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the global status of ccs: 2011 - Expert Group on Clean Fossil Energy ...

THE GLOBAL STATUS

OF CCS: ong>2011ong>


THE GLOBAL STATUS

OF CCS: ong>2011ong>


© Global CCS Institute, ong>2011ong>

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ISBN 978-0-9871863-0-0


CONTENTS

Preface

Abbreviations

Executive summary

v

vi

vii

1 Introduction 2

1.1 Scope ong>ofong> this report 2

1.2 The role ong>ofong> CCS in CO 2

emission reductions 3

1.3 What is CCS 5

2 Projects 8

2.1 Key project developments 8

2.2 Detailed project breakdown 15

3 Technology 34

3.1 Capture 34

3.2 Transport 47

3.3 Storage and use 54

3.4 Technology costs and challenges 65

4 Policy, legal and stakeholder issues 70

4.1 Policy, legal and regulatory context 71

4.2 Status ong>ofong> funding support 89

4.3 Public engagement 95

5 Making ong>theong> Business Case for CCS 100

Appendices

Appendix A Overview ong>ofong> data analysis process 106

Appendix B Asset Lifecycle Model 107

Appendix C Large-scale integrated projects 109

Appendix D Reconciliation ong>ofong> project changes since 2010 Status Report 122

Appendix E Policy context 125

Appendix F Public engagement quality factors 138

References 139

Tables

Table 1 LSIPs in ong>theong> Operate and Execute stages 11

Table 2 CCS project submissions for NER300 to ong>theong> European Commission 21

Table 3 LSIPs by region, by technology and by industry 29

Table 4 Technology Readiness Levels (TRLs) 36

Table 5 Transport cost estimates for CCS demonstration projects, 2.5Mtpa 54

Table 6 Transport cost estimates for large-scale networks ong>ofong> 20Mtpa 54

Table 7 ZEP cost estimates for storage 58

Table 8 Summary ong>ofong> recently completed CCS design cost studies 66

Table 9 CCS cost estimates from ZEP 67

Table 10 Country ong>statusong> ong>ofong> emission reduction aspirations 72

Table 11 International groupings for countries 80

Table 12 CCS policy landscape 81

iii


Table 13 Project survey responses to policy question 87

Table 14 Project survey responses to legal and regulatory question 88

Table 15 Public engagement resources 97

Table 16 Key business features ong>ofong> LSIPS in operation or construction 101

Table 17 Comparison ong>ofong> risks between a new build CCS demonstration power project

with a conventional power project 102

Table C‐1 ong>2011ong> large-scale integrated CCS projects 110

Table D‐1 Reconciliation ong>ofong> LSIPs with 2010 Status Report 122

Table E‐1 Project responses to questions on high level policy, legal and regulatory issues 136

Figures

Figure 1 Global CO 2

atmospheric concentrations and temperature 3

Figure 2 Global CO 2

emissions and GHG emission reductions 4

Figure 3 Avoided costs ong>ofong> CO 2

by technology in ong>theong> power sector 5

Figure 4 Geological storage options for CO 2

6

Figure 5 LSIPs by asset lifecycle and region/country 9

Figure 6 LSIPs by asset lifecycle and year 9

Figure 7 Timing ong>ofong> FID ong>ofong> LSIPs in ong>theong> Define and Evaluate stages 10

Figure 8 Changes in LSIPs from 2010 to ong>2011ong> 13

Figure 9 LSIPs by region and year 15

Figure 10 Volume ong>ofong> CO 2

potentially stored by region or country 15

Figure 11 World map ong>ofong> LSIPs by industry 16

Figure 12 North American map ong>ofong> LSIPs by industry 18

Figure 13 European map ong>ofong> LSIPs by industry 20

Figure 14 LSIPs by industry sector and year 24

Figure 15 Volume ong>ofong> CO 2

captured by industry sector and year 25

Figure 16 Volume ong>ofong> CO 2

captured by capture type and capture asset lifecycle stage 26

Figure 17 LSIPs by capture type and region 26

Figure 18 Volume ong>ofong> CO 2

by storage type and region 27

Figure 19 Comparison ong>ofong> capture asset lifecycle with ong>theong> progress ong>ofong> EOR

and storage in deep saline formations or depleted oil and gas reservoirs 28

Figure 20 Layout ong>ofong> Gorgon CO 2

compressor train 31

Figure 21 Technical options for CO 2

capture from coal-power plants 35

Figure 22 Summary ong>ofong> TRL for capture technologies 36

Figure 23 Applications ong>ofong> capture technologies to LSIPs 37

Figure 24 Typical post-combustion capture process for power generation 38

Figure 25 Post-combustion capture TRL rankings 38

Figure 26 Projected performance ong>ofong> post-combustion capture technologies 39

Figure 27 TRL ong>ofong> pre-combustion capture components 40

Figure 28 IGCC developments to recover energy losses from CO 2

capture 41

Figure 29 TRL for oxyfuel combustion components 42

Figure 30 Oxyfuel combustion developments to recover energy losses from CO 2

capture 43

Figure 31 Cost ong>ofong> CO 2

avoided for capture technologies 46

Figure 32 Existing and planned CO 2

pipelines in North America 48

Figure 33 European CO 2

transport corridors and volumes, CO 2

Europipe reference scenario 2050 49

Figure 34 Western Canadian CCS potential 51

Figure 35 Ship-based CO 2

carrier: Submerged Loading System general arrangement 53

Figure 36 Current ong>statusong> ong>ofong> country-scale storage screening assessments 54

Figure 37 Brazil sedimentary basins 55

Figure 38 Schematic risk prong>ofong>ile for a storage project 61

Figure 39 CO 2

use technologies, feedstock concentration and permanence 64

Figure 40 Scope ong>ofong> policy landscape 70

Figure 41 Linkages between ong>theong> UNFCCC, ong>theong> CEM and G8 76

Figure 42 CCS policy index 78

Figure 43 Public funding support commitments to CCS demonstrations by country 90

Figure 44 Public funding committed to large-scale CCS demonstration projects 92

Figure 45 Public funding to large-scale projects 93

Figure B‐1 Asset Lifecycle Model 107

iv THE GLOBAL STATUS OF CCS: ong>2011ong>


PREFACE

Since 2009, ong>theong> Global CCS Institute has produced a series ong>ofong> major reports which aim to provide a comprehensive

worldwide overview ong>ofong> ong>theong> state ong>ofong> development ong>ofong> carbon capture and storage projects and technologies, and ong>ofong> actions

by governments to facilitate ong>theong> demonstration ong>ofong> those technologies at a large scale.

This report is ong>theong> latest in that series, and covers developments up until August ong>2011ong>. It draws on ong>theong> results ong>ofong> ong>theong>

Institute’s annual project survey, completed by lead proponents ong>ofong> major CCS projects around ong>theong> world. Survey results

were supplemented by interviews with personnel from many ong>ofong> ong>theong>se projects, and by research undertaken by

Institute staff.

The assistance ong>ofong> project proponents in completing survey questionnaires and taking part in interviews is particularly

acknowledged. The Institute is grateful for ong>theong> very high degree ong>ofong> cooperation received.

Preparation ong>ofong> ong>theong> report was led by Edlyn Gurney and many Institute staff contributed by authoring individual sections

or reviewing ong>theong> document. Material in ong>theong> sections on capture technologies, ong>theong> policy context and legal and regulatory

developments also draw on studies by oong>theong>r organisations specifically commissioned for this report, as detailed in

those sections. The Institute also acknowledges ong>theong> many helpful comments provided by external reviewers on drafts

ong>ofong> ong>theong> report.

PREFACE

v


ABBREVIATIONS

TERM

DESCRIPTION

TERM

DESCRIPTION

AGR

Acid gas removal

kW

Kilowatt

ASU

Air separation unit

km

Kilometre

AWG

Ad-Hoc Working ong>Groupong>

LSIP

Large-scale integrated project

CCEP

Climate Change and Energy Package

MENA

Middle East and North Africa

CCS

Carbon capture and storage

METI

Ministry ong>ofong> Economy, Trade and Industry

CCS-R

CCS Ready

MMV

Monitoring, measurement and verification

CDM

Clean Development Mechanism

Mtpa

Million tonnes per annum; million tonnes a year

CEM

Clean Energy Ministerial

MW

Megawatt

CER

Certified emission reduction unit

MWe

Megawatts electrical capacity or output

CMP

Conference ong>ofong> ong>theong> Major Parties

MWth

Megawatt ong>theong>rmal

CO 2

Carbon dioxide

NDRC

National Development and Reform Commission

CO 2

-e

CO 2

equivalent

NER

New Entrants’ Reserve

CO2CRC

COP

CPU

Cooperative Research Centre for Greenhouse

Gas Technologies

Conference ong>ofong> Parties

CO 2

purification unit

NGO

NO x

OECD

Non-government organisation

Nitrogen oxides

Organisation for Economic Cooperation

and Development

CSLF

Carbon Sequestration Leadership Forum

PCC

Post-combustion capture

CTL

Coal-to-liquids

psia

Pound-force per square inch absolute

EB

CDM Executive Board

ppm

Parts per million

EC

European Commission

R&D

Research and development

EEPR

EIB

EOR

EPA

EPRI

ETS

EU

FGD

FID

GHG

European Energy Programme for Recovery

European Investment Bank

Enhanced oil recovery

Environmental Protection Agency

Electric Power Research Institute

Emission trading scheme

European Union

Flue gas desulphurisation

Final investment decision

Greenhouse gas

SACCCS

SBSTA

SCR

SNG

SO 2

SO x

TRL

UNFCCC

South African Centre for Carbon Capture

and Storage

Subsidiary Body for Scientific and Technological

Advice

Selective catalytic reduction

Synong>theong>tic natural gas

Sulphur dioxide

Sulphur oxides

Technology readiness level

United Nations Framework Convention on

Climate Change

IEA

IEAGHG

IGCC

IPCC

International Energy Agency

IEA Greenhouse Gas R&D Programme

Integrated gasification combined cycle

Intergovernmental Panel on Climate Change

UNIDO

ZEP

United Nations Industrial Development

Organization

European Technology Platform for

Zero Emission Fossil Fuel Power Plants

vi THE GLOBAL STATUS OF CCS: ong>2011ong>


EXECUTIVE SUMMARY

Carbon capture and storage (CCS) has an essential role in reducing ong>globalong> greenhouse gas emissions. As part ong>ofong>

a portfolio ong>ofong> low-carbon technologies, CCS is needed to stabilise atmospheric greenhouse gas concentrations at

levels consistent with limiting projected temperature rises to 2°C by 2050, as recommended by ong>theong> United Nations

Intergovernmental Panel on Climate Change.

