Winning European Union funding is rarely without its obstacles, even for a technology such as carbon capture and storage (CCS), which has the potential to transform fossil fuels into a low carbon energy source. However, CCS is too important for technology vendors to sit back and wait for policy to support it. The industry needs to take a proactive approach to improving the appeal of CCS, from the inside out.
The International Energy Agency (IEA) estimates that fossil fuels will account for 60 per cent of energy generation by 2030, making CCS a vital technology for decarbonising the world’s energy supply. The IEA, the EU and the Intergovernmental Panel on Climate Change indicate that one-fifth of the carbon reduction target needed to curb a two degree rise in global temperatures by 2050 could come from CCS.
However, funding sources are uncertain. For example, at the end of last year, the NER300 fund of â¬1.2 billion (£1 billion) originally set aside for CCS, from the auctioning of carbon allowances under the EU Emissions Trading Scheme (EU ETS) was instead allocated to renewables. This decision does not represent a policy shift from the European Commission: Connie Hedegaard, commissioner for climate action, expects CCS plants to qualify for funding in the next round. The Commission has also proposed moving beyond the EU ETS to introduce new mechanisms such as emission performance standards or a CCS certificate system. It does highlight, however, that unless CCS technology advances, its perception as an “unproven” technology will continue to block funding.
Energy companies have been capturing and transporting carbon dioxide in large-scale plants for decades. The technique has been used in enhanced oil recovery, as well as the production of carbonated drinks. But the fact remains that unlike other now mainstream low-carbon technology sectors, such as wind and solar, CCS does not exist at commercial scale. Currently, carbon capture is costly. The Global Carbon Capture and Storage Institute estimates that each megawatt-hour supported by CCS costs energy generators an additional $50-$100 (£32-£64), as well as substantial capital costs for development.
The stimulation of a full scale CCS market will to a large extent be sparked by an adequate carbon floor price being set. However, a carbon price alone will not bring about the innovations in the energy and industrial sectors necessary to achieve the emission reductions. Even with a carbon market, CCS will still be competing against other low carbon innovations for funding, such as wind and solar. For CCS technology to stand out in that competition, it must advance and prove its viability now.
Certainly the rewards are there for those countries and generators that invest – in the UK, for example, research by the Carbon Trust found that CCS industrial development could contribute £3-16 billion to UK GDP cumulatively to 2050. Furthermore, as well as enabling generators to benefit from the rise in cheap unconventional energy, such as shale gas, CCS allows countries to simultaneously avoid penalties for missing legally binding carbon targets. So, how can CCS advance to live up to its promise?
Technology testing is the vital route for verifying and demonstrating capture technology, which in turn can reduce costs, plus technical, environmental and financial risks, thereby creating the preconditions for CCS success. The UK Energy Research Council, which spent two years researching the means for establishing CCS as a mainstream technology, came to the same conclusion: a regulatory approach making CCS compulsory in all fossil plants will only work if the technology is more advanced. By bringing down costs and making the market viable, technologists provide a basis for global energy policy and investment.
To meet the need for testing, test centres have been developed on a major scale, allowing the safe simulation of carbon capture. CO2 Technology Centre Mongstad is the most advanced of these, offering the ability to capture 100,000 tonnes of carbon a year, from simulated coal and gas-fired sources, as required. Key CCS players, such as Alstom and Aker Solutions, are successfully using the facilities to refine their capture process. Shell has also partnered with TCM. Its billion-dollar Quest CCS project linked to oil sands production, which received government financial support, used operational experience from the capture processes tested at TCM. Recently, TCM has started engaging with other major technology brands in negotiation for the second phase of testing, including Hitachi, Mitsubishi and Siemens.
Collaboration is another key benefit of testing carbon capture technologies at scale. Recently, the world’s first international test centre network for carbon capture test facilities was launched, to share knowledge and accelerate the commercialisation of technology. The key aims of the network are diverse: to share technological developments, construction and operational experience, establish performance indicators, promote technology certification and standardisation. This has ensured that a collaborative playing field has been established to advance technology innovation, secure public support for and develop awareness of CCS.
What this activity shows is that the CCS industry must push forward the advancement of the technology. Government, industry and investors must work together to build the essential demonstration projects over the next few years. But first government and investors have to believe there is a market for CCS. To secure confidence from the EU and other funding sources, it is up to technologists to demonstrate the commercial reality of CCS. It is a difficult and at times thankless task for generators, but until government aligns with enterprise on CCS, they must continue with research and development to reduce cost and risk.
Frank Ellingsen, managing director, CO2 Technology Centre Mongstad
Results from TCM
Since TCM opened in May 2012, the facility has been in operation for more than 5,000 hours. The results from its first year of testing have now prepared the ground for widespread CCS deployment and showed achievements that are crucial to de-risking CCS investments. The TCM core utility infrastructure has operated with more than 98 per cent availability and this has made it possible to supply the two absorption plants with exhaust gas and other utilities as requested by the two technology owners using the large-scale test units. Based on the TCM programme, three scientific reports have been published, which for the first time have independently recommended the viability of safe amine carbon capture.
At a time when it is proving difficult to finance a large-scale CCS demonstration, due in part to the current economic concerns as well as uncertainty in climate policy, these results provide a path forward for technological innovation. Our experience and that of the generators that use the facilities at Mongstad is: build it and investment will come.
This article first appeared in Utility Week’s print edition of 13th September July 2013.
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