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Strategic Analysis

of the Global Status of


Carbon Capture and Storage
Report 5: Synthesis Report

Final Report
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Strategic Analysis
of the Global Status of
Carbon Capture and Storage
Report 5: Synthesis Report
Strategic Analysis of the Global Status of Carbon Capture and Storage

Confidentiality

This report has been prepared by WorleyParsons Services Pty Ltd


(WorleyParsons) for the exclusive use of The Global CCS Institute. It is
subject to and issued in accordance with the agreement between The
Global CCS Institute and WorleyParsons. WorleyParsons does not
accept liability or responsibility whatsoever for it in respect of any use of or
reliance upon this report by any third party.

Copying this report without the permission of The Global CCS Institute or
WorleyParsons is not permitted.

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Synthesis Report

Preface
In May 2009 the Global CCS Institute commissioned a WorleyParsons led consortium comprising of
Schlumberger, Baker & McKenzie and the Electric Power Research Institute (EPRI) to undertake a
Strategic Analysis of the Global Status of Carbon Capture and Storage (CCS).

The Strategic Analysis of the Global Status of CCS consists of six reports to be completed by
September 2009. These are:

• an Early Report presenting a high level overview of the key issues and preliminary findings of
the study to inform the 2009 G8 Summit held in L'Aquila, Italy, between 8 to 10 July; and

• four foundation reports and a fifth synthesis report that covers:

− a comprehensive survey of all CCS projects being undertaken globally;

− a detailed analysis of the capture, transport and storage costs for power plants and a
select range of industrial applications. All costs used in this study are in US$ unless
otherwise specified;

− a detailed assessment of the status of policy supporting CCS development globally;

− a comprehensive list and analysis of existing Research and Development (R&D)


networks (government, academia, industry and institute) involved in CCS; and

− a comprehensive assessment of the gaps and barriers to the global deployment of large
scale CCS projects.

This is Report Five (the Synthesis Report). It summarises the four foundation reports, presents a gaps
and challenges assessment, risk analysis and CCS project analysis, as well as providing mitigation
strategies and recommendations to the Global CCS Institute.

This task has been assisted by the engagement of an expert panel with global experience in CCS
technologies.

Commercial-in-confidence data provided by some project proponents were not disclosed in this or the
four foundation reports.

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Acknowledgements
The Strategic Analysis of the Global Status of Carbon Capture and Storage was undertaken by a
WorleyParsons led consortium of Schlumberger, Baker & McKenzie and the Electric Power Research
Institute (EPRI).

The project was sponsored by Peter Brooks (WorleyParsons) and the Project Manager was Chai
McConnell (WorleyParsons).

WorleyParsons would like to acknowledge the Global CCS Institute for funding this study and
particularly the efforts of Andrew Roden (Project Manager).

WorleyParsons would like to particularly acknowledge the CCS stakeholders who provided their time
and information, without which this study could not have been undertaken.

This synthesis report was edited by Chai McConnell, Philip Toohey and Mitchell Thompson
(WorleyParsons) with content supplied by Faust Denis D’Ambrosi and James Simpson
(WorleyParsons), Andrew Beatty (Baker & McKenzie) and Jose Marasigan (EPRI).

The report’s expert panel consisted of Chris Higman, Paul Hardisty, Doug Carter and Geoff Ingram.
It was peer reviewed by Kelly Thambimuthu, Neville Holt, Michael DeLallo, Peta Ashworth and
Peter Hanley.

WorleyParsons gratefully acknowledge the contributions of Macquarie Capital Advisers for their
analysis on financing CCS, in particular Sally Aitken.

The authors would also like to acknowledge the CO2CRC for providing additional graphic
support for the report. Further invaluable contributions were made by Norma Kuehn, Yukiyo Matsuda,
Ashley Newman, Haruo Kikkawa and Anthony Holt (WorleyParsons).

Strategic Analysis of the Global Status of Carbon Capture and Storage


Report 5: Synthesis Report
Final Report © 2009 Global CCS Institute.

For general enquires about this or any of the foundation reports, please contact
the Global CCS Institute, GPO Box 828, Canberra ACT 2601 Australia
or email info@globalccsinstitute.com

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Synthesis Report

Contents
Preface ........................................................................................................................................... iii

Acknowledgements ........................................................................................................................... iv

Abbreviations......................................................................................................................................1

1. Executive summary.............................................................................................................5

1.1 CCS and climate change ....................................................................................................5

1.2 G8 objective ........................................................................................................................6

1.3 How have CCS projects been analysed? ...........................................................................7

1.4 CCS project development ................................................................................................ 24

1.5 Cost of CCS ..................................................................................................................... 26

1.6 Government policy and regulations ................................................................................. 30

1.7 CCS research and development...................................................................................... 32

1.8 CCS business case.......................................................................................................... 34

1.9 So, where do we stand? .................................................................................................. 36

1.10 Study recommendations.............................................................................................. 38

2. Introduction ...................................................................................................................... 43

2.1 Background ...................................................................................................................... 43

2.2 Carbon capture and storage in context............................................................................ 44

2.3 Potential economic benefits of CCS ................................................................................ 46

2.4 Overview of CCS technologies ........................................................................................ 47

3. Overview of the first foundation report............................................................................. 55

3.1 Introduction ...................................................................................................................... 55

3.2 Background ...................................................................................................................... 55

3.3 Limitations and exclusions ............................................................................................... 55

3.4 Project analysis process .................................................................................................. 56

3.5 Project status and trends ................................................................................................. 60

3.6 Challenges to deployment ............................................................................................... 75

3.7 Conclusion ....................................................................................................................... 79

4. Overview of the second foundation report ....................................................................... 81

4.1 Introduction ...................................................................................................................... 81

4.2 Limitations ........................................................................................................................ 81

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Strategic Analysis of the Global Status of Carbon Capture and Storage

4.3 Overview of the economic assessment methodology...................................................... 81

4.4 Description of metrics....................................................................................................... 86

4.5 Cost of CO2 avoided......................................................................................................... 88

4.6 Cost of CO2 captured ....................................................................................................... 89

4.7 Cost of CO2 transport ....................................................................................................... 90

4.8 Cost of CO2 storage ......................................................................................................... 90

4.9 Results of the economic assessment of CCS technologies............................................. 93

4.10 Overview of other key findings .................................................................................... 97

5. Overview of the third foundation report .......................................................................... 105

5.1 Introduction..................................................................................................................... 105

5.2 Qualifications.................................................................................................................. 105

5.3 Laws promoting and facilitating CCS ............................................................................. 114

5.4 International legal framework ......................................................................................... 124

5.5 United Nations Framework Convention on Climate Change ......................................... 124

5.6 Issues associated with CCS offshore............................................................................. 126

5.7 Onshore and offshore cross-border transportation and storage.................................... 129

5.8 Onshore and offshore general liability............................................................................ 130

5.9 Conclusions.................................................................................................................... 130

6. Overview of the fourth foundation report........................................................................ 133

6.1 Introduction..................................................................................................................... 133

6.2 Limitations ...................................................................................................................... 134

6.3 The technology development process ........................................................................... 134

6.4 The Global CCS Institute CCS R&D network database................................................. 137

6.5 Monitoring CCS R&D progress ...................................................................................... 145

6.6 Aggressive development schedule ................................................................................ 149

6.7 R&D gaps ....................................................................................................................... 150

6.8 Conclusions.................................................................................................................... 162

7. Gaps and barriers to CCS deployment .......................................................................... 163

7.1 Introduction..................................................................................................................... 163

7.2 Background .................................................................................................................... 164

7.3 Projects .......................................................................................................................... 171

7.4 Technology..................................................................................................................... 175

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7.5 The economics of CCS .................................................................................................. 178

7.6 Policies and regulation................................................................................................... 187

7.7 Public acceptance.......................................................................................................... 190

7.8 Time ............................................................................................................................... 194

7.9 Going forward................................................................................................................. 194

8. Conclusion ..................................................................................................................... 195

9. References..................................................................................................................... 197

Appendices
Appendix A – Active or planned, commercial scale, integrated CCS projects by region and asset
lifecycle stage

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Strategic Analysis of the Global Status of Carbon Capture and Storage

List of figures
Figure 1-1 Contribution of technology segments to reduce CO2 emissions by 50 percent
by 2050................................................................................................................................ 5

Figure 1-2 The asset lifecycle model.................................................................................................... 7

Figure 1-3 Status of CCS projects........................................................................................................ 8

Figure 1-4 Active or planned, commercial scale, integrated CCS projects by capture
facility, storage type and region ........................................................................................ 12

Figure 1-5 Active or planned, commercial scale, integrated CCS projects by region and
asset lifecycle stage .......................................................................................................... 23

Figure 1-6 Number of organisations per region and type of R&D coverage performed..................... 33

Figure 2-1 Document map for the Synthesis Report .......................................................................... 44

Figure 2-2 Contribution of technology segments to reduce CO2 emissions by 50 percent


by 2050.............................................................................................................................. 45

Figure 2-3 A simplified schematic of CO2 capture approaches.......................................................... 48

Figure 2-4 Geological storage options for CO2................................................................................... 52

Figure 3-1 The asset lifecycle model.................................................................................................. 59

Figure 3-2 Hierarchy of analysis......................................................................................................... 61

Figure 3-3 Total projects by geographic region.................................................................................. 62

Figure 3-4 Total projects by status ..................................................................................................... 63

Figure 3-5 Breakdown of active or planned CCS projects by scale ................................................... 64

Figure 3-6 Active or planned CCS projects by type ........................................................................... 65

Figure 3-7 Active or planned CCS projects by storage type .............................................................. 66

Figure 3-8 Active or planned CCS projects by facility ........................................................................ 68

Figure 3-9 CCS project types for active or planned, commercial scale projects................................ 70

Figure 3-10 Active or planned, commercial scale, integrated CCS projects by capture
facility, storage type and region ........................................................................................ 72

Figure 3-11 Number of active or planned, commercial scale, integrated CCS projects by
region and stage in asset lifecycle .................................................................................... 73

Figure 3-12 Cancelled or delayed projects by facility........................................................................... 75

Figure 3-13 Hypothetical failure scenarios for 55 integrated, commercial scale, CCS
projects currently not operating......................................................................................... 79

Figure 4-1 Flowchart of methodology for CCS economic assessments ............................................ 82

Figure 4-2 Illustration of CO2 avoided for a hypothetical power generation plant .............................. 89

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Synthesis Report

Figure 4-3 Conceptual site(s) exploration and appraisal study schedule ...........................................92

Figure 4-4 Comparison of LCOE with CCS for reference facilities in the USA Gulf Coast.................97

Figure 4-5 Transportation cost savings resulting from increasing pipeline flow .................................98

Figure 4-6 Dependence of CO2 storage costs on initial site characterisation and
identification costs..............................................................................................................99

Figure 4-7 Installed generation and capture equipment costs as a function of location ...................100

Figure 4-8 LCOE including CCS as a function of location ................................................................100

Figure 4-9 CO2 credit value breakpoint for generation and capture technologies ............................101

Figure 5-1 The CCS project cycle .....................................................................................................106

Figure 6-1 TRL summary of technologies and sectors analysed......................................................137

Figure 6-2 Number of organisations per region and type of R&D coverage performed ...................138

Figure 6-3 Number of organisations researching and developing CCS technologies ......................140

Figure 6-4 Timescale for a capture process development................................................................150

Figure 6-5 Battelle's cost estimates for the capture and compression of CO2 from
various sources................................................................................................................157

Figure 6-6 Net cost of employing CCS in the USA based on current technologies and
sources ............................................................................................................................157

Figure 7-1 Risk matrix .......................................................................................................................164

Figure 7-2 Likely deployment path of commercial scale, integrated CCS projects by
facility ...............................................................................................................................174

Figure 7-3 Comparison of equipment and labour cost indexes ........................................................180

Figure 7-4 Expectation of impact of GFC on funding sources for renewable energy
projects in the next few years ..........................................................................................184

Figure 7-5 Expectation of impact of GFC on funding sources for renewable energy
projects ............................................................................................................................185

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Strategic Analysis of the Global Status of Carbon Capture and Storage

List of tables
Table 1-1 Active or planned, commercial scale, integrated projects at the Identify stage ................ 13

Table 1-2 Active or planned, commercial scale, integrated projects at the Evaluate
stage.................................................................................................................................. 16

Table 1-3 Active or planned, commercial scale, integrated projects at the Define stage ................. 19

Table 1-4 Active or planned, commercial scale, integrated projects at the Execute
stage.................................................................................................................................. 21

Table 1-5 Active or planned, commercial scale, integrated projects at the Operate
stage.................................................................................................................................. 22

Table 3-1 Definition of project scale for CCS .................................................................................... 59

Table 3-2 Active or planned CCS projects by capture type .............................................................. 66

Table 3-3 Active or planned, commercial scale CCS projects in developing countries .................... 69

Table 3-4 Asset lifecycle stage of active or planned, commercial scale CCS projects..................... 71

Table 3-5 Asset lifecycle stage for commercial scale, integrated projects by storage
type.................................................................................................................................... 74

Table 4-1 Units for levelised production costs for select industries .................................................. 87

Table 4-2 Summary results of the economic assessment of CCS technologies .............................. 94

Table 6-1 The nine Technical Readiness Levels (TRLs) ................................................................ 136

Table 6-2 Select existing and planned CO2 storage projects as of early 2009 .............................. 144

Table 6-3 CCS application matrix.................................................................................................... 147

Table 6-4 Storage matrix................................................................................................................. 149

Table 7-1 Risk matrix likelihood category........................................................................................ 165

Table 7-2 Risk matrix consequences .............................................................................................. 166

Table 7-3 Extreme risks identified in risk assessment process ...................................................... 167

Table A-1 Active or planned, commercial scale, integrated projects at the Identify stage .............. 203

Table A-2 Active or planned, commercial scale, integrated projects at the Evaluate
stage................................................................................................................................ 206

Table A-3 Active or planned, commercial scale, integrated projects at the Define stage ............... 209

Table A-4 Active or planned, commercial scale, integrated projects at the Execute
stage................................................................................................................................ 211

Table A-5 Active or planned, commercial scale, integrated projects at the Operate
stage................................................................................................................................ 212

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Abbreviations
ACES Act The American Clean Energy and Security Act (2009)
ACTL Alberta Carbon Trunk Line
ADM Archer Daniels Midland
ANZ Australia and New Zealand
APP Asia-Pacific Partnership on Clean Development and
Climate
Ar Argon
ASU air separation unit
CAPEX capital expenditure
CCP CO2 Capture Project
CCR carbon capture ready
CCS carbon (carbon dioxide) capture and storage
CDM Clean Development Mechanism (established under
Article 12 of the Kyoto Protocol)
CO carbon monoxide
CO2 carbon dioxide
CO2CRC Cooperative Research Centre for Greenhouse Gas
Technologies
COE cost of electricity
CPRS Australian government's proposed Carbon Pollution
Reduction Scheme
CPRS Bill Carbon Pollution Reduction Scheme Bill 2009 (Cth)
CSLF Carbon Sequestration Leadership Forum
CURC Coal Utilisation Research Council
CW cooling water
DNV Det Norske Veritas
DOE United States Department of Energy
DOE-NETL (US) Department of Energy – National Energy
Technology Laboratory
EC European Community
ECBM enhanced coal bed methane
EEZ exclusive economic zone
EGR enhanced gas recovery
EIS environmental impact study
EOR enhanced oil recovery
EPA United States Environmental Protection Agency
EPBC Act The Australian government's Environmental Protection
and Biodiversity Conservation Act 1997 (Cth)
EPRI Electric Power Research Institute

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Strategic Analysis of the Global Status of Carbon Capture and Storage

EU European Union
EU ETS European Union Emissions Trading Scheme
EU ETS Directive EC Directive 2003/87/EC
EUA European Union Allowance
FGD flue gas desulphurisation
FOAK first of a kind
G8 Group of Eight
GDP gross domestic product
GEE GE Energy
GFC global financial crisis
GHG greenhouse gas
Global CCS Institute Global Carbon Capture and Storage Institute
GT gas turbine
Gtpa giga (109) tonnes per annum
GW gigawatts
H2S hydrogen sulphide
Hz hertz
IEA International Energy Agency
IEA GHG IEA Greenhouse Gas R&D Program
IGCC integrated gasification combined cycle
IISD International Institute for Sustainable Development
IMO International Maritime Organisation
IOGCC Interstate Oil and Gas Compact Commission
IPCC Intergovernmental Panel on Climate Change
ISEEE Institute for Sustainable Energy, Environment and
Economy
ITM ion transport membrane
JI Joint Implementation (established under Article 6 of
the Kyoto Protocol)
JV joint venture
kg kilogram
km kilometre
kW kilowatt
LCOE levelised cost of electricity
London Convention Convention on the Prevention of Marine Pollution by
Dumping of Wastes and Other Matter, opened for
signature 29 December 1972, 1046 UNTS 138
(entered into force 30 August 1975) and 1996 Protocol
Thereto
London Protocol 1996 Protocol to the London Convention
LPG liquefied petroleum gas

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m3 cubic metres
Marine Pollution Act Act Pertaining to the Prevention of Marine Pollution
and Maritime Disaster, 1970, Law No.49 of 1970
(kaiyō osen oyobi kaijyō saigai no bōshi ni kansuru
hōritsu)
Masdar Abu Dhabi Future Energy Company
MIT Massachusetts Institute of Technology
MMV measurement, monitoring and verification
Mtpa million tonnes per annum
MW megawatt
MWe megawatt electrical
MWh megawatt hour
N2 nitrogen
NA not applicable
NEPA US National Environmental Policy Act
NETS Norwegian Emissions Trading Scheme
NGCC natural gas-fired combined cycle
NGO non-government organisation
NH3 ammonia
NOAK nth of a kind
NOx nitrogen oxides
O2 oxygen
ºC degrees Celsius
OECD Organisation for Economic Cooperation and
Development
OEM original equipment manufacturer
OPEX operating expense
OSPAR Convention The Convention for the Protection of the Marine
Environment of the North-East Atlantic

PC, pc pulverised coal


PCC post combustion capture
ppm parts per million
PPP public private partnership
PRCI Pipeline Research Council International
R&D research and development
RAMSAR wetlands Wetlands listed in the RAMSAR Convention on
wetlands of international importance especially as
waterfowl habitat, opened for signature 2 February
1971, 996 UNTS 245 (entered into force 21 February
1975)
RD&D research, development and demonstration

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RGGI Regional Greenhouse Gas Initiative


RSA Republic of South Africa
SACROC Scurry Area Canyon Reef Operators Committee
SCR selective catalytic reduction (for NOx control)
3
sm standard cubic meters
SNG synthetic natural gas
SO2 sulphur dioxide
Syngas synthetic gas
tpd tonnes per day
tph tonnes per hour
TBD, tbd to be determined
The Australian The Australian Federal Government
government
The Australian Offshore Petroleum and Greenhouse Gas Storage Act
government's GGS 2008 (Cth)
Act
ton short ton, (2,000 lb)
tonne metric ton, (1,000 kg or 2,205 lb)
tpa tonnes per annum
TRL technical readiness level
UAE United Arab Emirates
UK United Kingdom
ULCOS Ultra-Low CO2 Steelmaking
UNCLOS United Nations Convention on the Law of the Sea
UNFCCC United Nations Framework Convention on Climate
Change, opened for signature 9 May 1992, 1771
UNTS 107 (entered into force 21 March 1994)
USA United States of America
US DOE United States Department of Energy
US EPA United States Environmental Protection Agency
WRI World Resources Institute
WRI Guidelines Guidelines for Carbon Dioxide Capture, Transport and
Storage, World Resources Institute, October 2008

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1. Executive summary
The Global CCS Institute was established as a key organisation charged
with the responsibility of accelerating the deployment of carbon capture and
storage (CCS) technology. In so doing it would work with other leading
organisations to achieve the Group of Eight (G8) objective of launching 20
large-scale CCS demonstration projects by 2010, taking into account varying
national circumstances, with a view to beginning broad deployment of CCS
by 2020.

1.1 CCS and climate change

1.1.1 What is CCS?


The set of technologies that encompasses CCS include those that capture,
transport and safely store anthropogenic carbon dioxide (CO2) deep
underground.

1.1.2 Is CCS optional to mitigate CO 2 emissions to


atmosphere to avoid dangerous climate
change?
No. Development and deployment of CCS must occur to reduce CO2
emissions to the atmosphere as part of a portfolio of solutions to combat
Development
climate change. As estimated by the International Energy Agency (IEA,
and deployment
2008) a variety of technologies and actions will be required to reduce of CCS must
anthropogenic CO2 emissions by 50 percent by 2050, including CCS. The occur to avoid
estimated contribution of various CO2 reduction methods is shown in Figure dangerous
climate change
1-1. Approximately 19 percent of emissions reductions could be contributed
by CCS.
Figure 1-1 Contribution of technology segments to reduce CO2 emissions by
50 percent by 2050

70 CCS industry
and transformation 9%
Baseline Emissions 62 Gt
60 CCS power generation 10%
CO2 emissions (Gt CO2/yr)

Nuclear 6%
50
Renewables 21%
Power generation efficiency
40 and fuel switching 7%
End-use fuel switching 11%
30
End-use electricity
efficiency 12%
20
End-use fuel
BLUE Map Emissions 14 Gt efficiency 24%
10
WEO2007 450 ppm case ETP2009 BLUE Map scenario
0
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Source: IEA Energy Technology Perspective, 2008

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Strategic Analysis of the Global Status of Carbon Capture and Storage

1.2 G8 objective

1.2.1 What does the G8 objective imply?

The G8 At the 2008 G8 Hokkaido Toyako Summit in Japan, the G8 committed to


objective is to supporting the recommendations of the IEA and the Carbon Sequestration
launch 20 large Leadership Forum (CSLF) to launch 20 large scale CCS demonstration
scale CCS
demonstration
projects globally by 2010, taking into account varying national
projects globally circumstances. The purpose of this commitment is to support technology
by 2010, taking development and cost reduction to enable the broad deployment of CCS by
into account
2020 (Group of Eight 2008).
varying national
circumstances,
This study refers to these types of CCS projects as commercial scale,
with a view to
beginning broad integrated projects which are defined as:
deployment of
CCS by 2020 • projects storing or proposing to store 1 Mtpa or greater of CO2 using
the metric suggested by the G8, IEA and CSLF (2007);

• CCS projects that are integrated, that is, combines the CO2 capture,
transport and storage technologies;

• considering any carbon capture technologies (pre-combustion, post-


combustion and oxy-fuel), transport and storage technologies;

• applying CCS to large stationary sources of CO2 emissions to


atmosphere including fossil-fuel power generation, cement, iron and
steel, aluminium and chemical production; and

• projects deployed across multiple geographic regions around the


world.

1.2.2 Can the G8 objective be achieved?

Arguably,
Arguably, yes. The decarbonisation of society in order to avoid dangerous
the G8 objective climate change will require an energy revolution. While the G8 objective is
can be met ambitious, the technologies are available today and have been
demonstrated in industries such as natural gas processing although they
have not been integrated at commercial scale for fossil-fuelled power
generation.

Proponents of CCS projects will face significant challenges, but the G8


objective can be achieved through a three point plan involving:

1. governments committing to support CCS projects through direct


funding, introducing market based pricing mechanisms to assign a
value to carbon, taking on long-term storage liability and
underwriting the establishment of critical infrastructure;

2. all CCS stakeholders educating the broader public that the


technology must be deployed as part of a portfolio of climate change
mitigation responses if the world is to avoid dangerous climate
change;

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Synthesis Report

3. all nations, developed and developing, adopting CCS as part of their


greenhouse gas (GHG) emissions reduction strategies where
Comprehensive,
practicable. coordinated and
disciplined
To achieve this ambitious goal, comprehensive, coordinated and disciplined leadership
leadership involving governments, industry and the community at national involving
and international levels will need to be demonstrated. Given the magnitude governments,
industry and the
of the challenge all CCS stakeholders will need resolve and stamina if the community, will
G8 objective is to be achieved. be needed

1.3 How have CCS projects been analysed?

1.3.1 What is the asset lifecycle model?


The projects were categorised and analysed using a number of different
metrics and classifications to undertake empirical analysis. One of these
classifications was the asset lifecycle model, which is used by
WorleyParsons to delineate between the stages of a project’s development
and operation (Figure 1-2). This articulates a staged approach with a series
of “go/no-go” decision gates at various levels of design definition, cost
estimating, execution planning and risk analysis. This is intended to assist

10-15
project developers in reducing technical and commercial uncertainty, and to
allow them to make informed investment decisions at each decision gate.
percent of a
The key issue for CCS stakeholders is that from a project development project’s total
perspective, industry experience suggests that approximately 10 to 15 installed cost
could be spent
percent of a project’s total installed cost is likely to be incurred to progress
to achieve
from the Identify to the Define stages prior to sanction. This means completion of
significant funding is required to develop the business case of CCS projects. the Define stage

Figure 1-2 The asset lifecycle model

Project Phase

Establish preliminary Establish development Finalise scope and Detail and Operate, maintain
Developer’s Goals scope and business options and execution execution plan construct asset and improve asset
strategy strategy
Select concept Sanction Start-up
• Scoping and • Pre-feasibility studies • Feasibility studies • Detailed Engineering
screening studies • Conceptual design • Preliminary • Engineering,
• Business model • Cost estimating Engineering (FEED) Procurement and
Activities development • Cost estimating Construction
• Contract planning
Management (EPCM)
• Execution planning
• Project Management
Contracting (PCM)

Source: WorleyParsons, 2009

1.3.2 How has the status of CCS projects been


determined?
The status of CCS projects has been grouped into the following categories.

• Planned projects are in the Identify, Evaluate or Define stage.

• Active projects are in the Execute or Operate stage after having been
sanctioned.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• Delayed projects are those that have had activities postponed and, for
all intents and purposes, stalled.

• Cancelled projects are those that have ceased activities prior to


fulfilling their intent and have no intention of resuming.

• Completed projects are those that have fulfilled their original intent
and have ceased operation and/or demobilised.

1.3.3 What is the status of CCS projects?


The Global CCS Institute projects database currently contains 499 CCS
activities. The information provided in the database is categorised according
to key parameters of:

• project facility;

• region;

• capture, transport and storage technologies;

• scale;

• asset lifecycle; and

• status.

275
projects were
When activities that were primarily research based were removed from the
data set, 275 CCS projects remained, the breakdown of which is shown in
identified Figure 1-3.
Figure 1-3 Status of CCS projects

Total - 275 Active or planned - 213

Completed - 34 Commercial scale - 101

Cancelled or delayed - 26
Integrated - 62

Input withheld - 2

62
active or
The 213 active or planned projects were then examined further by their scale
and CCS project type. Of the 213 active or planned projects, 101 are of
commercial scale. Of these, 62 projects are considered as integrated that is,
planned,
commercial they demonstrate the entire CCS process chain of CO2 capture, transport
scale, integrated and storage. Seven of these are already in operation. This leaves potentially
CCS projects 55 projects that could be candidates for the G8 objective.

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The largest number of active or planned CCS projects is in the Evaluate


phase. In the Identify, Evaluate and Define stages, there are collectively 135
projects, representing 63 percent of all active or planned CCS projects. This
shows a dynamic level of activity and a significant pipeline of potential CCS
projects being investigated.

1.3.4 What is a commercial scale, integrated CCS


project?
As stated previously, given that storage underpins the entire CCS chain, the Commercial
scale CCS
metric suggested by the G8/IEA/CSLF of commercial scale CCS projects projects store
storing 1 Mtpa or greater of CO2 was applied. Of the 213 active or planned, greater than
CCS projects, 101 of these (47 percent) are considered commercial scale. 1 Mtpa of CO2

An integrated project is where the capture, transport and storage


components are undertaken by a single project owner or operator with the
view to developing and deploying a full source-to-sink CCS solution.

Projects that have a CO2 capture, transport or storage component and are
integrated with other components being undertaken by a separate entity
have been classified as “dependent” integrated CCS projects. Proponents
managing a dependent project face additional risks to achieving execution of
their project including technical and commercial interfaces between separate
proponents.

Development of these “dependent” integrated projects will be contingent on


the cooperation of all parties before a project can be sanctioned. This
introduces significantly greater risk to the project’s likelihood of progressing
to operation, relative to projects that are “stand alone”. However, this type of
business model has been successfully applied in enhanced oil recovery
(EOR) for decades. This business case also seems sensible in that it
distributes specific risks to proponents whose core business may position
them better to manage those risks.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

1.3.5 Are there enough projects under development


to achieve the G8 objective?
In order to meet Not at this stage. In order to meet the G8 objective CCS projects need to be
the G8 objective
CCS projects identified now or in the next few years. Excluding the operational projects,
need to be the 55 active or planned, commercial scale, integrated projects have
identified now nominated start dates for operation ranging from 2009 to 2020. If all of
or in the next
these projects were to progress through to the Operate stage, they would
few years
meet the G8 objective.

However, for a project to become fully developed it invariably moves through


a lifecycle from the Identify stage through to the Operate stage. This
process is designed to eliminate projects that are technically or commercially
flawed and to ensure investment is focussed on projects with the highest
likelihood of success.

In nascent industries, such as CCS or renewable energy, the project failure


rate is comparatively high. The number and magnitude of “unknown
unknowns” in project development within nascent industries such as
renewable energy and CCS significantly influences the failure and
analogously, project success rate.

Failure rates of It is impossible to predict with confidence how many of these 55 projects will
CCS projects are become operational. If CCS project failure rates are comparable to those
likely to be high
at this stage
observed for renewable energy projects, then hypothetically, perhaps
between 11 and 26 of the 55 projects will proceed to operation. The G8
objective will not be achieved if the lower end of the hypothetical scenario
prevails.

Furthermore, the significant number of commercial scale, integrated CCS


projects in Europe that are aiming to be operational by 2015 are potentially
influenced by the funding mechanisms in place. In particular, the allocation
of 300 million European emission allowances (EUAs) by 2014 could be
causing rent seeking behaviour. The economic viability of these, and indeed
other commercial scale, integrated projects needs further consideration on a
case-by-case basis.

The analysis suggests that in order to mitigate this risk of project failure to
A greater
number of meeting the 2010 objective, a greater number of candidate projects must be
candidate identified by 2010 to supply a sufficient pipeline of potential CCS projects.
projects must be The number of potential CCS projects could also include those projects that
identified by
2010 to mitigate are not currently integrated but have the potential to be integrated with other
the risk of failure CCS projects undertaken by separate entities.

Page 10
Synthesis Report

1.3.6 What are the key characteristics of the active


or planned, commercial scale, integrated CCS
projects?
As stated previously, there are 62 active or planned, commercial scale,
integrated CCS projects that are storing, or planning to store 1 Mtpa of CO2
or greater. As stated above, of these, seven projects are already in
operation.

These are presented by their geographic location in Figure 1-4 and


described further from Table 1-1 through Table 1-5. Figure 1-5 shows the
distribution of this subset of projects by region, as well as their position in the
asset lifecycle.

The notations, units and acronyms used within the following tables are
summarised below.

• Dependent (D) – Projects that are capture, transport or storage related


in the database but are integrated with secondary capture, transport
or storage projects to form an integrated CCS system.

• Separate (S) – In the database, these are listed as two separate


projects.

• CFB – Circulating Fluidised Bed.

• SNG – Synthetic Natural Gas.

• NG – Natural Gas.

• LNG – Liquefied Natural Gas.

• PFBC – Pressurised Fluidised Bed Combustion.

• Mt – million tonnes.

Page 11
Figure 1-4 Active or planned, commercial scale, integrated CCS projects by capture facility, storage type and region

20 59 51
47 Refer to
55 54 inset
35 53 40
56 61
42 1 25
49 50 36
22
52 41
24 15
58 39
60
38
43

Inset of Europe Area 62

21
16
2
3 33
45 57 23

Page 12
44 29
34 10
26 17 46
27 9 8
19 7 28
6
48
Strategic Analysis of the Global Status of Carbon Capture and Storage

41 4 13
31 37 30
32
12 5
11 14

18

LEGEND

Storage Type Capture Facility


Geological Power generation Oil refining

Beneficial reuse Natural gas processing Fertiliser production and oil refining

Geological and/or beneficial reuse Coal to liquids Various

To be determined (TBD) or undisclosed Coal gasification


Table 1-1 Active or planned, commercial scale, integrated projects at the Identify stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

200 MW
AEP Northeastern CO2 slipstream from
1 Oklahoma, USA 2011 Post-combustion Pipeline Beneficial reuse (EOR) 1.5 Mtpa
Capture Project (D) 450 MW coal fired
power plant

4x100 MW PFBC
TBD / not
2 Sargas Husnes (D) Hordaland, Norway 2012 coal fired power Post-combustion Beneficial reuse (EOR) 2.6 Mtpa
specified
plant

420 MW Natural
Geological
3 Karsto Rogaland, Norway 2012 gas fired power Post combustion Pipeline 1.0 Mtpa
(saline aquifer)
plant

450 MW Hard
Beneficial reuse (EGR)
Rotterdam, coal / biomass /
4 Rotterdam CGEN (D) 2014 Pre-combustion Pipeline / Ship or geological (depleted 2.5 Mtpa
Netherlands gas hydrogen
oil/gas field)
power plant

Page 13
5 Lassie (D) Victoria, Australia 2015 Various Various Pipeline Geological >1.0 Mtpa

North Bohemia, 660 MW Coal


6 Ledvice (D) 2015 Post-combustion Pipeline Geological 1.1 Mtpa
Czech Republic fired power plant

Mokotów district, 480 MW Coal


7 Siekierki 2015 Post-combustion Pipeline Geological 2.5 Mtpa
Poland fired power plant

250 MW coal 1.8 Mtpa


Brandenburg, oxyfiring power Oxyfiring and Geological (Oxyfiring)
8 Janschwalde 2015 150 km Pipeline
Germany plant, 125 MW post-combustion (saline aquifer) 0.9 Mtpa
coal fired for PCC (PCC)
Synthesis Report
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

450-1,000 MW
South-West Coal and Geological
9 Shell/Essent Project (D) 2015 Pre-combustion Pipeline 2.0-4.0 Mtpa
Netherlands biomass/pitch (depleted oil/gas field)
IGCC power plant

1,200 MW Hard
Groningen, coal / biomass / Geological
10 Nuon Magnum 2015 Pre-combustion Pipeline 2.0 Mtpa
Netherlands gas IGCC power (depleted gas field)
plant

300 MWe Coal

Page 14
Geological TBD / not
11 Compastilla Project Leon, Spain 2015 oxyfiring power Oxyfiring 80-90 km Pipeline
(saline aquifer) specified
plant
Strategic Analysis of the Global Status of Carbon Capture and Storage

3x660 MW Coal
fired power plant Geological
12 Porto Tolle Rovigo, Italy 2015 Post-combustion Pipeline 1.0 Mtpa
(capture from 1 (saline aquifer)
unit)

250 MWe capture


Rotterdam Afvang en Zuid-Holland, unit on 800 MW Geological
13 2015 Post-combustion 25 km Pipeline 1.1 Mtpa
Opslag Demo Netherlands Coal/biomass (depleted oil/gas field)
fired power plant

Coal to liquids
Geological (saline
South Australia, (producing diesel 80-200 km
14 FuturGas 2017 Pre-combustion aquifer and/or depleted 1.6 Mtpa
Australia and naphtha / Pipeline
oil/gas field)
power / sulphur)

Coal to liquids
Shanxi Province, TBD / not 5.0–10.0
15 Yulin Chemical Plant (coal to chemicals Pre-combustion Pipeline TBD / not specified
China specified Mtpa
being studied)
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

BKK Gasskraftverk TBD / not 450 MW Natural Geological


16 Hordaland, Norway Post-combustion Pipeline 1.0 Mtpa
Mongstad (D) specified gas fired power (saline aquifer)

TBD / not 600 MW Coal TBD / not Geological


17 Kalundborg Sjælland, Denmark Post-combustion 3.4 Mtpa
specified fired power plant specified (saline aquifer)

Reggion Calabria, TBD / not 1,320 MW Coal Geological


18 SEI - Saline Joniche Post-combustion Truck or pipeline 8.0 Mtpa
Italy specified fired power plant (saline aquifer)

2x800 MW Power
Tilbury Clean Coal TBD / not (coal & biomass)
19 Essex, England Post-combustion 150 km Pipeline TBD / not specified 4.0 Mtpa
Power Station (D) specified captured from
300 MW net

Page 15
Synthesis Report
Table 1-2 Active or planned, commercial scale, integrated projects at the Evaluate Stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

British Columbia, Gas processing Geological


20 PCOR Ft Nelson (D) 2011 NG processing 78 km Pipeline 1.6 Mtpa
Canada facility (saline aquifer)

Geological
LNG plant (gas TBD / not
21 Bintulu Malaysia 2011 NG processing (saline aquifer and/or 3.0 Mtpa
processing) specified
depleted oil/gas field)

125 MW
TBD / not
22 W.A. Parish (D) Texas, USA 2012 equivalent, coal Post-combustion Beneficial reuse 1.0 Mtpa
specified
fired power plant

400 MW Gas/coal

Page 16
Hamburg region, Pipeline, ship or
23 HYPOGEN (D) 2014 hydrogen and Pre-combustion Geological 2.5 Mtpa
Norway combined
power plant
Strategic Analysis of the Global Status of Carbon Capture and Storage

600 MW net Coal


24 Tenaska Texas, USA 2014 Post-combustion Pipeline Beneficial reuse (EOR) 4.3 Mtpa
fired power plant

500-525 MW
Geological and/or
25 Taylorville IGCC (D) Illinois, USA 2014 IGCC (coal) Pre-combustion TBD TBD
beneficial reuse
power plant

300-400 MWe
equivalent capture
Geological
26 Kingsnorth Kent, England 2014 on 1,600 MW Post-combustion 270 km Pipeline 2.0 Mtpa
(depleted gas field)
Coal fired power
station

900 MW gross Geological


South Yorkshire,
27 Hatfield (D) 2014 IGCC (coal) Pre-combustion 80 km Pipeline (saline aquifer and/or 4.75 Mtpa
England
power plant depleted oil/gas field)

Queensland, 400 MW IGCC Geological


28 ZeroGen 2015 Pre-combustion 100 km Pipeline 2.0 Mtpa
Australia (coal) power plant (saline aquifer)
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

Geological
Western Australia, LNG plant (gas
29 Browse LNG 2015 NG Processing Pipeline (saline aquifer and/or 3.0 Mtpa
Australia processing)
depleted oil/gas field)

Queensland, 400 MW net IGCC Up to 200 km Geological or beneficial


30 Wandoan Power (D) 2015 Pre-combustion 2.5 Mtpa
Australia (coal) power plant Pipeline reuse (EOR)

300 MW
Opole Province, Coal/biomass
31 Kedzierzyn 2015 Pre-combustion Pipeline Geological 2.4 Mtpa
Poland polygeneration
IGCC power plant

Łódź Voivodeship 858 MW Coal Geological


32 Belchatow 2015 Post-combustion Pipeline 1.7 Mtpa
province, Poland fired power plant (saline aquifer)

565 MW Coal
33 FINNCAP - Meri Pori (D) Pori, Finland 2015 Post-combustion 800-2000 km Ship Geological 2.4 Mtpa
fired power plant

850 MW Geological
34 Eston Grange Teesside, England 2015 Coal/petcoke fired Pre-combustion 250 km Pipeline (saline aquifer or 4.2 Mtpa
IGCC power plant depleted oil/gas field)

Geological

Page 17
Southern California 600 MW Coal
35 Utah, USA 2017 Pre-combustion Pipeline (saline aquifer) or 3.0 Mtpa
Edison IGCC (D) IGCC power plant
Beneficial reuse (EOR)

1x400 MW IGCC TBD / not Beneficial reuse (EOR) TBD / not


36 GreenGen Tianjin, China 2020 Pre-combustion
(coal) power plant specified and/or geological specified

2x200 MW or
Western Australia, TBD / not 3x150 MW Coal Geological (depleted
37 Coolimba Post-combustion 20-80 km Pipeline 3.0 Mtpa
Australia specified fired CFB power oil/gas field)
plant
Synthesis Report
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

TBD / not 800 MW IGCC TBD / not Geological


38 Dongguan Guangdong, China Pre-combustion 0.1-1.0 Mtpa
specified (coal) power plant specified (depleted oil field)

1,200 MW IGCC
and 1,300 MW
ultra supercritical
TBD / not Pre and post- TBD / not
39 Lianyungang Jiangsu, China PC power plants Beneficial reuse (EOR) 0.1-1.0 Mtpa
specified combustion specified
(coal) – co-
producing SNG

Page 18
and chemicals
Strategic Analysis of the Global Status of Carbon Capture and Storage
Table 1-3 Active or planned, commercial scale, integrated projects at the Define stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

40 SWP Entrada (D) Wyoming, USA 2009 Gas Processing NG processing Pipeline Geological 1.1 Mtpa

2009
Lockwood Gasification
41 Texas, USA (break SNG Plant Pre-combustion Pipeline Beneficial reuse (EOR) 7.2 Mtpa
(D)
ground)

120 MW
Antelope Valley and slipstream from
42 North Dakota, USA 2012 Post-combustion Pipeline Beneficial reuse (EOR) 1.0 Mtpa
Williston Basin (D,S) 450 MW coal fired
power plant

Multiple –
Hydrogen Power
Abu Dhabi
United Arab (HPAD) power
43 Masdar (D) (S) 2013 Post-combustion 300 km Pipeline Beneficial reuse (EOR) 4.3 Mtpa
Emirates plant (1.8 Mtpa),
steel (0.8 Mtpa),
aluminium smelter
(1.7 Mtpa)

Coal fired power


Aalborg Nordjylland, Geological
44 2014 plant – 300 MWe Post-combustion 30 km Pipeline 1.9 Mtpa

Page 19
(Nordjyllandsvaerket) Denmark (saline aquifer)
net with CCS

4x600 MW
Coal/biomass
Geological
45 Longannet (D) Fife, Scotland 2014 fired power station Post-combustion Pipeline or ship 2.0 Mtpa
(depleted oil/gas field)
(1 unit with
capture)

Western Australia, LNG plant (gas Geological


46 Gorgon Project 2015 (est.) NG processing Pipeline 3.4 Mtpa
Australia processing) (saline aquifer)
Synthesis Report
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

Beneficial reuse (EOR)


Genesee CCS Project 252 MW net IGCC
47 Alberta, Canada 2015 Pre-combustion Pipeline or geological (Alberta 1.2 Mtpa
(D) (S) (coal) power plant
Saline Aquifer Project)

North Rhine- 360 MW net IGCC


RWE Goldenbergwerk Geological
48 Westphalia, 2015 (coal) power Pre-combustion Pipeline 2.8 Mtpa
(Huerth) (saline aquifer)
Germany plant

Page 20
390 MW gross
IGCC
49 HECA IGCC California, USA 2015 Pre-combustion 6.4 km Pipeline Beneficial reuse (EOR) 1.8 Mtpa
(petcoke/coal)
Strategic Analysis of the Global Status of Carbon Capture and Storage

power plant

275 MW IGCC Geological


50 FutureGen Illinois, USA 2018 Pre-combustion Pipeline 1.0 Mtpa
(coal) power plant (saline aquifer)

TBD / not
51 Quest CCS Project (D) Alberta, Canada Oil refinery Oil refining 10-60 km Pipeline Beneficial reuse (EOR) 1.2 Mtpa
specified

SWP Deep Saline TBD / not


52 Utah, USA Gas Processing NG Processing Pipeline Geological 1.0 Mtpa
Sequestration (D) specified

Petroleum or
Big Sky Development TBD / not Oil refining or NG Geological
53 Wyoming, USA natural gas Pipeline 1.0 Mtpa
Test (Moxa Arch) (D) specified processing (saline aquifer)
processing
Table 1-4 Active or planned, commercial scale, integrated projects at the Execute stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

TBD / not
54 Husky CO2 Injection Alberta, Canada 2012 Oil refining Oil refining Pipeline Beneficial reuse (EOR)
specified

Enhance Energy Oil refining and 240 km Pipeline


TBD / not Fertiliser and oil 1.8 Mtpa
55 Pipeline and EOR Alberta, Canada fertiliser (Alberta Carbon Beneficial reuse (EOR)
specified refining (initial)
Project (D) (S) production Trunk Line)

Page 21
Synthesis Report
Table 1-5 Active or planned, commercial scale, integrated projects at the Operate stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

Rangely EOR Project Shute Creek gas


56 Colorado, USA 1986 NG processing 285 km Pipeline Beneficial reuse (EOR) 1.0 Mtpa
(D) processing facility

CO2 separated
Geological
from produced Pipeline (capture
(saline aquifer)
57 Sleipner North Sea, Norway 1996 gas – gas NG processing and storage at 1.0 Mtpa
(16.3 Mt stored at the
processing same location)
end of 2008)
platform

Page 22
Val Verde CO2 Pipeline Five natural gas
58 Texas, USA 1998 NG processing 132km Pipeline Beneficial reuse (EOR) 1.0 Mtpa
(D) (S) processing plants
Strategic Analysis of the Global Status of Carbon Capture and Storage

2000 Great Plains


Saskatchewan, (using CO2 Synfuels plant,
59 Weyburn Operations (D) Pre-combustion 330 km Pipeline Beneficial reuse (EOR) 2.4 Mtpa
Canada as flooding Dakota
agent) Gasification

Natural gas Geological


60 In Salah Ouargla, Algeria 2004 NG processing 14 km Pipeline 1.2 Mtpa
processing plant (3.0 Mt stored to date)

Shute Creek gas


61 Salt Creek EOR (D) Wyoming, USA 2006 NG processing 201 km Pipeline Beneficial reuse (EOR) 2.4 Mtpa
processing facility

Barents Sea, Snøhvit LNG


62 Snøhvit CO2 Injection 2007 NG processing 160 km Pipeline Geological 0.7 Mtpa
Norway Plant
Synthesis Report

Figure 1-5 Active or planned, commercial scale, integrated CCS projects by


region and asset lifecycle stage

20

Number of projects
15

10

Region Select concept Sanction Start-up Total


Africa 1 1
Australia and New Zealand 2 4 1 7
Canada 1 2 2 1 6
China 1 3 4
East Asia (ex. Japan) 1 1
Eastern Europe 2 2 4
Europe Area 12 5 4 2 23
Middle East 1 1
USA 1 4 7 3 15
TOTAL 18 20 15 2 7 62

66
Figure 1-5, the categorisation of commercial scale, integrated projects by
region and asset lifecycle stage shows that 66 percent of proposed projects
are in the power generation sector. However, none of these have advanced percent of
proposed
beyond project sanction. The cement, aluminium and iron and steel
projects were in
production industries are significantly underrepresented in terms of proposed power
commercial scale, integrated CCS projects. generation

In terms of geographic distribution, 37 percent of this subset are in Europe,


24 percent in the United States of America (USA), 11 percent in Australia
and New Zealand, and 10 percent in Canada. The distribution of projects in
other parts of the world such as India, China or South America is relatively
low.

