A new paper from Harvard’s Belfer Center estimates the cost of carbon capture and storage (CCS), and comes up with a few promising figures for the technology.
CCS technology is not proven at commercial scale and is expected to develop further, making it very difficult to reliably estimate how much power generated using CCS will ultimately cost. And estimating finance costs for such capital-intensive projects are tricky enough: McKinsey figures that weighted average capital costs could vary the cost of carbon abatement with CCS by as much as €9 per tonne – much more than coal, steel or engineering costs which were each estimated to have a €1 impact.
Despite coming out with slightly higher carbon abatement cost estimates than other studies, the Harvard paper has some positive conclusions for CCS in terms of costs and comparisons to other low-carbon energy technologies.
The Harvard paper concluded that the abatement cost in 2030 for ‘first of a kind’ plants under a (high) 2008 cost scenario, each tonne of CO2 emissions avoided could cost between $120 – $180 per tonne, while ‘nth of a kind’ plants would cost $35 – $70.
But the authors of the report point out that the 2008 cost data used in this estimate marked the end of a period of rising commodities and financing costs. For mature plants operating under a lower cost regime (that of 2005 – 06), the cost could be $90 – $115 per tonne for first of a kind plants, and $25 – $50 for plants using mature technologies: somewhere within the realm of the predicted cost of carbon in 2030.
They also ran a comparison with other published estimates:
As the authors of the Harvard study note, their estimates for first of a kind plants are higher costs, but some of this is attributed to variation in capital costs. For mature plants, the studies fell into a similar range.
There was also a rough comparison with other sources of low-carbon energy, which shows an interesting similarity between CCS and nuclear energy costs:
In fact the authors conclude that CCS compares relatively well to other low carbon technologies, with the exception of onshore wind with low transmission costs.
So far, so good. But this is looking out towards 2030, when CCS is expected to be far more advanced, and therefore cheaper, than it is now. What about the prospects for early CCS projects, which will have a far higher abatement cost than the actual cost of carbon? The report’s authors also do some research into offsetting the costs of CCS by enhanced oil recovery: injecting carbon dioxide to help extract oil from declining underwater oil fields. This is not only possible solution to the storage dilemma (one of the most sensitive aspects of CCS is where exactly to store all that CO2), but also provides opportunities to gain critical revenue for the early ‘first of a kind’ projects.
Depending on the oil price, it could look rather promising:
Based on these assumptions, the project requires about $75/bbl crude oil price to achieve a net
zero cost of abatement. A higher crude oil price will increase the return on investment. Figure 7
shows the relationship of oil price and cost of CO2 when EOR is included. It covers the value
chain as a whole. In practice the value of the EOR is likely to be distributed between the CCS
project, the reservoir owner, and the government (through taxes or royalties), and is unlikely all
to accrue to the capture part of the chain project.
There are a number of other caveats: for example it does not include the carbon emissions from the oil itself. But the paper says in theory, prolonging conventional oil supplies and therefore reducing the need for oil sands could in fact have a beneficial effect on emissions.