The specific challenge for ong>theong> CCS industry is to demonstrate ong>theong> entire chain at commercial scale—incorporating CO 2

capture from large point sources, CO 2

compression and ong>theong>n transportation and injection into suitable storage sites or

for a use that results in permanent emissions abatement.

Progress is being made

In ong>2011ong> ong>theong> CCS industry exhibited measured progress, with an increase in ong>theong> number ong>ofong> large-scale integrated

projects (LSIPs) in operation or under construction and a clustering ong>ofong> projects around ong>theong> advanced stages ong>ofong>

development planning.

There are eight large-scale projects in operation around ong>theong> world and a furong>theong>r six under construction. Three ong>ofong> ong>theong>se

projects have recently commenced construction. Importantly, ong>theong>se include a second power project, Boundary Dam

in Canada, and ong>theong> first project in ong>theong> United States that will store CO 2

in a deep saline formation, ong>theong> Illinois Industrial

Carbon Capture and Sequestration (ICCS) project.

The total CO 2

storage capacity ong>ofong> all 14 projects in operation or under construction is over 33 million tonnes a year. This is

broadly equivalent to preventing ong>theong> emissions from more than six million cars from entering ong>theong> atmosphere each year.

In ong>theong> Institute’s annual project survey for 2010, ten projects reported that ong>theong>y could be in a position in ong>theong> next

12 months to decide on wheong>theong>r to take a final investment decision (FID) and move into construction. Power generation

projects are prominent in this group and include Project Pioneer in Canada, ong>theong> Texas Clean Energy project in ong>theong>

United States and ong>theong> ROAD project in Europe.

While ong>theong> prospect ong>ofong> a number ong>ofong> power projects moving to a FID in ong>theong> next year is a positive development, this is

contrasted with oong>theong>r high-emitting industries such as iron and steel and cement, where ong>theong>re is a paucity ong>ofong> projects

being planned at large-scale.

In total ong>theong>re are 74 LSIPs recorded in this report, compared with 77 reported in ong>theong> Global Status ong>ofong> CCS: 2010 report.

These CCS projects continue to be concentrated in North America, Europe, Australia and China with few large-scale

projects planned in developing countries. It is vital that ong>theong> lessons learned from demonstration projects in developed

countries are conveyed to developing countries, and that capacity development activities and customised project

support are undertaken so that ong>theong>se countries can eventually deploy CCS.

Factors influencing a project’s success

As with most industrial projects, building a viable business case for a CCS demonstration project is a complex and

time consuming process that requires both ong>theong> project economics and ong>theong> risks to be understood prior to a FID.

All projects in operation use CO 2

separation technology as part ong>ofong> an already established industry process and eiong>theong>r

use CO 2

to generate revenue through enhanced oil recovery (EOR) and/or have access to lower cost storage sites based

on previous resource exploration and existing geologic information sets. Six ong>ofong> ong>theong> eight operating projects are in natural

gas processing, while ong>theong> oong>theong>r two are in synong>theong>tic fuel production and fertiliser production, and five ong>ofong> ong>theong>se projects

use EOR.

A number ong>ofong> projects in operation or under construction are undertaking CCS in response to, or anticipation ong>ofong>,

longer-term climate policies and/or potential carbon ong>ofong>fset markets. While this is promising, developing a business

case is challenging especially when projects do not have access to eiong>theong>r revenue streams, such as EOR or oong>theong>r

opportunities, or where CO 2

capture is not already part ong>ofong> an established industrial process.

EXECUTIVE SUMMARY

vii


There are 11 LSIPs that are considered on-hold or cancelled since ong>theong> Institute’s 2010 report, with eight in ong>theong>

United States and three in Europe. The most frequently cited reason for a project being put on-hold or cancelled

is that it was deemed uneconomic in its current form and policy environment. The lack ong>ofong> financial support to continue

to ong>theong> next stage ong>ofong> project development, and uncertainty regarding carbon abatement policies and regulations were

critical factors that led several project proponents to reprioritise ong>theong>ir investments, eiong>theong>r within ong>theong>ir CCS portfolio

or to alternative technologies.

This clearly indicates that substantial, timely and stable policy support, including a carbon price signal, is needed for

CCS to be demonstrated and ong>theong>n deployed. This support will give industry confidence to continue moving forward

and invest in CCS. In turn, such investment would ensure continuing innovation which will ultimately help to drive

down capital and operating costs.

Both government and ong>theong> private sector have a role in resolving and bringing greater transparency to business case

issues so that ong>theong> demonstration ong>ofong> CCS progresses and associated learnings and benefits are realised.

CCS in ong>theong> power sector

Power generation projects have significant additional costs and risks from scale-up and ong>theong> first-ong>ofong>-a-kind nature ong>ofong>

incorporating capture technology. Electricity markets do not currently support ong>theong>se costs and risks, even where climate

policies and carbon pricing are already enacted. A major cost for CCS is ong>theong> energy penalty or ‘parasitic load’ involved

in applying ong>theong> technologies. Going forward a major emphasis in pre-, post- and oxyfuel combustion capture applied to

power stations (and oong>theong>r industrial applications) is on research into reducing this cost.

Despite ong>theong>se challenges, construction ong>ofong> a post-combustion capture project (Boundary Dam in Canada) and an

integrated gasification combined cycle (IGCC) project (Kemper County) is proceeding. This indicates that ong>theong>

technology risk for ong>theong>se applications is considered manageable and ong>theong> technical barriers are not insurmountable,

if oong>theong>r conditions are right, such as allowance for ong>theong> added cost into ong>theong> rate base and oong>theong>r incentives. Both ong>theong>se

projects received government support and will be selling CO 2

for EOR, thus tapping into anoong>theong>r revenue stream.

They are also demonstrating some elements ong>ofong> risk mitigation in ong>theong> project design, by eiong>theong>r having a relatively low

CO 2

capture rate from ong>theong> flue gas stream (in ong>theong> case ong>ofong> Kemper County) or capturing CO 2

from a relatively small

power unit (in ong>theong> case ong>ofong> Boundary Dam).

It is vital ong>theong>se and oong>theong>r planned demonstration power projects are successful in carrying out CCS on a commercial-scale

and operating in an integrated mode, in real electricity wholesale markets and with storage at sufficient scale to provide

ong>theong> confidence and benchmarks critical for future widespread deployment.

Capture, transport and storage issues

The eight operating CCS projects in ong>theong> natural gas processing, synong>theong>tic fuels and fertiliser production industries

attest to ong>theong> proven nature ong>ofong> ong>theong> capture technology in ong>theong>se applications. As noted above, while ong>theong>re are projects

proceeding to construction in ong>theong> power sector, ong>theong>re is a need for more projects to demonstrate ong>theong> range ong>ofong> possible

capture technologies that could be applied. There have been limited recent developments in iron and steel sector

demonstrations ong>ofong> capture technologies. In ong>theong> cement sector, capture technology is still at an early stage. Both ong>theong>se

industries are major emitters and furong>theong>r developments are expected and necessary.

Pipeline transport ong>ofong> CO 2

is a proven and well developed technology, but it is ong>theong> scale ong>ofong> ong>theong> future CO 2

transport

requirements that will require strong investment support. While pipelines are expected to be a cost-effective transport

solution, with increasing distance and in certain circumstances, shipping can be cost competitive and ong>ofong>fers greater

flexibility to serve multiple CO 2

sources and sinks. Significant economies ong>ofong> scale can result from shared transport

infrastructure, but establishing a network is a large investment that can add considerable risks to early mover projects.

These risks need to be understood, in particular by governments when providing incentives for demonstration.

The operating projects demonstrate storage ong>ofong> CO 2

in both deep saline formations and through EOR, showing that

viable storage is achievable. The storage challenge ahead is with increasing injection volumes, gaining site-specific

experience and with continuing improvements to ong>theong> design and methodologies ong>ofong> measurement, monitoring and

verification ong>ofong> storage in effective and appropriate regulatory environments.

viii THE GLOBAL STATUS OF CCS: ong>2011ong>


Information from project proponents indicates that storage assessment and characterisation requires considerable

investment and can have long lead times ong>ofong> five to 10 years or more for a greenfield storage site, depending on

ong>theong> existing available geologic information about ong>theong> site. Policymakers need to factor ong>theong>se lead times into ong>theong>ir

assessment ong>ofong> a project’s progress. Projects that have not yet commenced active storage assessment may have a

challenge to achieve operation before 2020.

As with storage, public engagement is situation and site specific and on a local level must address all aspects ong>ofong> ong>theong>

project, including its possible and potential impacts and benefits. Project proponents need to continuously review

ong>theong>ir public engagement approach to identify and mitigate potential challenges.

Policy and legal developments

CCS applied in new and large-scale applications is at ong>theong> demonstration phase and requires substantial policy

and financial support. Governments should continue to send strong, consistent and sustained policy signals

(including incentives, legislation and regulatory frameworks) to support this early stage ong>ofong> transitioning towards

commercial deployment. Some project proponents perceive policy uncertainty as a major risk to project

development and it is ong>ofong> particular concern when governments articulate policy intent without implementation.

