The Role of CCS
Average Annual Power Plant Investment Needed Between 2010 - 2050 to Reduce Emissions by 50% from Current Levels
There is an increasing recognition that technology developments have to be part of the solution to climate change. This is particularly true for coal because its use is growing in so many large economies, including China and India. In recent years, coal use has risen at an average rate of 4.9% per year; faster than any other fuel.
World primary energy demand continues to rise, mainly driven by the growing energy needs of developing countries. Latest projections forecast energy growth to rise 40% between 2007 and 2030. Almost 90% of this increased energy demand is driven by the needs of developing countries, fuelling economic growth and increased standards of living. China and India alone will account for over 50% of the total increase. Coal use is forecast to rise by over 60% over this same period, with developing countries responsible for 97% of this increase, primarily to meet increased rates of electrification.
International climate change goals can only be achieved if emissions from fossil fuels are drastically reduced. While increasing how efficiently fossil fuels are used is important, CCS is the only currently available technology that can align the increased use of fossil fuels with climate change goals. CCS is needed to reduce emissions from a range of industrial sectors including, coal- and gas-fired power generation, petroleum refining, iron and steel production, cement manufacturing and chemicals production.
The Intergovernmental Panel on Climate Change (IPCC) has concluded that CCS can contribute between 15-55% of the cumulative emission reduction effort to 2100, providing it with a central role within a portfolio of low carbon technologies needed to address climate change. The International Energy Agency (IEA) has studied a number of global GHG reduction scenarios and concluded that CCS is "the most important single new technology for CO2 savings" in both power generation and industry. The IEA found that attempting to stabilise emissions without CCS is estimated to be 78% more expensive; equivalent to US$4.7 trillion between 2010 and 2050.
Is CCS ready?
CCS is not a new or emerging technology. There are decades of operational experience from industrial-scale CCS projects, underground injection of CO2 for enhanced oil recovery, and the use of technologies analogous to CCS, such as acid gas injection and natural gas storage. These industrial level experiences are complemented by numerous research-scale CCS projects, intergovernmental and industry partnerships, research programmes and stakeholder networks.
While all the elements of CCS have been separately proven and deployed in various fields of commercial activity, a key step is the successful integration of large-scale CCS systems. The integration of CCS into commercial-scale power plants still remains costly at current electricity and carbon prices and these plants have not yet been constructed. A concerted effort is needed to commercialise CCS at large scale in the power sector (see 'Financing CCS' page).
Current CCS deployment rates are too slow to allow global GHG emissions reductions goals to be achieved. They must be accelerated significantly. Carbon markets, the primary current mechanism for driving emissions reductions, will not deliver CCS within the time period and at the scale needed.
The limited number of industrial-scale CCS plants currently operating globally is primarily a result of public policy expecting CCS to be delivered by the private sector, while at the same time failing to address the barriers which are inhibiting CCS deployment. Norway - a pioneer of CCS - has used the technology since 1996 as the country has a clear CO2 management policy along with government support for the technology. It is essential that countries develop enabling frameworks that address the barriers limiting CCS so that it can be deployed at the scale required.
There are four types of barriers inhibiting CCS development:
1. Commercial and market factors
Commercial and market factors that fail to incentivise business investment in CCS are a key barrier to extensive CCS deployment. They primarily relate to the differential between the current cost of CCS technologies and the revenues (or avoided costs) that can be used to offset these, such as the price of electricity and price of emissions credits. Potential investors in CCS are unable to generate an acceptable return.
2. Legal and regulatory uncertainty
Clear and supportive legal and regulatory frameworks for managing CCS operations are a precondition for investment in CCS. The absence of these frameworks will preclude the development of CCS projects as private investors are unable to invest and operate without the certainty and risk reduction offered by such frameworks. There is significant international action to develop regulatory frameworks to permit CCS and integrate CCS into existing GHG reduction mechanisms. A number of international treaties that would have prohibited CO2 storage underground have been amended to permit CCS activities.
3. Public awareness of the benefits of large-scale CCS operations
Public awareness of CCS is essential. Public understanding of CCS is typically low indicating the need for public education on the critical role of CCS in reducing GHG emissions.
4. Technical performance of large-scale integrated CCS
CCS component technologies are all commercially available and already deployed around the world in various industries and existing CCS projects. Data on technology performance is required from large-scale integrated projects, and on demonstration that costs are decreasing so that CCS can be commercialised and widely deployed.
Deployment of CCS must be accelerated so that it is commercialised at a broad international scale a decade or more earlier than will occur based on current policies and commercialisation expectations. A global programme for early deployment would lower technology integration costs and implement robust policy frameworks that allow commercial power plants with CCS to proceed.
An important step in pushing the wider deployment of CCS has been the establishment of the Global Carbon Capture and Storage Institute (GCCSI). The GCCSI was formed in September 2008 and receives annual funding of A$100 million a year from the Australian government. It supports international efforts to deploy commercial-scale CCS projects by 2020 and aims to be an international "go-to" place for CCS services and advice (WCA is a founding member of GCCSI).
CCS & Climate Agreements
The limited action to further CCS during the Kyoto Protocol's first commitment period (2008-2012) has hindered global efforts on CCS and needs to be rectified to allow this critical technology to contribute to global greenhouse gas mitigation (see climate change page).
The Kyoto Protocol's Clean Development Mechanism (CDM) enables clean energy technology to be transferred to developing countries. Under the CDM, developed countries may invest in emissions reduction projects in developing countries in order to generate emissions reductions credits that can be used to help achieve their Kyoto targets. At present, CCS is not eligible for approval as a CDM activity. Including CCS in the CDM would strengthen the CDM and represent an important step towards accelerating the wide scale deployment of CCS and achieving the ultimate objective of the climate change treaties - the United Nations Framework Convention on Climate Change and the Kyoto Protocol- the reduction of global CO2 emissions. Excluding CCS from the CDM denies developing countries the opportunity to deploy this critical technology, limits their capacity to contribute to emissions reductions and undermines global efforts to reduce emissions.
All Low-Carbon Technologies Are Needed
Reducing emissions from coal is additional and complementary to the deployment of other low-carbon and energy efficient technologies. All emission reduction technologies must be made available and deployed at a scale and rate never seen before. Addressing the challenge of climate change, while meeting countries' development goals and affordable energy needs, will require access to the full range of energy efficient and low carbon technologies.
Current deployment rates for all low-carbon technologies are inadequate and investments must be increased substantially. Increased investment in technology deployment will generate emissions reductions and significant co-benefits that include improvements to the environmental and economic performance of technologies. These improvements will enable future emissions reductions to be reached at lower cost. Concerns that investing in CCS is diverting investment from other technologies such as renewables and energy efficiency are misplaced; all low-carbon technologies are required and greater investment is needed for all.