Of this subset of 62 projects, 63 percent are considering geological storage. The USA,
Europe,
Beneficial reuse (that is, EOR, enhanced gas recovery (EGR) or enhanced
Australia and
coal bed methane recovery (ECBMR)) represents a further 26 percent by Canada are
storage type. The remaining 11 percent of projects did not specify the leading
storage type or this is yet to be determined. developers of
CCS projects
A number of the projects proposed in the Europe Area are considering
offshore storage options. The costs of developing new storage sites
offshore will likely be an order of magnitude greater than onshore storage
options. Many of these are likely to be subject to transboundary transport
challenges associated with the Basel Convention and the London Protocol
that prohibit CO2 transport across national boundaries.

Of the 62 active or planned, commercial scale, integrated CCS projects, 30


are classified as “dependent” integrated CCS projects. The risk of these

Page 23
Strategic Analysis of the Global Status of Carbon Capture and Storage

projects not proceeding could be higher because they involve other parties
delivering key and separate components to form an integrated CCS system.
The weakest link could determine the fate of the entire system.

The operational projects within this subset obtain their CO2 from natural gas
processing, except for one gasification plant. Four of the seven projects in
operation are using the CO2 for EOR, while the remaining three projects are
storing the CO2 in geological formations.

1.3.7 What is the level of engagement in CCS by the


largest emitters?
Varied. The USA, Europe, Australia and Canada are the most active
regions. The USA, European, Canadian and Australian governments have
programs in place to support project development.

The majority of project activities are at early stages of the asset lifecycle
where funding requirements are relatively minor compared to overall capital
costs. Also, the technical and commercial viability of many of these projects
are yet to be confirmed.
China and some
The USA, Canada, and Norway are furthest advanced with sequestration
countries in the
Middle East activity at commercial scale. While the USA is driven by a confluence of
have some CCS regional coal dependent markets and EOR opportunities, Canada is
initiatives and a investing in CCS to keep its EOR and oil sands market viable. Norway
track record of
accelerating continues to emerge as a sequestration centre, capturing and storing CO2
industrial from natural gas processing operations for storage in saline aquifers.
projects if given
the correct Coal dependent economies, led by Australia, China, the United Kingdom
incentives (UK), Germany, the Netherlands, Denmark and Poland are increasing the
number of CCS demonstration projects. This is primarily to prolong this
important domestic and export market.

Of the regions of the world that are forecast to experience significant CO2
emissions to atmosphere there are some positive signals that CCS can be
deployed. For example, China and some countries in the Middle East have
a number of initiatives and a track record of accelerating industrial projects if
the correct incentives are present.

1.4 CCS project development

1.4.1 How long does it take to progress a CCS


project through the development cycle to
operation?
Engineering industry experience in large infrastructure projects such as
those that could be installed with CCS suggests that seven to ten years will
be required between undertaking pre-feasibility studies through to
commissioning.

Page 24
Synthesis Report

Therefore, the projects identified in this study, and perhaps new projects
identified by 2013 are likely to represent the pool of commercial scale,
integrated CCS projects that could meet the G8 objective.
10years to
Contrasted with the stated aim of the G8, industry views the timeframe
design, permit
involved in the CCS project cycle to be in the order of: and build a
fossil-fuel
• 10 years to design, permit and build a fossil-fuel power plant and other power plant
large industrial facilities with CCS such as steel mills and cement and other large
factories; industrial
facilities such
• 20-30 years of operation and injection of CO2 before plant closure is as steel mills
and cement
considered; and
factories
• 20-100 years or more to monitor a CCS site post-injection.

1.4.2 Is CCS a coal and power industry only issue?


No. The owners and industry representatives of coal fired power facilities
have a significant interest in the development of CCS initiatives. However,
the tightening international regime for large emissions reduction by 2050 will
dictate that CCS be utilised by a broad cross section of the resources and
industrial sectors.

In order to meet the G8 objectives, CCS must also be applied to other large
stationary emission sources such as from the steel, cement, aluminium and
fertiliser sectors. From this study there is little evidence of these industries
devoting the funds or commitments required to address long-term CO2
reduction management from commercial scale, integrated CCS projects.

1.4.3 Is EOR a distraction to CCS development?


Yes, in part. Although there has been essential experience gained in
pipelining and injecting CO2, the majority of the CO2 EOR experience has
yielded very little information on CO2 storage, monitoring and risk
assessment.

There is also conjecture over whether storage for EOR purposes is In order to
considered long-term, and suitable sites for EOR are limited from a meet the G8
objectives CCS
geographic and capacity perspective relative to geological storage.
must also be
However, given the paucity of existing data, measurement, monitoring and applied to other
verification (MMV) must be incorporated into future EOR projects for large stationary
learnings to be gained and shared in order to build capacity. emission
sources such
Beneficial reuse (principally EOR) may also present a short term bridging as from the
steel, cement,
opportunity to demonstrate the integration of CCS, possibly with coal-fired aluminium and
power plants, as revenue associated with EOR can partially offset CCS fertiliser sectors
costs. However, the business case for EOR is inherently a function of oil
prices that can fluctuate widely over time. Furthermore, financially, fossil-
fuel power generation plants represent large sunk costs that require long
payback periods. The potential to operate an associated EOR site may not
exist for a similarly long period. Therefore, the potential viability of this

Page 25
Strategic Analysis of the Global Status of Carbon Capture and Storage

model of combining EOR with fossil fuel power generation to supply CO2
may be limited.

1.5 Cost of CCS

1.5.1 What industries were modelled?


The modelling performed as part of this study provides decision makers with
the opportunity to consider the cost of installing CCS to a range of large
stationary emitters such as fossil-fuelled power generation, natural gas
processing, cement, blast furnace steel and fertiliser production using a
common set of metrics.

The economic modelling performed in this study is based on contemporary


and comprehensive market based estimates across the CCS system as at
March 31 2009. As in any form of economic modelling, caution needs to be
exercised because factors such as the assumptions used in the model and
the affect of a CCS project’s location on fuel costs, for example, can
significantly affect it’s economics. The economics of a CCS project needs to
be assessed on a case-by-case basis. The modelling did not consider the
cost of offshore CO2 transport and storage but these are likely to be an order
of magnitude greater than onshore CO2 transport and storage.

1.5.2 What happens to costs when CCS is included?


CCS increases Using the USA Gulf Coast as a reference location, the analysis shows that
the cost of
the percentage increases in costs of production from the application of CCS,
production
because over non-CCS facilities, for power generation were:
non-CCS
facilities • integrated gasification combined cycle, IGCC (39 percent);
currently emit all
of the CO2 they • natural gas combined cycle, NGCC, (43 percent);
produce to the
atmosphere • oxy-combustion (55 to 64 percent); and
without any
financial penalty • supercritical pulverised coal (PC) technologies (75 to 78 percent).
and do not incur
any cost for
The analysis shows that the percentage increases in costs of production
greenhouse gas from the application of CCS, over non-CCS facilities, for industrial processes
mitigation were:

• natural gas processing (1 percent);

• fertiliser production (3-4 percent);

• blast furnace steel production (15 to 22 percent); and

• cement (36 to 48 percent).

The fact that the application of CCS increases the cost of production is
unsurprising as non-CCS facilities currently emit all of the CO2 they produce
to the atmosphere without any financial penalty and do not incur any cost for
GHG mitigation.

Page 26
Synthesis Report

The results also indicate that the costs of CCS are lowest for processes that
have CO2 capture inherent in its design, such as natural gas processing and
fertiliser production. This is significant as the cost of CO2 capture and
compression for coal fired power plants in this analysis represented over 80
percent of the total integrated CCS costs.

1.5.3 How much does it cost to transport CO 2 ?


While the cost of CO2 capture and compression generally represents the Increasing the
largest component of the CCS chain, at a project level, transport and storage volume
transported by
costs could render a project uneconomic.
pipeline to
greater than
Sensitivity analysis showed that significant cost savings can be achieved
10 Mtpa can
through increasing the CO2 flow through a pipeline. Results from this model cut 50 percent
revealed that the cost to transport CO2 by a pipeline will be between $3 to $4 of costs
per tonne CO2. By combining CO2 emissions from three or more industrial
plants, the CO2 flow can be increased to greater than 10 Mtpa leading to a
cost of between $1 to $2 per tonne CO2. This represents a saving of
approximately 50 percent.

1.5.4 How much does it cost to safely store CO 2 ?


As experience in the oil and gas industry has shown, exploration activities
can incur significant costs with no guarantee of reaching production targets.
Analogously, for CO2 storage, significant investments could be made in
finding and appraising a potential storage site only to learn that it is
unsuitable. This is referred to as the finding cost. The finding costs are site
specific.
Initial site
In regards to storage, the initial site identification and characterisation costs identification and
represent a significant risk to projects and could cost between $15 million to characterisation
costs represent
$150 million. Finding costs of $150 million were considered the threshold a significant risk
before project proponents would abandon investigations into a storage site. to projects and
could cost
Based on the modelling performed, this uncertainty can increase storage between
costs from $3.50 per tonne of CO2 to $7.50 per tonne of CO2, depending on $25 million to
the number of sites needed to be investigated in order to locate a suitable $150 million

storage option.

Reservoir properties, specifically permeability, impact the ease at which CO2


can be injected into the reservoir and the required number of injection wells.
Reservoirs with high permeability can reduce storage costs by a factor of up
to two to below $5 per tonne of CO2 over reservoirs with lower permeability.
Projects in China
and India, all
1.5.5 What is the cost of CCS for power generation
things remaining
around the world? equal, could be
developed at a
The installed capital costs of CCS technologies for power generation were significantly
estimated for various regions around the world. Low labour rates in China lower cost
and India resulted in installed capital costs of approximately 30 percent less relative to where
the majority of
than other regions surveyed. proposed CCS
projects are
currently located

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Strategic Analysis of the Global Status of Carbon Capture and Storage

This suggests that the cost of CCS projects in these regions could be
significantly cheaper than in other regions of the world. Projects in these
locations, all things remaining equal, could be developed at a significantly
lower cost relative to where the majority of proposed CCS projects are
currently located.

The levelised cost of electricity (LCOE) variation across the regions


illustrates the importance of fuel costs on plant economics. The low cost of
natural gas in Saudi Arabia led to the lowest LCOE in this study. The LCOE
for the Europe Area is higher by almost 30 percent due to the higher cost of
fuel and installed capital costs.

1.5.6 What other factors have increased CCS costs?


Construction Construction costs for conventional power plants with well known and proven
costs for
conventional
technologies have doubled between 2000 and mid-2008 (Cambridge Energy
power plants Research Associates, 2008). Therefore, the high cost of CCS was
with well known significantly influenced by the general rise in the cost of equipment and in
and proven
constructing large infrastructure facilities without CCS over this period.
technologies
have doubled
between 2000 1.5.7 What other cost issues need to be
and mid-2008
considered?
First-Of-A-Kind (FOAK) CCS plants inherently tend to have higher costs
arising from greater risks in terms of finding and appraising a storage site,
transport, financing, design integration and environmental licensing. In
addition, the uncertainty surrounding the potential economic value of CO2
(that is, the future marginal cost of compliance with climate change
regulations) has caused project proponents to be unable to identify potential
long-term revenue streams. As a consequence, few CCS projects have
been pursued without significant government financial incentives.

A number of project proponents in the Europe Area are pursuing offshore


storage options and generally as a dependent arrangement with other
parties. The costs of developing new storage sites offshore will be
significantly higher than onshore options. As stated previously, finding and
appraising suitable geologic reservoirs and constructing sub-sea pipelines to
offshore storage locations is likely to be an order of magnitude more
expensive compared to onshore options. Shipping CO2 may offer an
alternative, however experience with this is very limited and it will also pose
unique economic and logistical challenges.
The availability The availability of existing transportation and storage infrastructure can play
of existing
transportation a key role in significantly reducing the costs of CCS deployment as the
and storage experience of EOR in North America has shown. The availability of skilled
infrastructure labour is the key “soft” infrastructure that can have a significant impact on
can play a key
role in
CCS costs. However, the availability of skilled labour to plan, design,
significantly execute, construct and operate CCS projects is limited in many regions of
reducing the the world.
costs of CCS
deployment

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Synthesis Report

1.5.8 Can the cost of CCS come dow n?


Yes. Costs can come down significantly but only through developing and
widely deploying CCS projects so that the learnings can be used to optimise
the designs of future CCS facilities.
CCS is in a
This represents a classic catch-22 scenario. The only way costs can catch-22 situation -
decrease is by installing a large number of CCS projects worldwide. the only way costs
However, the high cost of CCS is challenging project development. can decrease is by
installing a large
Davison and Thambimuthu (2009) suggest that the cost of electricity (COE) number of projects
worldwide,
from CCS power plants based on current technologies has the potential to however, the high
decrease 10 to 18 percent after 100 GW of capacity has been installed. This cost of CCS is
is supported by Rubin et al (2007) who showed that reductions in the capital challenging project
development
costs of flue gas desulphurisation (FGD) units decreased approximately 40
percent over two decades from when it was first introduced into the USA
power generation market. Furthermore, Rubin et al also showed that the
global deployment of selective catalytic reduction (SCR) systems to power
plants resulted in capital cost decreases of approximately 50 percent over
two decades. These experiences show that costs will only decrease by
developing and widely deploying CCS projects. As a result, the G8 objective
is fundamental to cost reductions.

1.5.9 What is the estimated level of investment


required to develop and deploy CCS
technologies?
The energy revolution that must take place to enable deep cuts in CO2 Some estimates
emissions to atmosphere from CCS will not be cheap. The magnitude of this suggest
$100 billion
challenge is similar to investing in the entire infrastructure for the annually is
hydrocarbons industry developed over the past century in the next 40 years. required to
To achieve this goal some estimates suggest $100 billion annually is develop CCS
required (Ernst and Young 2009).

1.5.10 How much is available to fund CCS projects?


Globally,
Globally, approximately $17-20 billion is available through a range of
approximately
government schemes and voluntary industry levies. $17-20 billion is
available
through a range
1.5.11 What is the value of CO 2 required to develop of government
CCS projects? schemes and
the voluntary
The CO2 credit value was estimated in this study to guide decision-makers industry levies
on the required value a unit of CO2 will need to be before owners of power
utilities for example, will pursue the concept of CCS or alternatively, to
purchase emissions credits.

For the USA Gulf Coast region the analysis shows that the oxyfuel
combustion technology has the lowest CO2 credit value breakpoint at
approximately $60/tonne of CO2. The lower costs for implementing CCS for
oxyfuel combustion is related to eliminating solvent capture from the CO2
from the gas stream. However, while the model shows that this technology

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Strategic Analysis of the Global Status of Carbon Capture and Storage

requires the lowest CO2 credit value, the commercial application of this
technology for power generation is limited. Currently, the largest application
of this technology for power generation is 30 megawatt electrical (MWe).

The CO2 credit value for IGCC technology is approximately $80/tonne. This
is related to the higher capital costs of IGCC. For the supercritical pulverized
coal technologies with post-combustion capture, the cost breakpoints are
approximately $90/tonne of CO2. This is largely due to the greater auxiliary
loads required to capture CO2 from a dilute gas stream.

The high CO2 credit value breakpoint, of approximately $112/tonne, for


NGCC technology, is related to the lower CO2 emission intensity of natural
gas and higher cycle efficiency compared to coal-fired technologies. The low
CO2 emission intensity results in more electricity generation (in terms of
MWh) for each tonne of CO2 emitted.

1.6 Government policy and regulations

1.6.1 What has been the role of Government?


The Federal Governments in the USA and Australia are developing
Proposed legislation for national-level schemes to introduce market based
legislation such mechanisms to assign a value to carbon. The schemes proposed in the
as the ACES Act American Clean Energy and Security Act (ACES Act) and the Australian
and the
CPRS Act must Carbon Pollution Reduction Scheme (CPRS) Act will provide a market based
be implemented mechanism to assign a value to carbon. They propose to also provide
urgently if the bonus allowances and other incentives to assist with the funding of CCS
G8 timeframe is
to be achieved facilities. These schemes must be implemented urgently if the G8 timeframe
is to be achieved.

Some jurisdictions, including Australia, China, Japan and some States in the
USA, have introduced, or are considering introducing, complementary
policies which have the effect of imposing a cost on carbon, or which provide
support in the form of subsidies or enabling frameworks. The
complementary laws and policies include mandatory renewable energy
targets, emissions reporting, incentives for energy efficiency and feed-in-
tariffs.

Some other jurisdictions, including Norway and Japan, have regulated


existing CCS projects through partially integrated CCS schemes or by
exception to existing regulations. These approaches can facilitate
demonstration-scale projects but are not considered suitable for commercial-
scale projects due to potential long-term liabilities.

As well as directly funding a number of demonstration-scale CCS projects,


governments in the jurisdictions surveyed have made use of three main
forms of domestic policy incentive to encourage the development of CCS.

a) High-level CCS or energy management policies which can provide


whole-of-government frameworks for initiatives to develop CCS, such
as the USA government’s goal of reducing USA GHG emissions by 83
percent by 2050.

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Synthesis Report

b) Direct government funding and research support for CCS through


cooperative research centres such as Australia's Cooperative
Research Centre for Greenhouse Gas Technologies (CO2CRC),
South Africa's National Centre for Carbon Capture and Storage and
the Masdar Institute of Science and Technology in the United Arab
Emirates (UAE).

c) Government-business collaboration on demonstration projects such


as the FutureGen project in Illinois in the USA or the Sleipner project
in Norway.

Policy measures like these may also provide project participants with high-
level political and policy support for their projects and technologies.

1.6.2 What changes need to be made to government


policy and regulations around the world?
In developed economies, existing legal frameworks designed to deal with
waste, transport, property rights and pollution liability do not readily
accommodate the whole CCS project cycle. This will hamper investment not
only in CCS projects but in the technologies required to achieve scalable
projects within the G8's timeframe.

Developing economies have not yet generally enacted specific CCS laws or In the absence of
CCS being
taken steps to amend existing legislation to accommodate the CCS project included in the
cycle. In the absence of an approach such as the Clean Development Clean
Mechanism (CDM) it seems unlikely that investment in CCS will be achieved Development
Mechanism,
in many developing countries within the timeframe proposed by the G8.
it is unlikely that
investments in
Only a few jurisdictions have in place dedicated CCS regulatory regimes (or
developing
amendments to existing regimes) required to adequately manage the unique countries will be
legal challenges posed by CCS. These jurisdictions include some Australian achieved within
and USA jurisdictions, together with the European Union (EU) and some EU the G8 timeframe
Member States. This poses significant barriers for investment in CCS
projects in other jurisdictions. Potential investors and project proponents will
be reluctant to support CCS projects where potential long-term risks are
present due to insufficient or inflexible regulatory frameworks.

Key policy and regulatory recommendations to enhance further CCS


development include:

• immediate implementation of market based schemes to assign a value


to carbon such as the ACES Act and CPRS Act;

• aspects of the CCS specific laws and policies adopted by some


governments (including the EU, USA, Japan and Australia) should be
used as components of a "CCS friendly" legal framework in those
countries wanting to host such projects;

• where time or other circumstances do not permit the development of


integrated or dedicated CCS legal schemes, governments should
amend existing legislation applicable to the CCS project cycle with
particular emphasis on transport, storage and leakage liability;

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• all regulatory frameworks need to provide sufficient flexibility to


accommodate evolving technological advances in CCS;

• all regulatory frameworks need to accommodate the very long time


frames associated with storage - without clear allocations of liability for
leakage, insurance and investment may not be available or attracted
to CCS projects;

• planning and environmental laws should be used to compel (or at


least make commercially viable) the use of CCS in new or refurbished
power plants and other GHG emitting facilities and enterprises; tax or
other incentives may be required to address the costs associated with
such requirements;

• where feasible, CCS enabling laws should be harmonised across


national and international borders to allow CCS projects to operate on
an international basis. This will be essential in areas such as Europe;

• governments should continue to provide incentives for the


development of CCS, principally through funding, scientific and
bureaucratic support for CCS R&D;
There should be
an immediate • there should be a concerted effort to coordinate current global,
completion of national and industry CCS research and promotional activities;
reviews, and if
necessary, • there should be an immediate completion of reviews of, and if
amendments necessary, amendments to, international agreements which could
to international
agreements, govern the transboundary movement of CO2, including the definitions
including the of "waste" under the London Protocol and "hazardous waste" under
definitions of the Basel Convention;
"waste" under the
London Protocol • steps should be taken by those with a vested interest in the future of
and "hazardous
CCS to advocate its inclusion as a project type capable of generating
waste" under the
Basel Convention carbon credits under the Flexible Mechanisms (CDM and JI) under the
that currently Kyoto Protocol (or its most relevant post-2012 manifestation); and in
prohibit the the EU, Member States should implement the CCS Directive as soon
transboundary
movement of CO2 as possible.

1.7 CCS research and development

1.7.1 What is the status of CCS research and


development?
The study identified 357 different organisations for inclusion in the R&D
Networks database. Figure 1-6 illustrates the regions to which the
organisations belong and the type of R&D coverage being performed.

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Synthesis Report

Figure 1-6 Number of organisations per region and type of R&D coverage
performed

200 F - Political Regional and Environmental Issues


E - Information Sharing
D - Public Awareness and Understanding
C - Economics
B - Regulations
150 A - CCS Technologies
Number of Networks

100

50

0
East Asia
East India Middle Pacific South
Africa ANZ Canada China (ex. Euro Area Japan USA
Europe Area East Islands America
Japan)
F 2 3 4 1 1 1 11 1 4 1 1 1 19
E 3 3 6 3 4 2 15 3 4 2 2 2 12
D 2 5 5 2 2 1 11 1 4 1 1 2 27
C 2 2 4 2 2 1 11
B 2 5 1 1 6 15
A 13 28 34 11 12 5 91 5 18 3 3 4 125

TOTAL 24 41 58 18 18 20 9 24 32 7 7 10 209

In many cases, an organisation is involved in more than one R&D coverage There are 357
different
area, and this is reflected in the preceding chart by counting them in their
organisations
applicable R&D areas. Consequently, the total number of organisations in in CCS R&D
the table adds up to more than 357. however
coordination
A number of observations were evident from examining the database of CCS between them
R&D. is limited

• There are a significant number of R&D networks operating in the world


which is encouraging. However, these activities do not appear to be
coordinated.

• All phases of CO2 capture, transport and storage require ongoing


research and development funding.

• A great majority of the CO2 capture R&D is focused on the power


generation sector, particularly coal-fired power generation. Even
Given the
within the coal fired power generation CO2 capture R&D efforts, the
significant
vast majority of the projects are focused on the early stages of R&D contribution
and have not yet reached the small pilot plant size. that cement
production makes
• Given the significant contribution that cement and iron and steel to anthropogenic
production makes to anthropogenic CO2 emissions, a CO2 emissions, a
disproportionately
disproportionately small R&D effort is focused on these industries. small R&D effort
is focused on
• Almost all R&D networks stated that significantly greater funding was
CO2 capture
required to progress R&D so that it can be commercialised. from cement
production
1.7.2 Is each region displaying a commitment to
pursuing R&D solutions?
No. In terms of geographic distribution, CCS R&D in East Asia (excluding
Japan) lags the efforts undertaken by the EU and Americas. Although some
networks have engaged several Indian and Chinese universities in R&D

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Strategic Analysis of the Global Status of Carbon Capture and Storage

activities, additional collaboration between the East Asian networks and


networks from Australia and New Zealand, the EU and Americas is needed
to close this gap.

1.7.3 How many R&D organisations are netw orked?


About half. Approximately 55 percent of the entries were single-entity
“networks” while 45 percent were formal, multi-entity collaborations.
Opportunities for fostering greater networking among the many entities that
are conducting CCS R&D worldwide without imposing a structure that could
stifle independent creativity may reduce inefficiencies and coordinate global
R&D efforts.

1.7.4 What role can R&D play in achieving the


objective of launching 20 large scale CCS
plants by 2010 for deployment by 2020?
Research and development in CCS technologies plays a vital role in
developing innovations and advancements across the CCS process chain.
R&D in CCS However, from a CCS project perspective, and having regard to the G8
technologies
plays a vital role objective of launching 20 projects by 2010, gaps in R&D will not hinder the
in developing achievement of this objective. While significant activities are occurring in
innovations but R&D, by definition it involves pre-commercial innovations that will not be
R&D gaps will not
applied to those commercial scale projects that are launched in 2010.
hinder the G8
objective of
However, given the significant public awareness and acceptance issues
launching 20
projects by 2010 being experienced by CCS projects, R&D networks could educate and
inform industry and other CCS stakeholders on approaches to increasing
public awareness and promoting public acceptance.

Commercial scale, integrated projects could inform R&D programs through


collaborative partnerships which could benefit future CCS technology
development.

1.8 CCS business case

1.8.1 What is the business case for CCS?


A viable The application of CCS has been undertaken at commercial scales in the
business case
for commercial natural gas processing and EOR industries. A viable business case for
scale, integrated commercial scale, integrated projects has not been established at this time
projects has not for coal-fired power generation and other large CO2 emitting industries.
been established
Without policies and legislation to assign a value to CO2 or to compel large
at this time for
coal-fired power stationary emitters to reduce CO2 emissions to atmosphere, industry has
generation and limited incentive to install CCS facilities.
other large CO2
emitting First-of-a-kind CCS plants inherently tend to have higher costs arising from
industries greater risks in terms of finding and appraising a storage site, transport,
financing, design integration and environmental licensing. In addition, the
uncertainty surrounding the potential economic value of CO2 has caused

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Synthesis Report

project proponents to be unable to identify potential long-term revenue


streams. As a consequence, this has delayed investment decisions in CCS.

There are current developments that are considering the business case of
collecting CO2 from multiple emitters and transporting the CO2 through a
large trunkline. This is being considered in an attempt to gain economies of
scale from transporting and storing large quantities of CO2. However, this
model may incur higher risks as it requires all proponents to commit to a
project simultaneously which is highly unlikely.

Natural gas processing plants where CO2 removal is an inherent part of the
process offer excellent opportunities to demonstrate CCS. The integration of
all elements of the CCS chain is mature and represents minimal additional What could make
investment for the capture plant. However, there are no commercial scale, the business case
work in the G8
integrated CCS projects for coal-fired power generation in operation today.
timeframe for
The attraction of offshore storage is obvious for geographically small nations commercial scale,
integrated CCS
with maritime borders but as stated previously, these are likely to incur projects is the
significantly higher costs compared to onshore CO2 transport and storage. “field of dreams”
These proponents are likely to need significant public assistance to finance or the “build it and
they will come”
these activities. option - this
involves
What could make the business case work in the G8 timeframe for governments
commercial scale, integrated CCS projects is the “field of dreams” or the working in
“build it and they will come” option. This involves governments working in partnership with
industry and the
partnership with industry and the community to develop, finance and build
community to
common user transport and storage infrastructure. develop, finance
and build common
These would take advantage of the economies of scale from larger capacity user transport and
pipelines and storage sites and may also minimise public opposition by storage
concentrating infrastructure development in designated easements. infrastructure

1.8.2 What has been the impact of the Global


Financial Crisis on the business case for
CCS?
In the post Global Financial Crisis (GFC) environment the financing of
infrastructure assets are likely to face serious challenges in securing private
equity funds. The perceived higher risk of infrastructure assets involving
CCS means that they are likely to face extraordinary challenges to secure
private capital. As a result, government investments will be crucial to assist
technology deployment to meet the G8 objectives.

A significant commercial gap exists in financing CCS projects from private


capital markets. This challenge is likely to face all CCS projects irrespective
of capture, transport and storage technologies even prior to the GFC. In a
post GFC market, CCS projects are likely to face extraordinary challenges to
securing capital from private markets.

At present, with the impact of the GFC, there is some market intelligence
that suggest that costs for key inputs such as materials and labour that
would be involved in constructing CCS projects has softened. However,

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Strategic Analysis of the Global Status of Carbon Capture and Storage

given the rapid change of the global economic system arising from the GFC
there is a high degree of uncertainty on the scale and the longevity of these
cost decreases. Indeed, the implementation of government stimulatory
packages and their potential effect of boosting infrastructure development
could result in these returning to pre-GFC levels.

The GFC has had a substantial impact on the pricing of debt, which in turn
has impacted the overall cost of funding for infrastructure projects.
As a result of the The GFC has renewed lenders’ focus on the credit worthiness of borrowers.
GFC, it is highly
unlikely that CCS Most infrastructure transactions now require a credit rating, even small
project proponents transactions and investment grade ratings have become more difficult to
will be able to obtain. As a result of these factors it is highly unlikely that CCS project
finance their
proponents will be able to finance their projects from private capital markets
projects from
private capital alone.
markets alone
1.9 So, where do we stand?
There is potential that the ambitious G8 objective can be achieved. There
are 62 fully integrated, commercial scale CCS projects identified in this
study. Of these, seven are already operating and 55 are at various stages of
progress.

A vast majority of the advanced projects are a result of efforts within the
power sector, particularly by the USA, European, Canadian and Australian
industry participants. Projects in large emitting regions, India and China and
within the steel, cement and fertiliser sectors have yet to reach a critical
mass that would indicate long-term investment.

However, nations such as China and some countries in the Middle East can
accelerate rapid development of industrial scale projects if provided the
correct incentives. This study found that the cost of CCS for power
generation in China, for example, could be 30 percent less than other
regions of the world.

However, given the failure rates associated with new technology dependent
markets that apply to CCS there is a significant need to rapidly advance
more integrated, commercial scale CCS projects or risk achieving the G8
objective.

The technologies Many of the technological options of the CCS process are, by and large,
are available, commercially available today. Costs of CCS will only decrease by further
industry is ready, optimising designs based on real world information sourced from operating
and with strong
government
CCS facilities.
leadership the
All phases of CCS R&D require further funding by government and industry.
ambitious G8
objective can be While R&D is not on the critical path to meet the first part of the G8 objective,
achieved funding of R&D is needed to move technologies beyond the bench testing
phase through to pilot and commercial phases.

Given storage underpins all integrated CCS projects, funding activities


associated with the identification and verification of storage sites is
alarmingly low given its key role in the solution. To avoid CCS becoming a

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Synthesis Report

theoretical solution it is essential funding is increased to targeted storage


programs. This could be achieved in partnership with the 55 project
proponents identified in the study.

The policies and legislation to overcome CCS are well known by many
governments. Fundamental to this is the assignment of a value to carbon,
resolving long-term storage liabilities and underwriting critical infrastructure.
As the EU ETS experience has shown however, the assignment of a CO2
value in itself is insufficient to catalyse the development of CCS projects.

Governments must show leadership by directly funding early mover projects.


Of the existing programs in place, it appears that the funding available will be
insufficient to invest in the number of CCS projects required to meet the G8
objective.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

1.10 Study recommendations

Key recommendations – Projects


• Engage with national governments to facilitate the development of
national strategies to assist in reducing the emissions intensity of
industry such as fossil-fuelled power generation through the
application of CCS. This process could also assist in identifying
potential CCS projects to include in the projects development
pipeline.
• Engage with the G20 to expand the G8 objective to become the
“G20 objective”.
• Engage with relevant government agencies and/or donor agencies
to identify other commercial scale, integrated projects that may not
have been captured as part of the survey. For the projects
identified through this process, work with the project proponents
and relevant stakeholders to identify any specific challenges and
strategies for its resolution.
• Engage with the proponents of the currently proposed 55
integrated, commercial scale projects to identify specific gaps and
challenges to the development of their business case, taking into
account their unique characteristics including location, capture
technology type and the portfolio of storage options.
• Engage with the proponents of the 30 “dependent” projects to
identify any barriers specific to their progress as an “integrated”
project and, working with other relevant stakeholders, facilitate
cooperation and collaboration to develop their business case.
• Monitor the progress of commercial scale projects that are not
currently integrated to identify opportunities for integration
potentially with other parties.
• Engage with the relevant governments and project proponents to
investigate and facilitate the development of transport and storage
networks. An example of this would be engagement with the EU
and UK to develop a network for the North Sea area given the
high number of projects proposing to store CO2 in this vicinity.
• Engage with project proponents and governments in regions that
are currently underrepresented in terms of CCS projects eg India,
China and South America to identify and develop a portfolio of
CCS projects.
• Engage with facility owners, industry associations, technology
providers and other stakeholders in industries that are currently
underrepresented in terms of CCS projects eg, cement, aluminium
and iron/steel production to facilitate project development.

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Synthesis Report

Key recommendations – Technology


• Explore the potential of reducing CO2 capture costs through
decreasing the CO2 capture percentage for commercial scale
projects.
• Facilitate targeted R&D efforts with the commercial scale,
integrated projects identified in this study.
• Encourage regulators to provide guidance for CO2 removal
specifications to meet regional CO2 management plans.
• Educate stakeholders on the critical dependence of all CCS
projects on the storage component of the CCS chain.
• Educate governments and funding institutions that the costs of
finding and appraising a site for the safe storage of CO2 is likely to
be high, and that it must be incurred up-front at the Identify and
Evaluate stages.
• Educate governments and funding institutions that CCS projects
will need financial support from governments and in regards to
storage, significant expenditures may be incurred, only to find that
the safe storage of CO2 at the volumes required for a project is not
possible.
• Engage with OEMs developing capture, process and power plant
technologies to encourage pursuit of integrated projects as
opposed to capture only projects.
• Engage with governments and other funding institutions to
encourage widespread surveying aimed at identification of
potential storage sites across all regions where CCS will need to
be demonstrated and eventually deployed.
• Facilitate small scale injection projects aimed at increasing
knowledge of the potential for differing geological formations to
provide secure trapping mechanisms for CO2.
• Working with other key stakeholders, facilitate the installation of
MMV to commercial scale EOR operations as a means to build
knowledge on safely storing CO2 in geological formations.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Key recommendations – The Economics of CCS


• Advise and promote awareness amongst funding agencies and
other key stakeholders that the costs of CCS will remain high for
FOAK plants and that the opportunities to reduce costs are likely
to be limited in the period that CCS projects will need to be
sanctioned if the G8 timelines are to be achieved.
• Advise and educate key decision makers that the only way to
reduce the cost of CCS is through gaining knowledge and
learnings from installing CCS technologies to multiple integrated
projects at commercial scale in the near term and with ongoing
R&D support to target even more significant cost reductions from
improvements to CCS technologies in the longer term.
• Engage the proponents of the commercial scale, integrated,
projects found in this study to identify potential cost saving
opportunities through multi-user pipelines and common storage
sites.
• Engage with the proponents of commercial scale, integrated
projects found in this study to determine what assistance can be
provided to overcome likely storage hurdles.
• Work with other key funding agencies such as industry groups,
national governments and supra-national institutions such as the
G20, World Bank and the Asian Development Bank to consider
sources of funding to support CCS projects.
• Communicate to governments that funding from private equity and
debt markets are highly unlikely for CCS projects and that
because of this, significant public expenditures are highly likely to
be required.
• Advocate for the adoption of a range of portfolio financing options
such as fixed feed in tariffs, TECs, tax incentives, accelerated
depreciation and production tax credits.

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Synthesis Report

Key recommendations – Policies and Legislation


• Review and if necessary, advocate amendments to, international
agreements which could govern the transboundary movement of
CO2, including the definitions of "waste" under the London
Protocol and "hazardous waste" under the Basel Convention;
• Facilitate the harmonisation of CCS enabling laws across state
and national borders, particularly in the UK and Europe;
• Advocate the inclusion of CCS as a project type capable of
generating carbon credits under the Flexible Mechanisms (CDM
and JI) under the Kyoto Protocol (or its most relevant post-2012
manifestation);
• Advise governments that regulatory frameworks need to
accommodate the very long time frames associated with storage
to clearly allocate liability for leakage;
• Advise governments on amendments to existing legislation
applicable to the CCS project cycle where time or other
circumstances do not permit the development of integrated or
dedicated CCS legal schemes;
• Review planning and environmental laws and how these could be
used to compel (or at least make commercially viable) the use of
CCS in new or refurbished power plants and other GHG emitting
facilities and enterprises; tax or other incentives may be required
to address the costs associated with such requirements;
• Engage with Member States of the EU to assist in the
implementation of the CCS Directive as soon as possible;
• Help develop and promote CCS project-specific 'best-practice'
regulatory principles and model laws (eg, from the EU, USA,
Japan and Australia) which can be used by countries wishing to
facilitate, attract and promote CCS projects; and
• Assist domestic legislators by providing examples of law reform
initiatives from other jurisdictions which have already enacted
CCS specific law to help promote and facilitate CCS projects
particularly in developing countries.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Key recommendations – Public Acceptance


• Develop a pursuit strategy to identify and, working with others,
secure the support of critical decision-makers to the development
and deployment of CCS as an emerging industry and specifically,
of the projects identified in this study.
• Inform stakeholders through regularly updating the status of CCS
projects, policies and legislation, costs and R&D developments
using the data and frameworks gathered through this study as a
foundation.
• Actively engage its members to build partnerships to develop and
share CCS information.
• Engage directly with governments at strategic levels to inform and
advise them of CCS and its potential as one of the fundamental
technological responses to mitigate the risk of climate change.
• Actively share this and other key CCS information, either
individually or in cooperation with other leading agencies such as
the CSLF and IEA GHG R&D Program, through a variety of
mechanisms including its website, workshops and various industry
and government fora.
• Engage with proponents of the commercial scale, integrated
projects identified in this study to assess their public acceptance
strategies and any assistance that could be required to minimise
public opposition.

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Synthesis Report

2. Introduction

2.1 Background
This report draws together the key findings of the preceding four foundation
reports undertaken as part of the comprehensive baseline study on the
global status of CCS.

These foundation reports include:

• a comprehensive survey of global CCS projects to determine their


status as at 31 March 2009. This information will enable a complete
CCS project database to be compiled, updated and maintained and
for projects to be directly compared (Report One);

• a detailed analysis of capture, transport and storage cost structures


for power generation plants and a select range of industrial activities.
This will provide comprehensive cost estimates of both delivered
electricity and additional production costs for industrial processes, and
will also allow informed evaluations of CCS options to be made
(Report Two);

• a detailed assessment on the current status of CCS regulations and


policies to support CCS developments around the world. This
analysis is provided on a country and/or regional basis, where
appropriate, to identify and discuss policies that reduce regulatory and
economic impediments to the deployment of CCS (Report Three); and

• a comprehensive list and analysis of existing research and


development (R&D) networks (government, academia, industry and
institutes) around the world. This will identify, collect and analyse a
range of information on CCS R&D networks, identify research and
technology gaps and develop non-prescriptive recommendations to
address these issues (Report Four).

This synthesis report summarises the key findings of the four foundation
reports. Importantly, it attempts to assess the gaps and barriers to achieving
the deployment of commercial scale, integrated CCS projects globally within
the 2020 timeframe as stated by the Group of Eight (G8) nations.

The learnings are then synthesised to assess the key CCS gaps and
challenges. The existing CCS projects identified in this study are compared
to the characteristics of projects required to achieve the G8 objective.
Overlays of the findings from the four foundation reports are also used to
analyse the identified issues.

The key CCS gaps and challenges are also guided by a risk matrix
developed using an expert panel and the coordinators of the four foundation
reports to identify, rank and compare key issues. Through this process the
risks can be compared and mitigation strategies developed for consideration
and action by the Global CCS Institute.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Figure 2-1 Document map for the Synthesis Report

Report 1 Report 2 Report 3 Report 4


Existing CCS R&D
Status of CCS Economic assessment Policies and legislation
networks around
projects globally of CCS technologies framing CCS globally
the world

Report 5 - Synthesis Report

Gap and issues CCS projects


Risk analysis
assessment analysis

Mitigation strategies, recommendations


and key performance indicators

Uniquely, this baseline study was informed by key industry stakeholders in


their respective professions. The baseline survey undertaken as part of
Report One engaged numerous stakeholders around the world involved in
CCS activities and projects. The cost structures of CCS are both
contemporary and comprehensive, and are informed through
WorleyParsons’ and Schlumberger’s own direct experience and market-
based costs of developing CCS projects across a range of large stationary
emitters. Results were compared with findings from published literature.
The global review of CCS policies is informed by Baker and McKenzie’s
engagement with stakeholders in local, state, federal and international
jurisdictions in this space. While there are literally thousands of CCS R&D
activities globally, the Electric Power Research Institute’s (EPRI’s) overview
of CCS activities is an attempt to identify the most significant in the time
allotted.

2.2 Carbon capture and storage in context


The risk of significant climate change and the impact this has on the global
society has been articulated in several authoritative studies. The Stern
Review on the Economics of Climate Change (2006), the Intergovernmental
Panel on Climate Change (IPCC) Fourth Assessment Report (2007) and
more recently the Garnaut Climate Change Review (2008) are unanimous in
calling for reductions in greenhouse gas (GHG) emissions and rapid
deployment of policies that trigger investment.

A portfolio of technologies will be required to stabilise GHG emissions. It is


highly unlikely that any single technology or action will deliver the necessary
GHG emission savings in the timeframes required. This is because all
technologies and actions are subject to constraints of some kind, there are a
wide range of sectors that generate GHG emissions and the ability of

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Synthesis Report

individual nations to undertake actions is varied. As a result, a portfolio will


be required to achieve the lowest cost mix of abatement approaches and
these are likely to differ from nation to nation and indeed, between areas
within a nation.

The application of CCS must play a significant role in reducing harmful


emissions to the atmosphere as part of a portfolio of solutions to combat
climate change. The International Energy Agency’s (IEA) estimate of the
various technologies and actions that can reduce anthropogenic CO2
emissions by 50 percent by 2050 can be seen in Figure 2-2 (IEA 2008).
Figure 2-2 Contribution of technology segments to reduce CO2 emissions by
50 percent by 2050

70 CCS industry
and transformation 9%
Baseline Emissions 62 Gt
60
CO2 emmissions (Gt CO2/yr)

CCS power generation 10%


Nuclear 6%
50
Renewables 21%
Power generation efficiency
40 and fuel switching 7%
End-use fuel switching 11%
30
End-use electricity
efficiency 12%
20
End-use fuel
BLUE Map Emissions 14 Gt efficiency 24%
10
WEO2007 450 ppm case ETP2009 BLUE Map scenario
0
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Source: IEA Energy Technology Perspective, 2008

Figure 2-2 shows that technological change holds an important key to


enabling the deep reductions in CO2 emissions to the atmosphere. The
portfolio of solutions to achieve the degree of mitigation required, and to
stabilise GHG emissions within or below the IPCC (2005) emission reduction
scenarios will consist of:

• increasing the efficiency of energy conversion or use;

• reducing the consumption of energy or energy conservation;

• switching to lower carbon content fuels such as from coal to natural


gas or even biomass derived fuels;

• enhancing sinks to absorb CO2 in forests, soils or oceans;

• using energy sources with very little or zero CO2 emissions such as
renewable or nuclear energy; and

• capturing, transporting and safely storing CO2 from existing high


emitting sources via CCS.

The Energy Technology Perspective (ETP) BLUE Map scenario, which


assessed strategies for reducing GHG emissions by 50 percent by 2050
(consistent with the 450 ppm carbon dioxide equivalent (CO2e) stabilisation

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Strategic Analysis of the Global Status of Carbon Capture and Storage

scenarios), concluded that CCS will need to contribute 19% of the necessary
emissions reductions to achieve stabilisation in the most cost-effective
manner. This is particularly important as the consumption of fossil fuels
(particularly coal in power generation) is expected to continue to provide a
large portion of the global energy demand over coming decades.

Under this BLUE Map scenario, the total CO2 emissions captured,
transported and safely stored would reach 10.1 gigatonnes per annum
(Gtpa) of CO2 by 2050. It is estimated that around 55 percent (5.5 Gtpa
CO2) will be sourced from power generation and the remaining 45 percent
(4.6 Gtpa CO2) from industrial and fuel transformation sectors.

Importantly, the BLUE Map results identified that if the CCS strategy is not
available, the overall cost to achieve the target of a 50 percent reduction in
CO2 emissions by 2050 will rise by 70 percent (IEA, 2008a). Similarly, the
IPCC Special Report on CCS (2005) found that CCS could provide between
15 and 55 percent of the cumulative mitigation effort worldwide up to the
year 2100, and at an overall abatement cost saving of 30 percent.

Furthermore, Figure 2-2 is also important because it clearly shows that all
individual emission reduction options must be effective in order to achieve
the cumulative reduction of a 50 percent decrease in CO2 emissions by
2050. Some opponents of CCS often suggest that CCS is not required and
that funding support for CCS should be diverted to, for example, renewable
energy options. However, the IEA estimates clearly show this is a false
economy. All options and actions must work in concert if significant
atmospheric emissions reductions are to be achieved within the 2050
timeframe.

Given the potential of CCS to significantly contribute to GHG emissions


reductions to the atmosphere, its importance was reinforced by the G8 at its
33rd meeting in Hokkaido on 8 July, 2009. There, the G8 Leaders affirmed
their support for the launching of 20 large-scale CCS demonstration projects
globally by 2010, taking into account varying national circumstances, with a
view to beginning broad deployment of CCS by 2020.

2.3 Potential economic benefits of CCS


Recent estimates of potential CCS investments range from US$33 to US$66
billion between 2010 and 2030 in the UK economy alone, to US$100 billion
annually (plus ongoing operating costs) by 2020 (AEA 2008, Ernst & Young,
2009). These potential investments are indicative of the large capital
requirements of major point sources of emissions such as fossil fuel power
plants, steel production and gas processing facilities that are potential
candidates for installing CCS. These types of infrastructure are generally
high in cost given their scale and complexity, even without the installation of
CCS. With the installation of technologies to capture, transport and store
CO2 in geological formations, it is apparent that the overall cost of these
plants will be higher than those facilities without CCS technologies.

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In addition, recent estimates for the UK suggest that CCS could also be a
major source of job creation going forward. The deployment of CCS could
catalyse new jobs in the provision of services (such as project management,
engineering, finance, legal and environment), the manufacture of
components (such as boilers and turbines) and construction of CCS plants
(either new build or retrofit). In total, an estimated 30,000 to 60,000 new
jobs in these fields could potentially be created in the UK by 2030 (AEA,
2008).

Deployment of CCS can also play a significant role in providing energy


security. Approximately 25 percent of the world’s primary energy needs is
provided by coal, predominately in the form of electricity generation. The
utilisation of coal for power generation is expected to continue in the coming
decades because it is relatively cheap, abundant and can be transported
easily and safely. The application of CCS to coal-fired power plants is
essential to not only meet global GHG reduction targets, but also to provide
energy security for many nations.

As a key emissions reduction scheme that has the potential to deliver


approximately one fifth of the global CO2 emissions reductions by 2050,
CCS will play a significant role in reducing the economic cost of climate
change. A number of reports have estimated the economic impacts of
climate change with the Stern Review (2006) concluding that the benefits of
strong and early action far outweigh the economic costs of inaction.

The Stern Review’s economic modelling estimated that if society did not act
to reduce GHG emissions, the overall costs and risks of climate change
could be equivalent to losing at least 5 percent of global gross domestic
product (GDP) each year, now and into the future. If a wider range of risks
and impacts is considered, the estimated damage could rise to 20 percent of
GDP or more. In contrast, the costs of acting to reduce GHG emissions to
avoid the worst impacts of climate change could be limited to around 1
percent of global GDP each year. As stated above, the IEA indicates that all
CO2 reduction options must be effective if the 50 percent reduction target is
to be achieved. With CCS contributing to almost one fifth of CO2 emission
reduction opportunities, its value in mitigating the effects of climate change,
going forward, is significant.