In ong>theong> past year ong>theong> development ong>ofong> CCS laws and regulations has continued, with a number ong>ofong> jurisdictions

completing framework legislation and commencing implementation ong>ofong> secondary regulations and guidance.

Effective regulatory regimes on a national level play a significant role in ong>theong> development ong>ofong> CCS projects ong>globalong>ly.

Notwithstanding ong>theong>se efforts, project proponents have identified a number ong>ofong> issues that in some cases have yet to

be adequately addressed, including regulation that is incomplete in nature or delayed. A number ong>ofong> proposals,

amendments and review exercises have already been put in motion by regulators and policymakers across several

jurisdictions to address such issues. Wheong>theong>r or not ong>theong>se activities will sufficiently address projects’ concerns will

be an important consideration in ong>theong> forthcoming years.

Many ong>ofong> ong>theong> countries and regions that have been acknowledged as leaders in ong>theong> deployment ong>ofong> laws and regulation for

CCS have continued in ong>theong>se roles. In ong>theong> past year, several European Union Member States, Australia, ong>theong> United States

and Canada have all sustained ong>theong>ir regulatory momentum and delivered a number ong>ofong> new proposals, laws, regulations

and initiatives. The importance ong>ofong> effective regulation has also been recognised by ong>theong> many countries that are to become

ong>theong> second generation ong>ofong> CCS lawmakers. Korea is one such example. While many ong>ofong> ong>theong>se countries have yet to pass

legislation, or complete ong>theong> design ong>ofong> ong>theong>ir regulatory frameworks, it is clear that significant actions are being taken to

facilitate ong>theong>ir development. This is particularly noticeable in a number ong>ofong> developing countries that are keen to integrate

CCS into future climate change mitigation strategies.

This year, ong>theong> Seventeenth session ong>ofong> ong>theong> United Nations Framework Convention on Climate Change (UNFCCC)

Conference ong>ofong> ong>theong> Parties (COP 17) in Durban, South Africa, could see an international framework established that

provides for ong>theong> institutional arrangements ong>ofong> CCS under any future UNFCCC mechanism and/or adopted within

national government policy settings. Inclusion ong>ofong> CCS in ong>theong> Clean Development Mechanism (CDM) or any future

mechanism post ong>theong> Kyoto Protocol’s first commitment period (2008 to 2012) is ong>ofong> particular importance for ong>theong>

future demonstration ong>ofong> ong>theong> technology in developing countries.

Government funding to support large-scale CCS demonstration projects has remained largely unchanged in ong>2011ong>.

In total, approximately US$23.5bn has been made available by governments worldwide. Competitive funding programs

designed to measure and fund ong>theong> ‘gap’ required to make projects financially viable have been widely adopted by

governments internationally. This approach will be taken by ong>theong> European Union’s NER300 program where 13 CCS

projects, togeong>theong>r with 65 innovative renewable projects, were identified as meeting ong>theong> criteria to go forward to ong>theong>

next stage with decisions on funding allocation expected in ong>theong> second half ong>ofong> 2012.

In ong>theong> near-term, government policy and funding levels will impact strongly on ong>theong> rate at which demonstration projects

progress and ong>theong>ir overall viability. For this to be done effectively, ongoing cooperation between government and

industry is required to address ong>theong> complex challenges in establishing early-mover CCS projects. In ong>theong> long-term,

ong>theong> value ong>ofong> CCS demonstration can only be realised and supported through sustained forward looking climate change

policies and carbon-price signals that will underpin ong>theong> future deployment ong>ofong> CCS.

EXECUTIVE SUMMARY

ix


x THE GLOBAL STATUS OF CCS: ong>2011ong>


1

INTRODUCTION

1.1 Scope ong>ofong> this report 2

1.2 The role ong>ofong> CCS in CO 2

emission reductions 3

1.3 What is CCS 5


1 INTRODUCTION

1.1 Scope ong>ofong> this report

Technologies that prevent or minimise carbon dioxide (CO 2

) being emitted into ong>theong> atmosphere from ong>theong> production

or use ong>ofong> fossil fuels could potentially play a major role in overall efforts to limit greenhouse gas (GHG) emissions.

Significant effort is being put into research and development (R&D) ong>ofong> carbon capture and storage (CCS) technologies,

and governments around ong>theong> world have committed funds to assist in demonstrating CCS technologies at large scale.

Such large-scale demonstration, across a range ong>ofong> technologies and in different operating environments, is a necessary

precursor to commercial deployment ong>ofong> CCS.

This report aims to provide a ong>globalong> overview ong>ofong> ong>theong> current ong>statusong> ong>ofong> CCS projects that are intended to demonstrate

ong>theong> technology at large scale. The spread ong>ofong> projects across industries and countries is detailed, in addition to ong>theong>

gaps in large-scale demonstration efforts.

There are different technologies being developed and planned to be demonstrated at each stage ong>ofong> ong>theong> CCS chain

– capture, transport, and storage or use. The current state ong>ofong> development ong>ofong> ong>theong>se various technologies is also

summarised, along with ong>theong> priorities for future research or demonstration efforts.

Demonstration ong>ofong> CCS depends not only on technology, but also on adequate funding and oong>theong>r government support,

financing and commercial considerations around building a business case for CCS, public acceptance, and ong>theong> existence

ong>ofong> a policy, legal and regulatory environment conducive to large-scale and long-term investments. All ong>ofong> ong>theong>se factors

are covered.

Drawing on this overview ong>ofong> ong>theong> ong>statusong> ong>ofong> ong>theong> technology and ong>theong> underlying policy and business environment, this report

also addresses ong>theong> factors needed for CCS to play its part in meeting CO 2

reduction targets. It is becoming apparent that

a key constraint to ong>theong> large-scale demonstration ong>ofong> CCS is not ong>theong> level ong>ofong> technology development, but ong>theong> existence

ong>ofong> issues such as inadequate financial support to continue to ong>theong> next stage ong>ofong> project development and uncertainty

regarding carbon abatement policies in key jurisdictions, which acts to constrain investment decisions. This report draws

out ong>theong>se issues.

The remainder ong>ofong> this chapter provides a brief background on ong>theong> potential role for CCS in GHG emission reduction

efforts, a basic overview ong>ofong> ong>theong> technology, and an indication ong>ofong> how CCS costs compare with those ong>ofong> oong>theong>r technologies

in ong>theong> electric-power generation sector, which is where ong>theong> bulk ong>ofong> eventual CCS deployment is expected to occur.

Chapter 2 discusses ong>theong> current ong>statusong> ong>ofong> large-scale integrated projects (LSIPs), ong>theong> projects that are intended to

demonstrate CCS at a scale necessary for eventual commercial deployment, and which include integrated projects

combining capture, transport, and storage or use ong>ofong> CO 2

. Changes in ong>theong> nature and number ong>ofong> such projects since

ong>theong> previous Status Reports (WorleyParsons et al. 2009; Global CCS Institute ong>2011ong>a) are explained. The characteristics

and distribution ong>ofong> projects by country, industry, stage ong>ofong> development and technology type are described.

In chapter 3, ong>theong> different components ong>ofong> ong>theong> CCS chain are separately described and discussed. It is important for

project proponents and governments to understand not only ong>theong> state ong>ofong> development ong>ofong> ong>theong> individual technologies

that make up CCS, but also ong>theong> considerations around linking ong>theong> different components into integrated projects.

This chapter concludes with a discussion ong>ofong> ong>theong> current understanding ong>ofong> ong>theong> costs ong>ofong> CCS technologies.

Chapter 4 outlines recent developments in government policy, law, legislation and regulation affecting CCS. In ong>theong> case

ong>ofong> policy, this not only includes developments specific to CCS, but also in ong>theong> broader climate change, energy and

innovation policy arenas. A summary is provided ong>ofong> funding and oong>theong>r financial incentives and support available for

projects. Finally, given ong>theong> importance ong>ofong> public awareness and acceptance ong>ofong> CCS as a new technology, ong>theong> chapter

includes a brief discussion ong>ofong> issues around public engagement.

The report concludes with some observations on ong>theong> current business case for CCS, and ong>theong> steps needed to facilitate

furong>theong>r projects entering construction or operation.

2 THE GLOBAL STATUS OF CCS: ong>2011ong>


1.2 The role ong>ofong> CCS in CO 2

emission reductions

Anthropogenic CO 2

emissions have increased greatly over ong>theong> past 150 years or so, leading to significantly increased

atmospheric concentrations ong>ofong> ong>theong> gas (Figure 1). Associated with this increase has been a significant rise in average

ong>globalong> temperatures.

Figure 1 Global CO 2

atmospheric concentrations and temperature

Atmospheric CO ²

concentrations (ppm)

400

380

360

340

320

300

280

260

240

220

200

-1.0

1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Year

CO 2

(LHS)

Sources: Data from Brohan et al. (2006), MacFarling et al. (2006), Tans and Keeling (ong>2011ong>)

Temperature (RHS)

In 2010, ong>theong> United Nations Framework Convention on Climate Change (UNFCCC) Conference ong>ofong> Parties 16 (COP 16)

approved a non-legally binding commitment to cap ong>globalong> average temperature rises to 2°C. A 2°C rise is considered

consistent with capping atmospheric CO 2

equivalent (CO 2

-e) concentration levels to 450 parts per million (ppm) by 2050

(IPCC 2007). The recorded mean level ong>ofong> ong>globalong> CO 2

in ong>theong> atmosphere for 2010 measured at ong>theong> Mauna Loa Observatory

in Hawaii was 390ppm, with an increase ong>ofong> 2.42ppm for that year (ESRL ong>2011ong>). CO 2

emissions are ong>theong> chief contributor to

ong>theong> current approximate CO 2

-e level ong>ofong> 430ppm, which is only 20ppm away from ong>theong> recommended target ong>ofong> 450ppm.

