Abby L. Harvey
GHG Monitor
9/19/2014
Mexico, though not on the hotlist of counties actively pursuing carbon capture utilization and storage, has taken significant first steps in recent years to develop a vast CCUS infrastructure in the county. The timeline that has been set forth by the country is aggressive with planning for two pilot programs to launch as early as 2016, according to a roadmap for CCUS technology published by the county’s Ministry of Energy (SENER) in March. However, with the country in the very early stages of deploying the technology and many technical questions remaining unanswered, such a timeline could be difficult to achieve, Dennis Best, analyst in the International Energy Agency’s CCS Technology Unit told GHG Monitor last week. “That does take some time, so 2016 we’re kind of right around there, a year-and-a-half. So that is a bit tight. How much they’ve done on the ground I guess will determine [if it’s feasible]. If they’re at the beginning stages of the process and just doing a lot of the technical work, it may be a challenge to get that deployed at that time,” Best said.
While Best remains uncertain about the feasibility of the roadmap timeline, Elizabeth Burton, General Manager for the Americas with the Global CCS Institute, notes that the country appears dedicated to the task. “Although the timeline is ambitious, the Government of Mexico has shown significant commitments to help advance regulatory and pilot activities through its capacity building efforts. The Global CCS Institute, World Bank and Asia-Pacific Economic Cooperation (APEC) have been supportive of these activities, and will continue their CCS/CCUS engagement with Mexico,” Burton told GHG Monitor in a written response this week. Members of government and private organizations involved in crafting the timeline, including SENER, Mexico’s Secretariat of Environment and Natural Resources and the Centro Mario Molina, declined to comment on current progress being made to meet the roadmap timeline.
EOR Pilot Planned First, Followed by Capture Pilot
According to SENER’s CCS roadmap, site selection for an EOR pilot program should begin in early 2015. The project would move into laboratory analysis and test design shortly thereafter and the pilot would be implemented before the end of that year. The second pilot project is a CO2 capture pilot from a power plant, either coal or natural gas fired. Should the country follow the timeline laid out in their roadmap, selection of a site for the pilot should be completed by the end of 2014, followed shortly by the selection of a technology to test at the project and feasibility and design studies. According to the roadmap, a tender would be posted mid-2015 and construction would begin by the end of that year with a goal of having the pilot operational by mid-2016. While this timeline is specific, very few additional details are provided about the future projects themselves. This lack of additional information makes it difficult to know if the country’s goals are reachable, Best said.
High-level discussions concerning the implementation of CCS have been ongoing since the technology was introduced in the National Climate Change Strategy developed in 2007. Those discussions, and various resulting publications, reveal several unique characteristics necessary for an implementation plan for the county. Unlike many other countries which have led the way in the development of CCS, Mexico’s power generation does not rely heavily on coal, making it likely that the country could excel in the deployment of the technology on natural gas-fired power plants and industrial sources of carbon emissions. The country also has a lower GDP than most countries working toward a large-scale deployment of CCS making the implementation of enhanced oil recovery a significant financial factor to successfully deploying CCS.
Financing May Prove Difficult, International Support Needed
According to the UN’s Deep Decarbonization Pathways Project, published in July, GHG emissions in Mexico are expected to increase as the country experiences continued economic growth. “Historically, GHG emissions in Mexico have been driven by increases in both population and in GDP per capita. Energy use per capita has increased as well, at an average rate of about 1 percent per year between 1995 and 2010,” the report says. However, while the country’s economy continues to grow, financing projects could prove difficult, a fact acknowledged in the roadmap. CCS projects to this point have proven to be multi-billion dollar endeavors, generally requiring a large government investment “CCUS technology requires significant capital investment resources, therefore the participation of the Ministry of Finance (SHCP) should be also considered. Moreover, collaboration among Government, private sector and research institutions should be encouraged and strengthen. There are international mechanisms responsible to support the climate change mitigation technologies as CCUS, where Mexico takes part; however, more international support will be required,” the roadmap says.
This need for additional investment may be a contributing factor to the government’s focus on EOR in developing a CCS framework, Best said. “I think this is why there’s been such a focus on the EOR component. If they actually have a project that can get a considerable amount of commercial benefit from the CO2 use for the enhanced oil or enhanced gas recovery, then the project economics are going to look just that much better,” he said.
At this time, Best said, there are few international funding options for Mexico, but progress could be made on that front in the near future. “Within the boarder of a climate finance sort of discussion, about two years ago … there was discussion of [Clean Development Mechanism] type funds or sort of a new renewed commitment for those types of activities. It’s really not clear right now how funding for CCS in a U.N.-style technology development fund would actually be manifested and I think that’s in process right now,” he said. “From my understanding, right now there is sort of a limit for the type of financing available through those, but things may develop to the point where there may be some funding on the horizon in six months or a year based on how those channels for financing through those UN based facilities eventually end up developing.”
Country Could Led on Natural Gas CCS
Coal accounts for only 13 percent of Mexico’s energy mix, according the Deep Decarbonization Pathways Project. Natural gas accounts for 50 percent. For this reason, Mexico stands to be at the forefront of CCS’s integration into the natural gas field. While it has not been determined if the proposed power sector pilot project will be on a coal or natural gas plant, CCS will eventually need to be installed on natural gas units in the future, Best said. “In the power sector applications that I’ve heard [Mexico is] looking for options. I think a gas power plant has been sort of floated. It really depends on the pricing for gas in that context and seeing how specific demonstration facilities might make financial sense,” Best said, “From the perspective of how the IEA sees CCS being deployed, if we look to 2025 time period, you need to start seeing more CCS deployed on gas fired power plants as well to meet a very ambitious two degree scenario and limiting [carbon to] 450 ppm in the atmosphere. I guess in the context of Mexico’s strategy that that needs to be considered.”
Installing CCS on a natural gas or industrial plant may also give the country more options to explore EOR, Best said, suggesting that perhaps “they’re just looking at where that potential CO2 emissions source is in conjunction with if they’re actually looking for an enhanced oil recovery project. Maybe they’re just saying, ‘Well if we actually want to move this forward, maybe the most feasible is actually looking at another type of industrial facility for that CO2 source that they are then using for a more commercial operation for EOR, which is slightly separate from the CCS specific discussion but it still may move the needle on certain types of understanding of the operation and technology.”
International Organizations Lending Guidance
Mexico is also currently working to develop a regulatory framework for CCUS. The World Bank posted a tender last month calling for consultants to explore the development of such a framework. The roadmap calls for a regulatory framework analysis to be completed by 2015. “Although leading countries have uncertainties about CCUS full implementation, some regulatory framework for CO2 management, sequestration methods and monitoring responsibilities have been developed. Mexico should make a diagnosis of all regulations to ensure the right use of the technology and define responsibilities between the stakeholders,” the document says.
The World Bank is only one of several international organizations working with Mexico to meet their ambitious goals, Burton told GHG Monitor. “APEC is supporting a capacity building program, run by the Global CCS Institute, which focuses on geologic storage opportunities. The World Bank has a tender out on Development of a Regulatory Framework for CCUS in Mexico and one that focuses on pilot project development. Additionally, the U.S. Department of Energy is engaged with Mexico on CCUS under its bilateral to support knowledge sharing and experiences from pilot project design and implementation,” Burton said.