2.4 Overview of CCS technologies


This section provides a high level overview of the technologies in the CCS
value chain. A more detailed discussion is provided in Report One.

The three general approaches to capturing CO2 generated from fossil fuels
(coal, natural gas and oil) or biomass utilisation are post-combustion, pre-
combustion, and oxyfuel combustion capture, as shown in Figure 2-3.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Figure 2-3 A simplified schematic of CO2 capture approaches

Post-Combustion Capture

CO2
Gas
Fuel and Air Treatment
GHG
Reduced
Exhaust

Pre-Combustion Capture
Air

Fuel, Air /
Gasifier or Gas
Oxygen and
Reformer Treatment
Steam Hydrogen
Rich
R Syngas
CO2

Oxyfuel Combustion Capture

CO2 and
Fuel and Poll
Pollutants Gas CO2
Geo-Sequestration
Oxygen Treatment

Pollutants

Legend Recycle
CO2 - Carbon Dioxide
GHG - Greenhouse Gas

2.4.1 Post-combustion capture


Post-combustion capture (PCC) of CO2 involves the separation of CO2 from
flue gas produced by conventional fossil fuel or biomass combustion in the
presence of air. The PCC technology is commercially available to separate
CO2 in many applications including the chemical processing industry and in
the natural gas industry for CO2 separation to purify natural gas (before it is
supplied to customers). However, as many of the existing applications are in
a synthetic gas (syngas) or reducing gas environment, a key requirement is
to adapt and scale up (particularly chemical solvent based processes) for
applications in an oxidising environment where the flue gas volumetric
throughputs are also significantly higher. A key benefit of PCC is its ability to
be retrofitted to existing large stationary emitters of CO2 such as coal-fired
power plants as well as ore smelters, steel production facilities and cement
plants.

2.4.2 Pre-combustion capture


Pre-combustion capture involves reacting a fuel with oxygen and/or air and
steam in a gasifier or reformer to yield a syngas, mainly consisting of carbon
monoxide (CO) and hydrogen. Additional hydrogen and CO2 are produced
by reacting the CO with steam in a shift reactor. The CO2 is then separated,
typically utilising a physical or chemical solvent scrubbing process, which
results in the production of a high purity CO2 stream. A key benefit from the
application of the shift reaction and pre-combustion capture is that the
resulting fuel is a stream of hydrogen which, when used for power
generation, results in a by-product that predominantly consists of oxygen
and water. Pre-combustion capture can be applied to integrated gasification
combined cycle (IGCC) plants. Technologies for the shift reaction and

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Synthesis Report

capture process currently exist in the chemical processing industry, as well


as at the scale required to implement the system in power generation plants.

2.4.3 Oxyfuel combustion capture


Oxyfuel combustion for CO2 capture uses near pure oxygen instead of air for
combustion of the fuel, resulting in a flue gas that is mainly water vapour and
CO2 (more than 60 percent by volume). The water vapour is then removed
by cooling and condensation. In oxyfuel combustion, cooled flue gas is
recycled back to the combustor to moderate the high flame temperature that
results from the combustion in pure oxygen. This process eliminates
nitrogen from the flue gas to produce a stream of CO2 for compression,
transport and storage. Residual oxygen, nitrogen, noble gases and moisture
in the CO2 stream may need further treatment to provide a suitable gas for
transport and storage.

2.4.4 Considerations of capture approaches


All three CO2 capture approaches can be utilised for CCS with CO2 capture
rates up to 90 percent. The following points highlight the key aspects when
assessing an approach for use in CCS projects:

• Post-combustion: The most appropriate technique to use for CO2


separation in fossil fuel based power generation plants, due to their
reliance on fuel burning in air. However, the process requires large
capacity equipment to accommodate the high volumetric flow of air
used during combustion, which presents energy penalties for CO2
capture, capital expenditure (CAPEX) and land availability issues
when retrofitted to existing plants.

• Pre-combustion: This technique is predominantly used on a


commercial scale in the chemical industry. The additional cost of
capture appears to be lower than for PCC at the current state of
technologies. However, the additional processing steps of air
separation, shift conversion and gas clean-up add complexity and cost
to pre-combustion operations. It is more likely to be applied to new
build plants rather than retrofit.

• Oxyfuel combustion: A relatively new concept of using a high


concentration of oxygen in the combustion process to produce an
almost pure stream of CO2 for direct compression and sequestration.
Air separation to produce oxygen is energy intensive whilst at the
same time the CO2 produced has to be further concentrated (cleaned
up) before transport and storage. This may require additional cleaning
units in the capture process to meet the specified quality specifications
for CO2.

All CO2 capture approaches are technically proven and viable. However,
none have been integrated with a coal-fired power plant at commercial scale.
Their use depends on the type of application or process being fitted with CO2
capture. The cost of capture (both CAPEX and operation and maintenance

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Strategic Analysis of the Global Status of Carbon Capture and Storage

expenditure (OPEX)) will be dependent on the type of capture and process


application, land availability, environmental factors and prevailing regulations
including those which impose an economic value on CO2 emissions. The
reduction of capture and compression costs are critical if CCS is to be
broadly deployed beyond initial demonstration units. One of the key
approaches in reducing costs is through the gaining of experiences in the
planning, construction and operation of commercial scale, integrated CCS
projects. A fundamental tenet of experience curves is that the more
frequently a task is performed, the lower the cost of doing it will be.
Implicitly, the G8 goal of launching 20 commercial scale, integrated CCS
projects by 2010, for broad deployment by 2020 is an attempt at generating
multiple experiences from which operations can be optimised and costs
reduced.

2.4.5 Transport of CO 2
After CO2 is captured, it can be safely transported for storage by pipelines,
land (road or rail) and/or by ship.

• Transport by Pipeline: Pipeline transportation of CO2 has some


Over 6,000km of
pipelines have
industry experience, predominately in the oil and gas sector. This is
been safely the most economical method of high quantity CO2 transportation over
transporting CO2 long distances. Over 6,000 kilometres (km) of dedicated CO2
for over 20 years
pipelines are in operation in the USA where such pipelines have
in the USA
operated safely for over 20 years. However, CO2 pipelines operate at
much higher pressure than, for example, natural gas pipelines, and
CO2 pipeline technology has not developed to the same extent as oil
and gas pipelines.

• Transport by Land: CO2 transport by either rail or truck tankers has


been utilised for many years to meet existing industrial needs. This
option is attractive for smaller quantities transported over shorter
distances when pipeline infrastructure is not cost effective.

• Transport by Shipping: CO2 transport by ships presents an option


when the emission source is within a feasible distance to adequate
seaport facilities capable of loading CO2 for injection in offshore fields.
Significant interest has emerged from existing shipping businesses to
transport CO2 for EOR and/or EGR in the North Sea. Transportation
of liquefied natural gas (LNG) has occurred over decades and further
research and design work is ongoing in Norway and Japan to adapt
this knowledge to transport CO2 by ships.

Of the three transport options currently available, CO2 transport by pipeline


is the most likely option to be used for the deployment of commercial scale
CCS projects. There are current initiatives to consider the business case of
collecting CO2 from multiple emitters and to transport the CO2 through large
diameter trunklines. This is being considered in an attempt to gain
economies of scale from transporting large quantities of CO2.

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Synthesis Report

For CCS to be deployed commercially within the timeframe and scale


required by the G8, government, industry and community stakeholders will
need to work together in strong partnerships. Establishing widespread CO2
transportation infrastructure will require strategic long-term planning, taking
into account the potential magnitude of future deployment scenarios for
CCS. In order to achieve the CO2 emissions reductions targets using CCS,
the scale of infrastructure required for transporting CO2 by pipeline could be
comparable to that of the oil and gas infrastructure in existence around the
world today.

Information provided by private pipeline developers through undertaking this


study indicated that while the business case for capturing and transporting
CO2 for EOR is viable, (particularly in the USA), many private developers are
unwilling to finance the cost of dedicated CO2 pipelines for geological
storage. The uncertainty on existing or proposed regimes for assigning an
economic value for CO2 is not conducive to developers of infrastructure with
20-40 year timeframes. This stipulates that it is highly likely that
governments will need to initially underwrite the funding of major CO2
pipeline infrastructure.

2.4.6 Storage of CO 2
The storage of CO2 can be undertaken through a range of approaches.
These include storage through plants such as algae and forests (terrestrial
storage), soil organic matter (such as bio char) and geosequestration, which
generally refers to the process of safely containing CO2 in the earth’s
subsurface, thereby preventing it from being emitted into the atmosphere.
The CCS concept refers only to geosequestration and is the focus of this
study. As stated above, under the IEA’s BLUE Map scenario, the total CO2
emissions captured, transported and safely stored would need to reach 10.1
Gtpa CO2 by 2050.

A range of potential storage formations have been identified to safely store


the CO2. These include geologic formations such as deep saline reservoirs,
depleted oil or gas fields, EOR/EGR, enhanced coal bed methane (ECBM)
extraction and basalt formations. The various methods of geological storage
are illustrated in Figure 2-4.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Figure 2-4 Geological storage options for CO2

Source: CO2CRC, 2009

To meet the G8 objectives, the most likely storage sites include deep saline
reservoirs and depleted oil or gas fields, as these storage formations are
relatively well understood. However, significantly more effort is required to
identify and prove sites for the injection and safe storage of large volumes of
CO2 for commercial operations. The techniques involved in identifying these
storage sites are similar to those employed by the oil and gas sectors when
prospecting for hydrocarbons.
Commercial Commercial projects such as Weyburn and Sleipner have been safely
projects such as
Weyburn and storing CO2 in deep saline reservoirs and depleting oil fields for more than a
Sleipner have decade. However, exploration and appraisal of technically viable and
been safely economically feasible storage sites will continue to be a key limiting factor in
storing CO2 in
the deployment of CCS going forward. Whilst CO2 storage through EOR or
deep saline
reservoirs and EGR offers an attractive pathway to commercialise CCS at this stage, it is
depleting oil highly dependent on locations favourable to this practice, reservoir
fields for more characteristics and the value of oil/gas recovered. The storage of CO2 using
than a decade
EOR and/or EGR is not likely to facilitate the widespread deployment of CCS
globally, compared to saline reservoirs.

The selection and characterisation of appropriate storage sites is a key


limiting factor for the commercial deployment of CCS. Irrespective of the
capture technologies, industries or transport methods, the ability to safely
store large volumes of CO2 is the critical issue that underpins the entire CCS
value chain.

Given the importance of storage in underpinning the CCS value chain the
following section gives an overview of the various storage formations
available for geosequestration.

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S AL I N E R E S E R V O I R S
Saline reservoirs are deep underground rock formations containing brine.
These are the most abundant and geographically diverse potential sinks for
CO2 storage. The ability of this formation to trap and dissolve CO2 within the
brine makes it potentially well suited to serve as long-term storage sites.

D E P L E T E D O I L AN D G AS R E S E R V O I R S
Depleting and disused oil and gas reservoirs are generally the most well
understood storage option for CO2. They have a proven history of
containing oil, gas and naturally occurring CO2 for millions of years, and as a
result, there is a high degree of confidence that these formations will be able
to contain anthropogenic CO2 over time. Furthermore, they represent
attractive development opportunities as they have already undergone
extensive site analysis during oil and gas production. This information can
be directly leveraged to evaluate, model and characterise the formation’s
suitability for long-term storage, minimising upfront development costs.

E N H AN C E D O I L AN D G AS R E C O V E R Y
There are many EOR activities, primarily in the USA, that currently store
large volumes of CO2. For EOR or EGR, CO2 is injected into oil or gas
reservoirs to enhance its recovery. Commercial scale, integrated CCS
projects for EOR include Rangely in Colorado USA, Weyburn in
Saskatchewan Canada and Salt Creek in Wyoming USA.

E N H AN C E D C O AL B E D M E T H AN E
Storing CO2 in uneconomic coal seams has attracted interest over the last
two decades. Coal beds that are either too deep or too thin to be mined
could be flooded with CO2 to release coal bed methane which is a valuable
source of natural gas.

B AS AL T I C R O C K F O R M AT I O N S
Basaltic rock formations have gained increased academic attention as
potentially the most stable and robust CO2 storage opportunity in a number
of regions. However, to date, there has only been limited laboratory
experimentation with storing CO2 in this formation.

O T H E R S T O R AG E O P T I O N S
Other ideas that have been explored include dissolution in the ocean with
iron fertilisation, mineralisation into calcium bearing and magnesium oxide
bearing rock formations near the surface, and securing CO2 in liquid pools or
clatharites (a form of hydrated CO2 ice) at the sea floor. However, these
remain largely conceptual and will not be ready in the timeframes required to
meet the G8 objectives.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

2.4.7 Conclusions
Society will face
the prospect of Ultimately, there will be a need to shift to a new energy economy that
having to deal
involves the use of low or zero emission technologies such as CCS. The
with continually
rising CO2 development of such technologies will take time and existing reserves of
emission levels fossil fuels will continue to play an important role in creating the energy
from the needed to drive societies. As such, society will face the prospect of having
combustion of
fossil fuels to deal with continually rising CO2 emission levels from the use of fossil fuels
worldwide worldwide. Given this, the application of CCS must be accelerated.

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Synthesis Report

3. Overview of the first foundation report


Status of carbon capture and storage projects globally

3.1 Introduction
The objective of Foundation Report One: Status of Carbon Capture and
Storage Projects Globally is to provide a single source of information on
CCS projects world wide as at 31 March 2009. The scope of this study was
to develop a report detailing:

• the most comprehensive status of global CCS projects (across CO2


capture technologies, transport and storage options);

• the most contemporary status of CCS project activities including


those that are cancelled, delayed, planned or active;

• the categorisation of projects across key regions; and

• a consistent and transparent set of metrics to enable comparisons


between projects and across a range of large stationary emission
sources.

3.2 Background
This section briefly describes the methodology of the data collection
exercise. Given the global nature of this activity, the administration and
coordination of the data gathering and validation process has been divided
into key regions of the world based on WorleyParsons’ office locations.
These are:

• Asia (Beijing, China);

• Americas (Reading and Houston, United States of America (USA));

• Australia and New Zealand (Brisbane, Australia); and

• Europe, Middle East and Africa (London, United Kingdom (UK)).

3.2.1 Collection points


Information on CCS projects has been sourced from multiple private
databases, surveys of CCS stakeholders, direct engagement of proponents
and through internet searches.

3.3 Limitations and exclusions


Best endeavours have been used to secure, verify and organise the data
collected in the global survey of CCS projects. Numerous primary and
secondary data sources have been used to collect and validate the data.
However, despite these best endeavours, the database may have some

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Strategic Analysis of the Global Status of Carbon Capture and Storage

limitations and exclusions arising from a range of factors beyond the authors
influence. The limitations are listed below.

• The timeframe in which the Consortium had to gather and validate the
project data was limited to four months.

• The Consortium was reliant on the good will of project proponents and
other key stakeholders to provide timely, accurate and complete
responses.

• Some project proponents/stakeholders chose not to participate in the


activity at this time.

• Certain data sets have been specifically withheld at the request of the
project proponent.

• Some data may have been recorded incorrectly when it was translated
into English.

• Significant challenges were encountered in establishing a globally


harmonised metric to define what a “large-scale CCS project” meant.

A detailed list of the limitations and exclusions is included in Report One.

Despite these limitations and exclusions, the authors believe that the data
set is robust. For example, when proponents of large-scale integrated
projects chose not to be part of the survey, publicly available data has been
sourced from the internet or secondary sources such as published literature.
The data has also been checked on numerous occasions by the regional
teams that collected the primary information to overcome any language
issues as part of the quality control process.

Given the possible limitations and exclusions, the authors recognise that
while the creation of the CCS project database is a significant step forward, it
is but one step in an ongoing process. It provides a robust and rigorous
platform upon which new CCS project information can be added, or existing
information refined, by the Global CCS Institute going forward.

3.4 Project analysis process


The following basic criterion was used to determine whether an activity
captured in the database should be considered for analysis.

The activity is intended to produce advancement in components,


systems and processes which will support the commercialisation of
integrated CCS solutions in either power or industrial applications with
emissions greater than 25,000 metric tons per year of CO2.

Any activity that was only intended to be an academic study has been
excluded from the analysis and is considered to be research only.

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Synthesis Report

3.4.1 CCS project type


The following project types have been used.

• Capture only

• Capture ready

• Capture and transport

• Transport only

• Transport and storage

• Storage only

• Integrated (capture, transport and storage)

3.4.2 CCS project scale


Based on the G8-IEA-CSLF (2007) third workshop on “Near-Term
Opportunities for Carbon Capture and Storage", it was determined that
industrial (large) scale equated to more than 1 million tonnes of CO2 stored
per annum.

The review also showed that various stakeholders have used different
metrics to determine the definition of large-scale CCS projects. Terms such
as “industrial scale”, “large scale” and “commercial scale” are used
interchangeably, often without a common basis of understanding. For this
study, the term “commercial scale” is applied to describe the minimum level
of CCS application required for the current industrial markets to adopt the
technologies in commercial enterprises. For example, this would be the
minimum size of CCS required if the current commercial power generation
market were to adopt CCS. This is discussed in more detail below.

The following project scale categories, listed from smallest to largest, have
been used.

• Bench

• Pilot

• Demonstration

• Commercial scale

A project specific set of metrics were developed to classify the projects


which are across numerous technologies and industries into these four
categories.

There are two aspects to this metric:

• the demonstration of CO2 storage; and

• the development of CCS technologies to prove technical and


commercial viability.

These are discussed further below.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

The demonstration of CO2 storage

The metric for commercial scale CO2 storage used in this study was based
upon the G8-IEA-CSLF volumetric rate of greater than 1 Mtpa, as discussed
above. This was applied to integrated, storage only and transport and
storage project types as these involve the storage of CO2. The smaller scale
categories were based on percentages of the commercial scale as
presented in Table 3-1.

The development of CCS technologies to prove technical and


commercial viability

Where a project does not involve storage of CO2, the approach adopted in
this study is to categorise the scale of a project according to the product
capacity of the facility. This is consistent with how facilities are already
characterised when considering scale and this assists in categorising and
grouping projects of similar scales. For example, the electric power industry
will scale on the net electrical output and the aluminium smelting industry on
the quantity (in tonnes) of aluminium produced per day.

Given that a number of existing CCS technologies are still at some stage of
development, it is necessary to demonstrate, prove and optimise these
technologies at their minimum scale necessary for that stage of
development. Due to the relative immaturity of integrating the three key
elements of CCS, demonstrating the integration of capture, transport and
storage can only occur initially at a scale in line with the least developed
component.

In the case of power generation, 90 percent of commercially operating power


plants in the USA fall within the range of 80 megawatt electrical (MWe) to
950 MWe. Therefore, for the power sector 80 MWe is used in this study as
the minimum capacity for commercial scale in the absence of any storage
component for the project. This is also the minimum commercial scale for
the application of CCS to biomass fired power plants, as identified by EPRI
in Foundation Report Four.

Once the technologies are proven to work for CCS applications, and
performance guarantees are set under integrated CCS systems, the actual
deployment of the technology is likely to occur on a larger scale than 80
MWe. For example, the commercial market for the power generation sector
is currently constructing non CCS power plants greater than 600 MW for coal
fired IGCC and pulverised fuel power plants and 250 MW for natural gas
power plants.

A similar approach of benchmarking has been applied to the other large


emitting industries.

Capture only, capture ready and capture and transport projects that are not
in any way integrated with storage of CO2 applied within these various
industries have been categorised on the basis of these minimum commercial
scales.

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Synthesis Report

Table 3-1 Definition of project scale for CCS

Percent of minimum Project scale


Comments
commercial scale category
100% ≤ scale Commercial Full commercial use of product
Limited commercial use of
10% ≤ scale < 100% Demonstration product, or intermittent sale of
product
No commercial use of product
Operates on actual flue gases
5% ≤ scale < 10% Pilot
The smallest size of plant that
works as an integrated unit
No commercial use of product
Operates on simulated flue gas
Scale < 5% Bench
Demonstrates only elements of a
commercial design

3.4.3 The WorleyParsons asset lifecycle model


The asset lifecycle model is used to categorise the status of a project
according to its development stage. This model is a framework to assist
decision-makers and articulates a staged approach with a series of “go/no-
go” decision gates. The asset lifecycle model is shown in Figure 3-1.
Figure 3-1 The asset lifecycle model

Project Phase

Establish preliminary Establish development Finalise scope and Detail and Operate, maintain
Developer’s Goals scope and business options and execution execution plan construct asset and improve asset
strategy strategy
Select concept Sanction Start-up
• Scoping and • Pre-feasibility studies • Feasibility studies • Detailed Engineering
screening studies • Conceptual design • Preliminary • Engineering,
• Business model • Cost estimating Engineering (FEED) Procurement and
Activities development • Cost estimating Construction
• Contract planning
Management (EPCM)
• Execution planning
• Project Management
Contracting (PCM)

The quantum of costs incurred to reduce technical and commercial


uncertainty increases as the project progresses through the asset lifecycle.

10-15
As a general guide, between 10-15 percent of a project’s total installed cost
could be spent to achieve completion of the Define stage.
percent of a
One proponent, ZeroGen Pty Ltd that is developing a commercial scale, project’s total
IGCC project with CCS demonstration has estimated that the total installed installed cost
could be spent
capital cost of it’s project to be in the order of $US3 billion to $US3.2 billion to achieve
(C Greig 2009, pers. comm. 4 September). Using the general estimate of 10 completion of
to 15 percent described above, the cost of advancing this project from the the Define stage
“Identify” phase to the end of the “Define” phase is in the order of $US300
million to $US480 million. This figure includes environmental studies to
secure regulatory approvals and engineering studies for the power plant, as
well as pipeline and field development costs for finding and appraising the

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Strategic Analysis of the Global Status of Carbon Capture and Storage

storage site. This illustrates the significant level of investment required to


deliver a CCS project. These investments are essential to ensure that
decisions be based on robust and accurate information prior to sanctioning
the commitment of even greater investments to projects.

3.5 Project status and trends

275
projects were
The database of CCS projects contains a total of 499 entries. Of these, 224
entries are small scale research and development activities. The details of
identified these activities are recorded in the database but are not considered in the
analysis of this report. Accordingly, data from 275 CCS projects that meet
the criteria form the basis of this study’s analysis.

The status of CCS projects has been grouped into the following categories.

• Planned projects are in the Identify, Evaluate or Define stage of the


asset lifecycle prior to sanction.

• Active projects are in the Execute or Operate stage of the asset


lifecycle after having been sanctioned. It is important to note that
active does not necessarily mean that a project is operating or actively
injecting CO2 for storage.

• Delayed projects are those that have had activities postponed and, for
all intents and purposes, stalled relative to the project schedule.
These projects are planned to resume at some point if more
favourable conditions develop and can occur at any stage of the asset
lifecycle.

• Cancelled projects are those that have ceased activities prior to


fulfilling their intent and have no intention of resuming. These can
occur at any stage of the asset lifecycle.

• Completed projects are those that have fulfilled their original intent.
For example, this may be the construction and operation of a pilot
plant for a limited period of time.

Figure 3-2 articulates the hierarchy of analysis applied in this section to


interpret the data. This hierarchy leads to the analysis of the commercial
scale, integrated projects that have potential to support the G8 objective.

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Synthesis Report

Figure 3-2 Hierarchy of analysis

Total - 275 Active or planned - 213

Completed - 34 Commercial scale - 101

Cancelled or delayed - 26
Integrated - 62

Input withheld - 2

Figure 3-2 shows the following division of the 275 CCS projects by status:

• 213 active or planned projects, including those which are operating;

• 34 projects that have been completed;

• 26 cancelled or delayed projects; and

• 2 projects where the respondents have chosen to withhold the project


status.

The active or planned projects are then examined further by their scale and
CCS project type. Of the 213 active or planned projects, 101 are of
commercial scale. Of these, 62 are considered as integrated that is,
demonstrate the entire CCS process chain of CO2 capture, transport and
storage.

3.5.1 Total projects by region


The 275 identified projects are distributed in regional areas as shown in
Figure 3-3.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Figure 3-3 Total projects by geographic region

East Asia (ex. Japan)


China 2% (5)
Australia and New Zealand 6% (16)
10% (27) India Area
2% (6)
Japan
Denmark (3)
4% (12)
Finland (1)
France (2)
Germany (8)
Italy (6)

Netherlands (12)
Europe
Other
Area
24%
24% (66) Norway (13)
USA Spain (4)
37% (104) Sweden (2)
UK (15)

Eastern Europe
3% (8)
Middle East
Canada 1% (3)
9% (24) Africa
1% (2)
South America
1% (2)

The data reveals that the USA is the most active country in CCS projects,
accounting for 37 percent of the identified projects. There is also significant
activity in the Europe Area which accounted for 24 percent of all identified
CCS projects followed by Australia and New Zealand, Canada and China.

There is evidence of widespread activity across the Europe Area. This may
be driven by CCS competitions, initiatives and funding schemes that are
applied across the European Union (EU).

The data shows that many countries have implemented funding schemes.
For example, the Australian federal government recently launched its CCS
Flagships program, Europe has had a funding scheme for CCS, as has
Canada and particularly, the Province of Alberta. The UK is currently
running a competition for funding CCS. These funding schemes, amongst
others, are described in greater detail in Section 5.2.4. These mechanisms
are proving successful in promoting activity. However, the results indicate
the majority of the activities are at the early stages of the asset lifecycle
where funding requirements are relatively low compared to the estimated
total capital cost of the project.

In North America, the capacity of the oil and gas industry means there are
significant opportunities for CCS involving enhanced oil or gas recovery.
This not only promotes activity but also represents some of the most mature
projects globally.

The status of the 275 CCS projects classified according to the categories
developed for project status in Section 3.5 are summarised in Figure 3-4.

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Synthesis Report

Figure 3-4 Total projects by status

Completed Input Withheld


12% (34) 1% (2)

Cancelled
4% (11)

Delayed
5% (15)

Planned
50% (135)

Active
28% (78) TOTAL - 275

There are 26 projects that have been delayed or cancelled, and two where
the project proponents have decided to withhold information in this category.

Figure 3-4 also shows that there were 34 completed CCS projects out of a
total of 275.

The majority of the completed projects are relatively small in scale. This
may be because the economic, technical, regulatory and public acceptance
challenges were smaller or fewer at this scale. As a result, these challenges
did not present significant barriers to these projects.

No integrated projects have been completed at any scale.

3.5.2 Active or planned CCS projects by geographic


region
Of the 275 projects listed, 213 projects (77 percent) are active or planned at
this time. This includes projects which are in the Operate stage.

The geographic distribution of active or planned CCS projects follows a


similar trend to that of all projects, with the USA and Europe being dominant.
Australia, Canada and China also represent significant activity.

3.5.3 Active or planned CCS projects by scale


The projects surveyed have been characterised according to the metrics
developed for project scale. Figure 3-5 below shows that the current state of
development is such that most projects fall into the demonstration or
commercial scale category.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Figure 3-5 Breakdown of active or planned CCS projects by scale

125

100

Number of Projects

75

50

25

0
Not Categorised Bench Pilot Demonstration Commercial
Planned 2 7 24 29 73
Active 0 5 11 34 28

101
There are 101 active or planned projects which are of commercial scale
according to the criteria developed for this report. There are an additional 63
active or planned projects which are demonstration scale. Together these categories account
projects are of
commercial scale for 77 percent of the 213 identified active or planned CCS projects. This
distribution is unexpected given the perceived relative immaturity of CCS
worldwide. For an emerging technology space it is generally expected that
most projects will be bench scale, with a downward trend of project counts
as it approaches commercial scale.

Of the active or planned, commercial scale CCS projects, 73 of these (72


percent) are being planned. That is, they are at the Identify, Evaluate of
Define stages of the asset lifecycle prior to project sanction. This may
represent the large number of projects currently being proposed globally in
response to government funding initiatives and grants.

The largest number of active projects is at demonstration scale. This subset


represents 44 percent, or 34 of the total 78 active projects. The second
largest group of active projects are at commercial scale, representing 28
projects (36 percent).

3.5.4 Active or planned CCS projects by type


Figure 3-6 presents the distribution of the active or planned CCS projects by
their project type.

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Synthesis Report

Figure 3-6 Active or planned CCS projects by type

Capture Ready
5% (10)

Integrated
28% (59)

Capture Only
39% (83)

Storage Only
22% (47)
Capture and Transport
2% (5)
Transport Only
Transport and Storage 2% (4)
2% (5) TOTAL - 213

The active or planned CCS projects are dominated by integrated, capture


only and storage only CCS project types.

Integrated projects represent the second largest category. This could be in


response to the current raft of stimulatory funding competitions and
programs in key regions which are dictating that projects be of an integrated
nature to be eligible.

The majority of the 83 capture only projects are in the power generation
sector (53), followed by fertiliser production (10) and gas processing (9).

Of the storage only projects, 21 are for beneficial reuse (such as EOR or
EGR) and 19 for geological storage. There are six storage only projects that
are storing or planning to store using terrestrial storage methods such as
bio-sequestration in agricultural lands or forests. The remaining storage only
project is currently not categorised.

Within the 213 active or planned projects, 159 of these employ the following
forms of CO2 capture: pre-combustion, post-combustion and oxyfuel
combustion.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Table 3-2 Active or planned CCS projects by capture type

Capture type Number of projects

Pre-combustion 56

Post-combustion 76

Oxyfuel combustion 14

Not categorised 13

Total 159

Pre-combustion capture is almost exclusively used in conjunction with


gasification technologies. Oxyfuel combustion technologies are inherently
associated with the actual process of combusting fuel, and at this stage, are
largely being developed for power generation. It can be applied to both new
build or as a retrofit to an existing conventional power station.

3.5.5 Active or planned CCS projects by storage


type

129
projects involve
Within the 213 active or planned projects, 129 of these projects involve a
form of CO2 storage. Figure 3-7 shows the distribution of projects by storage
some form of CO2 method employed.
storage Figure 3-7 Active or planned CCS projects by storage type

Not Categorised
6% (8)

Beneficial Reuse
34% (44)

Geological
55% (71)

Terrestrial TOTAL - 129


5% (6)

The survey shows that geological storage and beneficial reuse are the major
methods currently being undertaken or planned for sequestering captured
CO2. Collectively they account for 89 percent of the projects which include a
storage component. Geological storage represents 55 percent of storage
projects, while beneficial reuse accounts for a further 34 percent.

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Synthesis Report

Of the projects undertaking or planning to undertake geological storage, 53 There is signficant


percent are for storage in saline reservoirs. This is encouraging given the global potential for
significant global potential for safe, long-term CO2 storage in these safe, long-term
storage in saline
formations. Storage in depleted oil or gas fields represented 28 percent of reservoirs
proposed projects. This too is positive given that in general, there is usually
more data available from the operation of hydrocarbon activities.

Of the projects considering beneficial reuse, 55 percent are for EOR. This is
unsurprising as EOR has been applied for many decades. The next most
common forms of beneficial reuse are EGR and ECBM recovery, accounting
for 11 percent each. These projects are able to partially offset the cost of
storing CO2 by the revenue associated with enhanced oil or gas production.

There is ongoing conjecture on the validity of beneficial reuse of CO2 for


EOR and the other beneficial reuse types of storage as long-term storage
options for CCS.

Measurement, monitoring, and verification (MMV) associated with beneficial


reuse is the means of determining how much actual CO2 has been stored in
the reservoir. The remaining CO2 is extracted with the resource (eg, oil, coal
seam methane) and then recycled for use in the injection and recovery
process. This therefore, requires measurement of the amount received from
the capture plant and injected, as well as measurement of the amount that is
separated from the resource being extracted for recycling. The MMV
process must also include monitoring of any leakage from the reservoir and
this must continue after the recovery of the resource has ceased. This is to
ensure the integrity of the reservoir. It is important to note that not all the
projects identified as using EOR or other beneficial reuse are performing
MMV because it results in additional capital and operating costs. The
application of MMV to these projects could significantly advance learnings in
subsurface storage.

3.5.6 Active or planned CCS projects by facility


The 213 active or planned projects were also arranged by the facility type.
This included a range of facilities from government sponsored research
laboratories to commercial hydrocarbon refineries. Other types of facilities
where CO2 capture is currently being utilised, or is being planned, include
power, fertiliser production, iron/steel production and gas processing plants
as shown in Figure 3-8.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Figure 3-8 Active or planned CCS projects by facility

Not Categorised
Chemical Production Coal to Liquids
Other 7% (14)
4% (8) 1% (3)
3% (6)
Oil / Gas Recovery Fertiliser Production
8% (17) 5% (11)
Gas Processing
9% (19)

Mining
CO2 Sequestration Plant 3% (7)
7% (14)

Iron and Steel Production


1% (3)

Research
2% (4)

Oil Refining
1% (2)

Power Generation TOTAL - 213


49% (105)

50
percent of all
The efforts to develop CCS projects are concentrated in the power industry,
representing approximately 50 percent of all active or planned projects.
active or planned The gas processing and oil/gas recovery industries represent the next
projects are in the
power generation largest group of facilities which are considering or applying CCS.
sector
The survey revealed that the steel production industry, another source of
significant CO2 emissions, only had three active or planned CCS projects.

Based on the data, other large CO2 emitting industries such as cement and
aluminium production do not represent any significant activity in the CCS
space.

3.5.7 Active or planned, commercial scale CCS


projects
Of the 213 active or planned projects, 101 of these are at commercial scale.

The distribution of the active or planned, commercial scale CCS projects by


region is similar to that for all projects.

The largest number of these active or planned, commercial scale CCS


projects are in Europe and the USA, both accounting for 33 percent each.
This is followed by Canada (12 percent), Australia (8 percent) and China (5
percent).

There are no active or planned, commercial scale CCS projects identified in


the Indian sub-continent, South America or Japan. However, many
Japanese original equipment manufacturers (OEMs) are engaged with CCS
projects in other countries.

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Synthesis Report

Active or planned, commercial scale CCS projects in developing


Countries 9
of the
Nine of the 101 active or planned, commercial scale CCS projects are 101 active
located in developing nations. The classification of “developed” and or planned,
“developing” countries is consistent with the standard described by the commercial
scale CCS
United Nations (United Nations, 2008). These projects are listed in Table
projects are
3-3. in developing
nations
Table 3-3 Active or planned, commercial scale CCS projects in developing
countries

Asset
Approx. CO2
Project Location Project Description Lifecycle
Storage Rates
Stage

A coal to chemicals plant is


Shanxi Province,
Yulin Chemical Plant being studied for CO2 storage 5.0-10.0 Mtpa Identify
China
via various routes

Capture, transport and storage


Bintulu LNG Plant Malaysia 3.0 Mtpa Evaluate
of CO2

CO2 captured from post or pre-


Lianyungang IGCC Jiangsu, China combustion capture to be 0.1-1.0 Mtpa Evaluate
transported and stored

Dongguan Guangdong, Pre-combustion CO2 capture for


0.1-1.0 Mtpa Evaluate
Taiyangzhou IGCC China transport and storage

GreenGen IGCC Pre-combustion CO2 capture for TBD / not


Tianjin, China Evaluate
Project permanent storage or EOR specified

CO2 from a power plant, steel


Masdar CCS Project UAE and aluminium production 4.3 Mtpa Define
transported by pipeline for EOR

Capture portion providing CO2


Hydrogen Power Abu
Abu Dhabi, UAE to the Masdar CO2 1.7 Mtpa Define
Dhabi (HPAD)
transportation project (above)

Huaneng Shanghai
CO2 capture from a coal-fired
Shidongkou Power Shanghai, China 0.1 Mtpa Execute
power station for industry use
Plant

CO2 is separated from produced


gas and is transported by
In Salah CO2 Injection Ouargla, Algeria 1.2 Mtpa Operate
pipeline to a fully operational
onshore gas field

The number of active or planned, commercial scale CCS projects in


developing nations is encouraging, particularly given the challenges CCS
proponents face such as limited access to capital and immature regulatory
frameworks. However, from the perspective of current and predicted global
CO2 emission sources, the small number of projects in these countries
relative to developed nations is concerning.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

3.5.8 Active or planned, commercial scale projects


by CCS project type
Figure 3-9 presents the distribution of active or planned, commercial scale
projects by their CCS project type.
Figure 3-9 CCS project types for active or planned, commercial scale projects

Capture Ready
8% (8)

Integrated
32% (32)

Capture Only
40% (41)

Storage Only
9% (9)

Transport and Storage


3% (3)

Capture and Transport TOTAL - 101


Transport Only 4% (4)
4% (4)

Figure 3-9 shows that integrated and capture only projects represent the
largest categories of the active or planned, commercial scale projects.

Further analysis was conducted to compare the position in the asset lifecycle
of projects that are part of an integrated system, or exist as a standalone
CO2 capture, transport or storage project.

The first column of Table 3-4 shows the asset lifecycle stage for active or
planned, commercial scale CCS projects that are not integrated. At
commercial scale, these projects are all either capture only or capture ready.
The second column of the table presents the distribution across asset
lifecycle stages for projects that are integrated, either being undertaken
entirely by a single entity or integrated as a cooperative chain of separate
CCS entities. For the latter case, these CCS projects would be dependent
on at least one other entity to complete the CO2 capture, transport and
storage process chain.

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Synthesis Report

Table 3-4 Asset lifecycle stage of active or planned, commercial scale CCS
projects

Integrated
Stage Not integrated (either independently or as part of a
complete CCS system)

Identify 5 22

Evaluate 2 21

Define 2 21

Execute 7 7

Operate 4 10

3.5.9 Active or planned, commercial scale,


integrated CCS projects
A filter was applied on the 101 active or planned, commercial scale projects
to determine if they are integrated. There are 62 projects that are 62
active or
categorised as active or planned, commercial scale, integrated CCS planned,
projects. Of the 62 projects, 30 have been classified as ‘dependent’ commercial
projects. This indicates that these projects involve separate capture, scale,
integrated
transport and storage activities that are connected to form an integrated CCS projects
CCS system.

The 62 active or planned, commercial scale, integrated CCS projects are


shown by geographic location in Figure 3-10. The listing of these 62 projects
is tabulated in Appendix A.

Figure 3-11 shows the distribution of these projects across the five stages of
the asset lifecycle.

Page 71
Figure 3-10 Active or planned, commercial scale, integrated CCS projects by capture facility, storage type and region

20 59 51
47 Refer to
55 54 inset
35 53 40
56 61
42 1 25
49 50 36
22
52 41
24 15
58 39
60
38
43

Inset of Europe Area 62

21
16
2
3 33
45 57 23

Page 72
44 29
34 10
26 17 46
27 9 8
19 7 28
6
48
Strategic Analysis of the Global Status of Carbon Capture and Storage

41 4 13
31 37 30
32
12 5
11 14

18

LEGEND

Storage Type Capture Facility


Geological Power generation Oil refining

Beneficial reuse Natural gas processing Fertiliser production and oil refining

Geological and/or beneficial reuse Coal to liquids Various

To be determined (TBD) or undisclosed Coal gasification


Synthesis Report

Figure 3-11 Number of active or planned, commercial scale, integrated CCS


projects by region and stage in asset lifecycle

20

Number of projects
15

10

Region Select concept Sanction Start-up Total


Africa 1 1
Australia and New Zealand 2 4 1 7
Canada 1 2 2 1 6
China 1 3 4
East Asia (ex. Japan) 1 1
Eastern Europe 2 2 4
Europe Area 12 5 4 2 23
Middle East 1 1
USA 1 4 7 3 15
TOTAL 18 20 15 2 7 62

The Europe area with 23 active or planned, commercial scale, integrated


CCS projects has the most projects of any region. This can be largely Europe, the USA,
Australia and
attributed to the 2007 commitment by the EU to construct 10 to 12 full-scale Canada are
CCS demonstration plants by 2015. As discussed previously, 300 million leaders in
EUAs were allocated to support this objective and could be causing rent developing
commercial scale,
seeking behaviour from project developers. The viability of these projects integrated CCS
will need to be assessed as part of the EU competitive bidding process. projects

The USA has the second highest number (15) of active or planned,
commercial scale, integrated CCS projects. Australia has seven projects
within this subset, of which none are in the Execute or Operate stages.
(Note the Gorgon Project at the time of this study was in the Define stage. It
has now been progressed to the Execute stage). Canada has six
commercial scale, integrated CCS projects.

The operational commercial scale, integrated CCS projects are listed below.

• Rangely, Colorado, USA, CO2 from natural gas (NG) processing for
EOR

• Sleipner, North Sea, Norway, CO2 from NG processing for geological


storage in saline aquifers

• Val Verde, Texas, USA, CO2 from NG processing for EOR

• Weyburn, Saskatchewan, Canada, CO2 from coal gasification for EOR

• In Salah, Ouargla, Algeria, CO2 from NG processing for geological


storage

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• Salt Creek, Wyoming, USA, CO2 from NG processing for EOR

• Snøhvit, Barents Sea, Norway, CO2 from NG processing for


geological storage

The authors understand that the Snøhvit project is capturing and storing
approximately 700,000 tpa CO2. While it technically does not meet the
commercial storage criteria used in this study it was included because the
storage volume is significant and it is a commercial plant currently in
operation.
There are There are currently no active or planned, commercial scale, integrated CCS
currently no
active or planned,
projects in India, Japan or South America.
commercial scale
integrated
As stated previously, of the 62 projects, 30 have been classified as
projects in India, ”dependent” projects. This indicates that these projects involve separate
Japan or South capture, transport and storage projects that are being pursued by
America
independent business interests. These need to be connected to form an
integrated CCS system, and are dependent upon the success of other
operators’ and/or owners’ related projects.

An example of this is the Genesee CCS Project in Alberta, Canada, where


separate entities are undertaking the CO2 capture, transport and storage
components.

For those active or planned, commercial scale, integrated projects with a


specified storage type of geological storage or beneficial reuse, their current
positions in the asset lifecycle are shown in Table 3-5.
Table 3-5 Asset lifecycle stage for commercial scale, integrated projects by
storage type

Asset lifecycle stage Geological storage Beneficial reuse

Identify 14 1

Evaluate 14 3

Define 18 6

Execute 0 2

Operate 3 4

Total 49 16

3.5.10 Cancelled or delayed projects


Of the 275 CCS projects in the database, 26 (9 percent) have been
cancelled or delayed.

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Synthesis Report

Figure 3-12 Cancelled or delayed projects by facility

Steel Chemical
Refinery 4% (1) 4% (1) Coal to Liquids
4% (1) 4% (1)
Gas Processing
12% (3)

Oil Recovery
8% (2)

Power TOTAL - 26
64% (17)

Of the 26 cancelled or delayed projects, 20 of these (77 precent) are Larger projects
carry greater
commercial scale. Larger scale projects may carry greater inherent
inherent financial,
financial, regulatory, technical and public acceptance issues resulting in regulatory,
them being more likely to be cancelled or delayed. technical and
public acceptance
issues, and are
3.6 Challenges to deployment more likely to be
cancelled or
delayed
3.6.1 Survey results – ranking of challenges
The survey provided CCS proponents with the opportunity to identify and
rank their perceptions of the challenges to CCS deployment. A total of 134
responses were received.

Based on the literature, four challenges to deployment were identified to act


as prompts in seeking responses to this question.

The four challenges to deployment provided were:

• regulations;

• public acceptance;

• costs; and

• financing.

The results indicated that all four of these challenges are considered to be
significant as they were all ranked similarly.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

When given the opportunity to select two other key challenges to CCS
deployment, the majority of respondents identified issues around technology
and storage.

Further examples of the challenges articulated by project proponents in the


survey are listed below.

• Inconsistent and often conflicting government policy. For example,


applying a tax to a government funding grant.

• In some jurisdictions, early mover CCS projects will be required to


purchase permits for their CO2 emissions despite the fact that they are
attempting to demonstrate low emission technologies at a time when
the business case is uneconomic.

• Timeframes associated with the permitting of large-scale projects


involving CCS are very long.

• The costs associated with offshore storage options may be an order of


magnitude higher than that for onshore storage due to the difficulties
and distance of transport and the costs associated with the equipment
required to develop the storage site. This is weighed against the
increase of public acceptance as a challenge for onshore storage.

3.6.2 Survey results – challenges of cancelled or


delayed projects
Fourteen of the 26 cancelled or delayed projects provided information on the
issues encountered that resulted in the delaying or cancellation of their
projects. These are listed and described below.

• Project economics – Some of the projects were uneconomic due to


the high cost of CCS, the forecast low value of CO2 and the lack of a
CO2 price signal. The global financial crisis (GFC) and the impact this
has had on raising finance was also specifically identified as a
challenge.

• Policy / regulations – The uncertainty surrounding CCS including


CO2 pipeline regulations, future emissions policies and the lack of, or
ambiguity concerning existing CCS regulations were also identified as
key issues.

• Stakeholder issues – Some project proponents met opposition from


the public and a specific issue identified was on the perceived
negative effect of CCS on property values in project areas.

• Storage – Some project proponents identified issues such as the


effects of CO2 storage on oil/gas reservoirs, seismic activity around
the CCS site, and difficulties in establishing a strong case for the safe
and long-term storage of CO2 as major reasons for cancellations and
delays.

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• Financing – A number of proponents stated that they were unable to


obtain funding. As stated above, some specifically highlighted the
GFC as a significant contributor to their project being cancelled or
delayed.

3.6.3 Dependent projects


Some potential challenges associated with the dependent projects
introduced in Section 3.5.9 are listed below.

• Processes such as obtaining contractual agreements could be time


consuming, given that the capture, transport and storage components
are being proposed by separate entities.

• The dependence on separate entities exposes project proponents to


increased risk. For example, if the CO2 storage element of the CCS
chain was found to be unviable, the business case for the capture and
transport proponents will fail.

• There is the potential for schedule delays associated with the


development of a particular element of the CCS chain lagging behind.
For example, if the development of a transport and storage network is
delayed, this also imposes significant delays to the capture plant
project.

It should be noted that business models for CCS projects involving multiple
parties successfully exist for EOR projects. The challenges identified above
imply that the development of the business case for these dependent CCS
projects could be more complex and time consuming. This could affect the
ability of these projects to contribute to the G8 objective.

3.6.4 Potential failure rates for CCS deployment


The successful development of CCS projects is subject to a constellation of
factors. While there is a great deal of literature on general deployment
challenges, there are few, if any, specific studies on CCS project failure
rates. This may be due to the fact that the historical experience in
developing CCS projects is very limited. Furthermore, and as this study has
experienced, many proponents associated with failed projects do not wish to
disclose any information. Therefore, it is difficult to quantify failure rates with
a high degree of certainty.

However, to address this gap, this study attempts to provide a rudimentary


framework on the potential failure rates of commercial scale, integrated CCS
demonstration projects. This is done by using as a proxy the failure rates of
other low emission renewable energy sources such as solar and wind
articulated in a report prepared by KEMA, Inc. for the California Energy
Commission in 2006. As stated above, the authors acknowledge that this
approach is rudimentary given gaps in the literature, time constraints and the
scope of this project.

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If CCS project failure rates comparable to those observed for renewable


energy projects occur, 50 to 80 percent of the projects in early stages may
never be completed.