On current projections, by 2050 CO 2

emissions must reduce significantly below not only ‘business as usual’ levels,

but also current levels in order to reach ong>theong> cap ong>ofong> 450ppm. This particularly applies to emissions ong>ofong> CO 2

resulting from

ong>theong> use ong>ofong> fossil fuels – coal, oil and natural gas.

Energy emission scenarios developed by ong>theong> International Energy Agency (IEA 2010a) give a least cost GHG emissions

reduction pathway (Figure 2). The IEA demonstrates that a portfolio ong>ofong> low-carbon technologies is needed to reduce

emissions to half ong>theong>ir current levels by 2050. Among ong>theong>se technologies are energy efficiency gains, renewables,

fuel switching and nuclear. The next ten years will see ong>theong> majority ong>ofong> ong>theong> most cost-effective reductions coming from

energy efficiency. After ong>theong>n, renewable technology starts taking a more significant role, with most ong>ofong> ong>theong> increased

growth in deployment projected to come from emerging energy technologies such as wind, solar (both photovoltaic

and ong>theong>rmal systems), biomass, and to a lesser extent geoong>theong>rmal.

0.6

0.4

0.2

0.0

-0.2

-0.4

-0.6

-0.8

Global temperature anomaly (°C)

INTRODUCTION

3CHAPTER 1


Figure 2 Global CO 2

emissions and GHG emission reductions

Gt CO 2

60

55

50

45

40

35

30

25

20

15

10

5

WEO 2009 450 ppm case

Baseline emissions 57 Gt

BLUE Map emissions 14 Gt

ETP2010 analysis

2010 2015 2020 2025 2030 2035 2040 2045 2050

Year

CCS 19%

Renewables 17%

Nuclear 6%

Power generation efficiency and fuel switching 5%

End-use fuel switching 15%

End-use fuel and electricity efficiency 38%

Source: IEA (2010a, p75)

Between 2025 and 2030, while ong>theong>re is continuing rapid growth in ong>theong> deployment ong>ofong> renewable technologies and in

energy end-use efficiency gains, ong>theong> IEA least cost scenario also has a rapidly increasing role for CCS. Once ong>theong> lower

cost options for energy efficiency and renewable technologies have been pursued, CCS becomes more competitive.

By 2050 ong>theong> IEA scenario has CCS contributing 19 per cent ong>ofong> least cost emission reductions. This contribution is more

than from renewables and more than triple ong>theong> contribution from nuclear.

Any major GHG abatement effort will add a significant cost challenge to current and future energy generation,

energy intensive industries and GHG emitting projects and investments. However, ong>theong> IEA estimates that without CCS,

achieving a 50 per cent emission reduction by 2050 would cost 70 per cent more than if CCS is included.

To understand this result, it is useful to look at ong>theong> current costs ong>ofong> CCS relative to oong>theong>r low-carbon technologies,

particularly in ong>theong> electric power generation sector.

Relative costs ong>ofong> CCS

Many ong>ofong> ong>theong> low-carbon technologies that will be required in coming decades are at an early stage ong>ofong> development or

deployment, and significant effort will need to be put into R&D and demonstration to both prove ong>theong>ir capability and

reduce costs. For some industrial processes which produce CO 2

, ong>theong>re are currently very few options available to reduce

or abate emissions. Adequate pricing ong>ofong> emissions to reflect ong>theong> environmental impacts ong>ofong> CO 2

or oong>theong>r GHGs would

assist in ong>theong> R&D, demonstration and ultimate deployment ong>ofong> all emission-reduction technologies.

To present a comparison ong>ofong> low-carbon technology costs in ong>theong> electric power sector, ong>theong> Institute (ong>2011ong>b) has undertaken

a review ong>ofong> studies around technology costs by ong>theong> IEA (2010b), IPCC (ong>2011ong>), United States Energy Information

Administration (EIA ong>2011ong>), United States Department ong>ofong> Energy National Renewable Energy Laboratory (DOE NREL

2010), DOE National Energy Technology Laboratory (NETL 2010), and WorleyParsons (ong>2011ong>). As ong>theong>se studies each

use differing methodologies and assumptions regarding key economic and technology criteria, care has been taken

to compare ong>theong> data on ong>theong> same economic basis and similar resource quality.

The technologies that are expected to provide most ong>ofong> ong>theong> future abatement in ong>theong> power sector have relatively high costs

(Figure 3). For most ong>ofong> ong>theong> emerging technologies applied at large scale, particularly CCS and ong>theong> solar technologies, ong>theong> costs

are expected to decline, possibly substantially, with increased efforts in innovation. For commercially mature technologies, such

as wind and nuclear, any cost reductions that can be achieved are not expected to match those ong>ofong> ong>theong> emerging technologies.

This analysis shows that for avoiding CO 2

emissions, CCS is a cost-competitive technology with oong>theong>r future large-scale

abatement options in ong>theong> electric-power generation sector. For example, ong>theong> CO 2

avoided costs for CCS used in coal-based

generation and natural gas-fired generation range from US$68 to US$123 per tonne, and US$108 to US$224 per tonne,

respectively. In contrast, solar photovoltaic (PV) and solar ong>theong>rmal systems have cost ong>ofong> CO 2

avoided ranging from US$184

to US$307 per tonne, and from US$219 to US$273 per tonne, respectively.

4 THE GLOBAL STATUS OF CCS: ong>2011ong>


Figure 3 Avoided costs ong>ofong> CO 2

by technology in ong>theong> power sector 1

US$ per tonne CO 2

350

300

250

200

150

100

50

0

-50

Geoong>theong>rmal

Hydropower

Wind onshore

Nuclear

Biomass

CCS (coal)

Wind ong>ofong>fshore

CCS (natural gas)

Solar ong>theong>rmal

1 The costs presented in this chart are for technologies operating in ong>theong> United States, and have been derived by ong>theong> Institute based on

reviewing a range ong>ofong> studies. Technology costs vary regionally due to a range ong>ofong> local factors including resource availability, as well as ong>theong>

costs ong>ofong> labour and capital inputs. Also, some options are very site specific (for example geoong>theong>rmal and hydropower).

Source: Global CCS Institute (ong>2011ong>b), data from IEA (2010b), IPCC (ong>2011ong>), EIA (ong>2011ong>), DOE NREL (2010), DOE NETL (2010a), and WorleyParsons (ong>2011ong>)

1.3 What is CCS

CCS is a technology that can reduce ong>theong> amount ong>ofong> CO 2

released into ong>theong> atmosphere from ong>theong> use ong>ofong> fossil fuel in

power plants and oong>theong>r industries. CCS involves:

••

collecting or capturing ong>theong> CO 2

produced at large industrial plants using fossil fuel (coal, oil and gas) or oong>theong>r

carboniferous fuels (such as biomass);

••

transportation ong>ofong> ong>theong> CO 2

to a suitable storage site; and

••

pumping it deep underground into rock to be securely and permanently stored away from ong>theong> atmosphere.

Capturing ong>theong> CO 2

Capturing CO 2

emissions from industrial processes is easiest at large industrial plants where CO 2

-rich flue gas can be

captured at ong>theong> facility. The separation ong>ofong> CO 2

is already performed in a number ong>ofong> industries as part ong>ofong> ong>theong> standard

industrial process. For example, in natural gas production, CO 2

needs to be separated from ong>theong> natural gas during

processing. Similarly, in industrial plants that produce ammonia or hydrogen, CO 2

is removed as part ong>ofong> ong>theong> production

process.

As ong>theong> largest contribution to CO 2

emissions is from ong>theong> burning ong>ofong> fossil fuel, particularly in producing electricity,

three main processes are being developed to capture CO 2

from power plants that use coal or gas. These are:

••

post-combustion capture;

••

pre-combustion capture; and

••

oxyfuel combustion capture.

Furong>theong>r details ong>ofong> ong>theong>se capture processes and ong>theong>ir current state ong>ofong> development is provided in section 3.1.

Solar PV

INTRODUCTION

5CHAPTER 1


In oong>theong>r industries, such as in oil refining and cement production, capture processes have not yet been demonstrated

at a large enough scale, but in most cases existing capture methods can be tailored to suit particular production

processes. For instance, capture ong>ofong> CO 2

in oil refineries could use post-combustion technology and cement plants may

utilise oxyfuel combustion technology. In addition, tailored capture methods are being developed specifically for iron

and steel manufacturing.

Transporting ong>theong> CO 2

Once separated from oong>theong>r components ong>ofong> ong>theong> flue gas, CO 2

is compressed to make it suitable to transport and store.

It is ong>theong>n transported to a suitable storage site. Today, CO 2

is already being transported by pipeline, by ship and by

road tanker — primarily for use in industry or to recover more oil and gas from hydrocarbon fields. The scale ong>ofong>

transportation required for widespread deployment ong>ofong> CCS is far more significant than at present, and will involve

ong>theong> transportation ong>ofong> pure or nearly pure CO 2

in a dense phase.

Storing ong>theong> CO 2

The final stage ong>ofong> ong>theong> CCS process sees CO 2

injected into deep underground rock formations, ong>ofong>ten at depths ong>ofong> one

kilometre or more. At this depth, ong>theong> temperature and pressure keep ong>theong> CO 2

as a dense fluid. The CO 2

slowly moves

through ong>theong> porous rock, filling ong>theong> tiny spaces known as pore space. Appropriate storage sites include depleted oil

fields, depleted gas fields, or rocks which contain water (saline formations) (Figure 4). These storage sites generally

have an impermeable rock (also known as a ‘seal’) above ong>theong>m. The seal and oong>theong>r geological features prevent CO 2

from returning to ong>theong> surface.

Such sites have securely contained fluids and gases (such as oil, natural gas, and naturally occurring CO 2

) for millions ong>ofong>

years, and with careful selection, ong>theong>y are expected to securely store injected CO 2

for just as long. Once injected, a range

ong>ofong> sensing technologies is used to monitor ong>theong> movement ong>ofong> CO 2

within ong>theong> rock formations. Monitoring, measurement and

verification (MMV) processes are important to assure ong>theong> public and regulators that ong>theong> CO 2

is safely stored.

