Abby L. Harvey
GHG Monitor
11/14/2014
While much attention in Europe has been paid to the technical and financial challenges associated with carbon capture, if investment doesn’t pick up into carbon storage research the full-scale deployment of CCS could be halted just as it begins to gain momentum, according to a new report published this week by the environmental group Bellona Europa. “The availability of CO2 storage is the linchpin of CCS deployment. A lack of storage capacity could render CO2 capture futile, and in the worst case could discourage investments in CCS projects. A CO2 storage industry that can match the scale of the oil and gas sector will therefore be necessary to enable the necessary scale of CCS deployment,” the report says.
In order for CO2 storage to be advanced to a point at which it could keep up with CO2 capture technology, investments must be made in the near future. “Annual investments in the range of €500 million need to begin by 2020, and increase rapidly into the 2020s, if we are to deliver the storage capacity required by the CCS projects operating in the 2030s and beyond,” the report says. “The first large scale investments in commercial storage should take place in 2019. This finding shows that what some consider early deployment is in fact timely deployment if we are to reach EU Energy Roadmap 2050 goals.” The report looks at two roadmap scenarios, the first, a “low nuclear” scenario, shows CCS accounting for 35 percent of gross power generation in the UE in 2050. The other scenario, results in CCS contributing only 7 percent of gross power generation.
The development of carbon storage sites is a very lengthy process, and as a result, work to prepare storage sites may have to begin even before there is a large demand for those sites, according to the report. “A functioning CO2 storage market needs to exist by 2019 in order to meet the CO2 injection and storage needs of the 2030s and 2040s,” the report says. If investments are not made the entire CCS chain in Europe would be held up, the report warns. “The lead times for the characterisation and development of CO2 storage capacity both on- and offshore is measured in years. This study has found that there is a critical need to have a functioning investment environment for CO2 storage operators from the end of this decade. This is the case under both reference scenarios and high capture rate scenarios,” the report says. “Even under a low capture scenario these investments are only delayed to the mid-2020s. It should be noted that such a delay would likely reduce the eventual CCS deployment in Europe – locking out a key low carbon technology.”
Injectivity Key Factor
The rate at which a well can inject CO2 will be a key factor in keeping costs down once a storage industry is in place, according to Bellona. “Lower injectivity could result in a doubling of the cost and scale of CO2 storage deployment. The role injection capacity plays in realising CCS is often underestimated. More effort is therefore needed to quantify the injectivity of prospective CO2 storage sites,” the report says. This becomes an even greater issue when considering offshore storage which already holds greater costs than onshore storage, according to the report. “Europe is fortunate in having a huge offshore CO2 storage resource. Costs are generally higher offshore than onshore as greater demands are placed on characterisation and drilling. As reduced injectivity increases the required injection wells, an offshore scenario will have an even greater effect on CO2 storage cost. Appropriate funding mechanisms for full-scale CCS as well as concrete investments in storage site development must therefore be a matter of policy priority,” the report says.
CO2 Storage Industry Could Rival Oil and Gas
While the CO2 storage industry in Europe is small at this point, due to a lack of demand, if CCS were to come to scale, the storage industry would rival the oil and gas industries, according to the report. “The scale of the CO2 storage industry has the potential to be comparable to the scale of current oil and gas activities. The need for wells, seismic, injection testing and expert human resources will rival and may even surpass that of oil and gas operations in many European countries,” the report says. “This raises the discussion of the rate of return for prospective CO2 storage operators. This is specially the case when considering a potential competition with the oil and gas industry for limited drill rigs and human resources. It is clear that a robust business case for CO2 storage, with long term security, must exist to attract human and financial capital. The time for putting in place a framework which can assure this is rapidly approaching.”
