Carbon capture: ‘The only show in town’

The European Parliament has backed proposals to set up a Euro10-billion fund to help kick-start the development of carbon capture and storage (CCS) technology. At the same time, MEPs voted to introduce an emissions performance standard on new power stations that would be authorised from 2015. Under this legislation, no power station would be allowed to emit more than 500g of CO2 /kWh – essentially creating a ban on building coal-fired power stations without CCS.

The proposals, from Liberal Democrat MEP Chris Davies, also call for the use of up to 500 million carbon emission allowances from the EU’s trading scheme to meet the cost of installing around 12 demonstration projects for CCS.

According to Davies, the cost of having to buy allowances to emit CO2 into the atmosphere will make investment in capture equipment and storage sites worthwhile for the power generation sector.

Approval of MEPs’ voting, however, is still subject to negotiation between the European Parliament and the Council of Ministers, with a decision due before the end of the year.

While carbon capture is prohibitively expensive – estimates indicate that it will approximately double the typical cost of building a power station to around Euro2 billion – it is potentially the single most important way to reduce global carbon emissions. Industry estimates suggest the technology could halve total CO2 emissions from power stations and major industrial installations by 2050 by separating the CO2 and storing it in depleted oil and gas fields or deep saline aquifers.

Meanwhile, CCS technology could also be applied in industries such as steel, cement and refineries, which together account for up to 15% of Europe’s CO2 emissions.

Indeed, CCS technology is already in operation in the chemicals industry, though not on the scale needed for large power stations. However, engineering companies such as Alstom and Hitachi say that CCS suitable for power stations will be commercially available from 2015; GE Energy’s integrated gasification combined cycle (IGCC) technology is also at an advanced stage.

For their part, power plant manufacturers believe that CCS will be commercially viable within 15-20 years, but insist that support will be needed to promote the technology during the development stages.

They expect the capturing equipment at the power plant, rather than the pipeline network to transport the CO2, to require most – around 70% – of the total additional cost.

Retrofitting an existing power plant would involve even higher costs due to the high Capex of the capture plant and the fact that the existing configuration of these facilities is likely to make adapting the plant much more difficult than on a new facility. Also, there would be the additional cost of having to take the plant off-line for the CCS installation.

Moreover, whereas the CCS system on a new plant would run for 40 years, the capture part of, for instance, a 20-year-old facility would offer only half the return on capital spend.

According to Davies, however, and despite the costs, CCS remains a vital stop-gap measure to curb the rate of emissions worldwide. He noted that China gets 80% of its electricity from coal and is building 1GW of electricity generating capacity every week, while global use of coal is expected to increase by 70% over the next 20 years.

“Unless we develop CCS technology we have no chance of dealing with the problem of global warming,” stated Davies, who emphasised that CCS demonstration projects will be designed to allow “a good degree of knowledge-sharing.” This even extends to China; Davies commenting that there is a lot of support from UK government and the EU for getting such a project up and running in that country.

“EU governments must now either back this proposal to kick-start CCS development or produce a realistic alternative. At present, the ideas from the European Parliament are the only show in town,” said Davies.

“CCS development has the potential to make an enormous contribution to the fight against climate change. We can afford no delay and no more construction of conventional coal-fired power stations,” he concluded.

The MEP’s views on the importance of CCS in combating global warming are reinforced by a major report from McKinsey in which the consultant estimated the potential global abatement of CO2 in 2030 at 3.6 gigatonnes a year (Gt/year) worldwide and 0.4Gt/year in Europe. This would be equivalent to around 20% of the total abatement potential in Europe in 2030 and require the installation of between 80 and 120 commercial-scale CCS projects.

These projects, said McKinsey, are likely to develop as a series of capture clusters, typically comprising power plants and adjacent retrofit and industrial capture projects, all connected into a common transport and storage network. In the UK, the North Sea oil fields offer the biggest possible storage area, with Yorkshire likely to become the second largest cluster as it covers 20% of all UK CO2 emissions and includes major power stations such as the Drax and Ferrybridge.

Early commercial-scale CCS projects are then expected to cost Euro35-50/tonne of CO2 abated, though subsequent operating efficiencies and economies of scale will bring these costs down to Euro30-45/tonne by 2030 – in line with expected carbon prices in that period.

“Costs at these levels would make such CCS installations economically self-sustaining at Euro30-48 per tonne of CO2 … There is potential for even lower costs if a global roll-out takes hold, or if some breakthrough technologies, now still in the laboratory stage, emerge,” said the McKinsey report.

Actual costs are likely to vary significantly between different projects, depending on scale, location and the technologies being tested.

The CO2 capture phase will represent around two thirds of total costs, according to McKinsey. Its reference case assumed for capture was a 900MW net output plant, fuelled by hard coal or lignite, with an expected lifetime of 40 years and a utilisation rate of 86%, the same as a non-CCS plant. The reference CCS technology was an ultra-supercritical 700°C technology for boilers, coupled with drying in the case of lignite. This led to efficiency levels of 50% and 52% for hard coal and lignite, respectively. While this technology is not yet available, it should be by 2020, when early commercial CCS projects are due to be built.

The main cost drivers for CO2 capture are the addition of capture-specific equipment and the efficiency penalty due to energy being absorbed in the capture process. The capture equipment such as the air separation unit for the oxy-fuel technology or the CO2 scrubber for post-combustion increases the Capex and operating and running costs. The absolute efficiency penalty of around 10% for the reference case increased fuel consumption and required an over-sizing of plant to ensure the same net electricity output.

Overall, McKinsey estimated that the extra Capex would contribute over half the CO2 capture cost, at Euro14-19 per tonne CO2, while the fixed and operational spending and fuel costs would represent the remaining part at Euro5-7 and Euro2-6 per tonne CO2, respectively.