Therefore, using the asset lifecycle model, a hypothetical scenario of failure


rates suggests between five and eight in 10 CCS projects will not proceed to
the Operate stage. These scenarios are described below as applied to the
55 commercial scale, integrated CCS projects that are not currently
operating as found in this study.

• Scenario 1 – pessimistic (11 projects proceed)

• Scenario 2 – optimistic (26 projects proceed)

• Scenario 3 – realistic (18 projects proceed)

The pessimistic scenario adopts the upper end of the estimate of failure
rates across all projects that are not already in operation.

The optimistic scenario considers those integrated CCS projects that are
proposing EOR or natural gas processing CO2 capture plants. Assuming
that all of the 19 proposed projects with either EOR or natural gas
processing succeed and applying the 80 percent failure rate to the
remainder, there may be a total of 26 projects that make it to operation.

The realistic scenario applies a failure rate to the EOR or natural gas
projects of 40 percent. With this assumption, it is possible that 18 of these
projects proceed to the Operate stage.

These scenarios are presented graphically in Figure 3-13.

As described in Section 3.5.9, of the 62 active or planned, commercial scale,


integrated CCS projects, 30 of these were classified as ‘dependent’ projects.
The failure rates of these projects could be compounded relative to those
fully integrated CCS projects as these are dependent on the success of
separate project owners’ and/or operators’ projects.

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Figure 3-13 Hypothetical failure scenarios for 55 integrated, commercial scale,


CCS projects currently not operating

Scenario 1 Scenario 2 Scenario 3


(pessimistic) (optimistic) (realistic?)

Likely to succeed
12 12 12 expected
failure 7
rate
40% 4
7 7 7
expected

55 failure
rate 11
80%
expected expected
36 failure 7 36 failure 7
rate rate
80% 80%

A possible 11 projects A possible 26 projects A possible 18 projects


proceed to Operate proceed to Operate proceed to Operate

Active or planned, commercial scale,


Enhanced oil recovery projects
integrated CCS projects

Projects proceeding to Operate Natural gas processing projects

3.7 Conclusion
The results of Report One indicate that the G8 objective of launching 20
large scale CCS demonstration projects by 2010 could arguably be met if
launched is considered to mean the start of the Identify stage of the project
lifecycle. From the survey, 62 active or planned, commercial scale,
integrated CCS projects have been identified. However, a project’s journey
from the Identify to Operate stages will encounter many challenges.

The geographic spread of these is centred around the USA, Europe, Canada
and Australia. There are nine CCS projects that are active or planned in the
developing world which is encouraging. However, for CCS to be an effective
mitigant to global climate change, significantly more projects need to be
identified in developing countries.

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4. Overview of the second foundation


report
Economic assessment of carbon capture and storage
technologies

4.1 Introduction
The objective of Report Two: Economic Assessment of CCS Technologies
was to provide a detailed analysis of the costs involved in implementing CCS
for new build fossil fuel power generation and a select range of industrial
activities. The economic analysis and development of comprehensive cost
estimates allow for a more informed evaluation of CCS options across these
large point sources of CO2 emissions. The reference location was taken as
the USA Gulf Coast region through which comparisons of CCS costs were
made for select countries/regions. A key requirement of the scope of work
was to develop a transparent methodology for estimating costs.
Furthermore, contemporary and current cost estimates (as at 31 March
2009) informed by WorleyParsons’ and Schlumberger’s experience in the
CCS market were used to populate the economic models. These were cross
referenced with available published literature. All costs are in US dollars.

4.2 Limitations
Limitations of the work for the Second Foundation Report are summarised
below.

• The cost estimates are +/- 30% for the reference location.

• The costs were developed for the reference location and in moving
from the reference location the following were not taken into account:

− changes in environment;

− availability of resources such as water;

− configuration modifications required to meet regional/location


regulations; and

− terrain and other location specific impacts were not included in


the system design.

4.3 Overview of the economic assessment


methodology
The cost analysis of CCS projects is essentially an assessment of the capital
and operating costs over the life of an investment necessary to meet CO2
emission reduction goals. The goal of private sector developers is to select
the CCS technology that maximises profits over the long run in a sustainable
way. In Report Two, a methodology is proposed to assist in understanding

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Strategic Analysis of the Global Status of Carbon Capture and Storage

and comparing CCS project development costs and to provide a better


definition of the drivers behind these costs.

The methodology selected to define the economics of CCS investments is


based on using capital costs and operating characteristics from published
sources; WorleyParsons’ and Schlumberger’s in-house database of actual
cost data gained from undertaking numerous designs, installations and
analyses of CCS; and other data from corporate, government and research
stakeholders. These were updated to 2009 dollars.

The methodology applied in this study combines these parameters to


determine the appropriate metrics to be used in the economic analysis of
CCS. This was conducted through calculations of capital costs for the
reference location, transposing the project to the selected location, and then
performing the subsequent economic analysis. Figure 4-1 provides a flow
chart showing, at a high level, the approach undertaken in the analysis.
Figure 4-1 Flowchart of methodology for CCS economic assessments

Technology inputs
• Generation and capture method Calculation of transporation
• Transportation method and and storage equipment sizing
parameters
• Storage method and parameters

Calculation of capital costs at


reference location

Sensitivity study ranges


• Fuel costs
Move project from reference • Labour rates
Project location input location to input location
• Annual pipeline flow rates
• Site characterisation costs
Economic analysis inputs
• Fuel costs
Economic analysis
• Levelisation period
• Capital recovery factor

CCS project metrics


• Levelised cost of production
• Cost of CO2 avoided
• Cost of CO2 captured

With respect to the capture technique of CO2 for power generation and
industrial processes, the three methods modelled include:

• post-combustion;

• pre-combustion; and

• oxyfuel combustion.

The listed capture technologies require significantly different equipment,


materials, labour, engineering, procurement, construction and contingency
costs. In addition to the capital costs, the operating and maintenance costs
such as consumables, solid waste disposal, and maintenance all influence a
CCS project’s economics.

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While there are several methods of transporting CO2 to a storage site, this To meet the G8
timeframes, it is
study considers the costs involved in pipeline and shipping modes of
more than likely
transport. To meet the G8 timeframes it is more than likely that that transportation
transportation by pipeline will be the preferred approach, given the large by pipeline will be
volumes of CO2 that will need to be transferred. the preferred
approach, given
Estimating the cost of storing CO2 is inherently uncertain. This is due to the the large volumes
of CO2 that will
uncertainties associated with locating a potential storage site and then need to be
determining whether it is suitable to safely store CO2 in the volumes transferred
required. Experience in the oil and gas industry has shown that these
activities can incur significant costs with no guarantee of reaching injection
(‘production’) targets. Analogously, for CO2 storage, significant investments
could be made in identifying and appraising a potential storage site only to
learn that it is unsuitable. The cost associated with finding and appraising
potential storage sites, whether they are successful or not, is referred to as
the finding cost, a parallel with the “exploration and appraisal costs” from an
oil and gas exploration venture. Estimating the
cost of storing
These finding costs are site specific. They may vary widely between sites CO2 is inherently
with leading categories including: uncertain - this is
due to the
• saline reservoirs or depleted hydrocarbon fields; uncertainties
associated with
• onshore or offshore locations; locating a
potential storage
• proximity to population centres; site and then
determining
• rural onshore; and whether it is
suitable to safely
• deep or shallow water offshore. store CO2 in the
volumes required
Critically, the economics of storage is driven by the fundamental geology of
the site under consideration and the geology dictates:

• containment (safety/security of storage);

• injectivity (the rate at which CO2 can be injected into the reservoir
which also drives well count);

• capacity (volume of CO2 stored); and

• MMV techniques.
In the long-term,
In this study the costs of safely storing CO2 are estimated for saline EOR formations
reservoirs, depleted oil and gas fields and EOR. While EOR presently have limited
global capacity to
provides a more favourable business case for CCS relative to saline store CO2 at the
reservoirs, in the long-term, these EOR formations have limited global scale required for
capacity to store CO2 emissions at the scale required for CCS to play its part CCS to play its
part in reducing
in reducing emissions to the atmosphere.
emissions to
atmosphere

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Strategic Analysis of the Global Status of Carbon Capture and Storage

The cost metrics selected to assess CCS projects included:

• levelised cost of production;

• cost of CO2 avoided; and

• cost of CO2 captured.

The levelised cost of production combines the capital costs and operation
and maintenance costs to determine the product cost with zero profit over
the facility lifetime. Cost considerations included in the levelised cost of
production are:

• capital costs

− equipment;

− installation and construction labour; and

− owners costs.

• operation and maintenance costs

− fuel/energy requirements;

− operating and maintenance labour; and

− consumables (eg, water and chemicals).

The methodology developed which combines the capital and operating and
maintenance costs, assesses projects with the consideration of:

• location through labour and fuel costs; and

• technology maturity through process contingency.

In Report Two, the cost parameters were determined for the following power
generation and industrial processes:

• power generation

− supercritical pulverised coal (PC) fired boiler;

− supercritical PC coal-fired oxyfuel combustion;

− coal-fired integrated gasification combined cycle (IGCC); and

− natural gas-fired combined cycle (NGCC).

• industrial processes

− blast furnace steel production;

− cement production;

− natural gas processing; and

− fertiliser production.

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Sensitivity studies were performed to determine how the cost parameters


depend on:

• generation and capture

− fuel cost;

− labour rates; and

− location.

• transportation

− flow through CO2 pipelines.

• storage

− initial site characterisation costs; and

− ease of injection (reservoir permeability).

Technology maturity was also considered in the economic assessment of the


CCS technologies. This was undertaken through applying process
contingencies to the components that introduce risk into the system due to
limited operating data, scale-up, and/or first time application in a specific
market application. The cost parameters determined for the First-Of-A-Kind
(FOAK) systems (with process contingency) and Nth-Of-A-Kind (NOAK)
systems (without process contingency) for reference cases were also
determined in the economic assessment.

4.3.1 Review of economic assessment


methodologies
When determining a cost parameter for assessing CCS projects, both the
goals of the project proponents and the technology available to implement
the project need to be considered. At the highest level, the application of
CCS can be categorised using the following framework.

• An existing process emits CO2 to the atmosphere and the desire is to


reduce these emissions.

The reduction of these emissions will impact the economics of the


investment through the requirement of additional capital and operating
expenses along with reductions in process efficiency or increases in auxiliary
loads.

These costs are in three primary areas:

• CO2 capture, including additional equipment and energy requirements


for separating, cleaning, drying, and compressing the CO2;
maintenance of the additional equipment; the costs for consumables
required for CO2 separation; and in the case of retrofits, the cost of
replacing lost power to the grid;

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• CO2 transport and establishment of a transportation infrastructure; and

• CO2 storage including potential sales of CO2 to EOR, EGR or other


applications, without CO2 release into the atmosphere and the
establishment of MMV techniques.

Economic assessment methodologies include return on investment, internal


rate of return, and production costs. The levelised production cost was
selected based on:

• the level of detail available;

• the need to directly address the costs of CCS and not the impact of
CCS on profit; and

• the analysis not requiring revenue stream information.

The incremental levelised cost of production due to CCS serves as an input


for determining the cost of CO2 avoided and the cost of CO2 captured, which
are selected as economic parameters for the assessment of CCS projects
across industries and regions. This is discussed in more detail below.

Performing cost estimates to a high level of accuracy requires a significant


amount of engineering effort to assess the lowest cost options for specific
locations to meet proposed CCS capacity requirements. For example,
geographical aspects within a state or nation, let alone between countries,
will have significant impacts on the costs and economic viability of CCS
projects. The following aspects also have a significant impact on cost:

• the availability, type, cost and properties of the fuel used;

• the quantity and availability, properties (eg, temperature, impurity


levels) and costs associated with various key utilities such as water
and waste disposal mechanisms;

• environmental factors such as weather conditions (eg, temperature


ranges, humidity levels), elevation and terrain (for transportation and
logistics);

• costs associated with local labour, raw materials, production of


equipment, plant construction and land use;

• local regulatory health and safety requirements on acceptable


emission levels; and

• land rights, permits and license issues.

This indicates that the relative economics of CCS plants need to be


assessed on a case-by-case basis as part of the financial investment
decision-making process.

4.4 Description of metrics


Currently, metrics used for comparing CCS projects and assessing their
costs include:

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Synthesis Report

• levelised cost of production;

• cost per tonne of CO2 avoided relative to a normal process providing


the same product or service without CCS; and

• cost of CO2 capture, transport and storage.

Additionally, the efficiency and fuel type, and their associated impact on the
CO2 emissions intensity (CO2 emissions per unit of product, for example,
kilogram CO2 emitted per Megawatt hour (kg/MWh) for electricity production)
should be considered as these may be required for compliance reasons
under plant permitting regulations.

4.4.1 Levelised production costs


Levelised production costs are a standard metric for assessing the
economics of projects. The levelised production costs represent the revenue
per unit of product that must be met to break even over the lifetime of the
plant, that is, a zero profit. For assessing CCS projects, the incremental
increase is the cost resulting from the addition of CCS. All costs need to be
considered including capital and operating costs of each of the capture,
transportation and storage elements of CCS. The difference between the
cost of the plant with and without CCS is then the incremental change in the
cost resulting from CCS. Examples of the units for these values, used by
different industries, are listed in Table 4-1.
Table 4-1 Units for levelised production costs for select industries

Industry Units

Power generation $/MWh

Natural gas production (including synthetic natural gas) $/GJ

Petroleum $/barrel

Cement or steel $/tonne

The advantage of the incremental levelised cost approach is that it provides


an indication of the cost increase incurred by a product from the The levelised
implementation of CCS. This levelised production cost approach can be production cost
approach can be
used to estimate the impact of CCS on other industries and on the overall
used to estimate
economy. Another advantage of this levelised production cost approach is the impact of
that assumptions regarding revenues do not need to be made. CCS on other
industries,
The levelised cost of electricity (LCOE) is used in the power industry as a and on the
measurement on the impact of all costs for electricity generation, including overall economy
the impact of CCS. By comparing the LCOE for the CCS and non-CCS
cases, the economic impact of CCS can clearly be determined.

The LCOE is determined by allocating the capital (fixed) cost on a MWh of


output basis for an anticipated length of time and output. This is consistent
with standard cost accounting methods for the determination of unit
production costs. If the output of the plant varies significantly from the
assumed output, the incremental cost of CCS will change. For example, if

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Strategic Analysis of the Global Status of Carbon Capture and Storage

the plant were to be run at half the anticipated output, the incremental capital
cost of CCS per unit output would double.

The LCOE metric shows the importance of calculating the unit cost of CCS
based on the anticipated output of the plant rather than its availability.
Additionally, the unit cost of CCS will also be affected by the period over
which the power plant capital cost is amortised. The timeframe should be
the realistic anticipated remaining life in the plant. Since the annualised cost
is a function of the cost of capital, the length of time and the initial cost, it
follows that mathematically, the longer the time horizon, the lower the
incremental cost impact on a per unit basis.

The operating costs that vary proportionally to the facility output are
classified as variable costs. These costs include fuel, consumables (eg,
water and chemicals) and operational and maintenance costs. The variable
costs are calculated separately and added to the annualised fixed costs to
determine the total increase in cost relative to CCS. With the additional
auxiliary loads and process utility requirements of CCS, the plant net
efficiency decreases and additional costs are incurred for fuels and
consumables.

4.5 Cost of CO 2 avoided


The cost of CO2 avoided reflects the cost of reducing CO2 emissions to the
atmosphere while producing the same amount of product from a reference
plant. The cost of CO2 avoided is expressed as a $/tonne of CO2 not emitted
with respect to the reference process. As illustrated in Figure 4-2, a facility
with CO2 capture generates additional CO2 per unit of product with respect to
a reference plant due to the lower plant efficiency related to the increased
auxiliary power required to run the CO2 capture process. In the CO2 capture
case, the emissions are reduced through the capture of CO2. However, with
respect to CO2 emissions in the reference case, emissions reduction is less
than that in the capture case.

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Figure 4-2 Illustration of CO2 avoided for a hypothetical power generation plant

CO2 Emission Intensity


without Carbon Capture CO2 Emitted
CO2 Captured

Reference
(No Capture)
Additional CO2
Generation from CCS

CO2 Emissions Avoided with Respect to Reference

CO2 Captured and Stored

CO2 Capture

CO2 Emission Intensity with


Carbon Capture

0 200 400 600 800 1,000 1,200

CO2, kg/MWh

The cost of CO2 avoided is determined by combining the difference in the


levelised costs with and without CCS, with the decrease in emissions in the
reference case.

The reference plant used for determining the cost of CO2 avoided has an
impact when comparing values from different technologies. Two prominent
approaches to selecting the reference plant include:

1. Reference plant set to similar technology without CCS

2. Reference plant set to low cost alternative for all options

The DOE/NETL Bituminous Baseline (2007) and IPCC Carbon Dioxide


Capture and Storage Special Report (2005) select the first approach of using
similar technology without CCS as the reference cases for the determining
cost of CO2 avoided. The reasoning provided by the IPCC for this approach
is that it “provides a consistent basis for reporting the incremental cost of
CO2 capture for a particular type of facility”. This approach, of using a
similar technology without CCS as the reference, is valid as long as the cost
of CO2 avoided is used for assessing a particular type of facility. For
comparing different technologies, as was performed in this study, the second
approach of the reference plant set to the low cost alternative without CCS,
is most suitable since the technologies are compared to a single reference
point.

4.6 Cost of CO 2 captured


The cost of CO2 captured refers to the system of cost for capture, transport
and storage. As dictated by convention, it is commonly only referred to as
the costs of CO2 capture. This metric is used to estimate the cost of
capturing, transporting and storing a unit of CO2 ($/tonne).

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Strategic Analysis of the Global Status of Carbon Capture and Storage

The transportation and storage components of the cost of CO2 captured are
helpful for quantifying the benefits of changes and improvements to these
systems. The cost of CO2 captured differs from levelised production costs in
that costs of CCS are normalised to the amount of CO2 captured and stored
instead of the amount of product produced. For example, in the case of
power generation, a power plant recovering the cost of captured CO2 for the
entire output of the plant at its gate will have recovered the incremental cost
of electricity production due to CCS.

4.7 Cost of CO 2 transport


The cost of CO2 transport reflects the costs incurred in transporting a unit
($/tonne) of CO2 for storage. This reflects the capital costs of installing
pipelines and other associated infrastructure such as loading facilities if
transport is by ship. The costs also include operating and maintenance
costs.

4.8 Cost of CO 2 storage


Storage costs include the capital and operating and maintenance costs of
injecting and storing a unit ($/tonne) of CO2. This includes the finding costs
to identify and evaluate prospective storage sites and the supporting
infrastructure such as drilling rigs and exploration wells. Operating and
maintenance costs include factors such as consumables (eg, fuel, electricity,
water), labour and insurances.
Storage of CO2 Storage of CO2 is the critical path technology in the CCS chain. From a
is the critical path
technology in the project developers perspective, if integrated CCS systems are being pursued
CCS value chain the cost of storage represents a key uncertainty associated with the finding
costs, as previously described. This is a fundamental issue for decision-
makers in considering commercial scale, integrated CCS projects currently
being developed in order to achieve the G8 objectives.

In order to ‘de-risk’ the storage stage of a CCS project, multiple sites will
need to be appraised to locate a suitable CO2 storage site for a project. To
meet the G8 objectives with regard to storage, a portfolio of geological
storage options on a project or region-wide basis will need to be found and
appraised to spread the risk associated with the finding cost. The Australian
Government has taken this into serious consideration through the Carbon
Storage Taskforce under the National Low Emissions Coal Council. In
addition, in the USA, the United States Department of Energy (US DOE) is
also funding several regional partnerships with the objective of
demonstrating several different types of capture operations at a variety of
locations that cover major potential geologic storage formations in the USA
and Canada. The US DOE will provide $459 million of the $722 million
required to fund these projects.

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Synthesis Report

4.8.1 How uncertainty around storage drives the


economics of the entire CCS chain
In a rational economic scenario, the cost of acquiring property rights for the
exploration and development of geological formations for CO2 storage would
have to be met, and the long-term price of CO2 would be sufficient for private
investment into CCS. In general, given these circumstances, there could be
the possibility of a proponent wishing to develop a storage site for an
economic return that is greater than the payback required for the finding
costs. In this environment there would be an incentive for the private sector
to risk these finding costs for profit to be derived later through CO2 storage. Due to the
current
However, due to the current uncertainty around the pricing of CO2 and/or the
uncertainty
lack of certainty around property rights for CO2 storage, there is little or no around the
incentive for any private companies to risk capital in locating and developing pricing of carbon
and/or the lack of
CO2 storage sites. Hence, in the absence of targeted exploration, existing
certainty around
knowledge around potential storage sites tend to be very high level property rights
assessments. These are derived from broad generalisations of geology in a for CO2 storage,
particular region or from out-of-date or obsolete publicly available data there is little or
no incentive for
previously collected for a different purpose. any private
companies to
Many of the early CCS demonstration projects have also sought to use risk capital in
formations near oil and gas fields to store limited quantities of CO2. In the locating and
case of commercial projects such as Sleipner and In-Salah, the field is developing CO2
storage sites
owned by the same company extracting the oil and gas, and the CO2 is re-
injected into either the same formation or one nearby. In these cases the
finding costs for such projects have already been incurred through the
exploration and appraisal of such assets for hydrocarbons. This is not the
case with the CCS projects for power generation or other industrial
processes, which may need to have access to, or undertake themselves,
fundamental geological exploration to ascertain potential sites for CO2
storage.

Figure 4-3 illustrates an appraisal process that would need to be undertaken


to identify transport and storage sites at a particular location. This could
benefit from public funding or Public Private Partnership (PPP) funding to
help accelerate the deployment of commercial scale integrated CCS projects
through sponsoring the upfront finding costs for CO2 storage sites. While the
schedule does not necessarily affect the cost of CCS, it does indicate that for
commercial scale, integrated facilities to be in operation by 2020, the
identification and characterisation of sites must be initiated now, if not
already underway.

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Figure 4-3 Conceptual site(s) exploration and appraisal study schedule

Appraisal 3D and Proj. FEED Detailed design Injection Closure


drilling approvals org. EIS and execution operations surrender
Project Year 1 2 3 4 5 6 7 8 9 10 35 35+X

Decision Gates and main activities


DG-0
2D seismic, 2 x wells, evaluation and modeling
DG-1a
3D seismic, initial baseline studies modeling, outline approvals
DG-1b Possibility for early CO2 injection testing

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Project Organisation (funding, structure, JVAs), CO2 supply contract from capture, for example, from proposed
demonstration plant
DG-2
Strategic Analysis of the Global Status of Carbon Capture and Storage

FDP, baselines, FEED, monitoring wells, permits, approvals, public


DG-3
Detailed engineering design, final permitting
DG-4a
Development drilling, facilities, pipeline const, EIA/EIS, commissioning
DG-4b
Start injection, operations, monitor, CO2 reporting/accounting 25 years
DG-5
Closure and post-closure monitoring
DG-6
Surrender of license and long-term liabilities

Sharing technical Pre-agreement, JV and Planning Co-development and


Contracted supply Residual
INTEGRATION WITH CAPTURE and schedule capacity-rate supply & FEED engineering coordination
and take-off liabilities?
information discussions agreements cooperation (build and commission)

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6


Synthesis Report

Notes on Figure 4-3:

DG-0: Ready to proceed to Phase 1? All conditions precedent met (tenements and
funding?

DG-1a: Ready to progress to 3D and feasibility studies? Does the evaluation of drilling data
support containment, injectivity and capacity forecasts?

DG-1b: Ready to progress to project organisation, Phase 2? Evaluation of 3D seismic,


initial environmental impact assessment (EIA), pipeline feasibility reports support full
development of project – outline consents in place.

DG-2: Ready to progress to front end engineering and design (FEED), field development
plan (FDP) and full EIA. Commercial agreements in place (funding, finance, JV and
CO2 supply etc).

DG-3: Ready to progress to detail design engineering (DDE), FDP, pipeline FEED,
environmental baselines, public confidence and permits all in place.

DG-4a: Ready for final investment decision (FID)? DDE complete and ready to start
execution.

DG-4b: Ready to start injection operations? Commissioning complete, operations plan in


place, all permits ready, measurement, monitoring and verification (MMV) in place.

DG-5: Ready to cease injection? Site licence fulfilled, licensed storage capacity met.
Approved plan for post-closure monitoring.

DG-6: Ready to surrender licence? Monitoring and modelling confirms little residual CO2
movement or risk.

As shown in Figure 4-3, the first stage of site selection would cover a
desktop study on a range of prospective sites using publicly available
geological data. This would ascertain storage fundamentals such as a
suitable seal, first-pass porosity and permeability data that will allow a
portfolio of perhaps six to eight “plays” to be earmarked as potential sites
warranting further investigation. This could take up to 12 months with a full
technical team of geologists and reservoir modellers at a cost of
approximately $1 to 2 million, depending on the quality of the initial data
available.

From this point, assuming property rights and funding can be accessed,
there would likely be new seismic studies done to determine where to drill “Finding” costs
can vary from
the wells to both test and confirm prospective sites for injection potential, and $15 million in the
to determine site capacities (bearing in mind that it will be injection rates that ideal case to
will determine the commerciality of a site operation going forward). $150 million or
more, depending
Fundamentally, however, the geology will drive the storage site selection and
on the geology
the site will drive the commerciality of integrated CCS projects. In general,
finding costs can vary from $15 million in the ideal case to $150 million or
more, depending on the geology.

4.9 Results of the economic assessment of CCS


technologies
The results of the economic assessments of CCS technologies is
summarised in Table 4-2.

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Table 4-2 Summary results of the economic assessment of CCS technologies

Power Generation Industrial Applications

PC Oxyfuel
combustion Blast furnace
supercritical & Cement Natural gas Fertiliser
IGCC NGCC steel
ultra standard & production processing production
production
supercritical*1 ITM*1
US$/tonne US$/tonne US$/GJ US$/tonne
Dimensions US$/MWh US$/MWh US$/MWh US$/MWh
steel cement natural gas ammonia

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Without
76 - 79 76 - 79*3 96 78 350-500 66 - 88 4-9 270 - 300
CCS*2
Strategic Analysis of the Global Status of Carbon Capture and Storage

Levelised With CCS


136 - 138 120 - 127 134 112 80 32 0.053 10
cost of FOAK*3
production With CCS
134 -136 118 - 125 132 111 72 30 0.053 10
NOAK*4
% Increase
over without 75 - 78% 55 - 64% 39% 43% 15 - 22% 36 - 48% 1% 3 - 4%
CCS*5
Cost of CO2 FOAK 87 – 91 62 - 70 61 112 52 50 18 18
avoided*6
($/tonne CO2) NOAK 84 - 88 60 - 68 59 109 47 47 18 18
Cost of CO2 FOAK 56 - 57 44 - 51 44 90 52 50 18 18
captured
($/tonne CO2) NOAK 54 - 55 42 - 49 42 87 47 47 18 18
Synthesis Report

Notes on Table 4-2:

*1: The ultra-supercritical and ion transfer membrane (ITM) technologies are currently
under development and are not commercially available. These technologies represent
future options with the potential for increasing process efficiencies and to reduce costs.

*2: Without CCS the cost of production for industrial processes are typical market prices for
the commodities.

*3: Oxyfuel combustion systems are not typically configured to operate in an air-fired mode.
Therefore, oxyfuel combustion without CCS is not an option. The values here are PC
without CCS, to be used as a reference for calculating the cost of CO2 avoided.

*4: For industrial processes, the levelised cost of production is presented as cost
increments above current costs.

*5: Expressed with respect to current commodity prices for industrial processes.

*6 The reference plant for the coal-fired technologies cost of CO2 avoided is the PC
supercritical technology. As discussed, in select previous studies, the cost of CO2
avoided has been calculated with the reference plant selected as the similar technology
without CCS. For IGCC, under this assumption, the FOAK and NOAK costs of CO2
avoided are $61/tonne and $59/tonne.

4.9.1 Capital and operating cost estimates


Implementation of CCS into power generation systems or other industrial The addition of
components for
facilities requires the addition of components for the capture, transportation the capture,
and safe storage of CO2. These components can significantly increase the transportation
capital costs of these facilities that, together with the efficiency losses and and safe storage
of CO2 can
auxiliary loads, increase the operating costs. These additions to the system significantly
create one of the most significant hurdles to achieving the G8 objective. increase the
capital and
Caution needs to be exercised in drawing conclusions regarding the direct operating costs,
costs of one technology over another that is illustrated in Table 4-2. The and these
margin of error in this study and the significant impact that project location additions create
one of the most
and CCS technology choice has on costs means that the relative economics signficant hurdles
of CCS projects need to be assessed on a case-by-case basis as part of the to achieving the
financial investment decision-making process. It is important to realise that G8 objective
all project costs are specific to that project and that the figures given in this
report represent a ‘ball-park’ cost analysis of implementing CCS in 2009.

The modelling determined that the cost of CCS for power generation, based
on the use of commercially available technology, was found to range from
$62 to $112 per tonne of CO2 avoided or $44 to $90 per tonne of CO2
captured. The lowest cost of CO2 avoided was at $62 per tonne of CO2 for
the oxyfuel combustion technology, while the highest cost at $112 per tonne
of CO2 for the NGCC with post-combustion capture. This compares with the
lowest cost of captured CO2 for the oxy-combustion and IGCC technologies
at $44 per tonne of CO2 and the highest of $90 per tonne of CO2 for NGCC
technologies. The metrics are determined for the reference site in the USA
with fuel costs based on values typical for 2009.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

In using these cost parameters to select a technology, the importance of the


reference case technology cost (the comparative technology without CCS)
must be considered. For the reference cases, taking into account currently
available technologies, the LCOE for PC supercritical and IGCC
technologies were the greatest at $138/MWh and $134/MWh respectively,
while NGCC technologies was the lowest at $112/MWh. While the cost of
CO2 avoided and captured range by a factor of two, the LCOE estimates
ranged between $112/MWh to $138/MWh with currently available
technologies.

Table 4-2 also shows the percentage increase in costs that the application of
CCS has over non-CCS facilities. For power generation, facilities that had
the lowest cost increases were IGCC (39 percent), NGCC (43 percent),
followed by oxyfuel combustion (55 to 64 percent) and PC supercritical (75
to 78 percent) technologies.

The application of CCS for FOAK industrial applications shows that cost of
CO2 avoided is lowest for natural gas processing ($18) and fertiliser
production ($18) followed by cement production ($50) and blast furnace
steel production ($52).

Table 4-2 enables comparisons to be made across industrial applications in


regards to the percentage increase in costs arising from the application of
CCS. The lowest cost increase is for natural gas processing (1 percent)
followed by fertiliser production (3 to 4 percent). This is unsurprising given
that these industries already have the process of capturing CO2 as a part of
their design. The production of steel (15 to 22 percent) and cement (36 to
48 percent) have the highest percentage cost increases with the application
of CCS because the capture of CO2 is not inherent in the design of these
facilities.

The maturity of currently demonstrated technologies will provide the


opportunity to lower costs by 3 to 5 percent based on lessons learnt through
the operation of FOAK plants. This is based on the maturity and previous
Fundamentally,
the costs of CCS demonstrations of many of the individual components of CCS.
will only Fundamentally, the costs of CCS will only decrease if there is significant
decrease if there investment in deploying commercial scale, integrated CCS projects to
is significant
investment in support learning by doing. Demonstration projects reduce uncertainties and
deploying generate valuable planning, construction and operational experience. Over
commercial time, as these experiences and learning are disseminated, usually with
scale, integrated
CCS projects to
technical improvements also taking place supported by R&D, the cost of
support learning CCS is likely to be significantly reduced.
by doing
Indeed, there are several other opportunities that could potentially reduce
costs through increasing process efficiency and decreasing capital costs. In
this study, increasing the steam temperatures to meet Ultra-Supercritical
(USC) goals for PC plants with post-combustion capture and oxyfuel
combustion plants can reduce the LCOE by approximately 10 to 20 percent
of the cost incurred by adding CCS. Similarly, replacing the cryogenic Air
Separation Unit (ASU) in an oxyfuel combustion fired plant with an ion

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Synthesis Report

transfer membrane (ITM) ASU technology can reduce costs by a similar


magnitude.

4.10 Overview of other key findings


For power generation, the economic assessment enables the key
contributors to the LCOE to be identified, based on the facilities in the USA
Gulf Coast region. This is shown in Figure 4-4.
Figure 4-4 Comparison of LCOE with CCS for reference facilities in the USA
Gulf Coast

200
Region: Americas Fuel O&M Gen
Country: United States Generation and Capture Capital Transportation
180
Sequestration

160
CF= CF=
85% CF=
140 85% 80%
CF= CF= CF=
85% 85% CF= 85%
85% CF=
120
85%
LCOE ($/MWh)

CF=
100 80%
CF= CF= CF=
85% CF=
85% 85%
80 85%

60

40

20

0
al l2 al t io
n on on CC CC
itic ca itic us s ti sti IG NG
rcr riti rcr b u ical bu c a l
pe erc pe m b cal o m rcrit o m r c r it i
Su Su
p su - c o rcriti - c - c
PC ra- y
O x upe
y
O x a-su
p e y
O x su p
e
U lt s r
ult IT M

Figure 4-4 shows that across the integrated CCS system, the most
significant contributor to the LCOE for power plants with CCS is CO2 capture
and compression followed by transport and storage costs. The cost of
capture and compression (including fuel) in this analysis is greater than 80
percent of integrated CCS costs, and this is within the range articulated in
published literature.

Key findings in regard to the transport of CO2 by pipeline and storage costs
are highlighted below.

4.10.1 Sensitivity Analysis


A range of sensitivity analyses were performed on the model. These
included the impact of CO2 volumes on transport costs, the impact of finding
costs on the economics of storage, regional costs on the LCOE for power
generation and the CO2 value breakpoint. These are discussed below.

THE ECONOMICS OF PIPELINE NETWORKS


Pipeline transportation of CO2 offers potential cost savings through
combining the flow of CO2 from multiple sources into a single large diameter
pipeline for delivery to a single storage site. In the reference cases, the CO2
flow through the pipelines was set to the CO2 generated by a single facility.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

For coal-fired power generation with CCS, the annual flow from the facilities
is in the order of 4 Mtpa of CO2, resulting in a pipeline diameter of
Pipeline approximately 0.5 metres. Current pipeline construction allows for pipelines
transportation of greater than one metre diameter to be constructed. Increasing the pipeline
CO2 offers diameter by a factor of two allows for the pipeline flow to increase by a factor
potential cost
savings through of four. Therefore, there is the potential for four stationary emitters to
combing the flow combine their captured CO2 into a single one meter pipeline for delivery to
of CO2 from the storage site.
multiple sources
into a single, Figure 4-5 illustrates the cost savings achieved through increasing the CO2
large diameter
flow through a pipeline. As illustrated in Figure 4-5, the cost to transport the
pipeline for
delivery to a CO2 from a single facility will be between $3 to $5 per tonne of CO2. Through
single storage site combining three or more plants, the CO2 flow can be increased to greater
than 10 Mtpa, leading to a cost of between $1 to $2 per tonne, a saving of
approximately 50 percent or more.
Figure 4-5 Transportation cost savings resulting from increasing pipeline flow

7.00

6.00
Transportation Cost (US$/tonne CO2 )

5.00

Multiuser Pipeline
(~4 Large Facilites)
4.00

3.00
Single User Pipeline
(1 Large Facility)

2.00

1.00

0.00
0 5 10 15 20

Pipeline CO2 Flow (Mtpa of CO2)

STORAGE ECONOMICS
For storage in saline aquifers or depleted oil and gas fields, several sites (as
many as five or more assuming that limited data are available on each at the
start of the study) may need to be characterised in order to identify a suitable
site for CO2 injection and storage. To illustrate the impact of this on the CO2
storage cost, a sensitivity analysis was performed using storage costs
ranging from $15 million to $150 million. The resulting impact on CO2
storage cost is illustrated in Figure 4-6.

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Synthesis Report

Figure 4-6 Dependence of CO2 storage costs on initial site characterisation


and identification costs

9.00
Based on CO 2 flow from single 550 MW net SC-PC
8.00
CO2 Storage Costs ($US/tonne CO2 )

7.00

6.00

5.00

4.00

3.00

Early Identification of Site Several Sites Evaluated


2.00
(Minimal Trials) (~5 Trials)

1.00

0.00
0 25 50 75 100 125 150 175

Initial Site Characterisation and Identification Costs (US$M)

Figure 4-6 shows that initial site finding and characterisation costs represent
a significant risk to projects. It can increase storage costs from $3.50 per
tonne of CO2 to $ 7.50 per tonne of CO2, depending on the number of sites
investigated.

Reservoir properties, specifically permeability, impact the ease at which CO2


can be injected into the reservoir and the required number of injection wells.
Reservoirs with high permeability can reduce storage costs by a factor of two
to below $5 per tonne of CO2 over reservoirs with lower permeability.

REGIONAL COST
The economics of a project are strongly influenced by the location through
The economics of
variations in fuel costs and labour productivity rates. The costs of CCS in a project are
the regions (Australia and New Zealand, Asia, India, Europe, Middle East, strongly
Africa and the Americas) were compared to the USA Gulf Coast reference influenced by the
location through
case through setting the labour and fuel costs to values that are typical for variations in fuel
the countries or groups of countries in these regions. While this method costs and labour
accounts for the variability on the costs and economics, it does not take into productivity rates
account differences in plant configuration resulting from local conditions or
available fuel.

The installed capital costs of CO2 capture infrastructure for the various
regions are illustrated in Figure 4-7. The low labour rates in China and India
result in an installed capital cost approximately 30 percent less than the
other regions surveyed. The European area has the highest installed costs.

The LCOE variation across the regions illustrates the importance of fuel
costs on plant economics as shown in Figure 4-8. The low cost of natural
gas in Saudi Arabia leads to the lowest LCOE in this study. The LCOE for
the European area is higher by almost 30 percent due to the high costs of
fuel and installed capital costs.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

The analysis shows that the relatively low cost of power generation with CCS
in certain regions could catalyse deployment faster than other regions.
However, critically, the competition in the electricity market and the
regulatory climate for CCS in these respective regions are key factors that
could limit this from occurring. For example, in areas with alternate low
carbon footprint power generation options, such as hydroelectric, CCS
technologies will have difficulty providing electricity at a lower cost. Similarly,
CCS project proponents in regions without either appropriate policy
frameworks to assign a value on CO2, or property rights for its transport and
storage including long-term liabilities, could in practice defer investments in
CCS or choose other alternative power generation methods.
Figure 4-7 Installed generation and capture equipment costs as a function of
location

6,000
PC Supercritical
Installed Capital Costs ($/kw) for Technologies w/ Capture

Oxy-combustion Supercritical
IGCC GEE
5,000 NGCC

4,000

3,000

2,000

1,000

0
Australia China Japan India Euro Area East Saudi South Canada United Brazil
Europe Arabia Africa States

ANZ Asia India Europ e ME-Africa Americas

Figure 4-8 LCOE including CCS as a function of location

250
PC Supercritical
Oxy-combustion Supercritical
IGCC GEE
LCOE ($/MWh) for Technologies w/ Capture

NGCC
200

150

100

50

0
Australia China Japan India Euro Area East Saudi South Canada United Brazil
Europe Arabia Africa States

ANZ Asia India E u ro p e ME-Africa Americas

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Synthesis Report

4.10.2 CO 2 credit value breakpoint


Emissions of CO2 will impose a cost on future power generation systems as
either a share price in a cap and trade system or as a CO2 tax. This CO2
credit value will be an input to be considered by owners and utilities in
determining whether to pursue the installation of CCS technologies or
alternatively purchase credits. The value of these credits will be driven by
policy (CO2 emission reduction goals, CO2 removal efficiencies and CO2
emission limits/MWh), the makeup of the existing regional generation fleet,
plans for fleet expansion and future electricity demand. Below the
breakpoint,
The CO2 credit value breakpoint refers to the CO2 credit value, expressed as project
$/tonne of CO2 emitted. This has the potential to drive the economics in proponents and
utility owners are
favour of systems with CCS over those without. Below the breakpoint,
likely to conclude
project proponents and utility owners are likely to conclude that it is more that it is more
economically favourable to operate the system without CCS, and pay for the economically
emissions in the form of a tax or purchased credits rather than building and favourable to
operate the
operating a system with CCS. system without
CCS, and pay for
Figure 4-9 illustrates the breakpoints for the major generation and capture the emissions in
technologies considered in this study. the form of tax or
purchased credits
Figure 4-9 CO2 credit value breakpoint for generation and capture
technologies

200

175

150
LCOE ($US/MWhe)

125

100
SC-PC
breakpoint
IGCC
75 breakpoint
Oxyfuel combustion NGCC
breakpoint
breakpoint
SC PC w/o CCS
50
SC PC w/ CCS
Oxy-comb w/ CCS
IGCC w/o CCS
25 IGCC w/ CCS
NGCC w/o CCS
NGCC w/ CCS
0
0 20 40 60 80 100 120

CO2 Credit Value ($US/tonne CO2 )

Note: The LCOE includes capture, transport and storage costs

The oxyfuel combustion technologies have the lowest CO2 credit value
breakpoint, approximately $60/tonne of CO2. This is related to eliminating
solvent capture of CO2 from the gas stream. However, the largest oxyfuel
combustion plant to date is 30 MWe, and therefore, this technology is not
considered demonstrated at a commercial scale for power generation.

The IGCC breakpoint, with respect to supercritical PC technology, is


approximately $80/tonne of CO2. In addition to the required equipment and
auxiliary loads for CCS, this cost is related to the higher capital costs of
IGCC facilities.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

For the supercritical technologies, the cost breakpoint is approximately


$90/tonne of CO2. These are due to greater auxiliary loads required to
capture CO2 from a dilute gas stream.

The high breakpoint for NGCC technology of approximately $112/tonne of


CO2 is related to the lower CO2 emission intensity of natural gas and higher
cycle efficiency compared to coal-fired technologies. The low CO2 emission
intensity results in more electricity generation (in terms of MWh) for each
tonne of CO2 emitted.

4.10.3 Cost reduction opportunities


There are several opportunities to reduce the cost of CCS. Technological
breakthroughs could achieve significant reductions in capture and
compression but may also reduce the cost of transport and storage. Several
organisations have published R&D roadmaps for advanced coal power
generation technologies that show pathways to achieving significant cost
reductions through technological improvements.

Davison and Thambimuthu (2009) suggest that the COE from CCS power
plants based on current technologies has the potential to decrease 10 to 18
percent after 100 GW of capacity has been installed. Rubin et al (2007) also
shows that reductions in costs of technologies by learning-by-doing can be
significant over time. Rubin et al’s study showed that the capital costs of
new flue gas desulphurisation (FGD) units, when applied to power plants in
the USA in 1976, was $250/kilowatt (kW), in 1997 dollars. As the technology
became widely applied, experiences in installation and operation saw the
cost fall to less than $150/kW in 1995 (approximately 40 percent reduction).
Furthermore, in the case of the global deployment of selective catalytic
Significant cost
reduction (SCR) systems to power plants, the capital cost of the first
reductions can
only be achieved commercial installation in 1980 was $110/kW (in 1997 dollars). By the year
when CCS 2000, the capital cost of SCRs had significantly decreased to less than
plants are built
$50/kW (in 1997 dollars). One of the key lessons from these studies for
and operating,
and that these CCS technologies is that significant cost reductions can be achieved only
experiences are when CCS plants are built and operating, and that these experiences are
widely widely disseminated.
disseminated
Furthermore, the US DOE has established a goal of reducing the cost of
CCS technologies for coal combustion-based power plants using oxyfuel
combustion or PCC. It has set a goal for these CCS power plants not to
increase the COE by more than 30 percent compared to the cost of
producing electricity from today’s non-CCS power plants. This will help
facilitate and coordinate R&D and demonstration priorities that can develop
technologies or processes at lower cost than what is available today.

Due to the immaturity of the global CO2 pipeline industry relative to the
global oil and gas pipeline industry, there are also significant gaps in
knowledge that require further research to increase safety and reduce costs.
International research bodies including the Pipeline Research Council
International (PRCI), the European Pipeline Research Group (EPRG), the
Australian Pipeline Industry Association Research and Standards Committee

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Synthesis Report

(APIA RSC), the School of Marine Science & Technology at Newcastle


University in the UK and Det Norske Veritas (DNV) are proposing research
studies to address these areas of uncertainty. All of these institutions intend
to cooperate and coordinate their programs to ensure that research is not
duplicated and the results are shared.
Despite the
Despite the clear value that R&D can have in driving CCS technology
clear value
breakthroughs, funding is a key issue. For example, R&D in CO2 capture R&D can have
and storage represented approximately 1 percent of the share of IEA in driving CCS
member countries total public R&D expenditure in 2004 (Coal Industry technology
breakthroughs,
Advisory Board, 2008). funding is a
key issue
The unanimous view of key CCS stakeholders is that cost reductions will
only occur with the construction and operation of demonstration projects as
proposed by the G8. The learning and know how gained from the
construction and operation of these plants are essential to achieving overall
cost reductions. However, although it appears that some government
support is being planned for a number of CCS demonstration projects,
funding of the full costs of undertaking these projects is yet to be
established.

Evidence suggests that the economic benefits of an accelerated technology


program for mitigating CO2 emissions from fossil fuel generation plants are
substantial. A study for the Pew Centre (Kuuskraa 2007) stated that “with
the experience gained from 30 demonstrations of CCS, the capital costs of
wide scale implementation of CCS in fossil fuelled plants could be $80 to
$100 billion lower than otherwise.” International agreements could also
provide an enabling mechanism for additional sources of funding for CCS
projects in developing countries.

4.10.4 Availability of infrastructure on CCS costs


The availability of existing transportation and storage infrastructure can play
a key role in significantly reducing the costs of CCS deployment. While
there is conjecture over whether EOR represents long-term storage of CO2,
these projects currently inject CO2 sourced naturally or through industrial
processes. The economics of these activities have benefited from the
presence of existing CO2 transportation networks and storage options.
Similarly, it is important to note that the industrial processes that have
provided CO2 for EOR have had CO2 separation technologies inherent in
their process design. This has also significantly reduced the overall cost of
incorporating CCS.

The implication of this on the economics of future CCS projects, especially


for fossil fuel power generation, is significant. The economic hurdle inherent
in these FOAK plants could be overcome if they are located in regions that
have, for example:

• existing infrastructure such as pipeline networks;

• identified and characterised storage sites;

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• access to coal supply; or

• access to the electricity distribution network.

The availability of skilled labour is a key “soft” infrastructure that has a


significant impact on CCS costs. Availability of skilled labour impacts the
costs of CCS projects in that it is a key resource affecting the ability of
proponents to plan, design, execute, construct and operate CCS projects. In
Availability of some regions of the world, competition for skilled labour with experience in
skilled labour
impacts the
these fields is limited. While these skills can be drawn from existing
costs of CCS companies in the oil, gas and engineering and project management
projects in that professions, competition from other industries could limit their availability to
it is a key
be applied to CCS projects.
resource
affecting the As an example, in Queensland, Australia there are at present seven
ability of
proponents to proposed coal seam gas (CSG) to LNG projects. The scheduled timeframes
plan, design, for proponents to make financial investment decisions are within the next five
execute, years which is commensurate with the G8 schedule. It is estimated that if all
construct and
operate CCS
of these projects proceed to the Execute stage, in excess of 15,000 highly
projects skilled jobs could be created, placing a significant strain on the availability of
labour for CCS projects in the country. This could cause CCS project
proponents to delay their commitments to commercial scale, integrated CCS
projects and put at risk the delivery of these projects within the G8
timeframe.