It is also possible to use ong>theong> CO 2

in industrial applications, however any use ong>ofong> CO 2

must result in permanent storage or

it will not contribute to GHG mitigation.

Figure 4 Geological storage options for CO 2

Image courtesy ong>ofong> ong>theong> CO2CRC

6 THE GLOBAL STATUS OF CCS: ong>2011ong>


2

PROJECTS

2.1 Key project developments 8

2.2 Detailed project breakdown 15


2 PROJECTS

KEY MESSAGES

• Overall ong>theong> CCS industry exhibits measured progress over ong>theong> past year with one project completing

construction and moving into operation, anoong>theong>r three projects entering construction and a clustering

ong>ofong> projects in advanced stages ong>ofong> development planning.

• Of ong>theong> 74 large-scale integrated CCS projects around ong>theong> world, 14 projects are eiong>theong>r in operation or

construction and have a total CO 2

storage capacity ong>ofong> over 33 million tonnes a year.

• A second power project, in addition to Kemper County in ong>theong> United States, is now under construction,

being Boundary Dam in Canada. The United States also has its first project under construction that

will store CO 2

in a deep saline formation, being ong>theong> Illinois Industrial Carbon Capture and Sequestration

(ICCS) project.

• A number ong>ofong> projects in advanced stages ong>ofong> development planning, including several power plants,

indicated in ong>theong> Institute’s ong>2011ong> annual project survey that ong>theong>y could be in a position in ong>theong> next

12 months to decide on wheong>theong>r to take a final investment decision.

• There remains a paucity ong>ofong> large-scale demonstration projects under development in ong>theong> iron and steel,

cement and oong>theong>r high emitting industries where CCS needs to be applied.

This chapter provides an overview ong>ofong> ong>theong> ong>globalong> ong>statusong> ong>ofong> LSIPs, and is based largely on ong>theong> Institute’s annual survey

undertaken in May-August ong>2011ong> (Appendix A). A detailed assessment ong>ofong> LSIP ong>statusong> is provided, including analysis ong>ofong>

project dynamics, challenges and opportunities. The assessment includes comparisons with ong>theong> Institute’s 2010 and

2009 Status Reports (Global CCS Institute ong>2011ong>a, WorleyParsons et al. 2009).

LSIPs are defined as those which involve ong>theong> capture, transport and storage ong>ofong> CO 2

at a scale ong>ofong>:

••

not less than 800 000 tonnes ong>ofong> CO 2

annually for a coal-based power plant; and

••

not less than 400 000 tonnes ong>ofong> CO 2

annually for oong>theong>r emission-intensive industrial facilities

(including natural gas-based power generation).

There are many more projects around ong>theong> world which are ong>ofong> a smaller scale or only focus on part ong>ofong> ong>theong> CCS

chain. These projects are important for R&D, demonstrating individual elements ong>ofong> CCS, or building local capacity.

However, if CCS is to play a substantial role in ong>globalong> GHG reduction, ong>theong>n it is essential to demonstrate and deploy

large-scale projects that involve all parts ong>ofong> ong>theong> CCS chain from capture through to permanent storage or oong>theong>r

sequestration. For this reason ong>theong> Institute’s project survey focuses on LSIPs.

2.1 Key project developments

The Institute has listed 74 LSIPs across ong>theong> world in ong>2011ong> (Figure 5). This is a small net reduction ong>ofong> three projects

from ong>theong> 2010 report but remains above ong>theong> 64 LSIPs reported in ong>theong> inaugural 2009 report (Figure 6). An explanation

ong>ofong> ong>theong> Asset Lifecycle Model used to classify ong>theong> stage ong>ofong> development ong>ofong> LSIPs is in Appendix B. The full project listing

is provided in Appendix C.

8 THE GLOBAL STATUS OF CCS: ong>2011ong>


Figure 5 LSIPs by asset lifecycle and region/country

Number ong>ofong> projects

30

25

20

15

10

CHAPTER 2

5

Identify Evaluate Define Execute Operate

Total

United States

Europe

Australia and New Zealand

Canada

China

Middle East

Oong>theong>r Asia

Africa

Total

1 8 9 3 4 25

1 9 9 0 2 21

1 5 0 1 0 7

0 2 4 2 1 9

4 2 0 0 0 6

0 1 2 0 0 3

1 1 0 0 0 2

0 0 0 0 1 1

8 28 24 6 8 74

Figure 6 LSIPs by asset lifecycle and year

Operate

Execute

De ne

Evaluate

Identify

Number ong>ofong> projects

5 10 15 20 25 30

ong>2011ong> 2010 2009

The most significant recent developments in ong>theong> movement ong>ofong> projects through ong>theong> development stages are:

••

The first gas processing train ong>ofong> ong>theong> Century Plant in Texas moved into ong>theong> Operate stage in late 2010. This

first train has a CO 2

capture capacity ong>ofong> around five million tonnes per annum (Mtpa). A second train is under

construction and is expected to be operational in 2012, incorporating additional CO 2

capture potential ong>ofong> around

3.5Mtpa. Note that this addition to ong>theong> Operate stage does not result in a net change in ong>theong> number ong>ofong> projects in

this stage from ong>theong> 2010 report. This is because ong>theong> previously included Rangely and Salt Creek (EOR) projects

are now represented by ong>theong>ir shared capture source, ong>theong> Shute Creek Gas Processing Facility.

• • The number ong>ofong> projects in ong>theong> Execute stage increased from two in 2009 to four in 2010 and is now at six in

ong>2011ong> (Figure 6). The most recent additions to ong>theong> Execute stage include ong>theong> Boundary Dam power project in

Canada, ong>theong> Illinois Industrial Carbon Capture and Separation (ICCS) project and ong>theong> Lost Cabin Gas Plant,

both in ong>theong> United States.

PROJECTS

9


••

Ten projects in ong>theong> Define stage have indicated ong>theong>y could be in a position within ong>theong> next 12 months to decide

wheong>theong>r to take a positive FID and thus move into ong>theong> Execute stage (Figure 7). Power generation projects are

prominent in this group and include ong>theong> ROAD project in Europe, Project Pioneer in Canada and ong>theong> Texas Clean

Energy project in ong>theong> United States. The CCS component ong>ofong> ong>theong>se power projects, togeong>theong>r with ong>theong> Kemper County

integrated gasification combined cycle (IGCC) and ong>theong> Boundary Dam projects already in ong>theong> Execute stage, is being

underpinned by broad government support, especially capital grants. The North American capture projects in this

group also demonstrate ong>theong> importance ong>ofong> multiple revenue sources [and especially ong>theong> reuse ong>ofong> CO 2

for enhanced

oil recovery (EOR) purposes] in providing a driver for development.

••

While ong>theong> prospect ong>ofong> a number ong>ofong> power projects potentially moving to a FID in ong>theong> next year is a positive

development, this is contrasted with oong>theong>r high-emitting industries such as iron and steel, for example, where ong>theong>re

is a paucity ong>ofong> projects at large-scale. This lack ong>ofong> representation is ong>theong> result ong>ofong> a combination ong>ofong> factors, including

higher government funding allocations to power generation and weak economic conditions in many countries

forcing a focus on core business prong>ofong>itability.

••

The low number ong>ofong> projects in ong>theong> Identify stage should not necessarily be viewed as an adverse development.

Some projects are advancing through ong>theong> asset lifecycle, moving out ong>ofong> ong>theong> Identify stage. At ong>theong> same time,

CCS at large-scale in key sectors such as power, iron and steel and cement making is not yet in a situation

where ong>theong> project development funnel is constantly being replenished. This would require continuing infusions

ong>ofong> significant government financial support.

Figure 7 Timing ong>ofong> FID ong>ofong> LSIPs in ong>theong> Define and Evaluate stages 1

Number ong>ofong> projects

10

9

8

7

6

5

4

3

2

1

0

Define

Evaluate

Define

Evaluate

Define

Evaluate

≤ 12 months 13-24 months > 24 months

Estimated time to a final investment decision

1 Responses were received from 24 out ong>ofong> ong>theong> 52 projects in Evaluate or Define stages.

Table 1 lists ong>theong> 14 projects in ong>theong> Operate and Execute stages. The total CO 2

storage capacity ong>ofong> all ong>theong>se projects

combined is over 33Mtpa. This is equivalent to preventing ong>theong> emissions from more than six million cars from

entering ong>theong> atmosphere each year and shows ong>theong> significant contribution that CCS can make to reduce GHGs

(conversion factor from US Environmental Protection Agency (EPA), website cited July ong>2011ong>).

10 THE GLOBAL STATUS OF CCS: ong>2011ong>


Nearly all ong>ofong> ong>theong> operating or committed capture projects listed in Table 1 are eiong>theong>r CO 2

EOR related and/or based

on gas processing (ong>theong> sole exception is ong>theong> Illinois-ICCS project though it has indicated that after a period ong>ofong> storage in a

deep saline formation, revenue opportunities from CO 2

for EOR will be sought). This illustrates ong>theong> challenge that presently

confronts projects which do not have access to eiong>theong>r EOR revenues and/or capture which is already part ong>ofong> ong>theong> industrial

process, such as in gas processing. This point is particularly pertinent in jurisdictions with less mature national carbon

legislation. Should opportunities for tertiary hydrocarbon production be available, many ong>ofong> ong>theong> large-scale early mover

capture projects are likely to include CO 2

for EOR to support a positive business case.

CO 2

EOR systems act as a substitute for exploration and development drilling to increase proved oil reserves, especially in ong>theong>

United States. The increasing prevalence ong>ofong> this practice has attracted a range ong>ofong> oil and gas companies, pipeline operators

and CO 2

source companies to forge mutually attractive business opportunities. This momentum will continue in ong>theong>

United States as long as ‘CO 2

EOR suitable’ fields are available and oil prices remain at ong>theong> levels that encourage such

investments. Over ong>theong> past few years, companies such as Denbury and Kinder Morgan have built a strong portfolio ong>ofong> CO 2

sources, pipelines and EOR fields in ong>theong> United States and opportunities for expansion are emphasised in investor briefings.

