|CCS testing helps win ongoing investment and builds a demand for the technology, argues Tore Amundsen
Winning European Union (EU) funding is rarely without its obstacles, even for a technology such as carbon capture and storage (CCS), which has the potential to transform fossil fuels into a low-carbon energy source.
However, CCS is too important for technology vendors to sit back and wait for policy to support it, the industry needs to take a proactive approach to improving the appeal of CCS, from the inside out.
The International Energy Agency (IEA) estimates that fossil fuels will account for 60 per cent of energy generation by 2030, making CCS a vital technology for decarbonising the world’s energy supply. The IEA and the EU indicate that a fifth of the carbon reduction target needed to curb a 2 oC rise in global temperatures by 2050 could come from CCS alone. But even though CCS is capable of reducing carbon dioxide (CO2) emissions from fossil fuel-fired power stations by as much as 90 per cent, providing the breathing space to transition supply to lower carbon sources, funding sources remain uncertain.
For example, at the end of 2012, the NER300 fund of €1.2 billion ($1.5 billion) originally set from the auctioning of carbon allowances under the emissions trading scheme (ETS) was instead allocated to renewable energy projects only.
This decision does not represent a policy shift from the European Commission (EC); Connie Hedegaard, European Commissioner for climate action, expects CCS plants to qualify for funding in the next round. Also, the EC has proposed to move beyond the ETS and introduce new mechanisms such as Emission Performance Standards or a CCS certificate system. It does highlight, however, that unless CCS technology advances, its perception as an ‘unproven’ technology, will continue to create further blockages for funding.
Energy companies have been capturing and transporting CO2 from large-scale facilities for decades; which has been utilised in enhanced oil recovery, as well as the production of carbonated drinks. But the fact remains that unlike other now mainstream low-carbon technology sectors, such as wind and solar, CCS technologies do not currently exist at commercial scale. Currently, carbon capture is costly; the Global Carbon Capture and Storage Institute estimates that each MWh supported by CCS costs energy generators an additional $50-100, as well as substantial capital costs for development.
Of course stimulation of a full-scale CCS market will to a large extent be sparked by an adequate carbon floor price being set à¢€” certainly President Obama’s recently announced aim “to roll back the spectre of global warming” has excited many of us about a move in this direction.
However, a carbon price alone will not bring about the necessary innovations in the energy and industrial sectors to achieve the necessary emission reductions. Moreover, even if, hopefully, when a carbon market is agreed, CCS will be still be competing against other low-carbon innovations for funding, such as wind and solar. In order for CCS technology to stand out in that competition, it must advance and prove its viability now.
Certainly the rewards are there for those countries and generators that invest, in terms of jobs created in this new industry. In the UK for example, research by the Carbon Trust found that CCS industrial development could contribute à‚£3-16 billion ($4.5-24 billion) to GDP cumulatively to 2050. Furthermore, as well as enabling generators to benefit from the rise in cheap unconventional energy, such as shale gas, CCS allows countries to simultaneously avoid penalties for missing legally-binding carbon targets. So, how can CCS advance to live up to its promise, whilst presenting itself as a viable technology that appeals to the short-to-medium term lens governments are permitted to exact on the low-carbon economy?
Technology testing is the vital route for verifying and demonstrating capture technology, which in turn can reduce costs, plus technical, environmental and financial risks, thereby creating the preconditions for CCS success. The UK Energy Research Council, which spent two years researching the means of establishing CCS as a mainstream technology, came to the same conclusion: A regulatory approach making CCS compulsory in all fossil plants will only work if the technology is more advanced. By bringing costs down and making the market viable, technologists provide a basis for global energy policy and investment.
To meet the need for testing, test centres have been developed on a major scale; allowing the safe simulation of carbon capture. CO2 Technology Centre Mongstad (TCM) is the most advanced of these, offering the ability to capture 100,000 tonnes of CO2 a year, from post-combustion oil, coal and gas-fired sources. Key CCS players, such as Alstom and Aker Solutions are successfully using the facilities to refine their capture process. Shell has also partnered with TCM; its billion-dollar Quest CCS project linked to oil sands production. This project, which received government financial support, used operational experience from the capture processes tested at TCM. Recently, other major technology brands have also signed up for the second phase of testing, including Hitachi, Mitsubishi and Siemens.
Collaboration is another key benefit of testing carbon capture technologies at scale. Recently, the world’s first international test centre network for carbon capture test facilities was launched, to share knowledge and accelerate the commercialisation of technology. The key aims of the network are to share technological developments, construction and operational experience, establish performance indicators, promote technology certification and standardisation. For the first time, a collaborative playing field has been established allowing technologists to advance technology innovation, secure public support for and develop awareness of CCS benefits.
What this activity shows is that the CCS industry must push forward the advancement of the technology. Government, industry and investors must work together to build the essential demonstration projects over the next few years. But first, government and investors have to believe there is a market for CCS. To secure confidence from the EU and other funding sources, it is up to technologists to demonstrate its commercial reality. While governments finalise incentives and competitions, CCS testing helps win ongoing investment, as well as build a demand for the technology, so that CCS-led regulations and policy making can have maximum impact. It is a difficult and at times thankless task for generators, but until governments align with enterprise on CCS, they must continue with RD&D to reduce cost and risk. Our experience and that of the generators that use the facilities at Mongstad is, ‘build it and investment will come.’
CCS trade boss delivers ultimatum
The UK could blow its chance to become a world leader in CCS according to a leading industry figure, writes Kelvin Ross.
|à‚||Dr. Jeff Chapman (pictured), chief executive of the Carbon Capture and Storage Association, said that “if we don’t get the policy over the line in the next month or two”, investor interest in CCS will evaporate. And he revealed his own association was already suffering a drop in membership. He said in the UK “we have allowed projects to wither on the vine” and now Britain’s chance to take a lead on CCS is “ours to lose”.|
Speaking at a recent conference in London, Dr. Chapman said CCS was “low-hanging fruit”.
“In the UK we are galvanised, we are ready for action. We have a range of projects under active development – we need to keep these projects alive and kicking.” He added with the right incentives, investors would throw their weight behind CCS and costs would come “tumbling down”, stressing “the single thing is incentive arrangements”.
Speakers at the conference agreed that the stumbling block to CCS getting to the demonstration stage and then into commercialisation was not one of engineering, as the technology was proven.
Professor Jim Watson, research director at the UK Energy Research Centre, said: “It’s about the other elements – regulation and financing – not just the technology. If we focus on the technology we may not get past tranche one.”
Tom Greatrex, a member of the UK government’s Energy Committee added: “If we want to reduce our emissions and keep a broad energy mix, then CCS is vital”.
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