2.5 Demonstration of large-scale integrated ccs projects
Figure 24 shows the potential volume of CO2 that could be stored in any given year by current and how this capacity is distributed across stages of the asset lifecycle, based on responses to the 2012 project survey. Total volumes recorded by projects in the 2011 and 2010 surveys are also provided for reference. For projects at the Define, Evaluate and Identify stages, the volumes shown do not correspond to the actual volumes of CO2 that will be stored by LSIPs, but to the total capacity of all LSIPs currently in planning, as only the projects that are best-in-class will reach FID.
The first peak of new LSIPs coming online that was expected to occur in 2015–16 (based on annual project survey responses in 2009 and 2010) has shifted and is now projected to start from 2018–20. This is partly due to the fact that six LSIPs at the Define stage and eight LSIPs at the Evaluate stage have been cancelled or put on hold since 2010, and were replaced with less mature projects. Additionally, a number of project proponents have reassessed their project’s development schedule since 2010, due to:
- delayed outcomes from competitive public funding programs leading proponents to slow down or shelve their project’s activity until further information is available, including the amounts likely to be awarded to individual projects;
- uncertainties around short to medium-term policy developments, particularly with respect to projected CO2 prices, hindering the confidence necessary for companies to invest in capital-intensive low-carbon technologies such as CCS;
- more generally, the aftermath of the global financial crisis (GFC), with reduced credit volumes available and tighter lending conditions, leading companies to reprioritise their investments away from LSIPs CCS projects, while remaining involved in smaller-scale demonstrations or research initiatives.
The total volume of CO2 potentially captured and stored by all LSIPs has also slightly decreased during the past three years, as very large projects that have been cancelled or put on hold were replaced with smaller projects, while some others (particularly hubs) have reassessed their capture capacity to a more modest scale.
FIGURE 24 Volume of CO2 potentially stored by LSIPs (Mtpa CO2)
The rate at which the next generation of CCS projects currently in development is moving forward into construction is considerably lower than was generally expected in 2008 and 2009, when manyor CCS-specific public funding programs were announced. Government action is needed for CO2 emissions to be priced at a level that is consistent with the social costs likely to be incurred if low-carbon technologies are not widely adopted. Further to this, there is a need – through a set of comprehensive, consistent, and stable regulatory and policy frameworks – for CCS to be explicitly and consistently supported as part of a portfolio of carbon abatement technologies.
In the absence of the above, CCS demonstration is strictly dependent on private initiative or one-off public funding programs that provide large sums to few LSIPs. This in turn increases the difficulty of obtaining the balanced set of early-mover CCS projects that is needed across a range of industries and technologies in order to reduce the costs associated with CCS, as well as to provide guidance for legislators as to how best to adjust prevailing policy and regulatory frameworks. The ongoing uncertainty over long-term climate policy is having a significant impact in shaping current investment decisions and is likely to push out the CCS demonstration phase further into the 2020s. A more concerted approach, supported by strong political action, is required for CCS technology to achieve its substantial mitigation potential as part of a portfolio of carbon abatement technologies.