First published in Cornerstone, Volume 4, Issue 4
By Kamel Ben Naceur, Director, Sustainability, Technology and Outlooks Directorate, International Energy Agency
Samantha McCulloch, Energy Analyst, International Energy Agency
The ratification of the Paris Agreement marked an historic milestone for the energy sector and confirmed a global target of limiting future temperature increases to “well below 2°C”. Achieving this will require a much faster and more extensive transformation of the energy sector than previously contemplated. All technologies and all options for reducing emissions will need to be embraced—with carbon capture and storage (CCS) being core among these. The Paris Agreement therefore presents enormous opportunities for the deployment of CCS technologies.
CCS provides a unique and important solution to emissions from current and future use of fossil fuels in industry and in power generation. It is the only technology able to significantly reduce emissions from coal- and gas-fired power plants. Crucially, CCS is also one of few technologies that can address emissions from industrial processes, including the production of steel, cement, and chemicals, all of which will remain building blocks of modern society. The Intergovernmental Panel on Climate Change (IPCC) has further emphasized the importance of CCS with bioenergy in delivering future “negative emissions” if more ambitious climate targets are to be achieved.
Fortunately, CCS technologies are now well understood and global experience in delivering large-scale projects continues to grow. The Sleipner CCS project in Norway has now been operating for 20 years, safely and permanently storing almost 17 million tonnes of COdeep under the North Sea. The International Energy Agency (IEA) has recently acknowledged this milestone and reviewed the progress achieved in developing and deploying CCS technologies in its report “20 Years of Carbon Capture and Storage – Accelerating Future Deployment”. The report also highlights the importance of CCS in achieving future climate goals.
THE SHIFT TO WELL BELOW 2°C WILL REQUIRE CCS
CCS plays a key role in moving the energy sector onto a pathway consistent with limiting future temperature increases to 2°C. Analysis by the IEA suggests that CCS could account for around 12% of the cumulative emissions reductions needed to transition from a “business as usual” (6DS) approach to a 2°C (2DS) target by 2050 (Figure 1). This amounts to 94 gigatonnes (Gt) of carbon dioxide (CO Coal-fired power generation is the single largest source of CO captured in the IEA 2°C scenario, with 40 GtCO captured in the period to 2050 and around 570 GW of global coal-fired generation equipped with CCS in 2050.) captured in the period to 2050, with around 55% of this (52 Gt) in the power sector and 42 Gt in industrial applications and fuel transformation.
Shifting to a well-below 2°C target will likely require even greater deployment of CCS, particularly in industrial applications. In the IEA 2DS, the power sector is virtually decarbonized by 2050, while industry becomes the single largest source of emissions at around 45%, followed by transport (Figure 2). There are alternatives to CCS for further emissions reductions in the industrial sector. The potential for other options, such as energy efficiency and fuel or feedstock switching, to contribute to further emissions reductions is likely to be limited. Faster deployment of CCS in the power sector, including through retrofitting existing coal-fired power plants, could also contribute to achieving a well-below 2°C target.
The scale of the challenge associated with limiting future temperature increases to well below 2°C means that achieving “a balance between anthropogenic emissions by sources and removals by sinks” in the second half of the century, as outlined in the Paris Agreement, may not be the end-point for achieving climate goals. Analyses by key institutions, including the Mercator Research Institute, highlight that overall emissions will need to be negative in the second half of the century under the more ambitious pathways agreed in Paris. CCS in combination with bioenergy, or BECCS, will be important as one of the few technologies able to deliver “negative emissions”. This was highlighted by the IPCC in its Fifth Assessment Report, where it found that many climate models were unable to achieve concentration goals consistent with a 2°C or well-below 2°C target without significant deployment of BECCS.
CCS UNDERPINS THE FUTURE OF COAL POST-PARIS
More than any other fuel, coal use will be substantially impacted as the energy sector transitions to a 2°C or well-below 2°C target. The successful and widespread deployment of CCS technologies will be a key determinant of the future role of coal as climate policies are strengthened globally.
In the IEA’s 2DS, around 75% of global coal-fired power generation capacity is equipped with CCS and provides around 3300 TWh of generation in 2050. The remaining unabated plants run at very low capacity factors. In a 2DS, the average emissions intensity of the global power sector must fall from more than 500 g/COper kWh to around 40 g/CO per kWh in 2050. In a well-below 2°C case, this may need to be reduced even further.
This leaves virtually no room for unabated coal-fired power plants in the power mix, and even challenges the role for CCS-equipped coal plants in the long term. An ultra-supercritical coal-fired power plant with a COcapture rate of 90% would produce emissions of around 100 g/CO per kWh— substantially higher than the average global fleet in 2050, notwithstanding a major reduction from the more than 760 g/CO per kWh of an unabated plant. Opportunities to further reduce this include technological improvements related to plant efficiency, higher CO capture rates, and co-firing coal with biomass in CCS-equipped plants. The latter option, in particular, has the potential to yield zero-emissions coal plants which could be the key to a future role for coal in a well-below 2°C world.
