So, carbon capture and storage (or carbon capture and sequestration, if you prefer) costs a lot. That is the finding of a report by the phenomenally well-funded by the Global CCS Institute, launched by the Australian government earlier this year.

The report states that CCS is unlikely to be cost-effective, at market carbon rates, before 2030 - 2040.

Matching the market price of carbon, under whatever cap-and-trade schemes are in operation, is the crucial threshold for CSS. When CCS plants first begin truly operating at scale - which won’t be until well into next decade - the cost of capturing a tonne of CO2 will likely be much, much higher than simply buying emissions allowances on the market.

Still, it’s hardly news that CCS is likely to be very expensive.

An often-cited report published by McKinsey in September 2008 estimated that CCS demonstration projects would cost about €60 - €90 per tonne of carbon captured, while CO2 allowances under the European Union emissions trading system now cost about €14. However, McKinsey estimated costs would come down in line with market CO2 costs by about 2030,  when both would be in the range of €30 - €45 per tonne.

What’s perhaps most interesting about the Global CCS Institute report is that it’s published by an organisation backed by a body with strong interests in making CCS work: the Australian Government.

Australia, the world’s biggest exporter of coal, plans to spend A$4bn supporting CCS, and the Canadian government is also allocating several billion to the technology.

Scientist Michael R. James writes in Australian email news service Crikey:

The bulk of the actual report is a somewhat laborious listing and discussion of hundreds of actual or planned CCS plants around the world. The vast majority of these, however, have nothing to do with commercial power generation. Many involve capture of gas containing high CO2 content from oil fields where it is reinjected into the oil bed to both sequester the unwanted gas and improve the oil recovery from the field. This is nothing new and not particularly relevant to the institute’s remit.

In fact the report says that there are only seven operating CCS but none are coal-burning power generating plants, again not of much interest. But this is slightly curious because there are actually two functioning CCS plants at coal-fired commercial power plants as Crikey has previously reported: a 20MW pilot plant at Schwarze Pumpe in Germany, and the Mountaineer CCS in West Virginia USA.

It’s perhaps not the cost, as James suggests, but the fact that no CCS project is currently thought to be operating to scale in the world. The CCS project at the Schwarze Pumpe plant, operated by Vattenfall, is not only small but reportedly isn’t actually storing the carbon dioxide it captures.

On this depressing note though, it may be worth referring back to a Harvard University CCS study we wrote about a few months ago, which points out that many of the high cost estimates placed on CCS are at least partly affected by last year’s high commodity prices. The bad news, of course, is that commodities prices have been on a fairly steadily rising trend of late…

Related links:

Clean coal for the confused (FT Energy Source, 16/07/09)
Clean coal is crumbling (FT Energy Source, 25/02/09)
Backgrounder: Clearing up clean coal (FT Energy Source)

October 30, 2009 1:36pm in Emissions, Politics | Comment