Carbon capture and storage: There is no alternative

à‚ Jeff Chapman is the chief executive of the Carbon Capture & Storage Association, which is headquartered in London, UK. The 60 year old from Northallerton, North Yorkshire discusses the somewhat slow strategic, if not technical, progress of this burgeoning technology with Deputy Editor Tim Probert.à‚ 

Jeff Chapman, chief executive of the Carbon Capture & Storage Association (CCSA), based in the UK
PEi: How did you become chairman of the CCSA?

Chapman: I was seconded by the British government to what is now called UK Trade & Investment for six years to promote UK business arising from climate change. I focused on two areas: emissions trading and carbon capture and storage (CCS). We worked to help make London the centre of emissions trading by showing the expertise all around the world.

CCS was less mature than emissions trading, so we pulled together an industry group which met quarterly from 2001 to 2006. This led directly to the creation in 2006 of the CCSA, which started with 11 founder members and now has 82 members comprising participants from the oil & gas, coal, power, cement and steel industries, plus shipping lines, pipeline companies, air separation and other equipment manufacturers.

PEi: CCS is very expensive and unproven at a power plant level. Why bother?

Chapman: Because you can’t solve climate change without it. It is as simple as that. The climatologists say we need to stabilize the levels of carbon dioxide (CO2) in the atmosphere at 450 parts per million (ppm) in order to restrict the forecasted temperature rise to 2 oC. We are already at 386 ppm and rising at 2 ppm a year, so we only have 30 years until we reach that critical level unless we do something about it.

There is a huge amount of good faith in energy efficiency both at the point of generation and the point of use, but I have to say we have been talking along these lines for many, many years without achieving an awful lot. So my hunch is that we will need to implement even more CCS than is currently being predicted.

The IEA Roadmap to 2050 states there needs to be 3400 CCS plants by 2050 to achieve the necessary savings. At a billion dollars each that could be $3.4 trillion on top of the plants needed to be built to feed into them. That is a lot of money. But to look at it another way, at the margins, CCS reduces the cost of carbon abatement by around 70 per cent. CCS will save a huge amount of emissions because they are large plants.

PEi: But won’t this also require huge subsidy?

Chapman: Only in relation to the size of the project. The subsidy for CCS per tonne of CO2 or per kWh of electricity generated will be considerably less than for offshore wind farms and a whole host of other measures that governments are putting in place to reduce carbon emissions. It is very cost-effective.

PEi: Will CCS ever pay for itself without subsidy?

Chapman: No. Carbon-free electricity is intrinsically a value-added product, but we are not properly reflecting the environmental cost of emitting carbon. But if consumers pay more for carbon-free electricity they will be internalizing the cost of emitting carbon by avoiding it.

PEi: Are you happy with the current mechanisms in place to develop and implement CCS?

Chapman: From a technological point of view, everything is already in place. There’s a lot of optimization and integration to be done at a scale hitherto not seen. The commercial scale, 400 MW-plus power plant projects in the UK and elsewhere will achieve that.

But it’s been recognized for a long time that it is government policy which is the limiting factor to the commercial development of CCS and there are two elements to this. The first is regulation: putting in place the necessary regulations to store CO2. For example, the OSPAR Convention1 on dumping at sea has yet to be ratified and needs to be. The London Convention and Protocol2 prevents trans-boundary shipment of waste and this is particularly important if we want to take CO2 from mainland Europe into storage in the North Sea.

Vattenfall’s Schwarze Pumpe lignite fired power plant in eastern Germany is home to a 30 MW axfuel carbon capture unit

The European Union’s new Emissions Trading Scheme (EU ETS) Directive, which comes into force in 2013, covers CCS. This states that pipelines and storage sites are registered as separate entities, which means that they will have a permit to emit CO2. The capture plant will also have to be registered, but this likely to be integrated into the generating facility.

The second element is financial incentive. Although it’s a long, hard struggle to get regulations in place, it’s relatively easy to draw them up as it doesn’t cost anything. CCS is cost-effective but it does require a very substantial amount of public money to build. This is attracting a great deal of public scrutiny.

PEi: Is the EU ETS sufficient to incentivize the building of CCS plants?

Chapman: No. It is not sufficient. Let’s face it, the EU ETS can and does make a contribution to wind farms, but it does not support wind farms ” you have to find additional mechanisms like ROCs (Renewable Obligation Certificates) or feed-in tariffs, or the EU’s Economic Recovery Package and NER3003. The same applies to CCS.

In the UK, the CCS Levy, which was created in the Energy Act 2010 to support the building of four CCS demonstration projects, is a good move. The government has estimated that over the lifetime of CCS projects the levy would generate between à‚£11 billion”à‚£14 billion ($17.5 billion”$22.3 billion). This would cover not just the capital costs but also the operational costs.

The UK has created something different by creating a mechanism that recognizes the lifetime cost of projects. As far as I am aware, this is the only CCS mechanism in the world that does not recognize only the capital cost. Because of its variable cost nature, the CCS Levy could be rolled beyond the demonstration projects as a mechanism that would support the implementation of CCS across the industry. However, the levy does not cover industrial emissions and there still needs to be some discussion about the best ways to finance pipeline infrastructure.

The levy has been carefully constructed. Ofgem4, which will administer it, will assess the total amount of funds that are needed in any given year. This amount will then, essentially, be divided into the estimated kWh of power that will be generated in the UK as a whole, and the levy will be applied accordingly.