CHAPTER 2

Table 1 LSIPs in ong>theong> Operate and Execute stages

NAME LOCATION CAPTURE TYPE

VOLUME CO 2

(MTPA)

STORAGE

TYPE

DATE OF

OPERATION

Operate stage

Shute Creek Gas Processing

Facility

United States

Pre-combustion

(gas processing)

7 EOR 1986

Sleipner CO 2

Injection Norway Pre-combustion

(gas processing)

1 Deep saline

formation

1996

Val Verde Natural Gas Plants United States Pre-combustion

(gas processing)

1.3 1 EOR 1972

Great Plains Synfuels Plant

and Weyburn-Midale Project

United States/

Canada

Pre-combustion

(synfuels)

3 EOR with

MMV

2000

Enid Fertilizer Plant United States Pre-combustion

(fertiliser)

0.7 EOR 1982

In Salah CO 2

Storage Algeria Pre-combustion

(gas processing)

Snøhvit CO 2

Injection Norway Pre-combustion

(gas processing)

1 Deep saline

formation

0.7 Deep saline

formation

2004

2008

Century Plant United States Pre-combustion

(gas processing)

5 (and 3.5 in EOR 2010

construction) 2

Execute stage

Lost Cabin Gas Plant United States Pre-combustion

(gas processing)

1 EOR 2012

Illinois Industrial Carbon Capture

and Sequestration (ICCS) Project

United States

Industrial

(ethanol production)

1 Deep saline

formation

2013

Boundary Dam with CCS

Demonstration

Canada

Post-combustion

(power)

1 EOR 2014

Agrium CO 2

Capture with ACTL Canada Pre-combustion

(fertiliser)

Kemper County IGCC Project United States Pre-combustion

(power)

0.6 EOR 2014

3.5 EOR 2014

Gorgon Carbon Dioxide

Injection Project

Australia

Pre-combustion

(gas processing)

3.4-4 3 Deep saline

formation

2015

1 The Institute understands that part ong>ofong> ong>theong> natural gas supply to ong>theong> Val Verde Natural Gas Plants has been diverted to ong>theong> Century Plant.

At ong>theong> time ong>ofong> publication, ong>theong> Institute is determining ong>theong> impact, if any, this diversion has had on CO 2

capture from Val Verde.

2 All charts and calculations using CO 2

volumes have used 5Mtpa for ong>theong> Operate stage and 3.5Mtpa for ong>theong> Execute stage.

3 3.4Mtpa has been used for all charts and calculations using CO 2

volume values.

PROJECTS

11


Of ong>theong> 14 projects in ong>theong> Operate and Execute stages, ong>theong>re are six projects considered ‘full’ CCS projects in that ong>theong>y

demonstrate ong>theong> capture, transport and permanent storage ong>ofong> CO 2

utilising sufficient MMV systems and processes to

demonstrate permanent storage – Sleipner, Great Plains/Weyburn-Midale, In Salah, Snøhvit, Illinois-ICCS and Gorgon.

These six projects are those listed in Table 1 as using deep saline formations for storage, and those using EOR with

MMV. The remaining projects exhibit ong>theong> capture, transport and injection ong>ofong> CO 2

but would need to implement furong>theong>r

MMV systems and processes to be consistent with ong>theong> demonstration ong>ofong> permanent storage. Similar needs exist for

enhancement around ong>theong> implementation ong>ofong> adequate MMV systems for many ong>ofong> ong>theong> projects in ong>theong> development

planning stages.

The operating or under construction projects which do not include ong>theong> full MMV regime demonstrating permanent

storage are included in ong>theong> Institute’s listing because experience, especially from ong>theong> capture element, can critically

inform future developments. The capture element ong>ofong> CCS projects is usually by far ong>theong> largest absolute cost component

ong>ofong> CCS demonstration. It is where ong>theong> need for cost reduction and production learning efficiencies are greatest.

That two power projects have moved into ong>theong> Execute stage and several oong>theong>rs are close to being in a position to decide

wheong>theong>r to take a FID represents a significant milestone for ong>theong> large-scale demonstration ong>ofong> capture technology.

For many ong>ofong> ong>theong>se power projects, CO 2

for EOR purposes (and, in some cases, oong>theong>r additional revenue sources)

is currently an important part ong>ofong> ong>theong> business case for proceeding.

Learnings do not just come from ong>theong> capture elements. The four decades ong>ofong> CO 2

EOR operating experience in ong>theong>

United States (and, more recently, from elsewhere) has developed a set ong>ofong> tools, techniques and experiences that can

be adapted to oong>theong>r storage options being pursued. These include some ong>ofong> ong>theong> workflows for site characterisation,

injection and well integrity guidance, detailed predictive reservoir simulation models and a range ong>ofong> monitoring

techniques during and after CO 2

injection operations.

CO 2

EOR experience is ong>theong>refore best viewed as providing an initial ‘facilitator’ role in ong>theong> demonstration ong>ofong> CCS in

regions with EOR potential. This role, coupled with MMV ong>ofong> injected CO 2

, is important to ong>theong> establishment ong>ofong> practical

legal and regulatory regimes, to fostering community acceptance and to demonstrate permanent storage. These issues

were explored in a recent Institute report on CO 2

use (Global CCS Institute and Parsons Brinckerhong>ofong>f ong>2011ong>).

The eight operating CCS projects in ong>theong> natural gas and chemical processing industries attest to ong>theong> proven nature ong>ofong>

capture technology in ong>theong>se applications. In ong>theong> power sector, despite ong>theong> challenges ong>ofong> scale-up and improving ong>theong> energy

efficiency ong>ofong> ong>theong> capture process, construction ong>ofong> a post-combustion capture project (Boundary Dam) and an IGCC project

(Kemper County) is proceeding. This indicates that ong>theong> technology risk for ong>theong>se applications is considered manageable

and ong>theong> technical barriers are not insurmountable. Similarly, ong>theong> operating projects demonstrate storage ong>ofong> CO 2

in deep

saline formations and EOR, showing that storage is safe and achievable. The storage challenge ahead is with increasing

injection volumes, gaining site-specific experience and with continuing improvements to MMV in effective and appropriate

regulatory environments.

While ‘measured progress’ provides an overarching description ong>ofong> ong>theong> ong>globalong> momentum ong>ofong> CCS at large-scale, project

developments and policy and business settings have distinct regional differences. These regional characteristics can

be summarised as:

••

Canada – robust progress under supportive settings;

••

United States – where CO 2

separation inherent to an industrial process combines with opportunities for CO 2

reuse,

specifically for EOR, CCS project opportunities are forthcoming. However, in ong>theong> absence ong>ofong> a national carbon

abatement mandate, ong>theong> prospects for power generation and coal gasification projects are now less certain than

in 2008 or 2009 even with significant government funding in place;

••

Europe – prospects are focused around ong>theong> outcome ong>ofong> ong>theong> present New Entrants’ Reserve (NER300)

funding round, for which results are expected in ong>theong> second half ong>ofong> 2012;

••

Australia – a focus on storage characterisation among all projects that qualify under ong>theong> government’s CCS

Flagships Program;

••

China – a focus on domestic research and development into CCS technologies, with particular emphasis on

CO 2

utilisation; and

• • Middle East and North Africa (MENA) – few projects at present but promising longer term opportunities,

particularly utilising CO 2

for EOR.

12 THE GLOBAL STATUS OF CCS: ong>2011ong>


LSIP changes in ong>2011ong>

There are 11 LSIPs that are considered on-hold or cancelled since ong>theong> 2010 Status Report, with eight in ong>theong> United States

and three in Europe (Figure 8). A full reconciliation ong>ofong> project changes since ong>theong> 2010 report, including recent name

changes, is at Appendix D.

The most frequently cited reason for a project being put on-hold or cancelled is that it was deemed uneconomic in its

current form and policy environment. The lack ong>ofong> financial support to continue to ong>theong> next stage ong>ofong> project development

and uncertainty regarding carbon abatement policies were critical factors that led several project proponents to

reprioritise ong>theong>ir investments, eiong>theong>r within ong>theong>ir CCS portfolio or to alternative technologies. For example, Shell cancelled

ong>theong> Shell CO 2

project in Mississippi in order to focus on developing its Quest project in Canada (which is in ong>theong> Define

stage). Rio Tinto decided to convert its Lynemouth power plant in ong>theong> United Kingdom (previously defined within ong>theong>

North East CCS Cluster) to biomass instead ong>ofong> retrong>ofong>itting it with CCS at this time.

In ong>theong> United States, both ong>theong> Boise White Paper Mill and CEMEX cement projects were put on-hold after failing to

be selected for ong>theong> second phase ong>ofong> funding by ong>theong> United States DOE. As a result ong>theong>re are currently no large-scale

CCS projects being developed in ong>theong> pulp and paper or cement industries anywhere in ong>theong> world. In ong>theong> case ong>ofong> ong>theong>

Mountaineer power project, American Electric Power cited regulatory and policy uncertainties as key factors contributing

to its decision not to progress to ong>theong> Execute stage.

CHAPTER 2

Figure 8 Changes in LSIPs from 2010 to ong>2011ong>

Number ong>ofong> projects

80

75

70

65

60

77

-3

-8 +8

(0)

74

55

50

45

40

35

30

25

20

15

10

5

2010 projects Cancelled On-hold Reclassifications Newly identified ong>2011ong> projects

PROJECTS

13


There are eight newly identified large-scale CCS projects:

1. Medicine Bow Coal-to-Liquids (CTL) Facility (United States – Define stage) – a coal-to-transport fuels plant in

Wyoming developed by Medicine Bow Fuel and Power LLC that proposes to capture up to 3.6Mtpa ong>ofong> CO 2

for EOR.