Putting scenario analysis aside, today’s reality is that more than 1950 GW of coal-fired generation capacity currently operates globally, with a further 250 GW under construction and 1000 GW in various stages of planning. Around 500 GW of existing capacity has been added since 2010, and the average plant age for developing countries is around 15 years. Much of this fleet has a technical operating life that extends to 2050 and beyond, meaning that early retirements would be unavoidable to achieve a 2°C target. In practice, this would present significant social, economic, and political challenges, particularly with more than 40% of fossil fuel power generation publicly owned. CCS, including retrofitting, can provide an important and strategic alternative to early retirements, preserving the economic value of these investments while bridging the gap between today’s reality and the achievement of future climate ambitions.
STABLE POLICY FRAMEWORKS ARE NEEDED FOR CCS INVESTMENT
CCS is far from being a new technology. Individual CCS technologies have been used in industry for decades, including the injection of COfor enhanced oil recovery purposes, which commenced in the U.S. in the early 1970s. Globally, 15 large-scale CCS projects are currently operating across a range of applications, with six more projects expected within the next 12 months. With all of this experience, it is evident that there are no insurmountable technological barriers to CCS deployment. The part of the equation that has been missing has been the financial incentives and climate policies necessary to support investment.
Over the past 20 years, policy and political support for CCS has fluctuated considerably and provided an uncertain foundation for investment (Figure 3).
Following the release of the IPCC Special Report on CCS in 2005 and the G8 leaders’ pledge to deploy 20 large-scale CCS projects before 2020, there was a considerable upswing in momentum. New international initiatives such as the Global CCS Institute were launched and around US$30 billion in public funding commitments were made globally, with the aim of supporting as many as 35 projects. However, by 2014 less than US$3 billion of this had been spent, and only seven projects have ultimately received support from these programs.
A number of factors have influenced this, including the failure of the Copenhagen climate negotiations in 2009 which saw climate change temporarily fall down the list of political priorities. Budget pressures following the global financial crisis also impacted public funding availability. Remarkable cost reductions in renewable technologies and advances in energy efficiency have arguably also captured the policy focus.
However, a major contributor was the fact that deploying first-of-a-kind, large-scale CCS projects also proved to be more complex, time consuming, and expensive than many governments and project proponents had anticipated. For every project that has successfully reached a final investment decision, two have been cancelled. This is not necessarily unexpected given the stage of the technology, the need for confidence in storage, and the size of the investment required. Yet it underscores the critical importance of increasing the number of projects under development and pulling through more investment with targeted support and stable policy frameworks.
WILL PARIS BE A TURNING POINT FOR CCS?
The analysis by the IEA confirms that the successful implementation of the Paris Agreement will almost certainly require deployment of CCS across industry and power applications, as well as investment in bioenergy with CCS for “negative emissions”. This investment in CCS is not just for the long term, with substantial deployment of CCS needed in the period to 2030 under our lowest-cost scenarios. Enormous opportunities for CCS could therefore emerge as global governments act to implement their Nationally Determined Contributions (NDCs) in parallel with planning for their long-term (2050) climate strategies.
Yet we must also recognize that the ratification of the Paris Agreement is just the beginning. A considerable gap exists between the level of effort represented in the NDCs pledged prior to Paris, and what is required to achieve the ambitions of the Paris Agreement. IEA analysis finds that the NDCs would put us on a pathway for temperature increases of almost 3°C and would not lead to an emission peak in the near future. The difference between this and a well-below 2°C target is immense, and could represent more than 40 years’ worth of current emissions.
Given the gap between the NDC pathway and a well-below 2°C target, the fact that CCS was mentioned in only 10 out of 162 NDCs could be seen as both a symptom and a cause. CCS is a technology essential for achieving more ambitious temperature targets, but the lower the ambition the less of a role for CCS, particularly in the near term. A refocusing of efforts to deploy CCS will be essential as we work to bridge the gap between action and ambition globally.
More than 20 years of experience with CCS technologies and a growing number of large-scale projects confirms that there are no insurmountable technological barriers to deployment. The ratification of the Paris Agreement now provides the foundation for significantly strengthened climate action that could unlock enormous opportunities for CCS. Given the climate challenge ahead, CCS is a solution that’s simply too big to be ignored, particularly for emissions from industrial processes and today’s large coal-fired power fleet. The coal industry has a particularly strong interest in the widespread deployment of CCS, with the future role of coal in the energy mix inexorably linked to CCS in low-emissions development pathways.