4.10.5 Conclusions
This analysis shows that the installation of CCS inherently increases the cost
of production for power generation facilities and a range of industrial
applications. This cost increase is unsurprising as existing facilities currently
emit CO2 into the atmosphere without any financial penalties.

It is important to consider the economics of CCS projects on a case by case


basis. Factors such as fuel, labour, productivity and distance to suitable
storage sites all affect the economics of a project.

All things remaining equal, the cost of installing CCS for power generation in
China and India is approximately 30% lower relative to the USA Gulf Coast.
This implies that the economic barriers to deploying CCS projects in these
countries may be relatively easier to overcome.

The study also shows that significant economies of scale can be achieved
through the transport and storage of large volumes of CO2.

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Synthesis Report

5. Overview of the third foundation


report
Policies and legislation framing carbon capture and
storage globally

5.1 Introduction
The Third Foundation Report: Policies and Legislation Framing Carbon
Capture and Storage Globally provides an empirical analysis of existing CCS
policies and laws in the jurisdictions surveyed. It provides policymakers with
a digest of approaches taken to CCS regulation by identifying approaches
which could be replicated or adapted in jurisdictions wishing to promote and
facilitate CCS projects. The report also identifies gaps in laws and policies
which may impede the development and deployment of commercial scale
CCS projects in the near term.

5.2 Qualifications
This report:

• states the law current as at 31 March 2009;

• should not be relied upon as a substitute for specific legal advice;

• has links and references throughout that were current as at 31 March


2009; and

• represents the views of Baker & McKenzie only and not of any person
or agency that may have contributed to or reviewed any aspect of the
report.

5.2.1 Background
Recognising the adverse environmental effects of greenhouse gases (GHG)
in the atmosphere, many governments (both at a State and sub-State level)
are taking steps to begin reducing such emissions. Some are taking action
in satisfaction of international treaty obligations (such as under the Kyoto
Protocol) and some are acting in discharge of domestic goals or in response
to domestic legal or political pressures.

In the developed world in particular, many States are putting a price on


carbon, either via cap and trade schemes or taxes. These measures are
designed to reduce reliance on high GHG emitting fuel sources and to
promote both energy efficiency and the development of low emission energy
sources.

This discussion is structured into three main sections.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• First, policies and legislation which aim to impose a cost on carbon


and which could therefore have the effect of improving the viability of
CCS as a GHG emission mitigation tool.

• Second, policies which aim to provide incentives for the development


of CCS and the gaps and barriers in these policies.

• Third, policies and legislation regulating key stages of the CCS


project cycle. The CCS project cycle can be divided into a number of
stages.
Figure 5-1 The CCS project cycle

Legislation/
Exploration/ Discharge/ Injection and
Commercial Transport Post-Closure
Site Security Capture Pre-Closure
Framework

A number of the legal and policy challenges posed by CCS are common to
more than one stage in the project cycle. This project cycle-centred
approach has been adopted here because it provides the best analytical
structure within which to compare regulatory approaches across the
jurisdictions surveyed for this report. These jurisdictions include: Australia,
Brazil, Canada, The People’s Republic of China, The European Union, India,
Indonesia, Japan, Mexico, New Zealand, Norway, Papua New Guinea,
Russia, South Africa, South Korea, The United Arab Emirates and The
United States of America. Comments are also made on international legal
developments and barriers.

5.2.2 Valuing carbon use

Absent a cost on carbon, it is very unlikely that many economies could


reduce their GHG emissions to levels which it is now widely accepted must
be achieved by 2050. Policies imposing a cost on GHG emissions play an
important role in making CCS and other emission reduction responses
economically viable.

Mandatory cap and trade and carbon taxation schemes are both
underpinned by legal sanctions. By introducing policies imposing a cost on
carbon (in combination with other measures), governments can utilise their
policy-making power to correct markets which have not internalised the cost
of carbon or have only done so in a limited or superficial manner.

Cap and trade schemes impose a carbon cost on GHG emissions and in so
doing may help bring down the comparative cost of CCS and other emission
reduction responses by making high emitting activities more expensive and
diverting capital into new technologies designed to reduce or eliminate those
carbon costs.

Mandatory emissions trading schemes (ETS) introduced to date include the


following:

• supranational – such as the European Union Emissions Trading


Scheme (EU ETS);

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• national – such as national emissions trading schemes in New


Zealand and Norway;

• sub-national (multi-state) – such as the Regional Greenhouse Gas


Initiative (RGGI) in ten Northeastern and Mid-Atlantic States of the
USA; and

• sub-national (single state) – such as the Provincial scheme in Alberta,


Canada and the Greenhouse Gas Abatement Scheme in the
Australian Capital Territory and New South Wales, Australia.

In addition, mandatory national-level cap and trade schemes are currently


under development in a number of jurisdictions. In the USA, the American
Clean Energy and Security Act (ACES Act) was passed by the House of
Representatives on 26 June 2009 and, at the time of writing, similar
legislation was under development in the USA Senate. In Australia, the
Federal Government is developing a national emissions trading scheme, the
Carbon Pollution Reduction Scheme (the proposed CPRS). Legislation
implementing the scheme, the Carbon Pollution Reduction Scheme Bill 2009
(Cth) (CPRS Bill) is likely to be reintroduced in the Federal Senate later in
2009. South Korea is also considering developing a national mandatory cap
and trade scheme.

However, the mere existence of a cap and trade scheme may not, of itself,
be sufficient to promote CCS projects in the very near term. For example,
although the EU has a sophisticated and well established cap and trade
scheme there has not yet been extensive CCS deployment in Europe.
Financial incentives or mandatory (non-tradeable) emission limits may also
be needed to help promote deployment of CCS as its cost can vary
dramatically depending on the project type and methodologies used.

Case study: The EU ETS


The EU ETS is the largest multi-country, multi-sector GHG ETS in the
world. It was introduced in 2003 through the European Community (EC)
Directive 2003/87/EC (EU ETS Directive), as amended by EC Directive
2009/29/EC (Revised ETS Directive).
The EU ETS covers energy-intensive installations in energy and
industrial sectors, such as electricity generation, iron and steel
manufacturing and minerals processing. It is divided into three distinct
phases:
• Phase I - commenced on 1 January 2005 and ran to the end of
2007;
• Phase II - 2008 to 2012 inclusive; and
• Phase III - 2013 to 2020 inclusive.
During each Phase, operators of installations within the scope of the EU
ETS must account for their actual emissions on a yearly basis through
the surrender of an equivalent number of "allowances" (European Union

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Allowances - EUAs). For Phases I and II, each Member State was
required to submit a National Allocation Plan, setting an overall
emissions "cap" for the sectors covered. This cap is converted into a set
number of EUAs, which are distributed in accordance with the National
Allocation Plan to individual installations falling within the scope of the
EU ETS. For Phase III, the use of Member State National Allocation
Plans will be replaced by a single EU-wide cap, distributed according to
harmonised rules.
After allocation, EU ETS installations must monitor and report their
emissions. They may choose to implement abatement technologies
and, by so doing, free up EUAs to sell on the carbon market.
Alternatively, they may purchase EUAs to cover any excess emissions
(ie, emissions that cannot be covered using their initial allocation). The
scheme cap covers around 46 percent of CO2 emissions and 40 percent
of GHG emissions. The overall number of EUAs allocated will decrease
over time and it is expected that this will result in a corresponding
reduction in European carbon emissions. The emissions reduction
target for sectors covered by the EU ETS is 21 percent below 2005
levels by 2020.

A combination A combination of incentives and penalties are likely to make it easier to


of penalties and facilitate CCS projects. The role of Norway's complementary carbon tax and
incentives are
likely to make it its own emissions trading scheme (NETS) in making commercial-scale
easier to carbon storage economically viable for the Sleipner Project provides an
facilitate CCS example of how such policies can, when targeted and well-developed,
projects
directly affect the viability of CCS. The price that will make CCS cost-
competitive will vary as the cost of capture varies from plant to plant.

Case study: Norway’s carbon tax and the Sleipner Project


The Sleipner Project, which involves the capture of CO2 from natural gas
and injection into a saline formation 1,000 metres below the sea bed, is
operated by Statoil, the Norwegian oil and gas company. In the last 13
years over 11 million tonnes of CO2 has been injected at the platform.
Statoil's decision to test CCS appears to have been made because of
the interplay between natural gas standards and the Norwegian carbon
tax. The natural gas extracted from the site needs to be "filtered" to
reduce the CO2 content in the raw extraction stream. Without such
refinement its CO2 content would be around four times higher than the
European commercial export target (EuroActiv.com, 2007).
Since Statoil was already capturing CO2 at the offshore platform, it was
faced with the decision whether to release or store it. This decision was
influenced by the contemporary level of carbon tax versus the cost of
injection. At the time that the storage decision was made, the high
Norwegian CO2 tax prompted Statoil to pursue storage as a

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commercially attractive option (Heiskanen, 2006). Although the injection


facility is estimated to have cost $80 million to construct and
approximately $5 million per year to operate (Walter, 2008), every year
Statoil has avoided paying tax on an estimated 1 million tonnes of
injected CO2, which currently costs around $30 per metric ton. No
official figures appear to be publicly available, but Olav Kaarstad, special
advisor to StatoilHydro, has agreed that carbon storage has proved cost
effective for Statoil.

The effectiveness of these policies can be maximised by ensuring that their


development is as free from rent-seeking as is politically feasible.
Governments and regulators should also ensure that the most cost effective
means of facilitating CCS projects is explicitly embedded in such policy
regimes. In this sense, the experiences of Australian, Canadian and USA
jurisdictions and the EU are particularly relevant as these could be utilised in
other jurisdictions considering implementing policies in this area.

In the absence of economically efficient pricing of GHG emissions set by A range of policy
measures will be
governments, CCS could potentially remain more costly than other GHG required to
emission reduction schemes in the short to medium-term. A range of policy prompt the
measures will be required to prompt the design, permitting and construction design,
permitting and
of CCS projects until a sufficiently high price is placed on GHG emissions. construction of
CCS projects
5.2.3 The challenges and risks of CCS until a sufficiently
high price is
The G8 objective of launching 20 large-scale CCS projects globally by 2010, placed on GHG
emissions
for broad deployment by 2020, is very ambitious.

Harnessing and deploying the resources required, overcoming the


opposition which will emerge (locally and ideologically) and establishing the
legal frameworks needed to attract and retain private sector investors will
require the immediate expenditure of vast political and financial resources
across multiple jurisdictions. It will also necessitate a better and more
coordinated public explanation of the long-term environmental benefits and
risk management strategies which will be employed along the CCS project
cycle.

A sufficient number of geologically adequate storage sites need to be


identified and secured to facilitate CCS projects. Not all States wanting to
store captured CO2 (or emitters operating within those States) will have such
Securing sites,
sites or, even if they do, they may not have immediate access to them or
compensating land
legal rights over them. owners and/or
negotiating rights
Securing sites, compensating land owners and/or negotiating rights of of access to sites
access to sites across State borders will be time consuming even with CCS across State
specific laws in place. Transporting the gas by pipelines over long distances borders will be
time consuming,
will throw up similar issues (as well as additional issues such as potential even with CCS
prohibitions under International Treaties affecting the transport and storage specific laws
of certain wastes). in place

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There are a number of international conventions that regulate pollution of the


marine and land-based environment and the treatment or disposal / dumping
of waste, hazardous waste and harmful substances. If a CO2 product falls
within one of these definitions, dealing with the CO2 as part of the CCS
project cycle may be prohibited, or attract strict regulatory requirements for
environmental impact assessment and project management.

Even if the emission reductions technically capable of being achieved by


CCS are widely understood by the public (which at present is not the case),
the issue of long-term leakage potential and the unknown consequences of
that (real or imagined) are likely to delay approvals and may well result in
litigation or other time consuming legal challenges.

There is also likely to be very considerable opposition to locating storage


sites under lands already given over to productive uses or which are
otherwise already environmentally sensitive - this opposition may also be
agitated by environmental groups for a variety of reasons.

While the costs of developing CCS projects have been well documented, the
long-term costs associated with managing risks associated with leakage
liability are less well known. Legal frameworks that apportion liability for
leakage from storage sites between project developers, site owners and host
country governments vary between States and are likely to change as
governments test the appetite for the private sector to accept longer-term
risks.

Where CCS specific legal frameworks do exist, in most cases liability for
leakage passes to a host country government after a period of between 10-
30 years. However, in the interim, the entity with responsibility for the
storage site may need to find insurance to cover the potential costs
associated with leakage (as may governments if and when they take on the
liability risk). Those costs are not only for direct physical harm caused by an
escape of CO2, but also for the indirect costs of CO2 leakage to the
atmosphere, which may equate to the cost of carbon at the date of escape.

Overcoming the challenges of selecting and securing appropriate sites


(including storage), dealing with leakage liability and obtaining the necessary
government approvals for CCS projects are just three of the threshold issues
that need to be addressed in the project planning phase. Equally important is
the ability to secure project funding which will cover not only the
infrastructure costs of capture, transportation, injection and storage, but also
It is critical that
policy frameworks
the long-term costs associated with ensuring permanent storage.
which provide
Funding in both the public and private arena is limited for low or zero-
similar incentives
are developed for emission technologies. Incentives and subsidies for some of these
CCS to enable it technologies, in particular renewable energy, are rapidly bringing down their
to stay within costs and making them more attractive as a commercial investment. These
competitive reach
of other new technologies are often less controversial from an environmental and social
technologies point of view, being seen to be cleaner, more sustainable and less
experimental than CCS. It is critical that policy frameworks which provide

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similar incentives are developed for CCS to enable it to stay within


competitive reach of other new technologies.

5.2.4 Policies supporting CCS


A variety of funding and support measures have been employed by
governments and other agencies which have, and are, contributing to
developments in CCS, especially at the "pilot" or “demonstration” stage.
These research funding and related measures generally assist in facilitating
what is still a relatively new technology and one which is still not widely
applied at a commercial scale. Some key funding schemes currently
operating or being proposed include:

• A$1 billion (US$ 860 million) over 10 years from 2006 through the
Australian Coal Association’s COAL21 Fund;

• A$2 billion (US$1.62 billion) under the Australian Government’s CCS


Flagships Program that is expected to leverage an additional A$4
billion (US$3.24 billion) from State governments and industry over
next nine years;

• C$650 million (US$562 million) under the Canadian Government’s


Action Plan (Canada's economic stimulus plan). Furthermore, C$2
billion ($US 1.73 billion) has been committed by the Alberta
Government;

• €1.05 billion (US$1.5 billion) from the European Economic Recovery


Plan (EERP) and up to 300 million EUAs from the new entrants'
reserve (NER) will be made available until 31 December 2015. At an
approximate value of $US20.00 per unit as at September 2009
approximately $US6 billion may be available;

• Approximately US$1 billion in CCS activities by the Japanese


government; and

• US$2.4 billion from the USA Governments American Recovery and


Reinvestment Act (ARRA) (economic stimulus funding).

At present there appears to be approximately $17 - $20 billion currently


available to support the development of CCS projects.

Without detracting from the important role that the funding of demonstration At present,
activities play, one concern is that because of the significant costs and private sector
engagement is
timescales involved in establishing full cycle projects, there is already
led by those
competition between the different demonstration and commercial pilot companies that
projects for funding – in particular for co-financing from the private sector. have a direct
At present, private sector engagement is led by those companies that have a interest in utilising
the resulting
direct interest in utilising the resulting technologies (eg, major global coal technologies, and
mining and energy companies) and which are likely to have their GHG which are likely to
emissions regulated. The number of those companies and their resources have their GHG
emissions
are finite and contributions to multiple projects rather than concentrating
regulated
efforts on one or two could mean that none of the projects are adequately
funded.

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As well as directly funding a number of demonstration-scale CCS projects,


governments in the jurisdictions surveyed have made use of three main
forms of domestic policy incentive to encourage the development of CCS.

• First, high-level CCS or energy management policies which can


provide whole-of-government frameworks for initiatives to develop
CCS, such as the USA Government's goal of reducing USA GHG
emissions by 83 percent by 2050.

• Second, direct government funding and research support for CCS


through cooperative research centres such as Australia's Cooperative
Research Centre for Greenhouse Gas Technologies (CO2CRC),
South Africa's National Centre for Carbon Capture and Storage and
the Masdar Institute of Science and Technology in the United Arab
Emirates (UAE).

• Third, government-business collaboration on demonstration projects


such as the FutureGen project in Illinois in the USA or the Sleipner
Project in Norway.

Case study: FutureGen


In 2003, the US DOE announced a US$1 billion investment in a project
known as FutureGen, a government-business joint venture to develop a
275 MW clean coal power plant to produce electricity and hydrogen
using CCS technology (FG1). In 2006, the US DOE determined that
providing financial assistance for the construction and operation of FG1
would constitute a major Federal action that could significantly affect the
quality of the natural and human environment and accordingly prepared
an Environmental Impact Study (EIS) for the project in compliance with
USA National Environmental Policy Act (NEPA) (FG1 EIS, 2007). After
a rigorous nation-wide selection process, the final four sites under
consideration to host FG1 were located in Illinois and Texas.
The US DOE decided to restructure the program in late 2007 after the
FutureGen Alliance (a consortium of private companies that form half of
the government-business joint venture) chose a site in Illinois over a site
in Texas to locate the project. The restructured FutureGen Project
(FG2) would fund implementation of CCS components at several
Integrated Gasification Combined Cycle (IGCC) plants planned to be
operational by 2015.
In conjunction with FG2, the agency issued a funding opportunity
announcement in autumn 2008 soliciting applications for a commercial
scale IGCC power plant or other coal-based power generation
technology that can capture and store in a saline formation of at least 1
million metric tons of CO2 per year for three to five years. The USA
government announced on 12 June 2009 its commitment to the project,
with a contribution of US$1.073 billion, US$1 billion of which will come
from USA stimulus package funds.

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These policy measures have helped facilitate coordination between


governments, academia and market participants to achieve concentrations
of financial and bureaucratic resources, academic and business knowledge.
They have also helped accelerate the commercialisation of CCS by enabling
project proponents to access funding which may not otherwise be available
on a commercial basis. Measures like this may also provide project
participants with high-level political and policy support for their projects and
technologies.

In isolation, however, these measures will be counter-productive where R&D


projects become too academically biased or not sufficiently focused on
reducing the commercial risks and costs of CCS and where a proliferation of
competing and overlapping R&D centres and projects occurs. Projects
reliant on government funding can also suffer from often protracted delays
in approval and funding clearance processes, which in some cases may be
significantly longer than typical commercial approval timescales.

To achieve the G8's goal within its stated timeframe means that there should
be a real coordination (and possibly pooling) of the resources of To achieve the
G8’s goal within
key international research agencies such as the IEA's Greenhouse Gas R&D its stated
Program (IEA GHG), the CSLF and the Asia-Pacific Partnership on Clean timeframe
Development and Climate (APP). Multilateral funding agencies such as the means that there
should be a real
World Bank and Asian Development Bank have not yet fully engaged in
coordination
funding CCS projects in any comprehensive way but are considering (and possibly
whether to finance such projects. They should be persuaded to act in pooling) of the
resources of key
concert with those coordinating the global drive to commercialise CCS rather
international
than acting in isolation. research
agencies
5.2.5 The timeframe challenge
Contrasted with the stated aim of the G8, industry views the timeframe
involved in the CCS project cycle to be in the order of:

• 10 years to design, permit, and build a fossil-fuel power plant and


other large industrial facilities such as steel mills and cement factories;

• 20-30 years of operation and injection of CO2 before plant closure is


considered; and

• 20-100 years or more to monitor a CCS site post-injection.

As a result there is a need to:

• manage environmental liabilities arising from injected CO2, which


could persist for many hundreds, if not thousands, of years;

• regulate site selection, monitoring and verification in ways which


ensure that regulatory requirements are appropriate to technology
type, geology and topography yet are sufficiently comprehensive to
provide certainty;

• ensure that property interests in potential and actual storage


formations and injected materials are clearly defined;

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• encourage growth in public confidence in, and acceptance of, CCS


and ensure adequate (but realistic) stakeholder consultation in the
development of CCS projects; and

• manage aspects of CCS projects which could cross jurisdictional


borders, not only including environmental liabilities but also transport
and ownership of storage formations and injected materials.

Given the lead time to design, permit and build CCS facilities, CCS project
proponents need robust policies around these key issues to be in place by
2010 if the G8 objective is to be met. Furthermore, addressing these
challenges will be crucial to the efforts of stimulating the global deployment
of CCS beyond 2020.

5.3 Laws promoting and facilitating CCS


International law is important to encouraging the commercial-scale
deployment of CCS because:

• CCS projects may in the future be undertaken in areas beyond the


jurisdiction of States;

• international legal principles have informed, and will continue to


inform, the development of domestic legal regulation of CCS projects;
and

• if CCS is widely deployed, consistency in crediting CCS operations


across jurisdictions will be important when linking emissions trading
systems.

In general terms, public international law regulates the relationships between


sovereign States. Of the sources of international law, treaties are the most
relevant to CCS. However, existing international environmental treaties
were not drafted with CCS activities in mind. At present, there is no single
international treaty regulating CCS activities. Instead, different stages of the
CCS project cycle are regulated by different sources of international
environmental law.

Developing economies have not yet generally enacted specific CCS laws or
taken steps to amend existing legislation to accommodate the CCS project
cycle.
With the
exception of the In developed economies, existing legal frameworks designed to deal with
EU, in most waste, transport, property rights and pollution liability do not readily
jurisdictions
surveyed,
accommodate the whole CCS project cycle. This will hamper investment not
existing only in CCS projects but in the technologies required to achieve scalable
legislative projects within the G8's timeframe.
frameworks
relating to With the exception of the EU, in most jurisdictions surveyed, existing
carbon capture
legislative frameworks relating to carbon capture are fragmentary and
are fragmentary
and incomplete incomplete. This is the case even in the Australian jurisdictions with
dedicated carbon storage legislative frameworks.

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The EU regulation envisages the imposition of Carbon Capture Ready


(CCR) requirements on new power plant construction. It is likely that in
coming years, other jurisdictions will implement similar regulations in order to
ensure that carbon capture capability is integrated into new power plant
construction. The EU approach of imposing CCR obligations through
planning permitting processes is a simple, straightforward approach. It is,
however, unlikely that any such regulations will be introduced in many
jurisdictions until CCS is at or near commercial-scale development.

In addition, few jurisdictions have dealt in any detail with the question of
whether captured CO2 should be treated as a waste or pollution and this will
need to be clarified. The dedicated storage regulations which have been
implemented, notably in Australian jurisdictions and the EU, seem to
contemplate that captured CO2 be dealt with as a waste product. This is
particularly important in the context of policies and legislation governing
transport of CO2.

Only a few jurisdictions have in place dedicated CCS regulatory regimes (or
amendments to existing regimes) required to adequately manage the unique
legal challenges posed by CCS. These jurisdictions include some Australian
and USA jurisdictions, together with the EU and some EU Member States.
This poses significant barriers for investment in CCS projects in other
jurisdictions. Potential investors and project proponents will be reluctant to
support CCS projects where potential long-term risks are present due to Potential
investors and
insufficient or inflexible regulatory frameworks. project
proponents will
The Federal Governments in the USA and Australia are developing be reluctant to
legislation for national-level schemes. The scheme proposed in the ACES support CCS
Act will provide bonus allowances and other incentives to assist with the projects where
potential
funding of CCS facilities. The EU ETS and the scheme proposed in the
long-term risks
ACES Act provide direct incentives for CCS operations in the form of staged are present due
technological benchmarks or bonus allocations of permits to CCS facilities. to insufficient or
inflexible
Some jurisdictions, including Australia, China, Japan and some States in the regulatory
USA, have introduced, or are considering introducing, complementary frameworks
policies which have the effect of imposing a cost on carbon, or which provide
support in the form of subsidies or enabling frameworks. The
complementary laws and policies include mandatory renewable energy
targets, emissions reporting, incentives for energy efficiency and feed in
tariffs.

Some other jurisdictions, including Norway and Japan, have regulated


existing CCS projects through partially integrated CCS schemes or by
exception to existing regulations. These approaches can facilitate
demonstration-scale projects but are not considered suitable for commercial-
scale projects due to potential long-term liabilities.

Integrating carbon capture permitting and regulation with transport and


storage legislation will provide CCS project proponents a greater degree of
certainty. This will reduce the administrative burden imposed by permitting
requirements at various stages of the CCS project cycle.

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These regulatory gaps should be addressed in order to encourage the


capture of commercial-scale quantities of CO2.

Tailored, end-to-end policies and laws, harmonised across national


boundaries, offer the best chance to rapidly and efficiently promote large
scale investment in CCS.

There is no one template or single "best practice" for end-to-end CCS


regulation with even the most robust existing frameworks having gaps.
However, governments should examine these dedicated regimes, and with
increases in international harmonisation of CCS regulation, regulatory risks
will be minimised for potential market participants.

A "universal" (and jurisdictionally adaptable) CCS regulatory template may


emerge from dialogue amongst those governments and international
agencies promoting CCS, especially if they agree to act urgently and co-
operatively. Policies and legislation as they relate to key components of the
CCS project cycle are described in more detail below.

5.3.1 Capture
Policies designed to impose a cost on carbon emissions could also be
accompanied by regimes restricting the construction of new fossil fuel power
plants without incorporating CCS or the mandating of CCS retrofits to
existing plants. These could include technology standards and planning
requirements for new plants to be CCS-ready. Such policies could be a
particularly useful complement to carbon cost imposition policies in the initial
stages of CCS deployment. CCS-ready policies under development in the
USA and some EU Member States could provide these frameworks.

There are, however, likely to be significant short-term financial ramifications


for utilities which may be obliged to retrofit CCS technology to existing plants
or budget for CCS capabilities in new plants. Tax incentives or other
financial measures are useful policy tools to promote investment in CCS.
These incentives not only assist in offsetting capital expenditure in plant and
equipment but may also be used to provide companies that are engaged in
storage activities with an additional revenue stream for storing CO2. The
USA Federal government's investment tax credits are one positive example
of this approach.

5.3.2 Transport
Transportation of captured CO2 by pipeline falls within pipeline permitting
regimes. This can potentially add complexity and delay to integrated CCS
activities.

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Case study: Pipeline licensing under the Australian government


CCS legislation
Under Chapter 2 Part 2.2 of the government's GGS Act, the pipeline
licensing process consists of four main steps:
• the pipeline proponent must apply to the licence determination
authority (the Designated Authority), providing information
including details of the pipeline's design and construction process,
the proponent's technical qualifications, a layout plan for the
pipeline and any agreements the proponent has entered into for
the procurement or conveyance of CO2;
• if the Designated Authority wishes to approve the licence
application it will issue to the proponent an "offer document"
indicating its intention to do so;
• if the proponent wishes to accept the Designated Authority's offer,
the proponent must within between 90 and 180 days after
receiving the offer document provide written notification to the
Designated Authority requesting that an issuing authority, the Joint
Authority issue the licence; and
• the Joint Authority will issue the pipeline licence if notice has been
provided in accordance with the Act.
Section 211 of the Act sets out the rights conferred on pipeline
licensees. These include the rights, in accordance with any conditions
imposed on the grant of the licence, to:
d) construct in the offshore area specified in the licence a pipeline:
i) of the design, construction, size and capacity specified in
the licence;
ii) along the route specified in the licence; and
iii) in the position, in relation to the sea bed, specified in the
licence;
e) construct in the offshore area specified in the licence the pumping
stations, tank stations and valve stations specified in the licence in
the positions specified in the licence; and
f) to operate:
i) that pipeline; and
ii) those pumping stations, tank stations and valve stations;
and
g) carry on such operations, to execute such works and to do all
such other things in the offshore area specified in the licence as
are necessary for, or incidental to, the construction or operation of:
i) that pipeline; and
ii) those pumping stations, tank stations and valve stations.

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In some Australian jurisdictions and the EU, existing pipeline legislation has
been well-integrated into CCS legislative schemes, providing a high degree
of certainty for market participants. Other jurisdictions, including the USA
and Canada, have pipelines regulations which could be adapted to CO2
transport. In many other jurisdictions, however, such regulatory integration
has not yet occurred. In these jurisdictions, CO2 transportation would
generally fall within existing pipeline regulatory regimes. These are not in all
cases well-adapted to regulating transportation of CO2.
A further A further weakness in existing CO2 transport regimes is ambiguity in relation
weakness in
existing CO2 to whether CO2 should be treated as a pollutant or waste. This will dictate
transport which regulatory regimes should apply to CO2 transport. This also poses a
regimes is challenge for the regulation of CCS transportation, particularly where there
ambiguity in
relation to
are restrictions on the treatment of the substance or where responsibility for
whether CO2 leakage and harm does not clearly attach to any one entity. A further
should be difficulty posed by existing transport regimes is the number of permits
treated as a
required to construct and operate pipelines. This is the case not only in
pollutant or
waste respect of general pipeline regulations but also in respect of those integrated
with CO2 storage legislative schemes. This is likely to increase the cost,
duration and uncertainty associated with undertaking pipeline activities.

In federated countries such as Australia and the USA, lack of integration


between State-level pipeline transport regimes will impede the development
of national pipeline networks suitable for CO2 transport. These jurisdictions
should seek to harmonise sub-national regulation to enhance regulatory
efficiency. This would also apply to national policymakers seeking to
harmonise regulations in an international context. The EU’s experience in
pipeline regulation may be useful for the latter.

Finally, transport of CO2 by non-pipeline methods is generally not


comprehensively regulated. This poses challenges to small-scale CCS
projects and to CCS activities in the exploration and testing phases, where it
may not be commercially viable to construct pipeline networks to transport
CO2.

These gaps will need to be overcome in order to encourage the investment


required to develop commercial-scale CO2 transport networks and this of
course needs to take place in an integrated fashion with laws dealing with
both capture and storage.

5.3.3 Storage
In jurisdictions where CCS exploration regimes have been integrated with
CO2 storage regulation, CCS exploration is relatively robustly regulated. This
is the case in respect of the Australian Federal jurisdiction and the
jurisdictions of Victoria and Queensland, as well as to some extent the EU.
Transparent approval regimes with clearly enunciated frameworks of
exploration rights are essential as is multi-stage permitting which can allow
administering authorities to monitor and regulate the environmental impact of
exploration activities on the existing and future uses of permit areas.

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In jurisdictions where CCS exploration has not yet been regulated, a lack of
regulation will inevitably delay proponents who may be required to seek
permits from multiple government agencies, assuming of course that those
agencies themselves are equipped to assess CCS project applications.

The existing regimes in the USA and South Africa contain key regulatory
components for effective CCS exploration regimes.

In those jurisdictions where specific CCS injection and storage laws have
been enacted, there appear to be relatively robust systems in place for
regulatory authorities. Proposals for storage typically identify the
characteristics of the storage site, access to commercial quantities of CO2,
the suitability of the operator (eg, technical and financial criteria) and
detailed site management and monitoring plans.

Case study: Regulation in Japan of sea-bed CO2 storage


An individual or entity that wishes to inject CO2 waste into the sub-sea
bed must apply for and obtain approval for the “disposal” of CO2 from the
Environment Minister.
Applications for sub-sea bed CO2 storage must include information such
as:
a) the applicant's name, address, representative’s details (for a
corporate entity);
b) a CO2 disposal implementation plan including:
i) the length of time the disposal will take (not to exceed five
years);
ii) the amount and characteristics of the CO2;
iii) the estimated amount of CO2 already disposed of at the
given site;
iv) where and how the CO2 will be disposed of; and
v) proposed measures to prevent and contain any damage
caused to the marine environment by the dumping;
c) a detailed plan regarding monitoring of any pollution arising from
the dumped CO2; and
d) any other information required by Ministry of Environment
Ordinances – such as environmental risk assessment survey
information.
The standards which must be met for approval of applications by the
Environment Minister include:
a) a finding that the disposal method meets the required standards;
b) a finding that there is no other appropriate means to dispose of
the CO2; and,
c) a finding that the applicant is fit to competently dispose of and
monitor the CO2 after disposal, in accordance with the

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implementation plans submitted, including having sufficient


financial and technical capabilities.
In accordance with Ministry of Environment Notice No.83, an applicant
who is granted a licence has up to five years to dispose of the CO2 in
question (Article 10-8-2 of the Marine Pollution Act, as applied
correspondingly by Article 18-2).

This is notably the case in relation to the EU and Australia at a Federal level
and in the States of Victoria and Queensland. The laws in these jurisdictions
provide a guide to other countries as they develop their own legal
frameworks.

There nonetheless remain some key regulatory gaps in existing dedicated


CO2 storage regulatory frameworks. They do not necessarily address
comprehensively the question of whether only one operator will be allowed
access to a storage site, or whether multiple operators will be able to inject.
If multiple operators are using a site, legal frameworks will need to be
developed to share or apportion liability and determine, if necessary, how to
prioritise access (eg, on a maximum volumetric basis or some other criteria).
The difficulties associated with managing multiple uses of land and potential
storage formations have resulted in most jurisdictions only granting approval
to one operator per site.

A further potential gap relates to activities which might fall under the
jurisdiction of multiple governments, either in adjacent jurisdictions or at
multiple levels. Where storage sites fall under more than one jurisdiction,
regulators from two or more States may apply different criteria in considering
CCS project activities. Alternatively, it is conceivable that in federated
countries, Federal and State jurisdictions might overlap. In these
circumstances, there will be a need for coordination amongst regulators and
the development of guidelines for, at a minimum, consultation and ideally a
joint approach to approving access to such sites and managing their use.

The absence of adequate regulation of this final stage of the CCS project
cycle is perhaps the greatest barrier to the commercial-scale deployment of
CCS in jurisdictions without robust regulation of CCS, or where existing
regulation needs to be adapted to accommodate CCS.

Where integrated legislation exists, liability for CO2 leakage post-closure is


reasonably well defined and the process for surrendering any access
licences is well set out. The laws in relevant jurisdictions in Australia, the EU
and the USA all address the ownership of injected CO2 post-closure, in most
instances with such ownership reverting to the regulating government upon
surrender of the relevant approvals by the operator. This is the key strength
of these legislative schemes. By clarifying these matters, governments
provide investors with a level of comfort that operators of injection facilities
will bear the post-closure liabilities associated with their storage activities to
the extent that this is practical but that the liability of such operators is not
unlimited.

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Case study: Post-closure liabilities under the Australian


government’s GGS Act
Under the Australian government's GGS Act, a closure assurance period
will commence in respect of a formation on the day the Minister is
satisfied that injection operations into the formation ceased and will end
at least 15 years later, when the Minister is satisfied that:
• the injected substance is behaving as predicted in the approved
site plan;
• there is no significant risk that the substance will have a significant
adverse impact on:
− the geotechnical integrity of the whole or part of the
geological formation or structure;
− the environment;
− human health or safety; and
− no further injection has taken place since the initial
cessation of injection activities.
If a site closing certificate has been issued in respect of a formation and
a closure assurance period exists, the Australian government's
indemnity is then triggered in respect of the formation when:
• a person who has been the registered holder of the relevant
licence has ceased to exist;
• if the person had continued in existence their liability is:
− a liability for damages;
− attributable to an act done or omitted to be done in the
carrying out of operations authorised by the licence in
relation to the formation; and
− incurred or accrued after the end of the closure assurance
in relation to the formation; and
• apart from this provision, the damages are irrecoverable because
the person has ceased to exist.
The section also requires that any further conditions set out in the
regulations have been met, however the regulations to the Act have not
yet become effective.

Pollution and other environmental regulations in most jurisdictions centre on


the "polluter pays" principle. It is not unreasonable that potential CCS
project developers would delay the development of CCS projects until
regulatory frameworks make it possible for them to quantify and manage
potential liabilities. Governments which seek to encourage the commercial-
scale deployment of CCS within their jurisdictions should seek to address
this immediately.

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A key concern arising from the assumption that governments will be


responsible for stored CO2 is that such governments will themselves face a
potentially unlimited liability. This liability can arise both from the potential
future cost of carbon escaping into the atmosphere (where an obligation is
placed on the State to meet targets to reduce or limit GHG emissions under
the Kyoto Protocol) and also where the escape of CO2 causes more
localised environmental harm.

To deal with this risk exposure, some governments are looking to extend
operator liability for longer periods of time as well as innovative insurance
and funding arrangements. Provisions requiring security in the form of
insurance and rehabilitation bonds will help to ensure that long-term liabilities
arising from injection activities can be funded and that governments are not
left with all such liabilities. Governments should prioritise such efforts to
develop financial instruments to facilitate efforts to manage these liabilities.

To begin with, models for long-term liability may include, for example both
tiered liability insurance and indemnification by the government or a per ton
fee paid to the government for CO2 injection, with a “handoff” to the
government for monitoring, remediation, and liability. The handoff might
occur a defined period after injection ceases, to minimise moral hazard
issues.

Case study: Policy options for liability – USA experience


• Price-Anderson Nuclear Industries Indemnity Act, USC § 2014(hh)
− The Price Anderson Act created a tiered system of limited
liability for nuclear accidents, which essentially divided
liability for such accidents between facility owners, the
industry as a whole, and the Federal government.
− The three-tiered coverage system requires licensed nuclear
facilities to maintain their own liability insurance, as well as
contribute to an industry pool for liability insurance.
− The Federal Government would provide the licensee with
indemnity in case liability exceeded the amount available
from these sources (EPA, 2008).
• Illinois and Texas FutureGen Statutes
− Under these statutes, the States would assume full
responsibility for CO2 at a given point in the CCS cycle.
− While these models are helpful to spur short-term
investment, a more strategic government approach to
liability assumption based on risk profiles or site
performance may be necessary in the future.
• DOE Carbon Capture and CO2 Storage Program Amendments
Act of 2009
− Sponsored by Senator Jeff Bingaman (D-NM), this Bill

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would enable the DOE to enter into cooperative agreements


to provide financial and technical assistance to up to 10
CCS demonstration projects.
− The Secretary of Energy would also have authority under
the Bill to indemnify and hold harmless the recipient of a
cooperative agreement from any liability arising out of their
CCS demonstration project. The value of this
indemnification is tempered by a requirement that the
government collect a fee from the project owner equal to
the net present value of payments made by the government
to cover the liability under the indemnification agreement.
In addition, the legislation would prohibit site closure until 10
years after the CO2 plume stabilised.
− This model provides the government more ability to
determine which projects should be insured, rather than
more general assumptions of liability for the entire industry,
but is limited in scope.
• Interstate Oil & Gas Compact Commission (IOGCC) Model
− Under the IOGCC Model, State authorities would assume
long-term responsibilities for monitoring and remediation
activities at CCS sites.
− This effort would be financed through an industry-funded,
State-administered trust fund.
− While the IOGCC Model insulates a CCS operator from
regulatory liability it would not insulate them from long-term
general liability.

A further difficult question is whether existing integrated legislative structures


are sufficiently flexible to accommodate the evolution in CCS and knowledge
of the environmental and social risks associated with CCS activities. As
understanding of CCS and the operation of geological storage sites
improves, it will be necessary to keep existing laws under periodic review
and amend them to accommodate emerging risks and new approaches to
manage them.

In those jurisdictions that do not have dedicated CCS legislation, questions


of liability remain unclear. Existing mining and environmental pollution Without access
legislation is not well suited to the purpose of long-term management for to and control
storage sites. Whilst mining laws often provide for rehabilitation bonds, over a suitable
storage site,
mine-closure plans and the like, the anticipated long-term risks are better no CCS project
understood and more easily quantified. If CCS is to be addressed under (no matter how
these frameworks, issues such as post-closure liability and surrender of that technologically
advanced at the
liability to the State will need to be addressed.
capture end of
the process) will
Without access to and control over a suitable storage site, no CCS project
be likely to
(no matter how technologically advanced at the capture end of the process) attract funding
will be likely to attract funding or investors. An absence of, or gaps in, or investors

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storage laws will make it very difficult to address this risk. The "timeframe
challenge" already referred to will also be exacerbated.

Governments should be expending real effort now to deal with the issue of
storage if the G8's timeframe is to be achieved.

5.4 International legal framework


International law is important to encouraging the commercial-scale
deployment of CCS for the reasons identified in Section 5.3 above.

It is true that in recent years the ability to conduct CCS activities under
international law has evolved significantly. However, some barriers still
remain. For example, the export of CO2 is prohibited under Article 6 of the
London Protocol, which means that until this Protocol is amended CO2 will
stay within national boundaries (this is discussed further below). Likewise,
storage of CO2 may be classified as pollution in certain circumstances.

If stages of the CCS project cycle take place in international waters or


involve multiple actors from different States, questions arise as to which
State should take responsibility for any leakage of emissions, on-going
monitoring and liability for remediation, and whether such activities can take
place at all. For example, as no State is able to assert sovereignty over the
sea bed in areas beyond national jurisdiction, the ability to undertake storage
activities in these areas is likely to be limited (discussed further below). In
the absence of clear guidance on these issues, most States have avoided
projects in these areas. Nevertheless, if CCS becomes a viable mechanism,
with potential storage sites in these areas, the international community will
need to determine appropriate regulatory frameworks.

5.5 United Nations Framework Convention on


Climate Change
As a starting point, the UNFCCC and its Kyoto Protocol seek to stabilise CO2
emissions in the atmosphere at levels that will prevent dangerous
interference with the climate system. CCS may assist in meeting this
objective.

If CCS is to be Parties to the UNFCCC must report emissions that are released into the
considered a atmosphere. If CO2 is captured and injected before any emissions are
viable mitigation
technology in released into the atmosphere, then arguably no emission occurs. Yet if CO2
the context of leaks many years after its original storage, the requirement to report on, and
the UNFCCC, account for, emissions liability for those emissions may not crystallise until
it will be
important to
many years after injection.
provide States
If CCS is to be considered a viable mitigation technology in the context of the
with guidance
on how to UNFCCC, it will be important to provide States with guidance on how to
measure, measure, monitor, verify, account for and report CCS activities. Consistent
monitor, verify international guidelines on monitoring, verification and reporting are needed
account for and
report CCS for both developed and developing countries that are binding under the
activities UNFCCC.

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5.5.1 Treatment in the Clean Development


Mechanism
There is currently debate as to whether CCS activities should be included
within the Clean Development Mechanism (CDM) under the Kyoto Protocol,
to provide CCS projects in developing countries with a means to generate
CERs, which can be traded in the international carbon market.

Whilst the views of the UNFCCC Parties are divergent, particularly as to


whether the international rules for the CDM allow such projects to take place
or should be amended to facilitate CCS, the CDM may provide incentives
that would make CCS projects in developing countries viable.

The UNFCCC’s Subsidiary Body for Scientific and Technological Advice has
been considering issues related to the inclusion of CCS in geological
formations as CDM project activities since 2006. As a result of these
deliberations, a number of issues have been raised about the
appropriateness of CCS in the CDM, including:

• risks and uncertainty of long-term physical leakage levels;

• project boundary issues (such as reservoirs in international waters,


several projects using one reservoir);

• long-term responsibility for monitoring the reservoir and any


remediation measures that may be necessary after the end of the
crediting period; and

• other relevant matters, including environmental impacts.

Under the Kyoto Protocol CDM is a private sector activity. This raises
particular issues around the appropriateness of CCS under the CDM given
the timelines required for monitoring, reporting and liability for damage and
emission units if leakage occurs.

It seems likely, however that if CCS is included in a revised version of the


In the absence
CDM after the Meeting of Parties to the Kyoto Protocol in Copenhagen in of a mechanism
late 2009 there may be an acceleration of investment in CCS projects in such as the
non-Annex 1 countries. CDM it seems
unlikely that
In the absence of a mechanism such as the CDM it seems unlikely that investment in
CCS will be
investment in CCS will be achieved in many developing countries within the
achieved in
timeframe proposed by the G8. many developing
countries within
the timeframe
5.5.2 Post-2012 proposed by
the G8
The Fifteenth Conference of the Parties to the UNFCCC will take place in
Copenhagen at the end of 2009 and is intended to be the end of a two year
commitment to shape an effective international agreement to guide climate
change action beyond 2012. This provides an opportunity for the role of
CCS as a climate change mitigation measure within the CDM to be re-
defined. However, notwithstanding general support, States recognise that
CDM rules will need to be developed regarding the distribution of risk
between private entities and States. There also appears to be general

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recognition that capacity building is needed in non-Annex I Parties to ensure


effective regulation of CCS projects.

5.6 Issues associated with CCS offshore


The United Nations Convention on the Law of the Sea 1982 (UNCLOS) is
largely a codification of the customary international law of the use of the
seas.

Relevantly, UNCLOS separates the sea into a number of jurisdictional


zones. Issues associated with different zones are highlighted below.

5.6.1 Territorial sea


Each coastal State may claim a territorial sea that extends seaward up to 12
nautical miles from its baselines (Article 2 and 3 of UNCLOS). This
sovereignty over the territorial sea extends to the air space above it, and the
sea bed and subsoil beneath it (Article 2, UNCLOS). As such, the domestic
laws and consequent consents and authorisations of each coastal State will
be required for the undertaking of CCS activities in each territorial sea.

5.6.2 Continental shelf


A coastal State has exclusive sovereign rights over its continental shelf for
the purposes of exploration and exploitation of its natural resources.
Arguably geological formations under the sea bed are a non-living resource
of the sea bed and subsoil and as such, the express consent of the coastal
State will be required to undertake CCS activities such as injection and
storage.

All States are entitled to lay submarine cables and pipelines on the
continental shelf. In relation to CCS, this gives other States a relatively wide
discretion to lay pipelines to transport CO2 over the continental shelf of
another. However, coastal States have the exclusive right to authorise and
regulate drilling on the continental shelf for all purposes (Article 81,
UNCLOS). As such, a coastal State will be able to control injection and
storage activities on the continental shelf to the extent that such CCS
activities involve drilling.

5.6.3 Exclusive economic zone


Each coastal State may claim an exclusive economic zone (EEZ) beyond
and adjacent to its territorial sea up to 200 nautical miles from which the
breadth of the territorial sea is measured (Article 57, UNCLOS), although in
many situations, States will not be able to claim the full 200 nautical miles
due to an adjacent State.

To the extent that the continental shelf and the EEZ cover the same area, a
State's right to lay pipelines and conduct other CCS activities such as drilling
in the EEZ will largely be the same as discussed above in relation to the
continental shelf.

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5.6.4 Offshore areas beyond national jurisdiction


Under international law, the global commons have a special status and are
treated as the common heritage of mankind. As such, these areas are
vested in the international community as a whole, with no State or person
being able to appropriate territory within them, and which are to be
preserved and to be freely available for use for the benefit of present and
future generations. The key barriers to CCS in the global commons relate to
the ability to undertake offshore CCS activities in the high seas, and in
particular, in the sea bed and ocean floor and subsoil beyond the limits of
national jurisdictions.

5.6.5 High seas


The high seas are defined in UNCLOS as being all parts that are not under
national jurisdiction. Importantly the definition of the high sea refers to the
water column and not to the sea bed, ocean floor and subsoil underlying
high seas.

