Global Status Of CCS - An Overview

Action is needed now to ensure CCS can play a vital role in tackling climate change.

To achieve greenhouse gas emission reduction targets limiting a global average temperature rise to no more than 2°C, the IEA estimates that energy-related emissions must reduce very substantially. Large-scale investments in several technologies are required in order to meet this target, with carbon capture and storage (CCS) contributing 7 Gt of the required 42 Gt emission reduction in a least cost scenario. If CCS were to be excluded as a technology option in the electricity sector, the IEA states that investment costs over the period to 2050 would increase by 40 per cent.

CCS is a vital component of a portfolio of low-carbon technologies, as it is able to reduce carbon dioxide (CO2) emissions substantially from both the energy sector and other industries.

The Global Status of CCS: 2012 report identifies the status of CCS, and the developments that have occurred in the past year, and the challenges that must be addressed.

CCS is already contributing, but progress must be accelerated

CCS is used in a number of industries today, and already plays an important role in tackling climate change. Around the world, eight large-scale CCS projects are storing about 23 million tonnes of CO2 each year. With a further eight projects currently under construction (including two in the electricity generation sector), that figure will increase to over 36 million tonnes of CO2 a year by 2015. This is approximately 70 per cent of the IEA’s target for mitigation activities by CCS by 2015.

To maintain the path to the 2°C target, the number of operational projects must increase to around 130 by 2020, from the 16 currently in operation or under construction. Such an outcome looks very unlikely as only 51 of the 59 remaining projects captured in the Institute’s annual project survey plan to be operational by 2020, and inevitably some of these will not proceed. This situation should send a strong message to governments on the adverse impact of delays to climate change legislation and its impact on private sector investment in CCS.

Slow progress but important developments

It is clear a very substantial increase in new projects needs to occur if the IEA scenario for CCS is to be met.

Since the Global Status of CCS: 2011 report, the net number of large-scale integrated projects (LSIPs) has increased by one to a total of 75. During the year, eight previously-identified LSIPs were cancelled, put on-hold or restructured. These were offset by nine new projects, and of these, five are in China, where the progress of CCS continues to be strong.

Most of the newly-identified LSIPs are investigating enhanced oil recovery (EOR). As an additional source of revenue, CO2 EOR has become a strong driver supporting projects, in particular in North America, China and the Middle East. Nevertheless, current assessments on the potential of EOR and depleted oil and gas fields strongly suggest that deep saline formations will provide the bulk of storage in the long term. Strong near-term potential for CCS exists in industries with the lowest additional cost of capture (natural gas extraction, fertiliser, synfuels and ethanol production).

Encouraging policy support but more required

It is vital that there be more progress towards reducing emissions via policy settings that will achieve large-scale emission reductions. It is important therefore to recognise progress in a number of countries including the UK and China, as well as the inclusion of CCS in the United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanism (CDM). Governments must ensure that the necessary regulatory infrastructure is in place, and as the IEA has noted, “policy packages should be regularly reviewed to maintain coherence over time”.

There has been some progress in rebalancing climate policy settings for carbon pricing, and enhanced support for all low-carbon technologies within the UK, specifically. Australia also introduced a carbon tax in 2012, which will shift to an emissions trading scheme in 2015.

The UK Government is taking a leading role with the first comprehensive policy to drive CCS deployment beyond demonstration projects. The inclusion of CCS in China’s 12th Five-Year Plan is also very encouraging.

Full ratification of the amendments to the Convention for the Protection of the Marine Environment of the North East Atlantic (OSPAR Convention) is important for those countries planning to transport and store CO2 offshore. International standards for CCS are being developed and this will support effective and efficient operations across all CCS activities.

Barriers must be overcome to realise the benefits of CCS

Like many emerging technologies, CCS faces barriers which discourage new projects from emerging and prevent existing projects moving to construction and operation.

Funding for CCS demonstration projects, while still considerable, is increasingly vulnerable and the level of funding support still available will service fewer projects than initially anticipated. The relatively higher-cost CCS projects (for example in the power, steel and cement sectors) require strong government support continuing into the operational phase. There are significant issues with debt availability to support CCS in the current challenging economic climate. CCS is also often not treated equivalently to other low-carbon technologies in policy settings and government support. In order to achieve emission reductions in the most efficient and effective way, governments should ensure that CCS is not disadvantaged.

Storage site selection and characterisation is a lengthy and costly process so this must begin at initial project stage. Indeed the majority of perceived risk in CCS projects is often associated with storage. Public understanding of CCS remains low. Early stakeholder engagement is therefore important and this must include addressing perceptions of storage.

Reducing the cost of technology through demonstration projects is vital

In Norway and Canada, two projects highlight the benefits of public and private sector support in advancing cost-effective technology. The opening of the US$1 billion Technology Centre Mongstad (TCM) in Norway, an industrial-scale test centre for carbon capture, marks an important milestone. In Canada, Shell’s Quest project announced it will capture and store more than one million tonnes of CO2 per year produced at the Athabasca Oil Sands Project. The knowledge generated by both of these projects will drive innovation around the world.

Commercial-scale demonstration of capture requires application at increasing scales with integration into an industrial process or power station. Southern Company’s post-combustion Plant Barry in the US recently became the world’s largest integrated CCS project at a coal-fired power plant.

Acceleration of CCS depends on collaboration and knowledge sharing

Sharing information and lessons learnt from CCS projects has great benefits, helping stakeholders address difficult and time-consuming challenges such as building the business case for CCS projects and improving understanding of the technology. Knowledge and expertise must be shared through open networks such as those run by the Global CCS Institute.

For more information on the global status of CCS, visit www.globalccsinstitute.com.

Recommendations for decision makers:

  • Climate change legislation must not be delayed. Timely and stable policy support is required to deal with the barriers to implementation of CCS. This will drive industry confidence, encouraging more innovation, and ultimately reducing capital and operating costs.
  • To achieve emission reductions in the most efficient and effective way governments should ensure that CCS is not disadvantaged. They must review their policies to ensure that CCS can play a full part in the portfolio of low-carbon technologies.
  • Funding for CCS demonstration projects by governments and industry should be accelerated to develop the technology and bring down costs through innovation.
  • Sharing expertise and learning from CCS projects around the world must be encouraged to ensure that progress is made as quickly as possible. This knowledge must be shared with developing countries where 70 per cent of CCS deployment must occur by 2050.