This amount stays reasonably stable year-on-year, but if it is wrong then it can be ‘netted’ off the following year. The levy is very promising indeed, but there isn’t yet a mechanism agreed to disperse the funds to the projects. There are ongoing discussions about ‘Contracts for Difference’, which may work if a little inefficiently. The power generating members of the CCSA would like to see a combination of a fixed annual payment plus a variable payment for the generation of carbon-free electricity.

PEi: The UK’s CCS competition seems like it has dragged on for years.

Chapman: Yes, the competition has been very frustrating to us all at the CCSA, including those who have been contenders, of which originally there were nine.

The government ruled out pre-combustion from the competition as it wanted to encourage retrofit applications to China, India and so on. But the government has not ruled out pre-combustion CCS plant from the further three projects that will get public funding. In fact, they’ll rule in
pre-combustion.

There are now two finalists: Scottish Power’s Longannet in Scotland and E.ON’s Kingsnorth in Kent but there will be only one winner. Longannet would be a 400 MW retrofit, whereas Kingsnorth would be a totally new coal fired power plant with a 400 MW post-combustion unit.

At present the Department of Energy & Climate Change is paying for both of those projects for a front end engineering design study to estimate the cost and benefits of each project.

PEi: Will the new coalition British government’s penchant for economic
belt-tightening damage the progress of CCS?

Chapman: Both the Conservatives and the Liberal Democrats have if anything been more supportive of CCS even than the previous Labour government, which was very supportive. The Conservatives would like to force CCS into existence by introducing an Emissions Performance Standard (EPS) for new fossil fuel power plants complemented by a financial support mechanism. The Liberal Democrats would also like to introduce an EPS but are silent about financial support.

The Conservatives’ idea for a national floor price for carbon is a very interesting proposition, but I have no idea how it is going to work. It sounds good, but how do you apply a national price to carbon in one country when it is part of the wider EU ETS market? Even if it could work, the price would still be insufficient to support CCS.

We are getting rather a plethora of different mechanisms supporting different technologies and one day the government will have to sit down and rationalize it. But if the UK is to fulfil its legal ambitions to reduce carbon emissions, then it will have to decarbonize its power sector by 2030. This requires all fossil fuel plant utilizing CCS.

PEi: Are there enough storage sites to hold all this CO2?

Chapman: We don’t have to prove that there’s hundreds of years worth of storage capacity. We only need to know that there are enough sites to be getting on with the job of storing CO2 for the foreseeable future.

National Grid is extremely active in the thinking of pipeline development for CCS in the UK. They want to charge power generators for transporting the CO2 from the plant to the North Sea oil and gas fields. There are ongoing discussions with National Grid and various organizations, as well as the government about how to finance a major pipeline for the Humberside region, which has the potential to collect 60 million tonnes of CO2 per year and could be used by Drax and Hatfield.

There is also potential for other CCS clusters at other eastern estuaries like the Thames, Tyneside, Teesside and the Firth of Forth and potentially Merseyside and Clydeside on the west coast, which could store in either the Irish or North Seas.

PEi: What about in Poland and Germany and other highly emitting regions?

Chapman: Whether it’s a saline formation or an oil/gas reservoir, CCS is storing carbon in sedimentary rock formations. There’s a huge saline formation that goes from the North Sea across Europe, and Poland has its share of it.

Most countries have sufficient access to suitable storage sites but some do not. Japan has mostly igneous formations that won’t store CO2 and it doesn’t have the wealth of storage sites as others do. However, I could see liquefied petroleum gas (LPG) being shipped from the Middle East to Japan and CO2 being shipped back again for storage.

LPG tankers, although not LNG tankers, can be reclassified for CO2. Maersk are involved with Fortum for the Meri-Pori project, which would take CO2 from Finland and inject it into an oil reservoir in the Danish sector. The shipping of CO2 could also be done from say Le Havre in France, where there is a CCS demonstration, to Rotterdam in the Netherlands for storage in the North Sea.

PEi: And in China and India? Chinese coal plants have been known to turn off flue gas desulphurization units to save coal throughput, so what hope is for them to utilize CCS?


Chapman: We have to find ways to incentivize them. It’s a huge problem. But China will probably have the first commercial scale CCS project in the world – the GreenGen 250 MW IGCC with CCS for enhanced oil recovery could be the one.

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1. The amendment of the OSPAR Convention paves the way for new types of large-scale CCS operations. OSPAR has set standards for a mechanism to minimize the risks associated with the storage of CO2. With these standards, the marine environment is effectively protected from CO2 that would have ended up in the oceans through emission from energy generation or industry, as well as from CO2 escaping geological formations where it will be stored.

2. The London Convention from 1972 is an international treaty that limits the discharge of wastes that are generated on land and disposed of at sea. On 2 November 2006 the contracting parties to the London Protocol adopted amendments to Annex 1 by adding CO2 streams from CO2 capture processes to this list. This means that a basis has been created in international environmental law to regulate storage of CO2 in sub-seabed geological formations.

3. NER300 is the nickname of a financing instrument which sets aside 300 million carbon allowances in the New Entrant Reserve ringfenced by the European Commission to support innovative CCS projects and renewable energy technologies.

4. Ofgem, the Office for Gas and Electricity Markets, is the regulator of the British electricity and gas sector.

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