States enjoy six freedoms within the high seas, being:

• freedom of navigation;

• freedom of over flight;

• freedom to lay submarine cables and pipelines, subject to Part VI;

• freedom to construct artificial islands and other installations permitted


under international law, subject to Part VI;

• freedom of fishing, subject to the conditions laid down in section 2;


and

• freedom of scientific research, subject to Parts VI and XIII.

These freedoms are to be exercised by all States with due regard for the
interests of other States and also with due regard for the rights under this
Convention with respect to activities in the Area.

Transport of CO2 in the high seas

The freedom to lay cables and pipelines and the freedom of scientific
research are relevant to CCS activities. Unlike the laying of pipelines in the
continental shelf, there is no requirement under UNCLOS to obtain the
consent of any particular State to conduct such activities in the high seas.
Whilst general notification provisions and obligations not to cause
environmental harm apply, States nevertheless have a wide discretion to lay
such pipelines.

Storage in the water column in the high seas

In relation to storage of CO2 in the water column in the high seas, the
Convention for the Protection of the Marine Environment of the North-East
Atlantic (OSPAR Convention) which relates to the North Atlantic was
amended in 2007 to specifically prohibit storage of CO2 in the water column.

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The London Protocol (discussed below) was also amended to allow storage
in geological formations in the sea bed (but not the sea column).

Further, storage in the water column must be considered in light of the


general provisions of UNCLOS regarding pollution and harmful changes to
the marine environment including waste dumping. In practice, these
provisions all serve to limit the ability to undertake storage in the water
column in the high seas.

Liability in high seas

Where activities are undertaken in the high seas, such as the transport by
pipeline, under Article 114 of UNCLOS, every State shall adopt the laws and
regulations necessary to provide that, if persons subject to its jurisdiction
who are the owners of a submarine cable or pipeline beneath the high seas,
in laying or repairing that cable or pipeline, cause a break in or injury to
another cable or pipeline, they must bear the cost of the repairs. If pipes are
damaged by a vessel of another State, the jurisdiction of the vessel (and
consequent liability) is determined by the flag State of the offending vessel.
However, this can be problematic as the vessel may be flagged in a State
with an open registry (ie a "flag of convenience") undermining enforcement
action.

5.6.6 The Area


The sea bed, ocean floor and subsoil beyond the limits of national
jurisdiction form a different geographic zone under UNCLOS defined as the
"Area". The provisions relating to the Area are directly relevant to the
injection and storage of CO2 in the sea bed.

As the global commons, the Area and its resources are regarded as "the
common heritage of mankind", and no State may claim or exercise
sovereignty or sovereign rights over any part of the Area or its resources
(UNCLOS Article 1(1) and Part XI).

Whilst it is arguable that exploration and research may take place in the Area
on a temporary basis, States are not able to assert sovereignty over the
Area through the permanent occupation of its Territory (including geological
storage spaces). This framework may limit the ability to explore for sub-sea
bed geological storage sites and, more importantly, prevents the injection of
CO2 into the Area by a State or States, and its permanent storage for the
benefit of the State or States.

For CCS injection and storage to be permissible in the Area, amendments


would be required to be made to UNCLOS in accordance with the
amendment and ratification procedures described above. In addition, the
International Seabed Authority would need to be given the ability to regulate
and set standards in relation to CCS activities, extending its jurisdiction to
regulate exploration related to matters other than mineral resources. No
information is currently available suggesting any intention to draft
amendments to UNCLOS to clarify the ability to undertake CCS activities in

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the Area. Similarly, there are no signs of there being any international will to
allow such activities to take place in the Area.

5.6.7 Other international issues associated with


CCS in the marine environment
Article 194 of UNCLOS requires States to take individually or jointly as There should be
an immediate
appropriate, all necessary measures to prevent, reduce and control pollution completion of
from any source. Pollution is defined in Article 1(4) of UNCLOS. The reviews, and if
definition of pollution is broad and the University College London Carbon necessary,
amendments
Capture Legal Program notes that there is no conclusive opinion as to to international
whether CCS would constitute pollution in accordance with this definition agreements,
(UCL Carbon Capture Legal Program, 2009). This definition of pollution may including the
definitions of
limit the ability to store CO2 in the sea column and is also relevant to whether
"waste" under the
CO2 that seeps from a geological formation will be regarded as pollution. London Protocol
The London Protocol prohibits the dumping of any wastes or other matter and "hazardous
with the exception of those listed in an Annex to the Protocol (London waste" under the
Basel Convention
Protocol, Article 4 and Annex 1). The London Protocol was recently that currently
amended in 2007 to make clear that CO2 could be stored in the sea bed with prohibit the
a permit. The amendment does not extend to the water column. transboundary
movement of CO2
Despite the amendments to the London Protocol and OSPAR Convention,
which can be seen as a positive move towards offshore CCS activities, there
remain barriers to the transboundary export of CO2, which is currently
prohibited under Article 6 of the London Protocol.

5.7 Onshore and offshore cross-border


transportation and storage
There remain barriers to the transboundary export of CO2 under the London
Protocol as such transport is currently prohibited under Article 6 of the
London Protocol. In a report dated 3 April 2009, an International Maritime
Organisation (IMO) working group noted that the majority of States were of
the view that transboundary export of CO2 was prohibited under Article 6 and
the London Protocol would need to be amended to allow export (IMO, 2009).
The key implication is that until such an amendment is in force it appears
that the export of CO2 for sea disposal is prohibited under the London
Protocol.

If CO2 which is to be transported across State boundaries falls within the


definition of "hazardous waste" under the Basel Convention this could also
preclude the international transport of CO2 to non-parties and to non-
Organisation for Economic Co-operation and Development (OECD)
countries for final disposal. The same IMO working group (considering
amendments to Article 6 of the London Protocol) also considered whether
the Basel Convention applies to such CCS activities. While the majority of
respondents were of the view that the Basel Convention does not apply to
the transboundary movements of CO2, States such as the Netherlands and
groups such as Greenpeace are of the view that the Basel Convention does
apply to the transboundary movement of CO2. Until these issues are

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resolved, CCS activities will likely remain largely confined within national
boundaries.

5.8 Onshore and offshore general liability


General principles of international liability may apply to CCS projects
undertaken both onshore and offshore. There are no agreed international
standards which establish a liability threshold for environmental damage
which triggers liability and allows claims to be brought (Sands 2003: 879). It
is foreseeable that the development of internationally agreed standards
relating to CCS will inform any relevant debate as to the standard of care
required and when damage has occurred.

5.9 Conclusions
This global analysis of CCS policies and legislation suggests that the G8
goal is ambitious. While there have been significant developments in key
policies and legislation concerning the CCS project development cycle many
challenges exist. The challenges are described below.

• Employing a mechanism which puts a price on carbon will not of itself


promote or facilitate CCS projects: it should be used as part of a suite
of measures.

• Delays in increasing the real cost of carbon may, however, retard


investment in CCS in the near term.

• A lack of cooperation amongst international agencies with similar


objectives supporting a multiplicity of projects will delay development
and deployment of CCS technologies.

• Taxpayer funded research into CCS will prove increasingly difficult


where broader social and environmental dividends are not adequately
articulated.

• Characterising CO2 as a "waste" or a "pollutant" may be required to


help facilitate and regulate capture, especially where specific CCS
laws have not been enacted.

• Many existing pipeline laws need to be amended to adequately (and


expeditiously) accommodate CO2 transport.

• Transport of CO2 by road, rail and ship is inadequately regulated.

• Overly bureaucratic or otherwise inadequate regulations covering


access and exploration rights will delay CCS projects.

• Multiple operator access rules are generally lacking.

• Multiple regulatory regimes are often commonplace.

• Identifying and assigning legal liability for leakage to a suitable party


or parties is essential.

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• The "storage" dimension of CCS will be the hardest to secure in the


short term and it is critical to significant near term CCS investment.

• Insurance products need to be developed to accommodate long-term


environmental liability where governments are not prepared to assume
liability.

• CCS is not yet an accepted carbon credit generating mechanism


under either of the Kyoto Protocol's Flexible Mechanisms. There are
good reasons why it should be, especially so as to promote
investment in developing countries.

• The London Protocol and the Basel Convention may both need to be
amended so as to accommodate key elements of CCS projects.

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6. Overview of the fourth foundation


report
Existing carbon capture and storage research and
development networks around the world

6.1 Introduction
The objective of Foundation Report Four: Carbon Capture and Storage
Research and Development Networks is to support the objective of
accelerating the development of CCS technologies. It identified and
assessed notable research and development (R&D) activities being
performed by organisations worldwide across a number of disciplines.
These included economics, public acceptance, regulations, information
sharing, CCS technologies, political, regional and environmental issues. This
screening process helped reveal which organisations have the most
advanced and comprehensive R&D programs to meet this objective. This
process also identified significant gaps in the current global R&D effort.

The R&D topics addressed in Report Four include all aspects of CCS
technology (ie, capture, compression, transportation and storage),
regulations, economics, public awareness and understanding, information
sharing, and political, regional and environmental issues relevant to the
deployment of CCS. The assessment of CCS technology R&D includes an
evaluation of the R&D efforts focused on the main industrial sectors where
CCS could be applied, including oil and natural gas production, fossil fuel-
based power generation, biomass-based power generation, biofuels
production, hydrocarbon processing (petrochemicals production and oil
refining), cement production and steel making. All types of R&D
organisations were considered including government, industry, academia,
and non-profit organisations.

Due to the importance of independent R&D efforts as well as those of


collaborative networks, in the context of this report and its associated
database, it was decided that a CCS R&D “network” may either consist of
several organisations linked with a common set of goals or a single entity
(eg, an individual company or university) performing remarkable R&D work.

There are currently hundreds, if not thousands, of organisations worldwide There are
engaged in some aspect of CCS R&D. To narrow the focus of this study, a currently
hundreds, if not
list of organisations undertaking considerable R&D in their respective areas thousands, of
of expertise was compiled through a panel of advisors, including key EPRI organisations
and WorleyParsons staff as well as outside consultants. It should be noted worldwide
engaged in
that this list was not intended to be a comprehensive list of all the
some aspect of
organisations involved in CCS R&D, but it is believed to be representative of CCS R&D
the global effort and includes most, if not all, of the key on-going R&D
projects.

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Upon establishing the list of networks, the process of researching the various
organisations commenced. Sources of public data collected include
websites of the organisations, telephone calls of a non-proprietary nature
with contacts at the organisations, and publicly available technical
conference papers and presentations. Questionnaires were also sent to the
organisations in an effort to gather additional information not found in
sources cited above, but the response rate to the questionnaire was
disappointingly low.

This chapter provides a summary of the findings as part of Foundation


Report Four.

6.2 Limitations
Several factors resulted in the omission of some key information from the
database, limiting the types of analyses that could be performed and
preventing any definitive conclusions to be made based on the data. A key
factor was that only 10 percent of R&D networks responded to the survey.
Despite these limitations, the authors believe that the R&D activities
captured in the database are a fair representation of the global effort on CCS
R&D.

The identification and evaluation of R&D gaps is still at a nascent level in this
report. Additional time and stronger support from the industry will close or
highlight the challenges and priorities.

6.3 The technology development process


In order to accelerate the deployment of new technologies, significant
investment support and institutional change is necessary. Knowledge
sharing is critical in order to accelerate technology development and to drive
down costs of future CCS developments. Indeed, future investment
decisions will depend on the experience gained by demonstration projects,
the ability to improve the design and operation of future projects and to build
competitive advantage. It will also facilitate public support for the
demonstration programme and enable the effectiveness of public funding to
be properly evaluated.

The technology development process, however, is significantly more


complex than a linear progression from R&D to demonstration,
commercialisation, market accumulation and wide-scale diffusion. Linkages
between these stages allow learning by doing, learning by using and
learning by interacting, all of which help innovators move along the
experience curve.

The innovation process involves the development and deployment of new


technologies, products and services by business. To achieve this, funding is
required from a variety of investors. In the early stages of the market, take-
up is largely driven by the product/technology push. As awareness builds,
the rate of deployment is accelerated by market pull as demand grows.
Government can make various policy interventions at various stages of the

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innovation chain to overcome barriers to the development of various


technologies.

Several authors considering the commercialisation of CCS (eg, Garnaut,


2008) identified several broad trends that create the conditions for
successful innovation.

• Innovation increasingly relies on effective interaction between the


science base and the business sector.

• More competitive markets and the accelerating pace of scientific and


technological change force firms to innovate more.

• Networking and collaboration among firms are now more important


than in the past and increasingly involve knowledge-intensive
services.

• Small and medium-sized enterprises (SMEs), especially new


technology-based firms, have a more important role in the
development and diffusion of new technologies.

• The globalisation of economies is making countries’ innovation


systems more interdependent.

6.3.1 Utilising technical readiness levels to assess


CCS R&D initiatives
Experiences with developing other power generation and emission control
technology have shown that new technologies must progress through nine
levels of technical readiness (Mankins 1995), or Technical Readiness Levels
(TRLs) before they reach “commercial deployment.”

The achievement of a given TRL will provide process developers and


customers with the advice necessary to commit resources required to
achieve the next level of readiness. An achievement of TRL-9 indicates that
the technology can be deployed with risks that are comparable to those
undertaken on other “commercial” technologies that are commonly deployed.
Only customers who are able to take on higher risks will be suitable
participants in efforts to achieve the TRLs up to and including TRL-9.

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Table 6-1 The nine Technical Readiness Levels (TRLs)

Phase for facility


TRL TRL phase name for R&D initiatives
development

9 Full-scale commercial deployment Commercial

8 Sub-scale commercial demonstration plant Demonstration

7 Pilot plant Pilot

6 Component prototype demonstration Bench

5 Component prototype development Bench

4 Laboratory component testing Bench

3 Analytical ‘proof of concept’ Bench

2 Application formulated Bench

1 Basic principles observed Bench

In the mid-20th century, coal-fired power plants had no controls for sulphur
dioxide (SO2), nitrogen oxides (NOx) or mercury emissions. Throughout the
last 50 years, various technologies to control these pollutants have
progressed from about TRL-4 to multiple commercial installations. This
experience has shown that the achievement of TRL-9 can take
approximately 20 years. This long development time is largely dictated by
design and construction activities associated with the field deployment of
pilot plants (to achieve TRL-7), commercial pilot plants (to achieve TRL-8)
and the first full-scale, commercial installation (TRL-9).

To a certain extent, the overall development times may be shortened by


committing resources for a pilot plant, demonstration or full-scale
deployment concurrent with activities designed to achieve TRLs lower on the
ladder. Commercial or other considerations may recommend such a “fast-
track” approach. It is often the case, however, that the effort to achieve a
TRL lower on the ladder will reveal process design, operation or
maintenance requirements that were not apparent at the beginning. Indeed,
this is one of the major motivations for undertaking an orderly approach to
technology development; it is likely to be less expensive in cost and time to
implement remedies for such uncovered requirements at a modest scale
than at a larger scale.

Experience has shown that passing over any of the development steps up
the TRL ladder will increase the likelihood of failing to achieve the targeted
TRL and may eventually necessitate returning to the skipped TRL before
progressing further. The time required to design, deploy and operate
facilities to achieve specific TRLs increases significantly as the TRL
increases. If multiple CCS demonstrations with improved technologies are
to be achieved at large-scale (ie, TRL-9) by 2020 to proceed with
commercial deployment, then many technologies need to be approaching
the pilot plant stage (TRL-7) today. However, our review of the data
revealed that there are very few organisations funding demonstrations at

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one-tenth to full commercial-scale. While this may not currently be


constraining the advancement of improved CCS technologies, it soon will.
Applications of CO2 capture for the oil and gas and power sectors appear to
be receiving enough funding to achieve pilot plant scale, but advancing to
sub-commercial scale demonstrations and larger will require an order of
magnitude greater level of funding.

Figure 6-1 summarises the current technical readiness of some of the main
technologies and sectors covered in this report.
Figure 6-1 TRL summary of technologies and sectors analysed

Post- Pre- H2-fired CO2 Iron and


Oxy- Algae CO2 CO2 Cement
TRL combustion combustion gas
combustion production compression pipelines
transport by
industry
steel
capture capture turbine ship industry

9
8
7
6
5
4
3
2
1

6.4 The Global CCS Institute CCS R&D network


database
357 different organisations have been identified for inclusion in the R&D
Networks database. Figure 6-2 illustrates the regions to which the
organisations belong and the type of R&D coverage being performed.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Figure 6-2 Number of organisations per region and type of R&D coverage
performed

200 F - Political Regional and Environmental Issues


E - Information Sharing
D - Public Awareness and Understanding
C - Economics
B - Regulations
150 A - CCS Technologies

Number of Networks

100

50

0
East Asia
East India Middle Pacific South
Africa ANZ Canada China (ex. Euro Area Japan USA
Europe Area East Islands America
Japan)
F 2 3 4 1 1 1 11 1 4 1 1 1 19
E 3 3 6 3 4 2 15 3 4 2 2 2 12
D 2 5 5 2 2 1 11 1 4 1 1 2 27
C 2 2 4 2 2 1 11
B 2 5 1 1 6 15
A 13 28 34 11 12 5 91 5 18 3 3 4 125

TOTAL 24 41 58 18 18 20 9 24 32 7 7 10 209

In many cases, an organisation is involved in more than one R&D coverage


area, and this is reflected in the preceding chart by counting them in their
applicable R&D areas. Consequently, the total number of organisations in
the table add up to more than 357.

6.4.1 Status of R&D networks


R&D networks need to support the basic building blocks that underscore
regional CCS development. These are:

• Scaling potential: The identification of existing demonstration


technologies that support scaling up to commercial capacity, as a
critical short to intermediate term objective;

• Availability of government funding to support demonstration


activity: Identify cross-regional funding opportunities to assist critical
development of emerging technologies;

• Evolution of carbon policies: Identify policy developments that


support the adoption of CCS over conventional coal and other fossil
fuels utilisation without CCS, including the deployment of CCS across
industrial sectors;

• Identification of potential CCS technology: to improve its cost


competitiveness through scaling and technology development.

In order to maximise global knowledge development and sharing on CCS,


three levels of stakeholder involvement have been identified as critical:

• Public and Government stakeholders that act to synthesise CCS


knowledge;

• CCS projects, that could benefit from knowledge sharing;

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• Demonstration projects, that test R&D applicability and communicate


knowledge gained across industry.

The history of science and technology shows that R&D is often an


independent activity and not a collaborative effort. Because of the
importance of independent R&D efforts as well as those of collaborative
networks, in the context of this report and its associated database, it was
decided that a CCS R&D “network” may consist of several organisations
linked with a common set of goals, or it can be a single entity (eg, individual
or university) performing significant R&D work.

6.4.2 Results and trends


It is clear from Figure 6-2 that most of the networks in the database are
focusing their R&D efforts on CCS technologies.

In terms of geographic distribution, CCS R&D in Asia lags the efforts


undertaken by the EU and North America. Although some networks have
engaged several Indian and Chinese universities in R&D activities, additional
collaboration between Asian networks and networks from Australia and New
Zealand (ANZ), EU and North America is needed to close this gap.

In assessing the degree of networking among the organisations in the


database, it was determined that approximately 55 percent of the entries
were single-entity “networks” while 45 percent were formal, multi-entity
collaborations. The median value of collaborating organisations in the multi-
entity networks was three. Consequently it appears that most of the CCS
R&D is being conducted by independent entities or small collaborations of
two or three organisations. While independent R&D is often the source of
technology breakthroughs, it is also the case that technology development
can be accelerated by learning from the successes and failures of others.
Therefore, it is recommended that the Global CCS Institute investigate
options for fostering greater networking among the many entities that are
conducting CCS R&D worldwide without imposing a structure that could stifle
independent creativity.

I N D U S T R I E S U N D E R T AK I N G CCS R&D Given the


significant
A great majority of the CO2 capture R&D is focused on the power generation contribution
sector, particularly coal-fired power generation. Given the significant that cement
contribution that cement production makes to anthropogenic CO2 emissions, production makes
to anthropogenic
a disproportionately small R&D effort is focused on CO2 capture from
CO2 emissions, a
cement production. While there is a significant effort based in Europe disproportionately
focusing on CO2 capture from iron and steel production, the overall effort in small R&D effort
this sector is disproportionately small as well. By contrast, the CCS R&D is focused on
CO2 capture
efforts in oil and gas production and processing appear to be quite steady. from cement
production
CO 2 C AP T U R E
Among the three main CO2 capture technologies, the data reveals that post-
combustion capture R&D is receiving the most emphasis, followed by oxy-

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Strategic Analysis of the Global Status of Carbon Capture and Storage

combustion and then pre-combustion capture. In most regions, the


emphasis on CO2 sequestration R&D is proportionately similar to that
devoted to post-combustion capture R&D. This data is summarised in
Figure 6-3.
Figure 6-3 Number of organisations researching and developing CCS
technologies

140

120

100
Number of Networks

80

60

40

20

0
Post-combustion capture Pre-combustion capture Oxyfuel combustion CO2 sequestration CO2 transport
USA 50 35 24 52 15
South America 2 2 1 2
Pacific Islands 2 2 1 2
Middle East 2 2 1 2
Japan 7 3 7 8 3
India Area 2 3 2 3
Euro Area 35 18 28 32 10
East Europe 2 1 3 1 2
East Asia (ex. Japan) 5 5 1 4
China 5 1 4 4 3
Canada 14 7 5 11 10
ANZ 8 5 7 13 6
WORLD TOTAL 136 72 94 132 65

There appears to There are a number of technologies around the world in the early stages of
be sufficient
funding available development that could provide reductions in the capital cost and energy
to elevate these penalties currently associated with post-combustion capture. There appears
technologies to to be sufficient funding available to elevate these technologies to the small
the small pilot
pilot plant level, but technology developers will need financial support if they
plant level, but
technology are to scale-up these technologies to the sub-commercial scale
developers will demonstration and ultimately full-scale commercial sizes. This is a key gap
need financial in post-combustion CO2 capture R&D.
support if they
are to scale-up Oxy-combustion capture stands to benefit from developments in oxygen
these
technologies to separation such as membrane-based air separation technology, which could
full-commercial replace the energy-intensive cryogenic process air separation technology.
sizes This is a R&D gap, as the survey identified only a small number of projects
aimed at reducing the cost of oxygen production. In addition, as is the case
with post-combustion capture, oxy-combustion developers are building small
pilot plants, but they will need outside funding to support scale-up to larger
sizes.

Pre-combustion CO2 capture is being practiced at large-scale in the


chemicals production, oil refining and natural gas processing sectors, and
three major suppliers of gas turbines are all currently willing to offer their
large “F class” firing temperature (1300ºC) machines for pre-combustion
capture applications in integrated gasification combined cycle (IGCC) plants.
As a result, it appears this technology is applicable today for commercial-
scale demonstrations in IGCC plants with pre-combustion capture.
However, there is still the need to foster cost reductions, and an important

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route to cost reductions in IGCCs is to increase the gas turbine efficiency.


Accelerating the development and testing of gas turbines with efficiencies
higher than the “F class” units for pre-combustion capture in IGCC plants by
2020 is a key R&D challenge.

Even within the coal power CO2 capture R&D efforts, the vast majority of the
projects are focused on the early stages of R&D and have not yet reached
the small pilot plant size. In order to have CCS technologies deployed at
commercial-scale by 2020, it will be necessary to have capture technologies
operating on realistic conditions, at least on a small pilot scale, by 2010.

CO 2 C O M P R E S S I O N
Improvements in CO2 compression have only recently begun receiving
attention. While CO2 compression has been deployed at commercial-scale,
it is now recognised that there is potential for improving the efficiency and
perhaps the cost of the compression equipment. In addition, application of
CCS to sectors outside of oil and gas production will bring new challenges in
terms of potential co-constituents in the CO2 stream as well as different
operating pressures and variable flow rates. A key R&D gap is the need to
obtain better thermodynamic data on CO2 mixtures at, and near, supercritical
conditions with anticipated impurities from the various capture applications.

CO 2 T R AN S P O R T
The R&D efforts for CO2 transportation are modest compared to those for
capture or storage. This is due in part to the fairly mature status of CO2
transportation. However, the scale of CO2 transportation that will be
required with widespread deployment of CCS is two or three orders of
magnitude greater than what is currently in place. The small R&D efforts
that are taking place appear to be exclusively focused on pipelines as
opposed to ocean tankers, road or rail transport. Some research is taking
place to examine the optimum way to develop regional CO2 pipeline
systems, and an R&D network based in Europe has started identifying key
CO2 pipeline R&D needs. As is the case with CO2 compression, a key gap
is the need for better models to predict thermodynamic data of the
transported supercritical fluid, especially when impurities are present.

CO 2 S T O R AG E
In most regions, the emphasis on CO2 sequestration R&D is proportionately
similar to that devoted to post-combustion capture R&D.

CO2 storage research is currently trending away from deep ocean storage
and processes that require the CO2 to be reacted with other materials (eg,
mineralisation). Focus has shifted to deep geological storage in saline
formations as well as alternative geological storage options such as oil and
gas reservoirs, unmineable coal seams and basalt formations. There is,
however, increased focus on biological fixation mechanisms such as the
production of algae. The latter has attracted attention because the algae
could potentially be converted into a biofuel and therefore would not be a

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Strategic Analysis of the Global Status of Carbon Capture and Storage

“throw away” product. However, many challenges to the widespread


deployment of algae production exist, not the least of which is the large land
requirement. For example, based on current technology approximately
12,000 hectares of land would be required for algae production to capture
the CO2 from a commercial (600 MWe) coal-fired power plant.

Geological storage R&D is focused on conducting tests in various geological


strata and on developing and proving techniques for monitoring CO2 in those
strata. Clearly this effort must continue in earnest if CCS is to begin
commercial-scale deployment in 2020. While the experiences gained from
existing large-scale CO2 storage projects provide confidence that geological
storage is possible, it does not by itself open the door for widespread
deployment of CCS. Due to regional variations in geology, it is important to
conduct similar tests in multiple regions around the world. Projects in
multiple locations also help build widespread public confidence and
acceptance.
Not only is Beyond actual storage tests, insufficient R&D effort is focused on decreasing
characterisation
a significant the cost of finding, developing and operating geological storage sites for
up-front cost, CO2. Techniques for reducing the costs of characterising storage sites are a
a thorough critical R&D gap. Not only is characterisation a significant up-front cost, a
characterisation
thorough characterisation could take up to three years to complete and may
could take up to
three years to end with the conclusion that the site is unsuitable for storage. At this point,
complete and few commercial entities will want to take this financial risk and will instead
may end with the delay the decision to implement a CCS project. More research is needed to
conclusion that
the site is identify the appropriate business structures that will facilitate the
unsuitable for implementation of large-scale commercial CO2 storage activities.
storage

N O N - T E C H N I C AL R&D
Outside of R&D on CCS technologies, Figure 6-2 shows that public
awareness and understanding has the most number of organisations
involved in non-technical R&D efforts. This trend is expected to grow as
CCS projects become larger and more prevalent. Some CO2 storage
projects have been postponed, moved or cancelled recently due to
opposition from the local public. Research has demonstrated that presenting
a comprehensive public awareness and/or education campaign will enable
the public to develop more informed opinions about CCS. Although this does
Some CO2 not always lead to acceptance, it does assist in creating a more positive
storage projects
have been attitude towards the technology. This is particularly important because once
postponed, formed, opinions can be slow to change. A recent community engagement
moved or workshop held by the World Resources Institute (WRI, 2009) concluded,
cancelled
among others, that there is a need for more government funding for research
recently due to
opposition from on CCS public awareness by conducting surveys, focus groups and public
the local public awareness workshops. This will not only outline but potentially lead to public
acceptance for successful CCS demonstrations.

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E C O N O M I C S O F CCS
The current
As shown in Section 4, the current economics of CCS is such that the cost of economics of
emitting CO2 from coal-fired power plants for example, is still less than the CCS is such that
the cost of
cost of implementing CCS anywhere in the world today.
emitting CO2
from coal-fired
6.4.3 Exemplary netw orks power plants is
still less than
While researching the networks and populating the database, certain the cost of
implementing
networks stood out from the rest in terms of R&D efforts. The exemplary
CCS anywhere
networks include: in the world

• Cooperative Research Centre for Greenhouse Gas Technologies


(CO2CRC) Otway and H3 Capture Projects;

• Australian Coal Association and Australian National Low Emissions


Coal R&D Ltd.;

• IEA Greenhouse Gas R&D Programme;

• World Resources Institute;

• US Department of Energy (US DOE) Regional CO2 Sequestration


Partnerships;

• Asia-Pacific Partnership for Clean Development and Climate;

• Japan Coal Energy Centre; and

• CO2 Capture Project.

The efforts planned by the US DOE Regional Sequestration Partnerships


merit particular mention. A total of nine demonstration projects are being
planned by the seven partnerships; and each project will store at least one
million tonnes of CO2. Eight of the projects will utilise saline reservoirs for
CO2 storage, and the ninth is an EOR application. By the end of 2010, three
additional demonstrations should be injecting CO2. By the end of 2017, all
nine demonstrations will be completed and a total of more than 19 million
tonnes of CO2 will have been stored in a variety of geological formations. It
will be important that the lessons learnt from these large-scale storage
projects as well as the knowledge gained from the other exemplary R&D
networks are shared around the world. The Global CCS Institute can serve
as the catalyst for disseminating this knowledge.

6.4.4 Proof of large-scale sequestration


Geological sequestration of CO2 is currently being demonstrated in several
projects around the world:

• Statoil’s Sleipner Saline Aquifer CO2 Storage project in the North Sea
off Norway

• Snøhvit Liquefied Natural Gas (LNG) project in Norway

• Weyburn Project in Saskatchewan, Canada

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• In Salah Project in Algeria.


There are several Together these projects sequester about 6 million tonnes of CO2 per year,
commercial scale
projects currently which collectively approaches the output of a typical 1,000 Megawatt (MW)
in operation, coal-fired power plant. With over 25 cumulative operating years of
however none of experience, these projects have thus far demonstrated that CO2 storage in
these projects
deep geological formations can be carried out safely and reliably. Statoil
are in the power
generation sector estimates that Norwegian GHG emissions would have risen incrementally by
three percent if the CO2 from the Sleipner project had been vented rather
than sequestered.

Table 6-2 lists a selection of current and planned CO2 storage projects as of
early 2009, including those involving EOR.
Table 6-2 Select existing and planned CO2 storage projects as of early 2009

CO2 Start of Amount injected by


Project Country
source injection 2006 2010 2015

Rangely GP USA 1986 22 Mt 25 Mt 29 Mt

Sleipner GP Norway 1996 9 Mt 12 Mt 17 Mt

Weyburn Coal Canada 2000 5 Mt 15 Mt 26 Mt

In Salah GP Algeria 2004 2 Mt 7 Mt 12 Mt

Midale Coal Canada 2005 1 Mt 3 Mt 5 Mt

Ketzin NA Germany 2007 0 50 kt 50 kt

Otway Natural Australia 2007 0 100 kt 100 kt

Snøhvit GP Norway 2008 0 2 Mt 5 Mt

Gorgon GP Australia 2010 0 0 12 Mt

TOTALS 39 Mt 64 Mt 106 Mt

Note: GP means gas process, NA means not applicable, and the amount of CO2 injected is
cumulative not on an annual basis.

Table 6-2 shows the cumulative values of CO2 injected at particular points in
time. The survey found that those projects that are currently in operation
have a collective storage rate of around 10Mtpa.
There are several As indicated, there are several commercial-scale storage projects currently
commercial scale
projects currently in operation, and each of these consists of an integrated CCS system.
in operation, However, none of these projects are in the power generation sector, and this
however none of represents a significant gap. Proposed integrated, commercial-scale CCS
these projects
projects in the power sector such as the Australian ZeroGen, the Chinese
are in the power
generation sector GreenGen, the USA FutureGen project and the EU’s European Energy
Program for Recovery demonstrations are still years from operation. They
will all face obstacles before they will begin operation, not the least of which
is financial support for assembling projects in the absence of supporting
infrastructure and an economic incentive to implement CCS.

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6.5 Monitoring CCS R&D progress


The development status of CCS across the various applicable sectors is
summarised in Table 6-3. It shows the largest demonstrated annual rate of
CO2 capture, compression, transport and storage that has occurred at any
single location worldwide. Comparisons are also made against the minimum
rate that would be required for a commercial-scale application of CCS in
each applicable sector.

It should be noted that “commercial-scale” in the context of this report refers


to commercial market scale. For example, for power generation
applications, the basis for minimum commercial-scale is considered to be
250 megawatt electrical (MWe), 600 MWe, 600 MWe and 80 MWe for a
NGCC plant, coal-fired power plant, IGCC and biomass-fired Rankine cycle
power plant, respectively (see Notes 2 through 5 in Table 6-3 for additional
details). The “commercial-scale” term used in the Foundation Report One
applies more to smaller-scale commercial projects with proven engineering
viability for scale-up to full commercialisation. These smaller-scale
commercial projects produce the same learnings as those from a full-scale
application, but due to their smaller size, they will not be as commercially
viable as the larger, commercial market-scale applications.

The shading in the table is colour-coded to represent the level of experience


with CCS. Green shading means the experience matches or exceeds the
minimum size needed for commercial application in that sector. Yellow
shading means there has been some experience but at a scale smaller than
that needed for full-scale commercial applications. Red shading means
there has been no experience to date.

The data in Table 6-3 shows a mixed picture. In some sectors, such as oil
and gas production, CCS has been deployed at commercial-scale sizes
across the entire “chain of custody” from capture, to compression, pipeline
transport and storage in various geological media. However, in a majority of
the sectors, particularly in power generation, CCS usage is still an order of
magnitude, or greater, away from commercial-scale operation.

Also, while pre-combustion capture has been used at commercial-scale


sizes in the industrial sector, it has not been deployed at a meaningful level
in the power sector. With minimal exceptions, the other two methods for
CO2 capture (ie, post-combustion and oxy-combustion) have not been widely
applied in the industrial sector and are being demonstrated at less than a
tenth of commercial-scale in the power sector.

In order to monitor the networks’ progress towards the commercial


deployment of CCS globally, it is proposed that the CCS Application Matrix
shown in Table 6-3 be used to provide a high level overview. In order to
facilitate widespread deployment of CCS across all applicable sectors,
ideally all of the cells in Table 6-3 need to be shaded green by 2020, which
would indicate that all aspects of the CCS supply chain have been
demonstrated at commercial-scale volumes in all the sectors. This will be a
tall order. A more realistic goal might be to have at least one capture, one

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Strategic Analysis of the Global Status of Carbon Capture and Storage

compression, one transport and two storage cells shaded green for each
application by 2020 and a majority of the other cells shaded yellow (meaning
sub-commercial scale operation has been demonstrated).

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Table 6-3 CCS application matrix

Proven Operating Scale, tonnes CO2/year

Commercial- CO2 Capture Technology Compression Transportation Storage


scale,
Application minimum
Pre- Oxyfuel Post- Pipeline Ship On-Shore Off-Shore Oil/Gas Basalt Coal Seam
tonnes CO2 Saline Reservoir
Combustion Combustion Combustion Saline
per year

15 16 17
Industrial Oil & Gas Production 1,000,000 5,000,0006 75,00019 5,000,0006 5,000,0006 1,000,000 1,000,000 5,000,000
1
Oil Refining 1,250,000

Chemicals Production 100,000 750,0007 130,00018 250,0007


13
Biofuels Production 100,000 365,000

Cement Production 750,000

Steelmaking 3,000,000

Coal Synfuels Production 3,000,000 25,000,0008 3,000,00014 3,000,00014 3,000,00014

Power Natural Gas 700,0002 100,00011


3 9 10 12 12 10 12
Coal 3,500,000 35,000 50,000 300,000 300,000 50,000 300,000

Petroleum Coke 3,500,0004

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Notes on Table 6-3:

1. 1.25 Mtpa is typical total CO2 emissions for an oil refinery, but this is made up of many
smaller sources, not one single source.

2. Basis for minimum commercial scale is a 250 MWe NGCC emitting 360 kg CO2/MWe with
annual capacity factor of 85 percent.

3. Basis for minimum commercial scale is a 600 MWe coal-fired power plant emitting 800 kg
CO2/MWe with annual capacity factor of 85 percent.

4. Basis for minimum commercial scale is a 600 MWe IGCC power plant emitting 800 kg
CO2/MWe with annual capacity factor of 85 percent.

5. Basis for minimum commercial scale is an 80 MWe biomass-fired Rankine cycle power
plant emitting 880 kg CO2/MWe with annual capacity factor of 85 percent.

6. ExxonMobil natural gas processing plant in La Barge, Wyoming, United States of America
(USA).

7. Coffeyville Resources coal-to-urea manufacturing facility in Kansas, USA.

8. Sasol coal-to-transportation fuels refinery complex in Secunda, Republic of South Africa


(RSA).

9. Elcogas IGCC pre-combustion capture slipstream unit in Puertollano, Spain.

10. Vattenfall 30 Megawatt thermal (MWth) oxyfuel combustion pilot plant in Schwarze Pumpe,
Germany and CO2Sink/Ketzin injection project in Germany.

11. FPL Bellingham NGCC in Massachusetts, USA (no longer operating), a natural gas-fired
power plant at Sumitomo Chemical’s facility in Chiba, Japan is currently capturing
approximately 55,000 tonnes per year of food grade CO2.

12. Carbon Dioxide Technology Corp and Lubbock Power & Light 2x50 MWe coal-fired power
plant and enhanced oil recovery (EOR) project in Texas, USA (no longer operating).

13. ADM Ethanol production facility in Illinois, USA. CO2 is naturally produced as a high purity
stream from the fermentation process in an ethanol manufacturing facility. Because this
does not fit the definition of the three generic forms of capture (pre-, post- and oxyfuel
combustion), it is placed in the “other” category.

14. Dakota Gasification lignite-to-substitute natural gas (SNG) manufacturing facility in North
Dakota, USA and Encana Weyburn EOR project in Saskatchewan, Canada.

15. In Salah natural gas processing facility in Algeria.

16. Sleipner offshore gas production facility in North Sea (Norway).

17. Multiple sites using CO2 from La Barge facility including the Rangely CO2 EOR project in
Colorado, USA.

18. Ruwais fertiliser production facility in Abu Dhabi, United Arab Emirates (UAE).

19. Total Lacq 30 MWth natural gas boiler for natural gas processing operation in France.

Table 6-4 shows the current annual rate of CO2 storage into geological
media. The Global CCS Institute should update this data on a yearly basis
to monitor the rate of CCS progress around the world. The estimates in
Table 6-4 include EOR projects that are obtaining their CO2 from naturally
occurring CO2 sources. The volumes, therefore, are greater than identified
by projects proponents who responded to the survey in Chapter 3.

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Table 6-4 Storage matrix

Current annual storage rate (tonnes of CO2)


Region
Onshore Offshore Oil/gas
Basalt Coal seam
saline saline reservoir

Americas 65,000 48,000,000 900 70,000

Europe 125,000 1,000,000 700,000

Africa 1,300,000

Asia 10,0001

Australia and
65,000
New Zealand

Note 1: A 10,000 tonne per year test injection was conducted near Nagaoka, Japan in 2004, but
injection ended in 2004.

Experiences relevant to CCS can be obtained from the oil industry, where
CO2 injection technology and modelling of its sub-surface behaviour have a
proven track record. Although the purpose of EOR is not to sequester CO2
per se, in practice it could lead to geological storage. Since the start of its
use 35 years ago, CO2 had been geologically stored after completion of the
EOR, therefore some (about 50 percent if totally depressurised) could be re-
used in potential nearby EOR developments at a later date. Very little CO2
was ever returned to the atmosphere, as its production was the biggest
operating cost of EOR. The EOR field operator, therefore, had a strong
incentive to prevent the CO2 from leaking or venting.

It should be noted that more than half of the CO2 that has been used for
EOR to date has come from naturally occurring reservoirs of CO2. While
these reservoirs testify to the potential for long-term storage of CO2 in the
proper location, the transfer of CO2 from one underground location to
another does not contribute to a reduction in atmospheric CO2
concentrations.

EOR could be a large commercial CCS application where the CO2 has a
value. However, that value is perhaps only 25 to 50 percent of the CO2
capture costs for a coal-fired power plant that implements CCS.

6.6 Aggressive development schedule


Figure 6-4 shows an example of an aggressive development schedule for a
capture process from TRL-1 through TRL-8. TRL-9 would start with design
and permitting in 2013 (2 years), construction in 2015 (3 years) and
operation in 2018 (2 years). This aggressive schedule would need to be
followed in order to have 2 years of operation at full-scale by 2020. Those 2
years of operations (assuming successful deployment) should be sufficient
to convince a buyer to include the process in a project that begins its design
from 2020.

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Figure 6-4 Timescale for a capture process development

TRL 9

TRL 8

TRL 7

TRL 6
TRL

TRL 5

TRL 4

TRL 3
Design
TRL 2 Construction
Operations
TRL 1

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year

6.7 R&D gaps


This section identifies R&D gaps that need to be filled in order to pave the
way for the proposed large-scale demonstrations as well as those needed to
achieve reductions in cost.

6.7.1 R&D gaps for CO 2 capture from power


generation
There are three main approaches for the capture of CO2 from fossil based
plants: post-combustion; oxy-combustion and pre-combustion.

P O S T - C O M B U S T I O N R E M O V AL O F CO 2 F R O M T H E F L U E G AS
Most post-combustion CO2 capture processes envisioned for power plant
boilers draw upon commercial experience with absorption and separation
using amine solvents. Extensive R&D is in progress to improve the solvent
and system designs for power boiler applications.

Extensive research is being conducted on potential alternatives to amine-


based solvent technologies to identify new processes and liquid solvents for
CO2 capture that offer economic advantages and are suitable for scale-up
and demonstration.

In addition to liquid solvents, alternative approaches also are being


investigated to separate CO2 from flue gas. These include multiple physical
and chemical adsorption processes, cryogenic separation processes that
“freeze” out the CO2, molecular sieve and solution-diffusion membranes and
biological processes that use photosynthesis to fix the CO2 as algae.

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COMBUSTION OF THE FUEL WITH OXYGEN (OXYFUEL


COMBUSTION)

The process is applicable to virtually all fossil-fuelled boiler types and is a


candidate for retrofits to existing power plants as well as integration into new
power plants. Because the oxy-fuel combustion process requires a supply of
high-purity oxygen that is also three times as much as the flow required for
an equivalent oxygen-fired IGCC plant, it stands to benefit from
developments in oxygen separation such as membrane-based air separation
technology, which could replace the energy-intensive conventional,
cryogenic air separation technology.

There is also a need to purify boiler exhaust gases to attain pipeline quality
CO2 specifications and to reduce residual O2 and N2 due to boiler in-leakage
of air. The same issues that influence the lack of understanding of the
thermodynamic properties of supercritical CO2 affecting pipeline design also
influence the design and need for the final, polishing CO2 purification stage.

P R E - C O M B U S T I O N R E M O V AL O F CO 2 F R O M N AT U R AL G AS O R
S Y N T H E S I S G AS ( F R O M F U E L G AS I F I C AT I O N O R R E F O R M I N G O F
N AT U R AL G AS )

The removal of CO2 from natural gas and synthetic gas streams is
extensively practiced commercially worldwide. However, the captured CO2
stream is usually vented or used in other commercial processes. In an
Integrated Gasification Combined Cycle facility incorporating CO2 capture,
the process steps of gasification, gas clean up, shift, sulphur and CO2
removal result in a hydrogen-rich syngas being fired in the gas turbine.
Although the IGCC and CO2 removal processes have recently been offered
commercially, the operation of a fully integrated IGCC plant with CO2
removal has yet to be demonstrated.

P O T E N T I AL I M P R O V E M E N T S T O IGCC W I T H CCS
The main opportunities for improvements in IGCC with CCS are in the areas
of better availability of the base power plant technology that has yet to see
large-scale deployment in power generation, lower cost and higher
efficiency. In the latter area, improvements that will result in reduction of the
power and efficiency losses when incorporating CCS are of particular
importance. These potential improvements include:

• better availability

− improved gasifier refractory, fuel injector and hot-gas gas filter


lives;

− gas turbine availability; and

− shorter start-up periods;

• lower capital cost

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− larger gasifiers and gas turbines provide economies of scale (50


Hertz (Hz) gas turbine is approximately 40 percent larger than
60 Hz – China and part of Japan are 50 Hz, USA 60 Hz);

− lower cost ASU (eg, ITM); and

− lower auxiliary power usage;

• higher efficiency

− higher firing temperature gas turbines;

− lower auxiliary power usage (eg, with GT air extraction);

− separation process that produce CO2 at higher pressure; and

− advanced power cycles (eg, fuel cell/gas turbine hybrids).

Potential improvements in the shift and gas clean up and separation areas
include:

• the steam required for the shift reaction reduces the steam turbine
output so a shift catalyst that can use lower steam/CO ratio would
improve efficiency and economics;

• lower cost CO2 separation technology that meets purity specifications;

• CO2 compression has high auxiliary power use, so CO2 separation


process producing CO2 at higher pressure, possibly by use of
membranes would reduce this usage; and

• Hydrogen sulphide (H2S) and CO2 separation processes currently are


low temperature (typically around 40°C) so that the hydrogen-rich
syngas then needs to be reheated for the gas turbine. The
development of a warm gas clean up process scheme for H2S and
CO2 removal at higher pressure would reduce that energy penalty.

The current level of R&D for IGCCs with pre-combustion capture does not
appear to be adequate to achieve most of the identified availability
improvements and cost savings potential by 2020.

6.7.2 R&D gaps for CO 2 capture from industrial


sources
Electric power generation is by far the dominant large stationary CO2 source,
followed by cement production, oil refineries and iron and steel production.

CEMENT
Typical cement plant CO2 emissions are very large and are at even higher
CO2 concentrations than the flue gas from coal power plants. However, due
to the high CO2 emission per tonne and more importantly the very high CO2
per million dollars of product value, adding CCS to cement production would
significantly increase cement prices.

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Overall the cement production sector trails the oil and gas and power sectors
in the application of CCS technologies. Due to the high CO2 emissions from
cement production relative to the cost of the cement product, it is clear that
this sector will need additional financial support to develop and deploy CCS
technologies.

OIL REFINERIES
The oil industry’s most public R&D effort, specifically in CCS, have been via
the CO2 Capture Project (CCP). The CCP consists of a partnership of eight
of the world’s leading energy companies and three government
organisations performing R&D technologies to help make CCS a practical
choice for reducing global CO2 emissions.

Overall, CCS R&D and deployment in the oil and gas industry is quite
healthy. Deployment in oil refining will benefit from the advances made in
pre-, post- and oxy-combustion capture for power generation applications.
The major R&D challenge is driving down the cost of capturing CO2 from
smaller scale sources that are prevalent in the oil refineries.

I R O N AN D S T E E L
Application of CCS for iron and steel production generally will exclude the The iron and
small “mini mills”, which are based on recycled scrap melting and purification steel sector is
trailing in the
in electric furnaces, due to small amounts of “direct” CO2 produced. Thus, deployment of
CCS interest for the iron and steel industry is generally focused on the big CCS technology
direct coal-based traditional integrated steel mills, which use coke ovens,
blast furnaces and basic oxygen furnaces.

