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You are here: Carbon Capture and Storage >> Questions and Answers
Section Contents
- Questions and Answers
- Business simple questions on CCS
- Climate Change questions
- Scotland Electricity
Business simple questions on CCS
This page answers some queries by Neasa Macerlean of the Observer (February 2007)
How much potential does carbon capture have? Could it be a worldwide industry?
Yes
There was a Special IPCC Report on Carbon Capture and Storage in 2005. (Same international concensus approach as the Climate Change reports). That identified CCS as the single best technology to reduce CO2 emissions rapidly, and at global scale. The world also needs to build lots of renewable energy, become more energy efficient, and reduce demand to achieve the correct cuts in all Greenhouse Gas emissions.
The size of the UK market is the size of electricity producer's emissions, ie about 150 Million tons CO2/yr for Phase II of the EU-Emissions Trading Scheme. At a carbon price of ¤30/ton, that is eventually worth ¤4,500 Million/yr in the UK alone., if we price all of that CO2
By the same logic, assuming a carbon price of ¤30/ton the world market would be worth ¤ 220 Billion per year when 7,000 injection boreholes are operating
This market will include making engineering and chemical plant equipment to capture CO2, pipelines to transport the CO2, and subsurface engineering (a UK speciality) using North Sea oil technology.
Perhaps the biggest slice of those markets will be national and international trading of carbon dioxide emissions permits - like that which started on a very small scale in 2005 with the EU Emission Trading Scheme. London can be the world centre of that market.
With a new technology. its difficult to work out the price, how can that be done?
a) There are not many companies involved at the start
Numerous players have made costings for CCS. These are all equal within error. Now a set of pilot plants needs to be built to discover the cost. Estimates are that, once in normal use, CCS electricity costs £50 per Megawatt hour wholesale price (today coal fired electricity is £38 per Megawatt hour). So CCS costs less that onshore wind (if the ROC subsidy from consumers is included) at £70 per Megawatt hour. Coal or gas with CCS even compares very favourably with nuclear generation, priced at £25 per Megawatt hour (£60 for Sizewell B), PLUS the £29 per Megawatt hour to fund the £70 Billion cleanup cost estimated by the Nuclear Decomissioning Authority, making a cost for ?clean nuclear? of £54 per Megawaatt hour ? on a level costing.
b) Can depleted oil and gas fields be re-used, and what is the timescale?
Yes, these are sites which have been demonstrably secure for millions of years.
Enhanced Oil recovery with CO2 is often put forward as attractive. It could produce 1,500 Million to 2,000 Million extra barrels of oil from the North Sea. This is worth a lot of tax (at 70%) to the Treasury. However, EOR has never been achieved offshore, and injecting the CO2 costs a lot more.
Injecting CO2 into salt water aquifers is the cheapest method. If these are properly surveyed, like an oilfield, then these can be shown to be secure. This has been demonstrated by the Norwegian Sleipner experiment where 10 Million tons of CO2 has already been stored in a salt water aquifer
c) What about the rules and regulations
There is a cross Government Task Force from DTI, DEFRA and Environment Agency and HSE looking at this. There are no insuperable problems. Much of the regulation is covered by adapting the Petroleum Act. But a system of checks and balances would be ideal, possibly with a CCS Authority being established.
A new grid of CO2 pipes would need to be built onshore, to carry CO2 from power stations to the offshore North Sea pipe network. Some existing offshore pipes may be re-used, but its also feasible to lay new offshore pipes, to form an offshore network, from Norway to the UK, Germany Holland and Poland.
d) would costs be passed on to ordinary individual and business consumers?
Yes. The Government cannot subsidise this and would not want to We buy wind powered electricity now, which is more expensive than coal.
We have also seen the price of electricity double from 2004, and the economy still works. Several studies Including the Stern Report in 2006) have calculated that the cost of CCS and other climate change cleanup, is about 1-2% of Gross Domestic product ? if it is started now. That?s another way of saying zero economic growth for just one year. If we wait too long, then the price increases to 20% of GDP.
There are several ways the price can be passed on to consumers, with no financial burden to the Treasury, for example:
1) By placing the de-carbonised plant and their CO2 into the EU Emissions Trading Scheme (EU-ETS).
2) By creating a new Band of de-carbonised electricity in the Renewables Obligation, keeping that separate from wind power, and pricing it lower
3) By asking de-carbonised electricity producers to undergo a Dutch auction every 2 or 4 years, to see how cheaply they can accept the price premium.
4) To allocate excess EU-ETS credits to a converted plant, so that the company can sell these in the EU-ETS market.
