IEA: CCS DEVELOPMENT ‘NOT ON TRACK’ TO MEET 2020 GOALS

Tamar Hallerman
GHG Monitor
4/19/13

Despite seeing an increase in global investment over the last year, carbon capture and storage technology development is “not on track,” the International Energy Agency warned this week. In the most recent edition of is annual “Tracking Clean Energy Progress” report, IEA says the 13 large-scale demonstration projects currently in operation or under construction only constitute about one-quarter of the capacity that must come online by the end of the decade in order to limit global temperature increases to 2 degrees Celsius by the end of the century—the target IEA says will limit the effects felt by climate change. “While the significant growth in cumulative spending that has occurred over the past five years is a positive sign, the current amount is far below the estimated $100 billion required to deliver CCS levels envisaged in the [2 degree Celsius goal],” the report says.

The progress report says that public and private funding spent on CCS projects last year increased “significantly” by $2.6 billion. IEA said the increase—constituting a more than 30 percent bump from 2011 investment levels—is evidence that there is growing commercial interest in CCS technologies. The Paris-based energy research organization also said that the rapidly increasing number of CCS-related patent applications over the last decade is also an indicator of the trend. Despite the increased investment—due mainly to two oil sands-capture projects reaching financial close in Alberta, Canada, Shell’s Quest and the North West Redwater Partnership’s Sturgeon Refinery project—the IEA warns that the door to its 2 degree goal is rapidly closing. Under that scenario, which would keep CO2 concentrations in the atmosphere at or below 450 parts per million, 38 large-scale power generation projects with CCS would need to be in place by 2020, as well as 82 industrial capture projects. IEA said that CCS under that scenario would encompass 6 percent of emissions reductions by the end of the decade, rising to about 20 percent by 2050.

CCS Recommendations

In order to reach those goals, the report says that it is the responsibility of governments to “urgently” put policies in place that can clear the way for the technology’s development. It recommends that governments do that by creating “clear, long-term deployment strategies” to prompt demonstration work and incentivize the bridging to commercialization, while also supporting long-term climate change mitigation commitments. “A lack of coherent incentive policies that link near-term demonstration of CCS with a long-term need for emissions reductions represents the most critical barrier to further penetration of CCS technologies,” the report says, adding that more private investment is also needed, but that such support will depend on long-term policy signals from governments.

IEA says those government policies must also recognize the large investments and long-lead times required for many CCS projects to develop. While the group said it saw some progress with governments implementing broader emissions reductions initiatives in 2012 that have the potential to incentivize CCS—most prominently Australia’s recently-implemented $23 tax on carbon emissions—none are generally sufficient enough in their current stage to drive CCS deployment. It says that the demonstration programs in place in many industrialized countries are not adequate to transition the technology into commercial-scale application, and the report argues that electricity market reform legislation currently being debated in the U.K. Parliament is the “only comprehensive attempt” globally to set a policy that can drive CCS deployment beyond the first wave of demonstration facilities. In the near term, IEA said governments should support regional and international consortiums that can develop and demonstrate CCS technologies through collaborative efforts

Clean Energy Ministerial

IEA released the report April 17 in New Delhi, aiming to prompt action during the annual Clean Energy Ministerial, a meeting of the energy ministers from 22 major countries that are collectively responsible for roughly fourth-fifths of global greenhouse gas emissions. During a presentation to delegates, IEA Executive Director Maria van der Hoeven warned that progress on clean energy technology development has largely “stalled.” “Despite much talk by world leaders, and despite a boom in renewable energy over the last decade, the average unit of energy produced today is basically as dirty as it was 20 years ago,” she said in her presentation of the report, which found that progress is lagging in nine of the 11 essential energy technologies IEA says must be developed in order to reach the 2 degree Celsius goal.

The report lists renewable energy technologies like solar photovoltaic and wind generation as one of the only areas on track to meet IEA’s 2020 objectives in terms of deployment and investment levels. IEA said it considers the current status of electric and hybrid-electric vehicles as another “bright spot” moving forward in “an otherwise bleak assessment of global progress towards low-carbon energy.” The report lists progress on biofuels, energy efficiency, CCS and nuclear as “alarmingly slow” looking forward to 2020. “As world temperatures creep higher due to ever-increasing emissions of greenhouse gases like carbon dioxide—two thirds of which come from the energy sector—the overall lack of progress should serve as a wake-up call,” van der Hoeven said. “We cannot afford another 20 years of listlessness. We need a rapid expansion in low-carbon energy technologies if we are to avoid a potentially catastrophic warming of the planet but we must also accelerate the shift away from dirtier fossil fuels.”

During her presentation, van der Hoeven said the lack of advances on key energy technologies is also further magnified by the expanded use of coal in power generation worldwide, especially in Europe and Southeast Asia, even as the U.S. has seen a historic shift away from the fuel source due to cheap shale gas in recent years. She said that coal has “far outpaced” the growth in generation from non-fossil energy sources for more than a decade, and increased by roughly 6 percent over the last two years.

CCS on Industrial Applications

The IEA placed special emphasis on the need to install carbon capture technology onto industrial applications worldwide through a special annex section released alongside the “Tracking Clean Energy Progress” report. That sub-report underscores what it says is the critical need to move forward on RD&D for industrial applications given that the sectors produce roughly one-fifth of the world’s CO2 emissions and that they can only hope to decarbonize through the deployment of CCS technology. “Such projects are of the utmost importance in the near term and should receive the greatest attention from both government and industry,” according to the report. “Today’s political and financial environment has been unsuccessful in driving sufficient private investment in research and development for CCS systems in these sectors, yet the technologies need to be available in the next decade in order to achieve deep reductions in greenhouse gas emissions.”

The report emphasizes that there are few demonstration projects on industrial sources currently in development and that the ones online are lop-sided, concentrating on natural gas processing and hydrogen production sectors, while there are currently no demonstrations in the highly-emitting iron and steel, cement, oil refining, biofuels and the pulp and paper sectors. IEA says in the report that governments should aim to commit public funding to about 10 pilot- and demonstration-scale projects to exhibit the technical and economic feasibility of large-scale CCS in those sectors. It also recommends that governments tailor funding programs to various stages of technical maturity—instead of emphasizing immediate emissions reductions, IEA recommends that demonstration programs ensure maximizing learning and knowledge sharing in areas where there are gaps. It says that governments should also be sensitive to competitiveness concerns in those sectors, especially when writing those energy and climate policies and that it should promote “synergies” with other power sector CCS projects to help reduce costs by sharing transport and storage infrastructure and knowledge.