The iron and steel sector is trailing in the deployment of CCS technology.
The CCS-related R&D in this sector needs to spread beyond Europe to
foster competition, allow for independent verification and develop the
worldwide expertise that will be needed for widespread deployment.

6.7.3 R&D gaps for CO 2 compression


For the compression of CO2, EPRI has identified the need to:

• continue the development of large-scale semi-isothermal and high-


pressure-ratio adiabatic CO2 compressors in order to decrease the
parasitic load of compression systems;

• approach the aircraft and military gas turbine community and discuss
the potential to design an advanced, axial-flow, high-pressure-ratio
CO2 compressor. Currently there are no axial flow CO2 compressors,
but such a machine would allow the recovery of high temperature heat
in compressor aftercoolers, which would improve the overall efficiency
of power plants integrated with CO2 capture and compression
systems. The high temperature heat recovery could be used to
generate additional power in the plant;

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• perform more gas properties and thermodynamic activity coefficient


measurements for CO2 mixtures;

• optimise the integration of CO2 capture/compression systems together


with the plant;

• compare and evaluate compression and early-stage liquefaction and


pumping options and configurations;

• investigate higher voltage, higher power and speed machines and


drives; determine the optimal machine types, speeds, and required
voltages, etc. for CO2 compressors;

• install test coupons in existing CO2 pipelines to obtain corrosion data,


then develop CO2 product specifications;

• establish allowable levels of contaminants in CO2 pipeline and/or


compressors;

• quantify compressor heat exchanger data for plant applications


including supercritical fluids; and

• integrate utilisation of waste heat to improve cycle efficiency.

6.7.4 CO 2 transportation gaps


The EPRI, Newcastle University in the UK (Race 2009) and the
CO2PIPETRANS collaborative organised by Det Norkse Veritas (DNV) (Det
Norkse Veritas 2009) have each recently published a list of R&D needs
related to CO2 pipeline transportation. A merged version of their
recommendations is listed below:

• Additional research, development and demonstration (RD&D) is


needed to better define the thermodynamic properties of CO2 and CO2
mixtures at supercritical conditions. Currently available equations of
state models to predict the properties of supercritical CO2 with
impurities (eg, Argon (Ar), nitrogen (N2), O2, CO, ammonia (NH3), and
H2S), at conditions near the critical point are not reliable for precise
design. Improvements with these models could facilitate in
researching alternative, less power- or capital-intensive methods to
produce supercritical CO2 and in optimising the integration of CO2
capture and compression systems with the pipeline system;

• Further the investigation of the effects of impurities on water solubility


in supercritical CO2;

• Identify, document, and quantify trace impurities from various new and
innovative CO2 capture technologies and approaches that will
potentially remain with the captured CO2;

• Further investigation is needed of the compatibility of non-steel


materials (eg, elastomers/polymers for seals and gaskets) with CO2
impurities;

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• Conduct more detailed material science analyses of existing CO2


pipelines and handling equipment. Confirm the integrity of the oldest
CO2 pipelines and potentially update existing material corrosion rates;

• Investigate corrosion R&D to confirm the impact of impurities from


newly developed CO2 capture technologies on the corrosion rates of
carbon steel pipelines and to evaluate the risk of CO2 corrosion in
case of an accidental intake of humidity;

• Revisit and improve existing models of pipeline fracture propagation


and verify the models with full-scale crack arrest testing;

• Improve CO2 pipeline blowdown and depressurisation models and


associated controls, and generate supercritical/dense phase CO2
release data for model validation. This will enable the CO2 pipeline
designers to determine adequate safety zones and avoid excessive
land acquisitions;

• Investigate hydrate formation to avoid operational downtime; and

• Public communication and interaction to build trust and awareness


around transmission of CO2 in pipelines.

CO2PIPETRANS has estimated the cost of performing its recommended


R&D to be a relatively modest sum (US$6.7 to US$7.5 million).

6.7.5 Storage technology R&D gaps


In addition to the R&D requirements, techniques for reducing the costs of
characterising storage sites are critical. Schlumberger has estimated that it
could cost approximately US$50 million to characterise a site where no
seismic data currently exists (Peters 2009). This is typical of many sites
outside of oil and gas producing regions, and it presents a major hurdle for
commercial ventures that are considering CCS. Not only is it a significant
up-front cost, but a thorough characterisation that would include seismic
scans, drilling of test wells to determine injectivity, and the development a
commercial-scale injection and monitoring system design could take up to
three years to complete, which may conclude the site as unsuitable for
storage. At this point, few commercial entities will want to take this financial
risk and, instead, will delay the decision to implement a CCS project.

There is also a need for the development of a business structure that would
facilitate the screening and certification of geological storage sites. This is
so that industries considering installation of CO2 capture systems know with
certainty that there will be a location to store the captured CO2 at a known
cost. For example, the USA-based Clean Air Task Force has proposed the
concept of managing geological carbon storage through a regulated public
utility. The role of such a public utility would be to develop, operate and
manage all geological CO2 storage sites within a given geographic area, and
it would recover its costs via fees regulated by a government utility
commission similar to those used to regulate electric utilities (Waltzer 2008).
This would allow the costs of locating and developing potential storage sites

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to be spread across all future users rather than placed onto the already
considerable financial burdens of first movers. More research into
appropriate business structures will facilitate a wider and more rapid
implementation of geological storage.

A final R&D gap is the investigation of the impacts of CO2 impurities. Since
CO2 used for EOR does not typically have more than a few ppm of oxygen
(O2), there is no data to show what would happen if CO2 from an oxy-
combustion process with perhaps 200 ppm of O2 was injected into a
reservoir. Would the O2 promote reactions with the sub-surface rock that
could affect the permeability of the reservoir? Would it promote growth of
microbes in sub-surface water that might foul the injection ports? Similarly, if
a storage site accepted CO2 from both pre-combustion capture and post-
combustion capture sources, there is a possibility that both H2S and SO2
would be present. Would these react in the formation via the Claus reaction
and produce sulphur, and would that impact permeability? The entire topic
of sub-surface chemistry impacts of CO2 impurities is a field that appears to
be ripe for investigation.

6.7.6 Gaps in proof of large-scale sequestration


While the experiences gained from existing large-scale CO2 storage projects
provide confidence that geological storage is possible, it does not by itself
open the door for widespread deployment of CCS. There are still a large
number of gaps in the demonstration of large-scale CO2 storage in various
underground media around the world. For example, while storage of CO2 in
North American oil reservoirs is clearly well-demonstrated, not all sources of
CO2 in North America are located near an oil field (and not all oil fields are
amenable to using CO2 for EOR), nor is the capacity of the suitable oil
reservoirs sufficient to store all the CO2 which could potentially be captured
by 2050. Therefore, other options for geological storage need to be proven.
In addition, due to regional variations in geology, it is important to conduct
similar tests in multiple regions around the world. Projects in multiple
locations also help build public confidence and acceptance in a wider-spread
fashion.

Smaller scale storage tests are needed in many regions of the world in a
variety of storage media before large-scale tests can begin. These tests will
help clarify regulatory issues and increase public acceptance, which might
otherwise stall or delay larger tests. They will also provide information on
the storage characteristics of the media, which will be needed to design the
storage systems for larger demonstrations in the same locations and also
develop the local expertise that will be needed to execute and monitor these
larger projects.

6.7.7 Commercial considerations


Battelle (2006) estimated the cost of capturing and compressing, but not
storing, CO2 from a variety of sources as summarised in Figure 6-5.

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Figure 6-5 Battelle's cost estimates for the capture and compression of CO2
from various sources

70

60
2006 USD per tonne of CO2 captured

50

40

30

20

10

0
Power IGCC Refinery Steel Cement Ethanol Ethylene Ammonia
plant boiler power flue gas oxide
flue gas plant

Source: Battelle, 2006

While Battelle did identify some non-electric power generation CO2 sources
that could be captured at costs less than that of applying CCS on coal-fired
power plants, its analysis of USA-based emission sources showed that these
would amount to no more than 25 percent of total CO2 emissions where
CCS could be applied.
Figure 6-6 Net cost of employing CCS in the USA based on current
technologies and sources

$120

$100
Net CCS Cost ($/tCO2)

10
$80

$60 5 9
4 8
$40 6 7
3
$20
2
$0
1
($20)
0 500 1,000 1,500 2,000 2,500
CO2 Captured and Stored (MtCO2)

Source: Battelle, 2006

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Chart Legend:

1 = High purity ammonia plant / nearby (<10 miles) EOR opportunity

2 = High purity natural gas processing facility / moderately distant (~50 miles) EOR opportunity

3 = Large, coal-fired power plant / nearby (<10 miles) enhanced coal bed methane (ECBM)
opportunity

4 = High purity hydrogen production facility / nearby (<25 miles) depleted gas field

5 = Large, coal-fired power plant / nearby (<25 miles) deep saline formation

6 = Coal-fired power plant / moderately distant (<50 miles) depleted gas field

7 = Iron & steel plant / nearby (<10 miles) deep saline formation

8 = Smaller coal-fired power plant / nearby (<25 miles) deep saline basalt formation

9 = Cement plant / distant (>50 miles) deep saline formation

10 = Gas-fired power plant / distant (>50 miles) deep saline formation

Emission credits in Europe during the first eight months of 2009 have
generally traded between 12 and 16 Euros (circa US$17 to US$22 at
US$1.4/Euro), which as shown in Figure 6-5 is considerably less than the
cost of implementing CCS on any coal or natural gas power plant as well as
other major industrial CO2 emission sources. Consequently, in order for
there to be a financial incentive to deploy CCS, technology improvements
must yield cost reductions, market prices must rise or a combination of those
scenarios must occur.

Several organisations, including among others, Coal 21 in Australia, Natural


Resources Canada, Cooretec in Germany, the Clean Coal Cycle Study
Group in Japan, and the Coal Utilisation Research Council (CURC) and
EPRI in the USA, have published R&D roadmaps for advanced coal power
generation technology, which have revealed that there is significant potential
to decrease the cost of CCS through technological improvements. These
improvements focus not only on the capture, compression and storage
technology, but also on making coal power generation more efficient so that
less coal is consumed in the first place.
These The assessment of the global CCS R&D effort shows that there is significant
improvements
focus not only on work going into concepts that could lead to cost improvements. This is
the capture, positive news. However, much of this work is occurring on concepts that are
compression and low on the TRL ladder, and as these concepts progress out of the lab, they
storage
will need substantially larger amounts of money to fund pilot and
technology, but
also on making demonstration scale applications. Our review revealed that there are very
coal power few organisations funding demonstrations at one-tenth of full commercial
generation more scale. While this may not currently be constraining the advancement of
efficient so that
less coal is improved CCS technologies, it soon will. Applications of CO2 capture for the
consumed in the oil and gas and power sectors appear to be receiving enough funding to get
first place to the pilot plant scale (TRL-7), but advancing to sub-commercial scale
demonstrations and larger will require an order of magnitude greater level of
funding.

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F U N D I N G AN D R AI S I N G C AP I T AL
One barrier to the widespread deployment of CCS is the difficulty in attaining
funds for demonstration and early commercialisation projects. During the
R&D stage, funding is provided mostly by equity from the technology owner,
and some additional funding may be obtained with government grants or
loans. As the technology evolves from R&D into applied development and
then demonstration, private equity such as venture capitalists and public One barrier to
widespread
offerings of equity would normally be engaged. However, it is only when a deployment of
technology has been proven in demonstration projects and has shown its CCS is the
capabilities at commercial scale will it attract mainstream sources of debt difficulty in
attaining funds for
and equity capital. Thus, for the early demonstration projects, it would seem
demonstration
that governments would be a key source of funding, including tax incentives and early
such as investment and production tax credits. In the case of power commercialisation
projects
production, without strong incentives from regulators that set electricity rates,
investors will only be interested to invest in proven technologies (ie, those
successfully demonstrated at commercial scale and accompanied by
performance warranties backed by credit-worthy manufacturers).

The current economics of CCS also works against raising funds. The cost of
emitting CO2 from coal-fired power plants is still less than the cost of
implementing CCS anywhere in the world today. Consequently, a
technology developer cannot convince a potential customer to accept the
risk of deploying a new technology because of the potential cost savings it
would provide. Barring significant subsidies for “early movers”, this situation
will impede technology deployment.

In addition to government subsidies, another approach to raising capital for


demonstration projects is through collaboration. EPRI, USA uses this model
to allow participating members to combine relatively modest individual
spending into more meaningful sums, thereby maximising the impact of
industry technology investments while spreading the risk.

6.7.8 Public awareness, policy and regulation

P U B L I C AW AR E N E S S AN D U N D E R S T AN D I N G
In order to build public confidence in CCS, demonstrations must be in place
In order to build
to show that the projects can operate safely, with no leakages or impacts public confidence
towards the ecosystem. Until these demonstrations are running, public in CCS,
education is required that includes climate change, energy policies and on demonstrations
must be in place
the use of CCS and other energy technologies and their associated risks.
to show that the
Any education materials need to be balanced and targeted at all relevant projects can
stakeholders and social groups. Research has demonstrated that operate safely,
presenting such a comprehensive public awareness and/or education with no leakages
or impacts
campaign will enable the public to form their own informed opinions about towards the
CCS. Although this does not always lead to acceptance, it does assist in ecosystem
creating a more positive attitude towards the technology. This is particularly
important because once formed, opinions can be slow to change.

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The World Resources Institute (WRI) held a workshop in April 2009 to initiate
the development of CCS Community Engagement Guidelines. The
workshop included a session on identifying and assessing existing practices
for community engagement. In this session, examples of effective
community engagement were identified as well as those that did not work.
Detailed considerations for effectively engaging communities were
highlighted and included the following:

• Understanding the local community context. A careful analysis of the


many constituents in a community and their sentiments is critical at
the outset of developing a public outreach/engagement strategy;

• Opposition to projects. It is important to know the perspectives of


different community constituents and engage the opposition parties to
address their concerns genuinely;

• Public meeting format. At a minimum, public meetings should offer


the public an opportunity to pose and receive answers to their
questions;

• Two-way engagement. The importance of two-way community


engagement (either directly or reaching out to community leaders first)
was emphasised;

• Media influence. The timing and manner in which the media frames
an issue is critical in shaping public opinion about the technology; and

• Social science research on CCS. The group discussed the need for
more government funding for research on CCS public awareness.
Conducting surveys, focus groups, and public awareness workshops,
as well as the need to outline how this will promote successful CCS
demonstrations will all lead to better public awareness.

In September 2007, Climate Change Central in Alberta, Canada partnered


with the Institute for Sustainable Energy, Environment and Economy
(ISEEE) and the International Institute for Sustainable Development (IISD) to
host a communications workshop on CCS. This three-day workshop linked
the latest in international research on public perceptions of CCS to practical
applications for Canadian industry, government and non-government
organisations (NGOs). The final report for the workshop summarised the
key research findings as follows:

• Once formed, opinions can be slow to change;

• Understanding of CCS remains low;

• There is a need to collaboratively provide balanced, valid and


accessible information from a range of sources (ie, industry,
government and NGO);

• Face-to-face dialogue is the most effective way to communicate;

• Communication must be set in the context of climate change;

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• Stringent regulation and monitoring should be an integral component


of any CCS project; and

• CCS should not be implemented at the expense of investments in


renewable energy.

I M P AC T O F N O N - U N I F O R M CO 2 R E G U L AT I O N S O N T H E
I N D U S T R I AL S E C T O R

If CO2 emission regulations are not deployed uniformly throughout the world,
the non-power generation CO2 intensive industries may face a contentious
issue. Due to fierce international product price competition, they may be
economically forced to move their most CO2 intensive operations to nations
with less stringent CO2 regulations if faced with CO2 taxes or CO2 reduction
mandates in their home nations. While this is a sensitive political issue, it is
nevertheless a very real issue, as companies cannot stay in business very
long if they are losing money from paying carbon taxes while their
competitors in other nations do not.

P O L I C Y - R E L AT E D CO 2 S T O R AG E G AP S
As stated in Chapter 5, beyond developing the technological aspects of long-
term geological storage, public policy needs to address issues such as CO2
storage site permitting, long-term monitoring requirements, and liability.
Development of CCS represents an emerging industry, and the jurisdiction
for regulating it has yet to be determined.

Currently, efforts are under way in some countries to establish regulatory


frameworks for long-term CO2 geological storage. Additionally, stakeholder
organisations such as the Interstate Oil and Gas Compact Commission
(IOGCC) in the USA are developing their own suggested regulatory
recommendations for states drafting legislation and regulatory procedures
for CO2 injection and storage operations. Other stakeholders, such as
environmental groups, are also offering policy recommendations.

It is clear that the development of CCS technologies must be accelerated if


global commercial deployment is to begin by the end of the next decade. To
support this objective, it is important to identify and assess progress made
by the significant research and development activities being performed by
organisations worldwide. This screening process could reveal which
organisations have the most advanced R&D programs and have the
capability to help the Global CCS Institute meet its objectives. Technology
collaboration enables the sharing of risks, rewards and progress of
technology development and enables coordination of priorities. In order to
achieve this, it is clear that CCS will need to be rapidly developed in all major
fossil fuel based economies.

Imperfect knowledge occurs in most other private and public investment


decisions. Establishing a price on GHG emissions would provide explicit
incentives for R&D to reduce future mitigation and adaptation costs, and it

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would provide a guide for the household and business sectors with which to
choose investments that save on carbon.

6.8 Conclusions
To support the objectives of Foundation Report Four and to facilitate the
assessment of the global status of CCS R&D, a database of organisations
performing considerable CCS R&D was developed. Based on inputs from
the panel of advisors for this project, 357 organisations were identified for
inclusion in the R&D Networks database. However, several factors resulted
in the omission of some key information from the database, limiting the types
of analyses that can be performed and preventing any definitive conclusions
that can be drawn from the data.

Despite these limitations, the authors believe that the R&D activities
captured in the database are a fair representation of the global effort on CCS
R&D. Omissions in the data were overcome by a qualitative assessment of
the R&D activity based on the authors’ and reviewers’ knowledge of ongoing
worldwide CCS R&D.

Based on the assessment of the data, CCS is not ready for commercial-
scale deployment in many of its potentially applicable sectors. In addition,
CO2 storage has not been demonstrated at the required scale in many of the
geographic regions and geological strata where CCS may be implemented.
Consequently, the development of many CCS technologies must be
accelerated if a global commercial-scale deployment of CCS is to commence
by the end of the next decade.

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7. Gaps and barriers to CCS deployment

7.1 Introduction
There is growing scientific and political consensus that deep cuts of GHG,
including CO2 emissions to atmosphere must be achieved urgently in order
to mitigate global climate change. The Stern Review (2006), the IPCC
Fourth Assessment Report (2007) and the Garnaut Review (2008) argue
that strategies for reducing GHG emissions by 50 percent by 2050 are
fundamental if the potentially catastrophic impacts of climate change are to
be avoided. The G8 objective to develop and widely deploy CCS is central
to this goal.

The IEA has predicted that CCS has the potential to contribute to 19 percent
of GHG emissions reduction to atmosphere, as part of a portfolio of
responses, by 2050 to avoid dangerous climate change. The portfolio of
responses additionally includes significantly expanding renewable energy
and energy efficiency amongst other measures.

The IEA’s analysis states that all of the technologies must be effective,
including CCS, if the deep cuts in CO2 emissions are to be achieved. That
is, the deployment of CCS is not optional. It must occur if dangerous climate
change is to be avoided.

For CCS to contribute to the decarbonisation of energy at the scale required,


and in the timeframes necessary to avoid dangerous climate change, an
energy revolution must occur. This revolution is similar to implementing the
world’s existing infrastructure for hydrocarbons developed over the past
century but within the next 40 years.

The benefits of CCS in terms of catalysing new infrastructure investments,


ensuring energy security and developing new skilled jobs in a greener
economy are significant.

However, before CCS can be deployed widely, many key challenges and
gaps must be addressed. To put this challenge into context, and as stated
previously, if CCS is to realise its potential of contributing 19 percent of
global CO2 emission reduction to atmosphere, a storage rate of 10.1 Gtpa is
required by 2050 (IEA, 2008).

The seven operating commercial scale, integrated CCS projects identified in Achieving the
this study are collectively storing less than 10 Mtpa. Therefore, to achieve global CO2
emissions
the global CO2 emissions reduction target for CCS will require 1,000 times reduction target
the annual rate of storage of the existing commercial scale projects. from CCS
will require
This section of the Strategic Analysis of the Global Status of CCS considers 1,000 times
the key gaps and barriers to its development and deployment. Having the annual rate
reviewed the current status of CCS in regards to proposed projects, of storage of
the existing
economics, policy and legislative frameworks and R&D underway, the commercial
findings suggest that the G8 objective is ambitious. While there have been scale projects

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positive developments across all of these issues in recent years significantly


much more effort is required if the G8 goal is to be met.

The following section synthesises the findings identified in the four


foundation reports to assess the key CCS gaps and challenges. This
discussion is guided by a risk assessment process developed using an
expert panel and the coordinators of the four foundation reports to identify,
rank and compare key issues. Through this process the risks can be ranked
and prioritised to allow the identification of a set of mitigation strategies
developed for consideration and action by the Global CCS Institute. These
actions need to be considered by the Global CCS Institute in developing a
comprehensive strategic plan to facilitate achievement of the G8 goal.

7.2 Background

7.2.1 Risk assessment process


A risk assessment is an early element of an effective risk management
process. Risk management is a tool that is used to add value to a project by
identifying, managing and controlling factors which may affect pre-defined
project objectives.

Certain events that may or may not occur can have a negative impact on
achieving the objectives of the relevant activity. The risk associated with this
event is determined by a combination of the significance of the consequence
and the likelihood of the event occurring. The risk is then ranked by use of a
matrix combining these two factors as illustrated in Figure 7-1.
Figure 7-1 Risk matrix

Consequence
Insignificant Minor Moderate Major Catastrophic
1 2 3 4 5

A Almost Certain High High Extreme Extreme Extreme

B Likely Moderate High High Extreme Extreme


Likelihood

C Moderate Low Moderate High Extreme Extreme

D Unlikely Low Low Moderate High Extreme

E Rare Low Low Moderate High High

The objective is For this risk assessment the objective is the G8 goal of launching 20 large
the G8 goal of
launching 20 scale CCS demonstration projects globally by 2010 with a view to beginning
large scale CCS broad deployment of CCS by 2020. This objective was further expanded to
demonstration include:
projects globally
by 2010 with a • CCS projects that are integrated, that is, combines the CO2 capture,
view to
transport and storage technologies;
beginning broad
deployment of
CCS by 2020

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• all carbon capture technologies (pre-combustion, post-combustion and


oxy-fuel), transport and storage technologies;

• application of CCS to large stationary sources of CO2 emissions to


atmosphere including fossil-fuel power generation, cement, iron and
steel, aluminium and chemical production; and

• projects deployed across multiple geographic regions around the


world.

Risks to the objective were analysed and evaluated to determine a


reasonable consequence and likelihood of the described event occurring.
Application of the risk matrix determines the following rankings of risks in
descending order of priority as:

• extreme (priority one);

• high (priority two);

• moderate (priority three); or

• low (priority four).


For the purposes
For the purposes of this report only the extreme (priority one) risks are of this report,
only the extreme
considered as these are assessed as being the potentially critical barriers to
(priority one)
achieving the G8 objective within its timeframe. risks are
considered,
The development of a risk assessment concentrates on a qualitative rather as these are
than quantitative assessment process which is inherently subjective. As a assessed as
result the identification of risks and their ranking using WorleyParsons’ being critical
potential barriers
Project Risk Management Process is based broadly on the Australian and to achieving the
New Zealand Standard for Risk Management AS/NZS 4360:2004, an G8 objective
international benchmark standard in risk management. The description of within its
timeframe
likelihood and consequence is provided in Table 7-1 and Table 7-2 below.
Table 7-1 Risk matrix likelihood category

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Table 7-2 Risk matrix consequences

The extreme risks identified by this process are provided in Table 7-3.

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Table 7-3 Extreme risks identified in risk assessment process

Risk Description (Event and Consequence) Category Existing Controls Consequence Likelihood

Public opposition leads to a lack of political will to Public Limited education of stakeholders (public 4 Major A Almost
support CCS. and policy makers) that CCS must be Certain
deployed to mitigate climate change.

Global financial crisis leads to inability to secure Business Case Economic stimulus packages provided by 4 Major A Almost
private sector finance of CCS projects. governments. Direct funding mechanisms Certain
proposed by Canadian, European, US
and Australian Governments.

A lack of detailed knowledge of site specific trapping Technology - Some small-scale injection testing and 4 Major A Almost
mechanisms leads to greater uncertainty in predictive Sequestration use of analogue set from other relevant Certain
modelling for early projects resulting in prolonged and geologic formations.
costly planning stages.

A lack of fundamental knowledge of geology in many Technology - Some geological surveys being initiated. 4 Major A Almost
regions of the world leads to uncertainty on the Sequestration Certain
number and size of potential storage reservoirs.
Limited ability to launch integrated CCS projects on a

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global basis.

Public opposition arising from perceptions of Public Limited education campaigns to inform 4 Major A Almost
catastrophic leakage (pipelines and storage) leads to stakeholders that CCS is integral to Certain
project delays or cancellations. mitigate threat of climate change.
Leverage off hydrocarbons experience
and educate on relative risk of storage.
Synthesis Report
Risk Description (Event and Consequence) Category Existing Controls Consequence Likelihood

A lack of public awareness of the necessity of Public Limited education that CCS is vital to 4 Major A Almost
commercial scale, integrated CCS projects to mitigate mitigate climate change. Certain
climate change results in public resistance to approval
Small scale / pilot demonstration
of demonstration projects.
projects.

Uncertainty on long-term liability for CO2 storage leads Governmental/ Some legislation where the state accepts 4 Major A Almost
to proponents unwilling to develop projects or delays Regulatory/ liability. Certain
to existing projects. Policy

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Failure to establish a mechanism to assign a monetary Governmental/ Policies such as cap and trade and CO2 4 Major A Almost
Strategic Analysis of the Global Status of Carbon Capture and Storage

value on CO2 or the apportionment of existing Regulatory/ taxes exist in some countries / regions Certain
mechanisms (such as CDM) to support CCS leads to Policy can be used as a model for global
no economic incentive to undertake projects. introduction. ETS operating in Europe
but this alone is insufficient to accelerate
deployment. Other jurisdictions such as
Australia and the USA proposing cap and
trade mechanisms. Norway introduced
carbon tax.

The failure of discreet project proponents (capture Business Case Utilise experience drawn from the EOR 4 Major A Almost
only, transport only and storage only) to cooperate industry. Certain
and develop commercial scale, integrated CCS
projects leads to delays or cancellations.
Risk Description (Event and Consequence) Category Existing Controls Consequence Likelihood

London Protocol and Basel Convention definition of Governmental/ Process to amend existing treaties and 4 Major A Almost
CO2 prohibits transport across national boundaries Regulatory/ conventions understood. Certain
leads to project delays or cancellations due to sub- Policy
optimal matching of CO2 source with potential sinks.

A lack of capacity among regulatory agencies on Governmental/ Education programs. 4 Major B Likely
permitting capture, transport and storage activities Regulatory/ Use existing legislation.
leads to delays in approvals. Policy

High cost of capture and compression, and the Technology - Some public funding of early mover 4 Major B Likely
associated energy penalty, delays commercial Capture projects to overcome economic barrier.
deployment.

First-of-a-kind technology leads to higher contracting Business Case Technology vendor (OEM) partnerships 4 Major B Likely
hurdles - financial and contractual acceptance with proponents and constructors to
hindering project development. provide cost optimisation.

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The length of time required to complete environmental Business Case Utilise existing legislation that can 4 Major B Likely
studies and approval process leads to project delays undertake a whole of government
or cancellations. approach.
Process to engage early, transparently
and frequently with relevant
stakeholders.
Synthesis Report
Risk Description (Event and Consequence) Category Existing Controls Consequence Likelihood

Insufficient number of commercial scale, integrated Global Funding schemes to encourage CCS 4 Major B Likely
CCS projects at a sufficient stage of development projects.
leads to a potentially limited portfolio of projects that
Government policies eg cap and trade
can meet the G8 timeframe.
and tax on CO2 emissions

Unwillingness of governments to underwrite critical Governmental/ Governments have set precedents in 4 Major C Moderate
infrastructure such as pipelines leads to project Regulatory/ underwriting construction of pipelines (eg
cancellations or delays. Policy natural gas)

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A lack of certainty on CO2 migration paths in storage Legal - Larger average tenement size is released 5 Catastrophic D Unlikely
Strategic Analysis of the Global Status of Carbon Capture and Storage

areas leads to permitting and schedule delays. Sequestration for early projects.
Thorough and detailed selection and
characterisation.
Synthesis Report

Table 7-3 shows that through the processes described above there are 17
issues categorised as extreme risks. A key observation of this study is that
many of these risks are complex, inter-related and dynamic. For example,
inadequate or absent policies and legislation on storage liability is
categorised as a governmental risk but has fundamental and direct
implications on weakening the business case of CCS projects. The Global
CCS Institute and other key leading stakeholders in this space should not
consider these risks as discrete but rather how they may have implications
across the CCS project cycle. A discussion of the risks grouped by key
themes, and recommended actions for their mitigation is provided in the
following section.

7.3 Projects
One of the key risks identified is that insufficient numbers of commercial One of the risks
scale, integrated CCS projects are in the development pipeline. This could identified was
insufficient
lead to a limited portfolio of projects that can be implemented within the G8 numbers of
timeframe. commercial
scale, integrated
Foundation Report One identified 62 active or planned, commercial scale, CCS projects in
integrated CCS projects. Of these, seven are already in operation, with the the development
pipeline
remaining 55 distributed across the other four stages of the asset lifecycle.

This study shows that the first part of the G8 objective to launch 20 large
scale CCS demonstration projects globally by 2010 has arguably been
achieved. There are 55 commercial scale, integrated projects from which 20
could be launched by 2010. However, as Report One showed, a project’s
journey from the Identify to Operate stages will encounter many challenges.
As failure rates for CCS projects are subject to a constellation of factors it is
likely that many of the 55 proposed commercial scale, integrated projects will
not proceed to operation.

Projects may fail due to a number of factors. For example, there were 30 of
the 55 commercial scale, integrated projects that were classified as
“dependent.” The risk of these projects not proceeding could be higher
because they involve other parties delivering key, and separate components
to form an integrated CCS system.

What could make the business case work in the G8 timeframe for
commercial scale, integrated CCS projects is the “field of dreams” or the
“build it and they will come” option. This involves governments working in
partnership with industry and the community to develop, finance and build
common user transport and storage infrastructure.

These would take advantage of the economies of scale from larger capacity
pipelines and storage sites and may also minimise public opposition by
concentrating infrastructure development in designated easements.

Many of the projects proposed in Europe are considering offshore storage


options in the North Sea area. The cost components for transporting and
storing CO2 will be an order of magnitude greater than for onshore CO2
transport and storage options. As a result, these projects may incur high

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Strategic Analysis of the Global Status of Carbon Capture and Storage

failure rates. The London Protocol and Basel Convention (as discussed in
Section 7.6) also impose limitations on these projects if they involve
transporting CO2 across national boundaries which is currently prohibited.
Both these conventions need to be amended so as to allow for cross-border
CO2 transport and storage to allow for the optimal matching of CO2 sources
and sinks.

As stated previously, engineering industry experience in large infrastructure


projects suggests that seven to ten years is likely to be required to move
from the Identify to Operate stages of the asset lifecycle. In regards to time,
this suggests that commercial scale, integrated projects will need to be
identified now or in the next several years if the G8 objective is to be met.

A hypothetical scenario of failure rates (applying between 50 and 80


percent) was presented in this study to give some indication of the ability of
the existing pool of commercial scale, integrated projects to contribute to
meeting the G8 objectives. The scenarios considered the pessimistic end of
failure rates which have been seen for emerging renewable energy projects
along with recognition of those projects proposed to utilise either natural gas
processing or EOR which have been proven to be able to support
progression of projects to operation. This hypothetical exercise suggests
between 11 and 26 of the commercial scale, integrated CCS projects may
proceed to operation. If the pessimistic scenario prevails, the second part of
the objective of deploying 20 large scale projects by 2020 is unlikely to be
achieved.
One of the risks To mitigate this risk, a greater number of candidate projects must be
identified was
insufficient identified by 2010 to supply a sufficient pipeline of potential CCS projects.
numbers of The study showed that, excluding the 62 commercial scale, integrated
commercial projects, there were 39 entries that were commercial scale but were not
scale, integrated
integrated projects. Although these projects are of sufficient scale to meet
CCS projects in
the development the G8 objective they critically do not enable the integrated demonstration of
pipeline CCS technology components. Perhaps with some facilitation, these could
become integrated projects.

This study also showed that Europe, the USA, Australia and Canada were
global leaders in the terms of significant CCS project activities. However, the
regional distribution of projects in other parts of the world such as India,
China or South America is relatively low. The identification and development
of additional CCS projects in these key regions is vital to mitigate projected
future increases in GHG emissions to atmosphere from fossil fuel use in
these regions.

Given that the availability of safe storage is fundamental to CCS, urgent


action is required to find and appraise the existence of potential storage
locations in both developed and developing nations. Further, the role of
CCS as a climate change mitigation measure within the CDM needs to be
re-defined to drive activity in emerging economies.

China and some countries in the Mid-East have an excellent track record of
executing industrial projects at an accelerated rate. Provided the right

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incentives, these regions have the ability to demonstrate CCS in the


ambitious timeframes set forth by the G8. As shown in this study, the cost of
installing CCS to coal-fired power generation is approximately 30 percent
less in China and India, all things remaining equal, than in other regions that
have greater CCS project activity. The ability to implement CCS under CDM
may therefore be a key enabling factor for the implementation of CCS in
these emerging economies.

To diversify the project portfolio, the Global CCS Institute could work with
governments around the world to develop national CCS strategies. Many
national governments have strategies for education, defence, infrastructure
and health, for example. Intuitively, national governments could also
develop CCS strategies that could contribute to economy-wide emissions
reductions that are currently being considered in the lead up to the
Copenhagen climate change negotiations.

As this study has shown, developing CCS projects is a complex and multi-
faceted process. These national CCS strategies should involve identifying
opportunities to reduce the emissions intensity of industries by applying
CCS, identifying policy and legislative frameworks required to support their
development and opportunities to develop or collaborate on R&D with global
networks to enable deployment. Potentially a starting point would be to
facilitate the G8 objective to become the G20 objective. The national CCS
strategies could be developed within these G20 nations as a start.

The study also found that there were 41 commercial scale, integrated
projects proposed for the power generation sector. Over 80 percent of these
were coal-fired power generation facilities. While there are no commercial
scale coal-fired power plants operating with CCS today this pipeline of
proposed CCS power projects is encouraging for the development of the
next generation of CCS installed power plants in a sector of the global
economy where CO2 emissions are growing significantly.

Indeed, the application of CCS to coal-fired power generation is urgently


needed. Approximately 25 percent of the world’s primary energy needs are
met by coal, predominately in the form of electricity generation. In 2005,
coal was responsible for about 46 percent of the world’s power generation
including approximately 89 precent of the electricity generated in China, 81
percent of the electricity generated in India, 84 percent of electricity
generated in Australia and about 50 percent of the electricity generated in
the USA (Parker et al, 2008). The coal fired power generation sector is
forecast to grow steadily at approximately 2.3 percent annually going forward
to 2030.

The study showed that there were no active or planned, commercial scale
CCS projects in other large CO2 emitting industries such as cement,
aluminium and iron/steel production. These industrial sectors contribute to
approximately 15 percent of global CO2 emissions to atmosphere (World
Resources Institute, 2005) and the application of CCS to these industries is
essential to meet the IEA forecasts for the mitigation of CO2 with CCS in the
industrial sector.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Based on this study the likely deployment trajectory of CCS technologies is


shown in Figure 7-2. The natural gas processing and chemical production
industries, for example, are already applying CCS. Given the number of
proposed fossil-fuelled power generation projects this sector is likely to have
the momentum to deploy CCS in the period 2012-2020. However, the up
take of CCS in cement, aluminium and iron and steel production is slow. As
CCS will significantly affect the competitiveness of these industries in global
trading, it is likely that the commercial scale application of CCS in these
industries would happen post 2020. This however, could be accelerated
through greater commitment to investing in CCS by these industries.
Figure 7-2 Likely deployment path of commercial scale, integrated CCS
projects by facility

EOR/EGR
Cement
Natural gas
processing
Facility/industry

Aluminium
production
Oil refining Fossil fuel-fired
power
generation Iron and steel
Chemical
production production

TRANSPORT
STORAGE

2009 2012 2020 ?


Year

Key recommendations – The Global CCS Institute should:


• engage with national governments to facilitate the development of
national strategies to assist in reducing the emissions intensity of
industry such as fossil-fuelled power generation through the
application of CCS. This process could also identify more
potential projects for the CCS development pipeline;
• engage with the G20 to expand the G8 objective to become the
“G20 objective”.
• engage with relevant government agencies and/or donor agencies
(eg Australian Government for the CCS Flagships program, EU for
the EERP or the Canadian Government under its economic
stimulus plan) to identify other commercial scale, integrated
projects that may not have been captured as part of the survey.
For the projects identified through this process work with the
project proponents and relevant stakeholders to identify any
specific challenges and strategies for its resolution.

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• engage with the proponents of the currently proposed 55


integrated, commercial scale projects to identify specific gaps and
challenges to the development of their business case, taking into
account their unique characteristics including location, capture
technology type and the portfolio of storage options;
• engage with the proponents of the 30 “dependent” projects to
identify any barriers specific to their progress as an “integrated”
project and, working with other relevant stakeholders, facilitate
cooperation and collaboration to develop their business case.
• monitor the progress of commercial scale projects that are not
currently integrated to identify opportunities for integration
potentially with other parties;
• engage with the relevant governments and project proponents to
investigate and facilitate the development of transport and storage
networks. An example of this would be engagement with the EU
and UK to develop a network for the North Sea area given the
high number of projects proposing to store CO2 in this vicinity ;
• engage with project proponents and governments in regions that
are currently underrepresented in terms of CCS projects eg India,
China and South America to identify and develop a portfolio of
CCS projects; and
• engage with facility owners, industry associations, technology
providers and other stakeholders in industries that are currently
underrepresented in terms of CCS projects eg cement, aluminium
and iron/steel production to facilitate project development.

7.4 Technology
As described above, component technologies for CCS are commercially
available. However, for gas and coal-fired power generation, cement,
aluminium, and iron and steel production industries, CCS technologies have
not been integrated with plant operations at commercial scale. The key risks
to achieving the G8 objective primarily concerns the safe and reliable
storage of CO2.

The high cost of capture technologies and their integration within process
plant with respect to equipment costs, energy penalties and plant availability
were highlighted as a risk to demonstration projects. However, this
manifests itself as a challenge to financing projects as opposed to the
technical risk that CO2 capture and compression technologies are
unavailable. A number of capture technologies are available for
demonstration today and costs will decrease as more operational plants are
deployed together with supporting R&D to reduce the energy penalties for
CO2 capture and compression.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

From this analysis, the costs of CO2 capture and compression for fossil fuel
power generation comprise approximately 80% of the incremental costs of
CCS. These costs have been driven by the design specification of capturing
90% of the CO2 emissions from the combustion of fossil fuels. By relaxing
this specification for early plant designs, the costs of capture and
compression could be reduced through reducing capital and operating costs.
Further, without clear guidance from regulators regarding the amount of CO2
to be captured, designers do not have design specifications to target.
Post-combustion Post-combustion capture is likely to be a key technology for application
capture is likely
to be a key across varied industries which require operation at much larger scale then
technology for hitherto available in industrial processes. Pre-combustion type technologies
application are already in use at large scale in applications such as natural gas
across varied
processing, ammonia and fertiliser production as part of conventional
industries
production operations. Oxyfuel combustion capture technology is currently
in the pilot-scale demonstration stage. All of these technologies as noted
above face risks of technology integration and commercial deployment
particularly in power generation plants.

Transportation technology poses relatively low risks. There is significant


experience in transporting CO2 by pipeline with approximately 6,000km of
pipelines transporting CO2 operating in the USA. Furthermore, there are
literally hundreds of thousands of kilometres of pipelines around the world
that deploy similar technology to safely transport millions of tonnes of natural
gas daily.

Offshore storage options are being considered by some project proponents


which is likely to be undertaken by pipeline. However, it could also suggest
that shipping of CO2 may be an option being considered by proponents.
Although there is little experience with shipping of CO2 the technology for
this is not considered to be problematic given experience in this form of
transport for hydrocarbons such as LPG and LNG. Nevertheless, transport
of CO2 by ship would require the development of first-of-a-kind commercial
CO2 sea borne tankers.
Geological Geological storage of CO2 underpins CCS and poses key challenges.
storage of CO2
underpins CCS Capture and transport technologies can be applied almost anywhere within
and poses key reason. While geologic storage of CO2 and other natural gases have been
challenges occurring for millennia as part of natural processes, when it comes to storing
large volumes of anthropogenic CO2 the experience is limited. As stated
above, currently seven operating commercial scale, integrated CCS projects
are storing approximately 10 Mtpa. To avoid dangerous climate change and
addressing the CCS capacity deployment challenge identified by the IEA,
1,000 times this must be stored annually by 2050.

However, a region’s geological storage capacity cannot be created. The


geologic formation inherently must be there to begin with and suitable
storage formations must be found within the economic proximity of the CO2
emission source.

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Furthermore, the demonstration of CCS needs to be performed across


diverse geographical regions and this inherently means that it must also
prove that suitable geologic formations exist around the world to allow CCS
to be deployed effectively.

Currently however, there is a fundamental lack of technical knowledge of the


geology in many regions of the world leading to an uncertainty on the
number and capacity of potential storage reservoirs.

In addition to this the current knowledge of specific geologic characteristics


which can provide a trapping mechanism for injected CO2 is
underdeveloped. Until there is a well developed understanding of what
types of geology will provide secure storage for a project, project proponents
will not be able to confidently identify the existence of suitable storage sites.

The finding cost associated with exploration and classification of storage


sites is not well understood by all CCS stakeholders. This can be a relatively
high cost that must be funded at the earlier stages of a project in order to
identify suitable storage options for projects globally and across a diverse
range of geological formations.

Measurement, monitoring and verification associated with beneficial reuse is


the means of determining how much CO2 has actually been stored in the
reservoir. This is currently not included as part of many EOR projects given
the higher capital and operating costs associated with the process. The
inclusion of MMV in EOR projects is vital to generate learnings from
operating experience.

Key recommendations – The Global CCS Institute should:


• explore the potential of reducing CO2 capture costs through
decreasing the CO2 capture percentage for commercial scale
projects;
• facilitate targeted R&D efforts with the commercial scale,
integrated projects identified in this study;
• encourage regulators to provide guidance for CO2 removal
specifications to meet regional CO2 management plans;
• educate stakeholders on the critical dependence of all CCS
projects on the storage component of the CCS chain;
• educate governments and funding institutions that the costs of
finding and appraising a site for the safe storage of CO2 is likely to
be high, and that it must be incurred up-front at the Identify and
Evaluate stages.
• educate governments and funding institutions that CCS projects
will need financial support from governments and in regards to
storage, significant expenditures may be incurred, only to find that
the safe storage of CO2 at the volumes required for a project is not
possible.

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• engage with OEMs developing capture, process and power plant


technologies to encourage pursuit of integrated projects as
opposed to capture only projects;
• engage with governments and other funding institutions to
encourage widespread surveying aimed at identification of
potential storage sites across all regions where CCS will need to
be demonstrated and eventually deployed;
• facilitate small scale injection projects aimed at increasing
knowledge of the potential for differing geological formations to
provide secure trapping mechanisms for CO2; and
• working with other key stakeholders, facilitate the installation of
MMV to commercial scale EOR operations as a means to build
knowledge on safely storing CO2 in geological formations.

7.5 The economics of CCS


A key theme The risk matrix identified a key theme concerning the economics of CCS.
concerning the
economics of This is a critical issue that considers the cost of the technology, quantum of
CCS is the funds required to develop and operate CCS plants and the potential sources
cost of the of finance. Together they are key determinants of the viability of a CCS
technology,
quantum of
project’s business case. While the economics of CCS is influenced by a
funds required number of factors the risk matrix identified the key risks as:
to develop and
operate CCS • high cost of capture and compression and the associated energy
plants, and the penalty delays commercial deployment;
potential
sources of • FOAK plants incurring higher contracting hurdles;
finance
• unwillingness of governments to underwrite critical infrastructure
such as CO2 pipelines; and

• GFC leading to project developers being unable to secure private


sector finance.

7.5.1 The high cost of CCS


The economics of developing CCS projects for a range of fossil-fuelled
power plants, natural gas processing and blast furnace steel, cement and
fertiliser production were reviewed in Chapter 4 of this study. Unsurprisingly,
A key finding of the costs of facilities with CCS are higher than non-CCS facilities. This is
this study is that because these non-CCS facilities currently emit all of the CO2 they produce
CCS project to atmosphere without any financial penalty and do not incur any cost for
costs are
specific to the GHG mitigation.
respective
project and can A key finding of this study is that the CCS project costs are specific to the
be significantly respective project and can be significantly influenced by location and fuel
influenced by type, for example. Accordingly, the relative economics of CCS projects
location and
needs to be assessed on a case-by-case basis.
fuel type

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Development costs are also high. Industry experience suggests that this
could be between 10 and 15 percent of the total installed capital costs of a
project. For CCS projects this could be many hundreds of millions of dollars.

Using the USA Gulf Coast as a reference location, comparisons of CCS


costs across a range of industries were modelled. This showed that the
percentage increase in costs from the application of CCS, over non-CCS
facilities for coal-fired power generation ranged between 39 percent for
IGCC, 43 percent for NGCC, 64 percent for oxy-fuel combustion and 78
percent for PC supercritical technologies.

The analysis showed that the percentage increase in costs from the
application of CCS over non-CCS facilities, for industrial processes were
lowest for natural gas processing (1 percent) and fertiliser production (3-4
percent). Costs for blast furnace steel production at 15-22 percent and
cement production at 36-48 percent were the most significantly affected by
the installation of CCS.

The results clearly indicate that the costs of CCS are lowest for processes
that have CO2 capture inherent to the process plant design that is also
recovered by a higher price gained from the sale of the product from the
industrial plant. This is significant as the cost of CO2 capture and
compression in this analysis otherwise represented over 80 percent of the
total integrated CCS costs for power generation.