5) By using the money raised by the current auction of EU-ETS permits, to guarantee a lowest ?base? price of CO2 value from a de-carbonised power plant
Some organisations and people claim CCS is not safe. Will it leak, what happens if CO2 goes into the atmosphere?
This is very safe. In fact, the more is discovered about the effects of climate change, its that change which looks much more risky than storing CO2 deep below ground. The CO2 is injected back deep below ground at equilibrium pressure. If a leak occurs, there is no explosion, no oilfield gusher, just a spring of carbonated water. Like Vichy water. We drink carbonated water most days - its safe. For CCS storage the water would be salty, because people dont use that deep salty water for anything else. In Italy, people have built villages on top of CO2 springs. If you lie down at the bottom of a hollow in the ground, or in your cellar, then there may be a problem, as CO2 is denser than air. If the UK stores its CO2 deep beneath the North Sea, then any slow seep will get dispersed into seawater. There are many places around the world where geologists can study natural CO2 accumulations, which have stayed below ground for tens of thousands or millions of years. To solve climate change, we need to store CO2 for only ten thousand years. That is a quite easy challenge for geo-engineering. But each site needs its specific and detailed survey evaluation.
How long until CCS gets going ?
Now
Australia will be operating the first commercial scale CO2 injection in 2007, in the Otway Basin of Victoria State. That?s a large experiment, and it is intended to start full commercial scale CCS in Gorgon Field around 2010. Canada plans to build its Sask Power plant to operate with CCS by 2011. Total oil company in France is starting large scale CO2 injection into a depleted gas field at Lacq in 2007.
BP wants to start now in 2007 on the Peterhead power station sending CO2 to the Miller oilfield project, and has already spent tens of millions pounds. That would be working by 2011. The UK Goverment has had notice of that since 2005, but still has not come to a decision.
As of february 2007, there are nine CCS projects in the UK proposed by power companies and oil companies. These are waiting for the Treasury to put a value on CO2, OR to let power companies charge 1 pence per kilowatt hour extra to consumers for de-carbonised electricity. Unless that value or price occurs, these power companies will go to Germany, the USA, Canada or Australia to develop clean electricity. We have already seen Shell choose to go to Norway and Australia, instead of developing in the UK.
The EU has a modest plan for 12 full size plants to be developed by 2015, with CCS plant being routine by 2020
However in the UK we need to replace our old coal-fired power stations well before then. The UK has to re-build 20 Giga Watts (one third) of our electricity generation by 2020, because of a combination of stricter EU rules on Sulphur and particle emissions, and partly because our existing coal plants are simply old and inefficient.
To build those means starting now, as it takes 2 years to plan and three years to build. There is an Early Day Motion in Westminster (880 , Meale) to encourage the Government to act.
However the Treasury keeps saying that it is not certain of the cost. Nobody is, and its also normal that the first time a new piece of equipment is built, it costs more. But the next pieces cost much less. Somebody has to start.
Right now, the power industry is still building new gas fired electricity plant. That increases our dependence on imported gas! Exactly the opposite of what the Government said it wanted in the 2006 Energy Review.
If the UK fails to build full-size versions of CCS de-carbonised electricity pilot plant now, then by 2010, the UK will have no choice other than new nuclear (with a 10-20 year time to plan and build), or more and more gas fired plant.
What else can you add to all that?
The UK is spending lots of commendable effort in trying to engage other countries such as China India or the USA in creating a world market for CO2.
In terms of actually building the projects, the UK could do a lot more, and faster. If the UK wishes to lead from the front, rather than talk from the back seat, then the UK needs to enable at least three pilot plant to be built in Britain ? not just the one that Treasury are discussing the possibility of helping to create. Three are needed because:
1) Gas clean up is important because many countries (including the UK) burn gas for electricity, and that CO2 also has to be kept out of the atmosphere.
2) Refitting existing coal plant with new boilers and CCS equipment seems to be (marginally) the cheapest way forward at present. This "retrofit" makes that plant more efficient. That type of equipment and approach is what will be needed to cleanup power stations in China and India.
3) Building new IGCC (coal gasification) plant is best if a totally new power station is being built. This can also make hydrogen from coal ?which can be used for vehicle transport, and can be very efficient at capturing the CO2. However, it's the most expensive to build.
To legislate for these new pilot plants is not the same as setting the rules forever. These can be explicit research Demonstrators. The CO2 price, or the price of their electricity, must be high enough so that companies do not make a loss.
Industry best estimates, are that after the first few plant are built, the cost of CCS electricity will be less that the delivered cost of wind electricity (ie with the renewables price added on). Renewables are certainly the way forward in the long term. By 2050, the UK could be producing most of its electricity from renewables. But we need to cut carbon dioxide emissions now, and the most direct and fastest way is to use CCS.
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