2. Kentucky NewGas (United States – Evaluate stage) – a coal gasification synong>theong>tic natural gas (SNG) plant jointly

developed by ConocoPhillips and Peabody Energy, aiming to capture up to 5Mtpa for storage in an onshore

saline formation.

3. Riley Ridge Gas Plant (United States – Evaluate stage) – a gas processing project being developed by Denbury

that will capture around 2.5Mtpa ong>ofong> CO 2

for EOR.

4. UK Oxy CCS Demo (United Kingdom – Evaluate stage) – a new build oxy-fired power plant in North Yorkshire

developed by Alstom UK Ltd, Drax Power Ltd and National Grid plc, aiming at capturing 2Mtpa ong>ofong> CO 2

for storage

in an ong>ofong>fshore saline formation.

5. C.GEN North Killingholme Power (United Kingdom – Evaluate stage) – a new build IGCC power plant developed by

C.GEN and based in North Lincolnshire that plans to capture over 2.5Mtpa ong>ofong> CO 2

for storage in an ong>ofong>fshore saline

formation.

6. Pegasus Rotterdam (Neong>theong>rlands – Evaluate stage) – a new build oxyfuel natural gas-fired combustor (340MWe),

to be developed by SEQ International BV as part ong>ofong> ong>theong> Rotterdam Climate Initiative (RCI), capturing 2.5Mtpa ong>ofong> CO 2

for storage in an ong>ofong>fshore depleted oil and gas reservoir.

7. Maritsa TPP CCS (Bulgaria – Identify stage) – a retrong>ofong>it power project aiming to capture 2.5Mtpa ong>ofong> CO 2

for storage

in a deep saline formation.

8. Sinopec Shengli Oil Field EOR (China – Evaluate stage) – with plans to capture 1Mtpa CO 2

from ong>theong> Shengli Power

Plant and transport it to ong>theong> Shengli Oil Field for EOR.

There have also been a number ong>ofong> project reclassifications (Appendix D). The key classification changes are:

••

Project clusters or hubs in Europe, Canada and ong>theong> Middle East regions are no longer represented singularly.

Instead, each cluster is split into its constituent parts. For example, ong>theong> Masdar CCS cluster is now split into ong>theong>

Emirates Steel Industries project (Define stage) and ong>theong> Emirates Aluminium CCS project (Evaluate stage).

Similarly, ong>theong> Enhance Energy EOR project in Canada and ong>theong> North East CCS Cluster in ong>theong> United Kingdom

have been separated into ong>theong>ir constituent capture projects. Accounting for projects in this way does not diminish

ong>theong> importance ong>ofong> cluster or hub developments in influencing ong>theong> deployment ong>ofong> CCS projects ong>globalong>ly.

••

The Rangely and Salt Creek EOR projects in ong>theong> United States (both in ong>theong> Operate stage) are now represented by

ong>theong>ir single capture source – ong>theong> Shute Creek Gas Processing Facility, which supplies anthropogenic CO 2

for EOR

to ong>theong>se and oong>theong>r fields. This is consistent with ong>theong> Institute’s accounting for oong>theong>r project listings to emphasise

ong>theong> CO 2

capture facility. Importantly, this change results in a net increase in CO 2

volume potentially stored. This is

because ong>theong> capture capacity ong>ofong> ong>theong> Shute Creek facility (expanded to 7Mtpa) is larger than ong>theong> combined ong>ofong>f-take

indicated previously for ong>theong> Rangely and Salt Creek EOR operations (around 3.5Mtpa ong>ofong> CO 2

combined). The effect

ong>ofong> this reclassification is that ong>theong> number ong>ofong> projects in ong>theong> Operate stage remains at eight even though ong>theong>re is a

new entry in that category (Occidental’s Century gas processing plant).

• • The Rotterdam CCS Network entry (ong>theong> Neong>theong>rlands – Evaluate stage: 3.4Mtpa ong>ofong> CO 2

) was deleted as its main

constituent large-scale projects are already listed in ong>theong> Institute’s database and maintaining a separate listing

would have led to double-counting.

14 THE GLOBAL STATUS OF CCS: ong>2011ong>


2.2 Detailed project breakdown

LSIPs by region and number

North America and Europe contain most ong>ofong> ong>theong> listed LSIPs (Figure 9). Specifically, ong>theong> United States and Europe account

for 25 and 21 projects respectively, or 62 per cent ong>ofong> all LSIPs, followed by Canada (nine projects), Australia (six projects)

and China (six projects). Within Europe, ong>theong> United Kingdom has ong>theong> largest number ong>ofong> projects (seven) followed by ong>theong>

Neong>theong>rlands (four) and Norway (three). There are currently no LSIPs identified in oong>theong>r key emitting countries such as

Japan, India or Russia.

Figure 9 LSIPs by region and year

United States

CHAPTER 2

Europe

Canada

Australia and New Zealand

China

Middle East

Oong>theong>r Asia

Africa

5 10 15 20 25 30 35

Number ong>ofong> projects

ong>2011ong> 2010 2009

The amount ong>ofong> CO 2

that is intended to be stored in any given year from ong>theong> 74 LSIPs provides anoong>theong>r indicator ong>ofong> ong>theong>

level ong>ofong> potential activity across location and asset lifecycle stage.

The United States is ong>theong> most active area not only with regard to project numbers but also ong>theong> amount ong>ofong> CO 2

captured

(Figure 10). Six countries – ong>theong> United States, ong>theong> United Kingdom, ong>theong> Neong>theong>rlands, Australia, Canada and China –

combined account for 86 per cent ong>ofong> CCS activity on ong>theong> basis ong>ofong> potentially stored CO 2

each year.

Figure 10 Volume ong>ofong> CO 2

potentially stored by region or country

United States

Europe

Australia and New Zealand

Canada

China

Middle East

Oong>theong>r Asia

Africa

10 20 30 40 50 60 70 80

Potential volume ong>ofong> CO 2

(Mtpa)

Planned

Execute

Operate

The 74 listed LSIPs are shown in maps in Figure 11 with Figure 12 and Figure 13 focusing on North America and

Europe respectively. These maps also identify ong>theong> industry sector and storage types ong>ofong> ong>theong> project. In ong>theong>se figures,

ong>theong> projects are identified by a reference number that corresponds to ong>theong> detailed project listing in Appendix C.

PROJECTS

15


Figure 11 World map ong>ofong> LSIPs by industry

See regional map for detail

LSIPs: Global

Industry Sector

Power generation

Gas processing

Multiple capture facilities

Oong>theong>r industry

Storage Type

EOR (enhanced oil recovery)

Deep saline formations

Depleted oil and gas reservoirs

Various/not specified

See regional map for detail

6

37

21

59

71

74

51

39

70

68 61

69

14

58

72

42

56

64

65

16 THE GLOBAL STATUS OF CCS: ong>2011ong>


United States

The United States is ong>theong> most dynamic market as it is characterised by ong>theong> following:

••

ong>theong> highest number ong>ofong> projects in operation (four), in construction (three) and in development planning (18);

••

three projects indicating ong>theong>y will be in a position to decide on wheong>theong>r to take a final investment decision

in ong>theong> next 12 months;

••

ong>theong> largest number ong>ofong> projects being put on-hold (five) or cancelled (three) over ong>theong> past year; and

••

significant government funding for demonstration projects.

This current level ong>ofong> project activity is underpinned by ong>theong> opportunities provided by CO 2

EOR systems as described

earlier in this chapter and by ong>theong> United States having allocated ong>theong> highest amount ong>ofong> government grants to specific

projects (section 4.2). This is in contrast to many oong>theong>r jurisdictions around ong>theong> world which are still occupied with

funding allocation processes and have less mature EOR opportunities.

CHAPTER 2

In ong>theong> US ong>theong>re is momentum in industries where CO 2

is already ‘captured’ as part ong>ofong> ong>theong> industrial process, such as

gas processing and fertiliser production, and where an opportunity is found to use that CO 2

. With a high purity

stream ong>ofong> CO 2

at hand, ong>theong> effort in ong>theong>se industries is centred on compression, transport and storage. In ong>theong> US,

where EOR opportunities are strongest, ong>theong>re is a strong incentive for deals to be done among ong>theong>se CO 2

capture

sources, pipeline and oil field operators.

However, where ong>theong> cost ong>ofong> capture is relatively high, such as power generation and SNG, developing a strong business

case for CCS is a challenge. There may be exceptions to this, such as coal-based plants that yield multiple premium

products in a poly-generation mode, as represented by ong>theong> Texas Clean Energy project. Such multiple products can

include electricity, high value chemicals and CO 2

.

One United States power project to date—Kemper County—has developed a viable business case and moved into ong>theong>

Execute stage. Oong>theong>r projects, like ong>theong> Antelope Valley and AEP’s Mountaineer projects, have not been able to progress

to Execute and have been placed on-hold, even with substantial government funding allocated. In ong>theong> absence ong>ofong> national

carbon legislation (and given ong>theong> higher relative capture costs), ong>theong> evidence suggests that for CCS to be applied to a

power project a suite ong>ofong> incentives may be required to make ong>theong> business case. This suite may include all or some ong>ofong>

ong>theong> following:

1. Continuation ong>ofong> significant federal government grants (in ong>theong> order ong>ofong> hundreds ong>ofong> millions ong>ofong> dollars or more)

and ong>ofong>ten with tax concessions for qualifying project owners as early movers.

2. States that are prepared to ong>ofong>fer electricity rate recovery (in part or full) to help cover ong>theong> higher operating costs ong>ofong> ong>theong>

capture plant or to meet a low carbon portfolio state mandate (for example, California’s Climate Legislation AB32).

3. Incentives such as loan guarantees and tax credits to help ong>ofong>fset ong>theong> higher capital and operating cost ong>ofong> ong>theong>

project with CCS.