Sensitivity analysis undertaken in this study also showed that the CO2 value
point, that is, the value of CO2 before a facility owner or developer is likely to
commit to CCS at today’s costs is approximately $60.00 per tonne. This is
considerably greater than the value of a unit of CO2 assigned by current Government
market schemes such as the EU ETS. Indeed, the value of CO2 emission funding is likely
to be required
credits during the first eight months of 2009 have traded between 12 and 16
to close the
Euros (circa US$17 to US$22). Government funding is likely to be required financial gap for
to close this gap for early mover projects. early mover
projects
Cost increases in the market place have also been influenced by the general
rise in the base cost of constructing power plants and other large industrial
facilities that do not deploy CCS. For example, Cambridge Energy Research
Associates (2008) state that the cost of building new power plants have
more than doubled since 2000. The majority of the cost increases have
occurred between 2005 and 2008, and as an example, a US$1 billion power
plant in 2000 would, on average, cost US$2.31 billion in 2008. Figure 7-3
shows a range of cost indices since 2000 and reveals the trajectory of costs
for large infrastructure such as power generation without CCS increased
significantly. That is, the cost of plants without CCS were high due to global
market factors. The installation of CCS represents a relative increase in
costs.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Figure 7-3 Comparison of equipment and labour cost indexes

1.5

Army Corps of Engineers-Power


1.4 Marshall & Swift Index
Che. Eng. Final Plant Cost
Chem. Engin. Equipment
1.3 Chem. Engin. Pipe, Valves, and Fittings
Cost index Normalised to 2006 Const Labour
Engineering Supervising
1.2

1.1

0.9

0.8

0.7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year

The economic analysis performed in this study considered the costs faced
by an owner of a facility installing CCS. However, the costs of CCS need to
also be considered within the broader analysis of social costs and benefits of
not installing CCS to account for externalities.

In this context, CCS deserves a full environmental and social economic


assessment. This enables all of the social costs and benefits of CCS to be
estimated. Potential benefits could include the prevention of damage arising
from climate change as expressed in the social cost of carbon, and other
ancillary factors such as reduced airborne pollutants. This is an area in
which very little work has been done to date due to the lack of operational
experience. This kind of analysis is required if the true economic value of
CCS is to be properly determined.

7.5.2 First-of-a-kind plants


The costs of CCS were high for coal-fired power plants given that while
individual components of capture, transport and storage are commercially
available they have not been integrated at scale. The study showed that
there are no commercial scale, coal-fired power plants with CCS in operation
today.

As a result, coal-fired power plants equipped with CCS are considered as


FOAK plants. These FOAK plants inherently incur higher costs because
technical designs have not been optimised because there has been
insufficient operating experience. Furthermore, because of this, engineering
procurement construction (EPC) contractors and storage service providers
are likely to charge higher margins when incorporating these technical risks.

The high cost of facilities installed with CCS relative to those without CCS,
are unlikely to be significantly decreased in the next few years when
proponents will need to sanction their projects if the G8 timeline is to be met.

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For example, based on the available technologies and the evaluation of R&D
activities underway, breakthroughs that result in significant decreases in the
cost of capture and compression do not appear to be likely within the G8
timeframe. However, R&D nevertheless remain an important part of the
longer term objectives to significantly reduce overall resource utilisation and
capacity deployment in addition to achieving much lower energy penalties
and costs for CCS.

Studies by Rubin et al (2007) suggest that the cost of technologies can also
be significantly reduced through operating experiences. Rubin’s study
showed that the capital costs of FGD units decreased approximately 40
percent over two decades. The capital costs of SCR technologies also
decreased by approximately 50 percent in the two decades that it was
introduced. Critically however, this study showed that cost reductions were
a function of installed capacity.

Applying the analogy to CCS, significant cost reductions can only be


achieved when multiple CCS plants are built and operating and their
experiences widely disseminated. Indeed, Davison and Thambimuthu
(2009) suggest that the cost of electricity from CCS power plants based on
current technologies has the potential to decrease 10 to 18 percent after 100
GW of capacity has been installed.

7.5.3 Governments funding infrastructure


Sensitivity analysis showed that cost savings can be achieved through
increasing the CO2 flow through a pipeline. The economic modelling
performed in this study showed that cost savings of approximately 50
percent can be achieved for onshore pipelines with a capacity of greater
than 10 Mtpa. This suggests that opportunities to link multiple sources of
CO2 into common-user pipelines would enhance the business case of
projects. However, this would require all of the emitters to financially commit
to their capture projects at the same time. Experience to date has shown
that this is unrealistic.

In addition, experience in the oil and gas pipeline industry has shown that
private proponents of pipelines will not factor in significant future capacity for
multiple additional users in their pipeline due to the risk that the additional
capacity is never used. Historical
experience in
Historical experience in the oil and gas pipeline industry in most regions of the oil and gas
the world has shown that Governments of the day were required to initially pipeline industry
in most regions
underwrite the funding of major pipeline infrastructure. A similar position
of the world has
could exist with CCS in order to meet the G8 objectives. shown that
Governments of
In regards to storage, the initial site finding costs and characterisation the day were
represent a significant risk to projects. These finding costs must be incurred required to
by all commercial scale, integrated projects to determine whether CO2 can initially
underwrite the
be safely stored and in the volumes required. Furthermore, as the geologic funding of major
characteristics of potential storage reservoirs are likely to vary between pipeline
regions these finding costs will need to be incurred for every commercial infrastructure

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scale, integrated project. However, the costs of this exercise may vary
significantly depending on the quality of geologic information available. This
study estimated that, based on current estimates the finding costs could be
in the order of $15 to $150 million for onshore storage. Finding costs could
be significantly greater than $150 million but this was considered the
threshold to proponents abandoning a project.

The modelling showed that uncertainty can increase storage costs from
$3.50/tonne CO2 to $7.50/tonne CO2, depending on the number of sites
investigated. The costs of offshore storage were not considered as part of
this study but it is likely to be greater than the cost of onshore storage.

Reservoir properties, specifically permeability also impact the ease with


which CO2 can be injected into the reservoir and hence effect the number of
injection wells required. Reservoirs with high permeability can reduce
storage costs by a factor of two to below $5/tonne CO2 over reservoirs with
lower permeability.

Determining an integrated CCS project’s storage capacity is fundamental to


its viability. There is a basic lack of knowledge on geological storage for
CCS projects globally. Some attempts in overcoming this gap have been
made through the production of storage atlases. However, these do not
provide the level of detail required by project proponents to inform
investment decisions.

Having regard for the issues considered above, CCS decision-makers need
to realise that the cost of FOAK plants are inevitably much higher. They will
remain so over the next several years when projects will need to be
sanctioned if the G8 timeline is to be met. Cost reduction opportunities will
only arise through the widespread deployment of CCS projects and
continuing R&D to support subsequent technology improvements. In this
regard, the achievement of the G8 objective is a fundamental first step if cost
reduction opportunities, and subsequently widespread commercial
deployment for CCS, are to be realised.

7.5.4 Financing of CCS projects


The successful deployment of large scale CCS projects to meet the G8
target will depend on the ability to finance these large infrastructure assets.
Some estimates Some estimates suggest $100 billion per annum is required to deploy CCS.
suggest
$100 billion This study found that the amount of funding available to directly support CCS
per annum is
required to projects through various public schemes such as the Australian governments
deploy CCS CCS Flagships program, the USA government’s American Recovery and
Reinvestment Act, the European Economic Recovery Plan and the
Australian Coal Association’s Coal 21 Fund is approximately $17 - $20
billion.

Even within the context of an ordinary financing market for infrastructure


projects, CCS projects would face considerable financing challenges. In the
context of the GFC, and the aversion to risk that it has caused, CCS projects

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can be expected to face extraordinary challenges in securing private sector


debt and equity finance in the time required to meet the G8 objectives.
In the context of
The role that Governments will play in reducing project uncertainties and in the GFC, and
the aversion to
reducing the cost of funding will be fundamental to meeting the G8 risk that it has
objectives. caused, CCS
projects can be
Proposed legislation that seeks to assign value on CO2 such as the ACES expected to face
Act in the USA and the CPRS in Australia are fundamental to the economic extraordinary
challenges in
viability of CCS and other low emission technologies. Without these key
securing private
pieces of legislation being passed it is highly unlikely that the G8 objective sector debt and
will be met. equity finance in
the time required
However, it should be noted that the introduction of an ETS in itself is to meet the G8
insufficient to support CCS project development. Other direct funding objectives
support will also be required for FOAK plants.

The CCS process chain does not display all of the favourable characteristics
of infrastructure projects that are valued by debt and equity investors. In
particular, significant uncertainties exist both in the short term (eg, for gas
and coal-fired power generation facilities, CCS integration is unproven at
scale) and in the long-term (eg, the potential emergence of new low-
emission technologies that may reduce the general demand for CCS) that
will impact the stability of, or degree of confidence around, project returns.
These uncertainties will impact the availability and cost of funding.

Compounding this issue is the fact that the GFC has impacted the availability
and cost of debt and equity funding for most asset classes, including
infrastructure. Key impacts in relation to availability of debt for infrastructure
projects have been:

• Repricing of risk, which has led to increased cost of debt;

• “Credit worthiness”, whereby only the best risk / return propositions


have been able to source ‘low-cost’ debt;

• De-leveraging of assets where lenders are aiming to reduce their risk


exposure to individual projects;

• Deterioration in debt terms, including increased establishment fees


and stricter loan covenants;

• Reduced loan tenor. Loan tenors refer to the life of the loan and prior
to the GFC these were 7 to 30 years for large infrastructure projects.
Currently, project finance has become largely construction plus five
years (approximately 8-10 years), and revolving credit facilities down
to three years or less;

• Reduced size of loans, both in total and on a per lender per project
basis. Prior to the GFC, bank financing for projects in excess of $10
billion were not uncommon, whereas now bank debt financing
appears to be capped out at around $1 billion; and

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• No underwriting of debt issues. Prior to the GFC large transactions


could be underwritten by a number of banks, whereas post-GFC all
financings are being clubbed, reducing certainty in obtaining financing

While the GFC has primarily affected the pricing and availability of debt, this
has spilled over to affect the availability of equity funding for infrastructure
assets such power plants that are likely to be deploying CCS. Key impacts
in relation to availability of equity for infrastructure projects have been:

• Reduced equity returns that are leading equity investors to shy away
from higher risk propositions in favour of higher quality infrastructure
assets;

• Rebalancing of equity portfolios where, as a consequence of the


GFC, equity values have contracted sharply. As a consequence,
portfolio managers’ appetites for further investments in infrastructure
assets have contracted significantly; and

• Increased competition for equity and this may mean that lower-
investment grade infrastructure projects will struggle to attract
sufficient equity investment

To illustrate the rebalancing of equity portfolios a review by the United


Nations Division of Technology, Industry and Economics (UN DTIE, 2009)
shows that project proponents for renewable energy infrastructure (which
financiers have greater understanding and experience in financing than
CCS) expect that availability of equity from private equity, venture capital
and the capital markets will decrease significantly (Figure 7-4).
Figure 7-4 Expectation of impact of GFC on funding sources for renewable
energy projects in the next few years

100%
90% 86%

80%
69% 69%
70%
61.5% 59%
60%

50%
40%
27%
30% 24.5%
19% 19%
20% 14% 12% 14% 11%
8% 6%
10%
0%
Decreas e

Decreas e

Decreas e

Decreas e
Decreas e

Increase

Increase
Increase

Increase

Increase
Flat

Flat
Flat

Flat

Flat

Private Equity Venture Capital Project Finance Capital Markets Public Finance
(Syndicated loans, Projects
Bond Emission, IPO,
M&A)

Source: UN-DTIE (2009)

Furthermore, it is likely that a significant proportion of available equity for


infrastructure projects will be directed to the refinancing of existing
infrastructure assets as de-leveraging of their capital structure occurs.

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Furthermore, despite increased proposed expenditure on infrastructure


through various economic stimulus packages, the UN DTIE survey of
renewable energy developers indicated that most project proponents expect
that a lack of available capital will cause projects to be postponed or
cancelled (Figure 7-5). As a proxy for private sector investments in CCS,
this reiterates the challenges faced by the CCS industry.
Figure 7-5 Expectation of impact of GFC on funding sources for renewable
energy projects

80%
72%
70%

60%
47%
50%

40% 34%
28% 25% 25%
30% 26%
21% 16%
20%
10%
2% 2%
0%
<25% 25- 50% 50-75% >75% <25% 25- 50% 50-75% >75% <25% 25- 50% 50- 75%

To change conditions Will be postponed? Will be cancelled?


(tenor, pricing, structure,
covenants etc.)?

Source: UN-DTIE (2009)

Many Governments around the world have recognised the importance of


CCS in contributing to the achievement of their climate change objectives. It
is expected that the key driver for continuing investment in infrastructure
(including infrastructure with CCS) in the near term will be by the stimulus
package responses to the GFC in various countries. However, as discussed
above, the quantum of funding available is potentially an order of magnitude
smaller than that required to support early mover CCS projects.

In addition to government stimulus measures, a portfolio of financing options


may also need to be considered. These include:

• fixed feed in tariffs which provide a low-risk energy price that is


sufficient to enable energy projects to be financed;

• tradeable energy certificates (TECs) such as used for renewable


energy in the form of renewable energy certificates (RECs) which
force energy retailers to purchase a certain number of TECs for each
unit of energy sold. The market then sets the price of the TEC. TECs
could be specific for CCS;

• mandatory adoption of CCS for all fossil fuel fired power stations. This
will require all existing plants to be retrofitted with CCS technology and
all new plants to adopt CCS technology. Resultant energy prices will
increase to enable generators to recover the increase in costs;

• tax incentives, such as low tax on interest and capital gains;

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Strategic Analysis of the Global Status of Carbon Capture and Storage

• accelerated depreciation; and

• production tax credits, where project owners are provided a fixed


value tax credit for each unit of energy generated from a particular
generation type.

In addition to government funding support there are some significant


financial contributions made to facilitate CCS development by industry
sectors. An example of these is the Australian Coal Association’s (ACA)
establishment of the COAL21 Fund, that will raise over A$1 billion
(approximately US$800 million) over 10 years, from 2006.

Other voluntary industry levies could be facilitated by governments to


support CCS projects across a range of industries and regions. This could
include large emitting industries such as coal-fired power generation, steel
and cement industries, where CCS must be deployed if the threat posed by
climate change is to be mitigated.

In light of the extraordinary challenges that CCS projects will face in securing
private sector finance, Governments will need to play a leading role in
funding the development of projects needed to meet the G8 objective.

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Key recommendations – The Global CCS Institute should:


• advise and promote awareness amongst funding agencies and
other key stakeholders that the costs of CCS will remain high for
FOAK plants and that the opportunities to reduce costs are likely
to be limited in the period that CCS projects will need to be
sanctioned if the G8 timelines are to be achieved;
• advise and educate key decision makers that the only way to
reduce the cost of CCS is through gaining knowledge and
learnings from installing CCS technologies to multiple integrated
projects at commercial scale in the near term and with ongoing
R&D support to target even more significant cost reductions from
improvements to CCS technologies in the longer term;
• engage the proponents of the integrated, commercial scale,
integrated projects found in this study to identify potential cost
saving opportunities through multi-user pipelines and common
storage sites;
• engage with the proponents of commercial scale, integrated
projects found in this study to determine what assistance can be
provided to overcome likely storage hurdles;
• work with other key funding agencies such as industry groups,
national governments and supra-national institutions such as the
G20, World Bank and the Asian Development Bank to consider
sources of funding to support CCS projects;
• communicate to governments that funding from private equity and
debt markets are highly unlikely for CCS projects and that
because of this, significant public expenditures are highly likely to
be required; and
• advocate for the adoption of a range of portfolio financing options
such as fixed feed in tariffs, TECs, tax incentives, accelerated
depreciation and production tax credits.

7.6 Policies and regulation


As identified in Chapter 5, a number of policies and regulations are in place
to support the deployment of CCS globally. However, without the certainty
of a clear legal framework encompassing the whole project cycle, the
ambitious aim of the G8 is unlikely to be achieved.

The specific risks associated with policies and legislation to support CCS are
listed below.

• London Protocol and Basel Convention definitions of CO2 prohibit


transport across national boundaries leads to project delays or
cancellations due to suboptimal matching of CO2 source with potential
sinks.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

London Protocol • Uncertainty on long-term liability for CO2 storage leads to proponents
and Basel unwilling to develop projects or delays to existing projects
Convention
definitions of • Failure to establish a mechanism to assign a monetary value on CO2
CO2 prohibit or the apportionment of existing mechanisms (such as CDM) to
transport across
support CCS leads to no economic incentive to undertake projects
national
boundaries
• Unwillingness of governments to underwrite critical infrastructure such
leads to project
delays or as pipelines leads to project cancellations or delays
cancellations
due to • A lack of capacity among regulatory agencies on permitting capture,
suboptimal transport and storage activities leads to delays in approvals
matching of CO2
source with The survey of CCS projects identified 55 active or planned, commercial
potential sinks scale, integrated projects that are not yet in operation. Of these, around one
third are located in the UK or Europe. A fundamental issue that is likely to
be faced by these projects is the limitation imposed by the London Protocol
and the Basel Convention prohibiting the transport of CO2 across national
boundaries. Many European nations may not have the geological storage
options within their national boundaries. As a result, these conventions
could lead to sub-optimal matching between CO2 sources and sinks.

In addition to onshore storage options, many of the projects in the UK and


Europe are considering offshore CO2 transport and storage. These could
also involve significant policy and legislative uncertainties.

The barriers associated with existing laws in general will be compounded


further with the challenges in the securing of sites, compensating land
owners and/or negotiating rights of access to sites across State borders.
The issue of The issue of long-term leakage potential and the unknown consequences of
long-term
leakage that (real or imagined) are likely to delay approvals. Policy must assign long-
potential and the term liability to governments. For example, state and federal governments in
unknown Australia recently agreed to shared long-term CO2 storage liability for the
consequences
Gorgon LNG project.
of that (real or
imagined) are
Overcoming the challenges of selecting and securing appropriate sites
likely to delay
approvals (including storage), dealing with leakage liability and obtaining the necessary
government approvals for CCS projects are just three of the threshold issues
that need to be addressed in the project planning phase. Equally important
is the ability to secure project funding which will cover not only the
infrastructure costs of capture, transportation, injection and storage, but also
the long-term costs associated with ensuring permanent storage. These
include ongoing MMV and continuance of insurance policies against
leakage.

Absent a cost on carbon, it is unlikely that many economies could reduce


their GHG emissions to levels which it is now widely accepted must be
achieved by 2050. Policies imposing a cost on GHG emissions play an
important role in making CCS and other emission reduction responses
economically viable. In the absence of a mechanism such as the CDM it
seems unlikely that investment in CCS will be achieved in many developing
countries within the timeframe proposed by the G8.

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For example, as described in Chapter 5, the ACES Act in the USA and the
CPRS Act in Australia are key pieces of proposed legislation that will create
a framework to assign a price signal to CO2. However, both are subject to
intense scrutiny and public debate as to their relative merits and, at the time
of writing, it is uncertain as to whether they will be successfully introduced as
scheduled. If they are not, and a mechanism is not created to assign a
value to CO2 it is highly likely that CCS projects in these jurisdictions will be
delayed or cancelled.

It is highly likely that governments will need to underwrite the development of It is highly
major CO2 pipeline infrastructure. Many private developers are unwilling to likely that
governments
finance the cost of dedicated CO2 pipelines for geological storage under
will need to
existing or proposed regimes for assigning an economic value for CO2. This underwrite the
also has the economic benefit of building a larger backbone CO2 pipeline development of
system initially rather than single “source to sink” approaches for each major CO2
pipeline
project. infrastructure
Harnessing and deploying the resources required, overcoming the
opposition which will emerge (locally and ideologically) and establishing the
legal frameworks needed to attract and retain private sector investors will
require the immediate expenditure of vast political and financial resources
across multiple jurisdictions. It will also necessitate a better and more
coordinated public explanation of the long-term environmental benefits and
risk management strategies which will be employed along the CCS project
cycle.

The CCS technologies are competing with a number of other new low
emission technologies for funding in both the public and private arena.
Incentives and subsidies for some of these technologies, in particular
renewable energy, are rapidly bringing down their costs and making them
more attractive as a commercial investment. These technologies are often
less controversial from an environmental and social point of view, being seen
to be cleaner, more sustainable and less experimental than CCS. It is
critical that policy frameworks which provide similar incentives are developed
for CCS to enable it to stay within competitive reach of other new
technologies.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Key recommendations – The Global CCS Institute should:


• review and if necessary, advocate amendments to, international
agreements which could govern the transboundary movement of
CO2, including the definitions of "waste" under the London
Protocol and "hazardous waste" under the Basel Convention;
• facilitate the harmonisation of CCS enabling laws across state and
national borders, particularly in the UK and Europe;
• advocate the inclusion of CCS as a project type capable of
generating carbon credits under the Flexible Mechanisms (CDM
and JI) under the Kyoto Protocol (or its most relevant post-2012
manifestation);
• advise governments that regulatory frameworks need to
accommodate the very long time frames associated with storage
to clearly allocate liability for leakage;
• advise governments on amendments to existing legislation
applicable to the CCS project cycle where time or other
circumstances do not permit the development of integrated or
dedicated CCS legal schemes;
• review planning and environmental laws and how these could be
used to compel (or at least make commercially viable) the use of
CCS in new or refurbished power plants and other GHG emitting
facilities and enterprises; tax or other incentives may be required
to address the costs associated with such requirements;
• engage with Member States of the EU to assist in the
implementation of the CCS Directive as soon as possible;
• help develop and promote CCS project-specific 'best-practice'
regulatory principles and model laws (eg from the EU, USA, Japan
and Australia) which can be used by countries wishing to facilitate,
attract and promote CCS projects; and
• assist domestic legislators by providing examples of law reform
initiatives from other jurisdictions which have already enacted
CCS specific law to help promote and facilitate CCS projects
particularly in developing countries.

7.7 Public acceptance


A key observation from this study is that public acceptance is often
considered a “non-commercial” issue but this label is largely inaccurate. In
democratic nations individual citizens or groups can significantly influence
the permitting and approval process of large infrastructure assets such as
CCS related industrial plants. In some cases, stakeholder opposition can
have a material effect on the commercial viability of a project by delaying the
approval process. In extreme cases, public opposition can result in

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Synthesis Report

proponents terminating the project. As a result, public acceptance should be Public


considered by project proponents as a key commercial challenge. acceptance
should be
The threat of public opposition to CCS projects was determined by the risk considered by
register to manifest itself through the inter-related issues of: project
proponents as a
• eroding the will of politicians and government leaders to support key commercial
challenge
policies and legislation that facilitate CCS project development;

• delaying or stopping projects based on the perceived threat of


catastrophic leakages from CO2 pipelines and storage reservoirs;
and

• delaying or stopping projects because stakeholders do not


understand that the technologies, amongst a portfolio of other
options, are fundamental to mitigate the effects of climate change.

Globally, the political will to act on climate change has been demonstrated
by a number of governments. In many cases, governments have acted
swiftly and with authority to introduce numerous policies and legislation to
direct their significant resources to tackle this problem. However, in
democracies, opposition groups can be highly effective in lobbying
governments to change or stop policies and legislation. In relation to CCS
projects, this could be achieved through the environmental approvals
process required under most, if not all, permitting schemes.

Two recent examples illustrate this point. Despite a successful


environmental impact assessment and the support of The Netherlands
government, Shell's plans to store CO2 in depleted gas fields under the town
of Barendrecht, near Rotterdam have been delayed. This was due to the
objections of the relevant local government where the project is located.
Similarly, Vattenfall’s Schwarze Pumpe project in Spremberg, Germany, has
incurred potential delays of up to 12 months after relevant government
authorities refused to issue permits to allow CO2 injection due to community
concerns about storage.
The public is not
The public is not well informed about CCS as a mitigant to dangerous well informed
climate change. There is a significant gap in the knowledge that most about CCS as a
stakeholders have about the role that CCS can play in mitigating GHG mitigant to
dangerous
emissions when compared with experts who work in the field. Policy
climate change
makers, financial, legal, insurance and regulatory stakeholders also need
information to be able to make accurate assessments of the technology and
its potential. Furthermore, as the full integration of the CCS chain has yet to
be demonstrated, the technology is open to criticism by opponents who
question its viability.

Public acceptance of CCS projects represents a classic catch-22 scenario.


Projects are urgently needed to build confidence among the public. The
authors understand that the Schwarze Pumpe project is proposing to store
100,000 tpa over five years and, as stated above, this has experienced
delays due to stakeholder concerns. The metric used in this analysis to
determine commercial scale storage is 1 Mtpa or greater of CO2. This is 10

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Strategic Analysis of the Global Status of Carbon Capture and Storage

or more times greater the amount proposed by Vattenfall’s project.


Therefore, it is highly likely that stakeholder opposition to commercial scale,
integrated projects could be significant.

One possible solution to break this cycle is to undertake CCS projects,


particularly commercial scale storage, on government owned land or
tenements well away from population centres or environmentally sensitive
ecosystems. Governments have used this approach to support the
development of other industries through test facilities over many decades.
Providing that governments engage with stakeholders in an open and
transparent manner the successful testing of CO2 storage on government
owned tenements could assist in building confidence that the technology is
safe prior to it being demonstrated in more populous areas.
The common Numerous studies (eg, Ashworth et al, 2007; Itaoka et al, 2006; Shackley et
issues tend to
focus on health al, 2007) highlight issues raised in relation to CCS by a range of
and safety in stakeholders when they are engaged in discussion about CCS. While all
terms of the risk components of the CCS system could be subject to public opposition, the
of failure
common issues tend to focus on health and safety in terms of the risk of
resulting in CO2
leakage failure resulting in CO2 leakage and its effects on ecosystems and the
contamination of groundwater. Whether CCS is simply a means to extend
the fossil fuel industry and the size of investment required to deploy CCS
when compared with other mitigation options are also issues raised.
However, research has also demonstrated that because a significant
majority of stakeholders do not have strongly formed opinions about CCS
there is an opportunity to positively inform their expectations and perceptions
so they are not opposed to the concept of CCS for GHG mitigation
(Ashworth et al. 2008; de Best-Waldhober, 2008).

Many A key challenge for CCS project proponents is that issues that can be
stakeholders perceived as harmful to the CCS industry such as the cancellation of
do not have
projects are communicated globally and almost instantaneously by the
strongly formed
opinions about internet. These issues, which may be region and technology specific, have
CCS and there the potential to undermine confidence in the efforts of CCS project
is an opportunity proponents globally.
to positively
inform their A key conclusion gained through this study is that a CCS project’s
expectations
and perceptions development is impacted by a diverse range of stakeholders. These extend
well beyond the technical CCS professions and include policy makers,
NGOs such as environmental groups and the broader public. These key
stakeholders must be engaged if CCS projects are to be developed on a
schedule to meet the G8 timelines. Recognising the plethora of stakeholder
groups, their geographic distribution and the limited resources of the Global
CCS Institute a pursuit strategy should be developed to identify the critical
decision-makers among this spectrum of stakeholders.

The Global CCS Institute should draw upon the experience of its
membership to aid in this task. Its membership consists of over 25 national
and state governments, 80 corporations representing the key aspects of the
CCS chain (OEMs, power generators, resource developers, storage, and
engineering and project management) and over 20 NGOs including R&D

Page 192
Synthesis Report

institutions, universities and geological survey organisations. The collective


wisdom and networks of these organisations could be leveraged to help
promote the benefits of CCS as one of the key technological options that
must be successfully deployed to mitigate climate change.

The effectiveness of engaging these diverse stakeholder groups could be


significantly enhanced by having a dedicated CCS information clearing
house available on-line. The industry is dynamic, geographically dispersed
and the status of projects and policies, for example, change quickly. While
some information on CCS currently exists they may be from multiple
sources, may not be contemporary and may not be comprehensive.

Overall, perhaps the greatest opportunity to positively educate stakeholders Perhaps the
greatest
about CCS is through having successful demonstration projects as proposed
opportunity to
by the G8. By having well functioning operating plants, a network of CO2 positively
pipelines and storage activities the attitudes and perceptions of stakeholders educate
stakeholders
can be positively influenced. However, there is also a need to ensure
about CCS is
adequate communication materials that are fit for the purpose of the reader through having
are made available. The issue of public awareness and acceptance is going successful
to require a significant focus over the coming decade. demonstration
projects as
proposed by
the G8
Key recommendations – The Global CCS Institute should:
• develop a pursuit strategy to identify and, working with others,
secure the support of critical decision-makers to the development
and deployment of CCS as an emerging industry and specifically,
of the projects identified in this study;
• inform stakeholders through regularly updating the status of CCS
projects, policies and legislation, costs and R&D developments
using the data and frameworks gathered through this study as a
foundation;
• actively engage its members to build partnerships to develop and
share CCS information;
• engage directly with governments at strategic levels to inform and
advise them of CCS and its potential as one of the fundamental
technological responses to mitigate the risk of climate change;
• actively share this and other key CCS information, either
individually or in cooperation with other leading agencies such as
the CSLF and IEA GHG R&D Program, through a variety of
mechanisms including its website, workshops and various industry
and government fora; and
• engage with proponents of the commercial scale, integrated
projects identified in this study to assess their public acceptance
strategies and any assistance that could be required to minimise
public opposition.

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Strategic Analysis of the Global Status of Carbon Capture and Storage

7.8 Time
A conservative Central to the G8 objective is the issue of time. It was previously estimated
project
development
that the timeline for CCS projects to progress from the Identify to Operate
approach would stages is in the order of seven to ten years. However, the actioning of
normally define strategies to mitigate the risks identified in this study suggest that this could
storage,
potentially take longer.
transport and
capture A conservative project development approach would normally define
sequentially, but
in order to meet storage, transport and capture sequentially. However, in order to meet the
the G8 G8 timeframe these key tasks will need to be undertaken in parallel. This
timeframe these may expose CCS project proponents to significantly higher upfront cost
key tasks will
need to be
risks.
undertaken in
With concerted and coordinated effort to action the strategies identified in
parallel which
may expose this risk analysis the G8 objective for the deployment of 20 integrated,
CCS project commercial scale CCS plants by 2020 can be met.
proponents to
significantly
higher upfront 7.9 Going forward
cost risks
This discussion on the gaps and challenges to deploying CCS has identified
a range of mitigation strategies. It is understood that the Global CCS
Institute has in place existing work programs that were developed at the
beginning of 2009.

Having regard to this, the risks to achieving the G8 objective and potential
mitigation strategies articulated above, the Global CCS Institute should
review their work programs in light of the key findings and recommendations
in this report.

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Synthesis Report

8. Conclusion
This Strategic Analysis of the Global Status of CCS represents a line in the
sand in terms of understanding the progress of the technology in terms of
projects, economics, policy and legislative frameworks and status of R&D as
at 31 March 2009. It is clear that the deployment of 20 or more integrated,
commercial scale CCS projects by 2020 is technically feasible. Components
of CCS technologies are available and are being commercially applied in the
oil and gas and chemicals industry. However, they have not been integrated
at commercial scale particularly for fossil-fuelled power generation, cement,
aluminium and iron and steel production.

Political leadership at national and international levels will need to be shown


to assist the deployment of CCS if the G8 objective is to be achieved. In the
coming years, the integrated, commercial scale CCS projects identified in
this study can be successfully developed and deployed through a three point
plan involving:

1. governments committing to support CCS projects through direct


funding, introducing market based pricing mechanisms to assign a
value to carbon, taking on long-term storage liability and
underwriting the establishment of critical infrastructure;

2. all CCS stakeholders educating the broader public that the


technology must be deployed as part of a portfolio of climate change
mitigation responses if the world is to avoid dangerous climate
change;

3. all nations, developed and developing, adopting CCS as part of their The Global CCS
GHG emissions reductions strategies where practicable. Institute, working
with other
The mixture of credible financing mechanisms, legal and regulatory leading agencies
in this space,
enablers, education of the public and international cooperation between
can facilitate
countries can ensure the G8 objective is successfully met. There are progress to
encouraging signs that these issues are being addressed but more will be achieve the
needed. Furthermore, they are needed urgently. G8 goal

This study has shown that many of the challenges and gaps are greater than
that which individual project proponents can resolve. The Global CCS
Institute, working with other leading agencies in this space, can facilitate
progress to resolve these but it must be backed by commitments from
national Governments around to world.

The world has a window of opportunity to make real progress to advance


CCS technology in the next few years. Adoption of the G8 objective to
develop commercial scale, integrated CCS projects can act as an economic
growth stimulus, ensure energy security and create the next generation of
skilled jobs in a greener, environmentally sustainable economy.

The cost of action to develop and deploy CCS technologies as part of an


energy revolution to decarbonise society will be high. Most studies indicate

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Strategic Analysis of the Global Status of Carbon Capture and Storage

Adoption of the that the overall cost of mitigation will be even higher in the absence of CCS
G8 objective to technology amongst the portfolio of mitigation options. However, when it
develop
commercial comes to the fact that GHG mitigation technologies must be deployed if the
scale, integrated world is to avoid dangerous climate change the cost of inaction will be far
CCS projects greater altogether.
can act as an
economic growth
stimulus, ensure
energy security
and create the
next generation
of skilled jobs in
a greener,
environmentally
sustainable
economy

Page 196
Synthesis Report

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Page 200
Synthesis Report

Appendix A – Active or planned, commercial


scale, integrated projects by asset lifecycle
stage

Page 201
Strategic Analysis of the Global Status of Carbon Capture and Storage

The notations, units and acronyms used within the following tables are
summarised below.

• Dependent (D) – Projects that are capture, transport or storage related


in the database but are integrated with secondary capture, transport
or storage projects to form an integrated CCS system.

• Separate (S) – In the database, these are listed as two separate


projects.

• CFB – Circulating Fluidised Bed.

• SNG – Synthetic Natural Gas.

• NG – Natural Gas.

• LNG – Liquefied Natural Gas.

• PFBC – Pressurised Fluidised Bed Combustion.

• Mt – million tonnes.

Page 202
Table A-1 Active or planned, commercial scale, integrated projects at the Identify stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

200 MW
AEP Northeastern CO2 slipstream from
1 Oklahoma, USA 2011 Post-combustion Pipeline Beneficial reuse (EOR) 1.5 Mtpa
Capture Project (D) 450 MW coal fired
power plant

4x100 MW PFBC
TBD / not
2 Sargas Husnes (D) Hordaland, Norway 2012 coal fired power Post-combustion Beneficial reuse (EOR) 2.6 Mtpa
specified
plant

420 MW Natural
Geological
3 Karsto Rogaland, Norway 2012 gas fired power Post combustion Pipeline 1.0 Mtpa
(saline aquifer)
plant

450 MW Hard
Beneficial reuse (EGR)
Rotterdam, coal / biomass /
4 Rotterdam CGEN (D) 2014 Pre-combustion Pipeline / Ship or geological (depleted 2.5 Mtpa
Netherlands gas hydrogen
oil/gas field)
power plant

5 Lassie (D) Victoria, Australia 2015 Various Various Pipeline Geological >1.0 Mtpa

Page 203
North Bohemia, 660 MW Coal
6 Ledvice (D) 2015 Post-combustion Pipeline Geological 1.1 Mtpa
Czech Republic fired power plant

Mokotów district, 480 MW Coal


7 Siekierki 2015 Post-combustion Pipeline Geological 2.5 Mtpa
Poland fired power plant

250 MW coal 1.8 Mtpa


Brandenburg, oxyfiring power Oxyfiring and Geological (Oxyfiring)
8 Janschwalde 2015 150 km Pipeline
Germany plant, 125 MW post-combustion (saline aquifer) 0.9 Mtpa
coal fired for PCC (PCC)
Synthesis Report
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

450-1,000 MW
South-West Coal and Geological
9 Shell/Essent Project (D) 2015 Pre-combustion Pipeline 2.0-4.0 Mtpa
Netherlands biomass/pitch (depleted oil/gas field)
IGCC power plant

1,200 MW Hard
Groningen, coal / biomass / Geological
10 Nuon Magnum 2015 Pre-combustion Pipeline 2.0 Mtpa
Netherlands gas IGCC power (depleted gas field)
plant

300 MWe Coal


Geological TBD / not

Page 204
11 Compastilla Project Leon, Spain 2015 oxyfiring power Oxyfiring 80-90 km Pipeline
(saline aquifer) specified
plant
Strategic Analysis of the Global Status of Carbon Capture and Storage

3x660 MW Coal
fired power plant Geological
12 Porto Tolle Rovigo, Italy 2015 Post-combustion Pipeline 1.0 Mtpa
(capture from 1 (saline aquifer)
unit)

250 MWe capture


Rotterdam Afvang en Zuid-Holland, unit on 800 MW Geological
13 2015 Post-combustion 25 km Pipeline 1.1 Mtpa
Opslag Demo Netherlands Coal/biomass (depleted oil/gas field)
fired power plant

Coal to liquids
Geological (saline
South Australia, (producing diesel 80-200 km
14 FuturGas 2017 Pre-combustion aquifer and/or depleted 1.6 Mtpa
Australia and naphtha / Pipeline
oil/gas field)
power / sulphur)

Coal to liquids
Shanxi Province, TBD / not 5.0–10.0
15 Yulin Chemical Plant (coal to chemicals Pre-combustion Pipeline TBD / not specified
China specified Mtpa
being studied)
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

BKK Gasskraftverk TBD / not 450 MW Natural Geological


16 Hordaland, Norway Post-combustion Pipeline 1.0 Mtpa
Mongstad (D) specified gas fired power (saline aquifer)

TBD / not 600 MW Coal TBD / not Geological


17 Kalundborg Sjælland, Denmark Post-combustion 3.4 Mtpa
specified fired power plant specified (saline aquifer)

Reggion Calabria, TBD / not 1,320 MW Coal Geological


18 SEI - Saline Joniche Post-combustion Truck or pipeline 8.0 Mtpa
Italy specified fired power plant (saline aquifer)

2x800 MW Power
Tilbury Clean Coal TBD / not (coal & biomass)
19 Essex, England Post-combustion 150 km Pipeline TBD / not specified 4.0 Mtpa
Power Station (D) specified captured from
300 MW net

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Synthesis Report
Table A-2 Active or planned, commercial scale, integrated projects at the Evaluate Stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

British Columbia, Gas processing Geological


20 PCOR Ft Nelson (D) 2011 NG processing 78 km Pipeline 1.6 Mtpa
Canada facility (saline aquifer)

Geological
LNG plant (gas TBD / not
21 Bintulu Malaysia 2011 NG processing (saline aquifer and/or 3.0 Mtpa
processing) specified
depleted oil/gas field)

125 MW
TBD / not
22 W.A. Parish (D) Texas, USA 2012 equivalent, coal Post-combustion Beneficial reuse 1.0 Mtpa
specified
fired power plant

400 MW Gas/coal
Hamburg region, Pipeline, ship or

Page 206
23 HYPOGEN (D) 2014 hydrogen and Pre-combustion Geological 2.5 Mtpa
Norway combined
power plant
Strategic Analysis of the Global Status of Carbon Capture and Storage

600 MW net Coal


24 Tenaska Texas, USA 2014 Post-combustion Pipeline Beneficial reuse (EOR) 4.3 Mtpa
fired power plant

500-525 MW
Geological and/or
25 Taylorville IGCC (D) Illinois, USA 2014 IGCC (coal) Pre-combustion TBD TBD
beneficial reuse
power plant

300-400 MWe
equivalent capture
Geological
26 Kingsnorth Kent, England 2014 on 1,600 MW Post-combustion 270 km Pipeline 2.0 Mtpa
(depleted gas field)
Coal fired power
station

900 MW gross Geological


South Yorkshire,
27 Hatfield (D) 2014 IGCC (coal) Pre-combustion 80 km Pipeline (saline aquifer and/or 4.75 Mtpa
England
power plant depleted oil/gas field)

Queensland, 400 MW IGCC Geological


28 ZeroGen 2015 Pre-combustion 100 km Pipeline 2.0 Mtpa
Australia (coal) power plant (saline aquifer)
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

Geological
Western Australia, LNG plant (gas
29 Browse LNG 2015 NG Processing Pipeline (saline aquifer and/or 3.0 Mtpa
Australia processing)
depleted oil/gas field)

Queensland, 400 MW net IGCC Up to 200 km Geological or beneficial


30 Wandoan Power (D) 2015 Pre-combustion 2.5 Mtpa
Australia (coal) power plant Pipeline reuse (EOR)

300 MW
Opole Province, Coal/biomass
31 Kedzierzyn 2015 Pre-combustion Pipeline Geological 2.4 Mtpa
Poland polygeneration
IGCC power plant

Łódź Voivodeship 858 MW Coal Geological


32 Belchatow 2015 Post-combustion Pipeline 1.7 Mtpa
province, Poland fired power plant (saline aquifer)

565 MW Coal
33 FINNCAP - Meri Pori (D) Pori, Finland 2015 Post-combustion 800-2000 km Ship Geological 2.4 Mtpa
fired power plant

850 MW Geological

Page 207
34 Eston Grange Teesside, England 2015 Coal/petcoke fired Pre-combustion 250 km Pipeline (saline aquifer or 4.2 Mtpa
IGCC power plant depleted oil/gas field)

Geological
Southern California 600 MW Coal
35 Utah, USA 2017 Pre-combustion Pipeline (saline aquifer) or 3.0 Mtpa
Edison IGCC (D) IGCC power plant
Beneficial reuse (EOR)

1x400 MW IGCC TBD / not Beneficial reuse (EOR) TBD / not


36 GreenGen Tianjin, China 2020 Pre-combustion
(coal) power plant specified and/or geological specified

2x200 MW or
Western Australia, TBD / not 3x150 MW Coal Geological (depleted
37 Coolimba Post-combustion 20-80 km Pipeline 3.0 Mtpa
Australia specified fired CFB power oil/gas field)
plant
Synthesis Report
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

TBD / not 800 MW IGCC TBD / not Geological


38 Dongguan Guangdong, China Pre-combustion 0.1-1.0 Mtpa
specified (coal) power plant specified (depleted oil field)

1,200 MW IGCC
and 1,300 MW
ultra supercritical
TBD / not Pre and post- TBD / not
39 Lianyungang Jiangsu, China PC power plants Beneficial reuse (EOR) 0.1-1.0 Mtpa
specified combustion specified
(coal) – co-

Page 208
producing SNG
and chemicals
Strategic Analysis of the Global Status of Carbon Capture and Storage
Table A-3 Active or planned, commercial scale, integrated projects at the Define stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

40 SWP Entrada (D) Wyoming, USA 2009 Gas Processing NG processing Pipeline Geological 1.1 Mtpa

2009
Lockwood Gasification
41 Texas, USA (break SNG Plant Pre-combustion Pipeline Beneficial reuse (EOR) 7.2 Mtpa
(D)
ground)

120 MW
Antelope Valley and slipstream from
42 North Dakota, USA 2012 Post-combustion Pipeline Beneficial reuse (EOR) 1.0 Mtpa
Williston Basin (D,S) 450 MW coal fired
power plant

Multiple –
Hydrogen Power
Abu Dhabi
United Arab (HPAD) power
43 Masdar (D) (S) 2013 Post-combustion 300 km Pipeline Beneficial reuse (EOR) 4.3 Mtpa
Emirates plant (1.8 Mtpa),
steel (0.8 Mtpa),
aluminium smelter

Page 209
(1.7 Mtpa)

Coal fired power


Aalborg Nordjylland, Geological
44 2014 plant – 300 MWe Post-combustion 30 km Pipeline 1.9 Mtpa
(Nordjyllandsvaerket) Denmark (saline aquifer)
net with CCS

4x600 MW
Coal/biomass
Geological
45 Longannet (D) Fife, Scotland 2014 fired power station Post-combustion Pipeline or ship 2.0 Mtpa
(depleted oil/gas field)
(1 unit with
capture)

Western Australia, LNG plant (gas Geological


46 Gorgon Project 2015 (est.) NG processing Pipeline 3.4 Mtpa
Australia processing) (saline aquifer)
Synthesis Report
Estimated Approx. CO2
Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

Beneficial reuse (EOR)


Genesee CCS Project 252 MW net IGCC
47 Alberta, Canada 2015 Pre-combustion Pipeline or geological (Alberta 1.2 Mtpa
(D) (S) (coal) power plant
Saline Aquifer Project)

North Rhine- 360 MW net IGCC


RWE Goldenbergwerk Geological
48 Westphalia, 2015 (coal) power Pre-combustion Pipeline 2.8 Mtpa
(Huerth) (saline aquifer)
Germany plant

390 MW gross

Page 210
IGCC
49 HECA IGCC California, USA 2015 Pre-combustion 6.4 km Pipeline Beneficial reuse (EOR) 1.8 Mtpa
Strategic Analysis of the Global Status of Carbon Capture and Storage

(petcoke/coal)
power plant

275 MW IGCC Geological


50 FutureGen Illinois, USA 2018 Pre-combustion Pipeline 1.0 Mtpa
(coal) power plant (saline aquifer)

TBD / not
51 Quest CCS Project (D) Alberta, Canada Oil refinery Oil refining 10-60 km Pipeline Beneficial reuse (EOR) 1.2 Mtpa
specified

SWP Deep Saline TBD / not


52 Utah, USA Gas Processing NG Processing Pipeline Geological 1.0 Mtpa
Sequestration (D) specified

Petroleum or
Big Sky Development TBD / not Oil refining or NG Geological
53 Wyoming, USA natural gas Pipeline 1.0 Mtpa
Test (Moxa Arch) (D) specified processing (saline aquifer)
processing
Table A-4 Active or planned, commercial scale, integrated projects at the Execute stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

TBD / not
54 Husky CO2 Injection Alberta, Canada 2012 Oil refining Oil refining Pipeline Beneficial reuse (EOR)
specified

Enhance Energy Oil refining and 240 km Pipeline


TBD / not Fertiliser and oil 1.8 Mtpa
55 Pipeline and EOR Alberta, Canada fertiliser (Alberta Carbon Beneficial reuse (EOR)
specified refining (initial)
Project (D) (S) production Trunk Line)

Page 211
Synthesis Report
Table A-5 Active or planned, commercial scale, integrated projects at the Operate stage

Estimated Approx. CO2


Ref. State/District,
Project Name Operation Capture Facility Capture Type Transport Type Storage Type Storage
No Country
Date Rates

Rangely EOR Project Shute Creek gas


56 Colorado, USA 1986 NG processing 285 km Pipeline Beneficial reuse (EOR) 1.0 Mtpa
(D) processing facility

CO2 separated
Geological
from produced Pipeline (capture
(saline aquifer)
57 Sleipner North Sea, Norway 1996 gas – gas NG processing and storage at 1.0 Mtpa

Page 212
(16.3 Mt stored at the
processing same location)
end of 2008)
Strategic Analysis of the Global Status of Carbon Capture and Storage

platform

Val Verde CO2 Pipeline Five natural gas


58 Texas, USA 1998 NG processing 132km Pipeline Beneficial reuse (EOR) 1.0 Mtpa
(D) (S) processing plants

2000 Great Plains


Saskatchewan, (using CO2 Synfuels plant,
59 Weyburn Operations (D) Pre-combustion 330 km Pipeline Beneficial reuse (EOR) 2.4 Mtpa
Canada as flooding Dakota
agent) Gasification

Natural gas Geological


60 In Salah Ouargla, Algeria 2004 NG processing 14 km Pipeline 1.2 Mtpa
processing plant (3.0 Mt stored to date)

Shute Creek gas


61 Salt Creek EOR (D) Wyoming, USA 2006 NG processing 201 km Pipeline Beneficial reuse (EOR) 2.4 Mtpa
processing facility

Barents Sea, Snøhvit LNG


62 Snøhvit CO2 Injection 2007 NG processing 160 km Pipeline Geological 0.7 Mtpa
Norway Plant