Monitor this week. “We’ve actually got to see that governments and investors alike are re-engaged in treating CCS as an equal party to any other low-emission technology. … I do think it’s a question around policy and I do think it’s about insuring that investors are given the right incentives to commit to the billions of dollars that are involved,” Page said.
With the Boundary Dam project coming on-line in Canada this year and two projects, the Kemper County Energy Facility in Mississippi and the Petra Nova Carbon Capture Project in Texas due to come into operation 2016 and construction beginning on the world’s first large-scale CCS project in the iron and steel sector, the Abu Dhabi CCS Project in the United Arab Emirates, significant progress has been made in the field. This progress can help drive the CCS conversation forward from if the technology is viable to how to best deploy it. “With large-scale CCS power projects now a reality, an important milestone in deployment of the technology has been achieved. This means that it is time to move discussion onto how CCS can best be deployed as part of a least-cost approach to climate change mitigation,” the report says. “We can now move on from arguments about its ‘experimental’ nature or that it has not yet been applied at scale to fossil fuel power plants.”
Policy Must Reflect Support for CCS
As CCS becomes a more mature technology, it will be imperative for policy measures to support large scale deployment, the report says. “Within the next year there is the potential for ten or more projects to be in a position to make a final investment decision. Current policy settings and any new initiatives taken in the next 12-18 months will therefore largely shape the CCS projects portfolio out to 2020. It is important that financial and policy structures in the near term support the transitioning of this ‘potential portfolio’ of planned projects into an ‘actual portfolio’ of operating projects by 2020,” according to the report.
Developing a policy to bring CCS deployment to the next level is more complicated than placing a price on carbon, Page said. Currently, GCCSI believes that the United Kingdom has the best example of a motivating policy in place. “I think that CCS, particularly in some of its applications like power is at first-of-a-kind stage and that means that it’s not as simple as saying you need a carbon price and I think that it’s the United Kingdom we’ve got to look to for the place where they’ve got the best policy,” Page said. “They have two legs to the policy the first was a £1 billion competition which is progressing two projects at the moment through FEED study stages–it may in the end support both of them and those funds will go toward that first-of-a-kind intense capital cost that’s faced. In conjunction with that, they modified their electricity market to put in place a mechanism called a contract for difference, which gives a subsidy of exactly the same amount and on the same basis to renewables, nuclear and CCS in recognition of the higher operating costs they face over more traditional technologies like gas fired power. So, in the UK’s case we think they’ve got it right.”
Page noted that the United Kingdom has no national carbon price but has developed a policy which fairly places CCS among other low- and no-carbon technologies. “That’s the sort of policy we’re talking about and I might observe in all of that there is no carbon price featuring in that policy. Certainly in the background there is a carbon price in the [European Union Emissions Trading System] but at the moment, given its level, it’s hardly going to make a difference to any particular investment decision. So I think it’s not as simple as a carbon price, I think it requires intelligent application of policy measures that are fit to purpose.”
CCS Must be Adopted in High Carbon Industries
While alternatives exist in power-generation, there are several industries where CCS is the only option for carbon emissions reduction. For this reason it is imperative that CCS be deployed among these high emitting industries such as cement, steel and iron production, according to the report. “CCS is the only technology that can achieve large reductions in CO2 emissions from industries such as iron and steel and cement. Urgent attention must be given to the development of policies that incentivise the widespread deployment of CCS in such industries,” the report says. It notes that aside from one project, “at this stage there are no further large-scale projects contemplated in the iron and steel industry, even though this industry accounts for about 9 [percent] of global CO2 emissions. Nor is any large-scale project planned in the cement industry, which accounts for about 6 [percent] of emissions.”
Progress has been made on this front but, Page noted, without a well-framed policy, there is little incentive to continue. “Abu Dhabi is the host of the first integrated CCS project on a steel plant … but you know steel manufacture occurs all around the world, as does cement manufacture, so our point about that is, there’s 20 percent of the global CO2 emissions coming from these sorts of point sources but if you look at policy settings or incentives to apply CCS to these, there’s almost none that you can observe anywhere in the world so it’s time that some attention was paid to that as well,” Page said.
Industry Moving Away From EOR
The report also finds a shift occurring away from the use of captured CO2 for enhanced oil recovery and toward the practice of dedicated underground storage. According to the report, while EOR has helped incentivize the deployment of CCS where possible, only about half of the CCS projects identified will include an EOR component. “If CCS is to reach its full potential in emissions mitigation, the majority of CO2 will eventually have to be stored in dedicated geologic reservoirs, such as deep saline formations. Resource estimates indicate a much greater potential for dedicated geologic storage options than EOR to meet longer-term CO2 capture and storage requirements,” the report says.
