INTERVIEW-Global CCS investment on track, despite setbacks

Wed Nov 2, 2011 9:04am GMT
 

* CCS investment moving ahead, despite financial crisis

* Global body says CCS can compete against some green power types

* China possible source of growth but not Australia in short term

By David Fogarty

SINGAPORE, Nov 2 (Reuters) - The world is on track to have 20 carbon capture and storage (CCS) projects by 2020, despite the high-profile cancellation of $l.5 billion in funding for a British plant last month, a leading industry proponent said on Wednesday.

A report by the Global CCS Institute on Wednesday also says CCS can be a cost-effective tool to curb greenhouse gas pollution from coal and gas-fired power stations when compared with other low-carbon emission technologies.

CCS involves trapping carbon dioxide (CO2) otherwise emitted by fossil fuel power plants, and piping it underground for long-term storage in spent oil fields or aquifers. The technology is also used in the natural gas sector and fertiliser making.

CCS is not yet competitive for the power sector but governments and the International Energy Agency see it as a key way to fight climate change by trapping and burying greenhouse gas emissions, while maintaining stable energy supply.

While CCS is regarded as a part of the energy mix in coming decades, there are doubts about how quickly it will be adopted and the rate at which the technology's costs will fall.

"Our view is a bit different," said Brad Page, CEO of the Global CCS Institute, which is backed by governments and industry and based in Australia.

"Our latest status report shows there are 74 projects in progress around the world today. There are 8 in operation and another six under construction. Of those, 6 are power projects," he told Reuters on the sidelines of the Singapore International Energy Week.

Another 12 would reach final investment decision over the coming year, with more than half of those power projects.

"If they keep going at the rate they are then the 20 projects by 2020 will be realised," he said. He pointed to $25 billion pledged by governments globally to support CCS.

The first two CCS projects for the power sector are under construction, one each in Canada and the United States, with these to earn money by using the recovered CO2 for oil extraction and then pumping the CO2 underground.

"The area that is a bit under-done at the moment is around steelmaking and cement where we are not seeing any investment," Paige said.

MAJOR CANCELLATION

Costs, though, remain a major issue for cash-strapped governments.

A British government decision last month to withdraw funding for the country's first and most advanced CCS project at Longannet in Scotland has underscored critics' doubts that CCS can reach commercial scale by the end of the decade.

Late last month, the government said it had dropped funding for the project that would have trapped emissions in a 330 megawatt unit but that the one billion pounds in subsidies would be dedicated to a different CCS project.

Projects have also been delayed or cancelled in Norway, Dubai and the United States. CCS also consumes large amounts of a power stations' energy, adding to costs.

The institute's report said it found hydropower and onshore wind technologies to be among the lowest-cost options for reducing emissions from the power sector. Once these technologies are fully exploited or in countries where they are not an option, CCS becomes very competitive, it said.

The cost of cutting or avoiding CO2 emissions for a coal-fired power plant fitted with current CCS technology ranges from US$23 to $92 per tonne of CO2 and is a little higher for natural gas-fired power plants, the report said.

This compared to an avoided cost of $90 to $176 per tonne for offshore wind, $139 to $201 per tonne for solar thermal and more for solar photovoltaic, or PV.

Page was optimistic about China's move towards CCS.

"China has six projects that we can identify already. These are at earlier stages than others but they are also large and ambitious projects."

But he couldn't see major investment in CCS in Australia in the short-term, despite parliament's expected approval of carbon pricing scheme next week. The scheme starts July 2012.

He said a carbon price starting at A$23 was not about to trigger huge investment in CCS to cut emissions from coal-fired power stations, which supply about 75 percent of the nation's electricity. "The cost gap is probably double that in Australia."

(Editing by Miral Fahmy)

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