4. Off-take agreements to generate revenue through ong>theong> sale ong>ofong> oong>theong>r valued products, including CO 2

for EOR.

A significant development in ong>2011ong> is ong>theong> exit ong>ofong> Rio Tinto and BP from ong>theong> Hydrogen Energy California project,

with expectations that a deal can be closed with prospective new owner SCS Energy LLC. This company intends

to reconfigure ong>theong> project as a poly-generation plant similar to ong>theong> Texas Clean Energy project.

It is important to note ong>theong> work being undertaken by ong>theong> seven Regional Carbon Sequestration Partnerships (RCSP)

in ong>theong> United States. The Partnerships form a nationwide network that is investigating ong>theong> comparative merits ong>ofong>

numerous CCS approaches to determine those best suited for different regions ong>ofong> ong>theong> country and to develop a set

ong>ofong> ‘best practices’ for CCS in North America that could be broadly applicable to oong>theong>r regions ong>globalong>ly. NETL manages

ong>theong> Partnership program.

One Partnership project—ong>theong> Midwest Geological Sequestration Consortium’s (MGSC) Illinois Basin-Decatur Test

Injection—is expected to commence injection in ong>theong> second half ong>ofong> ong>2011ong>. The CO 2

will be captured from ong>theong>

Archer Daniels Midland (ADM) ethanol plant in Decatur, Illinois, compressed and ong>theong>n injected into a nearby deep

saline formation. The planned capture and injection rate, at 1 000 tonnes ong>ofong> CO 2

per day or 365 000 tonnes per year,

is significant and very close to ong>theong> Institute’s LSIP scale criteria for an industrial facility. This test injection project is

expected to operate for three years, for a total CO 2

injected ong>ofong> around one million tonnes. A second project at larger

scale – ong>theong> Illinois-ICCS project with 1Mtpa ong>ofong> CO 2

captured from ong>theong> ADM plant – is included in ong>theong> Institute’s LSIP

listing, in ong>theong> Execute stage.

PROJECTS

17


Figure 12 North American map ong>ofong> LSIPs by industry

29

California

36

Alberta

48

26 27

12/18

57

47

5

11

63

9

23

3

2

16

Oklahoma

Texas

54

50

10 45

32

60

Indiana

41

Kentucky

13

Louisiana

17 Mississippi

46

15

8 19 1 33

Kansas

LSIPs: North America

Industry Sector

Power generation

Gas processing

Synong>theong>tic natural gas

Fertiliser production

Oil refining

Coal-to-liquids

Ethanol plant

Hydrogen

Storage Type

EOR (enhanced oil recovery)

Deep saline formations

Various/not specified

British

Columbia

Saskatchewan

Wyoming

Colorado

North Dakota

Illinois

Pennsylvania

67 38

New

Jersey

18 THE GLOBAL STATUS OF CCS: ong>2011ong>


Canada

CCS continues to play a major role in Canada’s carbon emission reduction strategy, and significant strides have been

made at ong>theong> provincial level in advancing ong>theong> policy regime and financial support base for projects. The possibility for

CO 2

EOR and oil sands continues to motivate CCS project development.

Major factors which have affected project development in ong>theong> past 12 months include:

••

In May ong>2011ong>, Shell filed for its Carbon Sequestration Lease for ong>theong> Quest project under ong>theong> Alberta Carbon

Sequestration Tenure Regulation. Shell has indicated that a FID may be possible in 2012 subject to financial,

permitting and community approval issues being satisfactorily progressed.

••

In April ong>2011ong>, SaskPower received approval from ong>theong> Saskatchewan Government to proceed with ong>theong> CCS

component ong>ofong> Boundary Dam.

••

In March ong>2011ong>, ong>theong> Alberta Government launched its Regulatory Framework Assessment process, an ambitious

project to develop world class regulations for all elements ong>ofong> CCS.

CHAPTER 2

••

In February ong>2011ong>, ong>theong> Alberta Government finalised its C$495 million grant agreement with Enhance Energy for

ong>theong> Alberta Carbon Trunk Line (ACTL). This decision is reinforced by approval from ong>theong> Alberta Energy Resources

Conservation Board to construct ong>theong> pipeline.

••

In November 2010, ong>theong> Alberta Government introduced ong>theong> Carbon Capture and Storage Statutes Amendment Act

to address some significant barriers to demonstrating CCS. In particular, this Act amends existing legislation

and provides ong>theong> mechanisms for companies that will be seeking access to pore space for storing CO 2

, and ong>theong>

associated requirements for monitoring and closure plans. In ong>theong> legislation, ong>theong> province will assume ong>theong> long-term

liability for ong>theong> stored CO 2

, after certain conditions have been met; ong>theong>se conditions are being developed though

Regulatory Framework Assessment. In April ong>2011ong>, ong>theong> Carbon Sequestration Tenure Regulation was published

which sets ong>theong> conditions for a pore space tenure application.

Canada continues with a robust large-scale CCS demonstration program, including:

••

ong>theong> Great Plains/Weyburn-Midale project continuing to inject around 3Mtpa ong>ofong> CO 2

;

••

two projects that are in ong>theong> Execute stage – Agrium CO 2

Capture with ACTL and Boundary Dam; and

• • three projects which may be in a position to decide wheong>theong>r to progress to a FID in 2012: Swan Hills Synfuels

which has finalised a funding agreement for C$285 million in government grant support; Quest which has finalised

a funding agreement for C$865 million; and Project Pioneer which is in advanced negotiations for C$779 million in

grant support.

PROJECTS

19


Figure 13 European map ong>ofong> LSIPs by industry

LSIPs: Europe

Industry Sector

Power generation

Gas processing

Iron and steel production

Hydrogen production

Oong>theong>r industry

Storage Type

EOR (enhanced oil recovery)

Deep saline formations

Depleted oil and gas reservoirs

Various/not specified

24

52

66

53

4

22

55 49

43

United Kingdom

40 35

Neong>theong>rlands

28 62

31

34

France

Spain

Norway

Germany

25

Italy

30

7

Poland

20

44

Romania

73 Bulgaria

20 THE GLOBAL STATUS OF CCS: ong>2011ong>


Europe

Since ong>theong> 2010 report, ong>theong> most material development in Europe has been Member States ong>ofong> ong>theong> European Union (EU)

making CCS project submissions to ong>theong> European Commission (EC) for ong>theong> first round ong>ofong> ong>theong> NER300 funding program.

A total ong>ofong> 65 renewable and 13 CCS project proposals were submitted to ong>theong> EC in May ong>2011ong> for assessment by ong>theong>

European Investment Bank (EIB). The EC intends to provide clarity on ong>theong> outcomes ong>ofong> ong>theong> first round ong>ofong> ong>theong> NER300

funding program in ong>theong> second half ong>ofong> 2012. Funding from ong>theong> total NER300 program could probably support four to

six large-scale CCS projects, though this is dependent on ong>theong> quality ong>ofong> applications and ong>theong> value ong>ofong> ong>theong> allowances

auctioned. The expectation is that ong>theong>se supported projects would be operating within four years ong>ofong> being informed ong>ofong>

a funding award. Table 2 below summarises ong>theong> 13 CCS submissions.

Table 2 CCS project submissions for NER300 to ong>theong> European Commission

CCS PROJECT CATEGORIES

PROJECTS SUBMITTED BY NAME

NO. OF

PROJECTS

CHAPTER 2

Power generation (pre-combustion)

Power generation (post-combustion)

Power generation (oxyfuel)

Industrial applications

••

C.GEN North Killingholme (United Kingdom)

••

Don Valley (United Kingdom)

••

Eston Grange CCS (United Kingdom)

••

Getica CCS Demonstration (Romania)

••

Bełchatów (Poland)

••

Porto Tolle (Italy)

••

Longannet (United Kingdom)

••

Peel Energy CCS (United Kingdom)

••

Peterhead Gas CCS (United Kingdom)

••

UK Oxy CCS Demonstration (United Kingdom)

••

Vattenfall Jänschwalde (Germany)

••

ULCOS – Blast Furnace (France) – steel production

••

Green Hydrogen (Neong>theong>rlands) – hydrogen production

3

6

2

2

From ong>theong> CCS related submissions, a number ong>ofong> observations can be made:

••

seven countries made project submissions to ong>theong> EC to compete for funds available under ong>theong> NER300

funding program;

••

seven project proposals were submitted by ong>theong> Government ong>ofong> ong>theong> United Kingdom across all three power

generation categories;

••

only ong>theong> Government ong>ofong> ong>theong> United Kingdom has submitted applications for ong>theong> power generation pre-combustion

category;

••

ong>theong> large majority ong>ofong> projects are related to power generation, and in general, ong>theong> capture elements ong>ofong> ong>theong>se

projects exhibit greater maturity than ong>theong>ir storage elements;

••

ong>theong>re is a growing realisation in Europe that finding and licensing ong>ofong>fshore storage sites ong>ofong> ‘strategic significance’ for

captured CO 2

will be ong>theong> key to a winning submission – at least for ong>theong> nine projects which propose ong>ofong>fshore storage;

••

growing interest in possible application ong>ofong> EOR based models in ong>theong> North Sea, in particular as a possible

financial underpinning for Don Valley;

••

ong>theong> Dutch Government submitted only ong>theong> Green Hydrogen project by Air Liquide out ong>ofong> four projects put forward by

industry for consideration. This non-power project will also receive €90 million ong>ofong> funding from ong>theong> Dutch Government

if successful in ong>theong> NER300 funding program;

••

four projects have already received funding through ong>theong> European Energy Programme for Recovery (EEPR),

including Bełchatów (Poland), Porto Tolle (Italy), Don Valley Power Project (United Kingdom; formerly known as

Hatfield) and Jänschwalde (Germany). The Norwegian Government has also announced an additional €137 million

in funding for ong>theong> Bełchatów project; and

• • ong>theong> Porto Tolle project in Italy was submitted to ong>theong> EC for consideration but suffered a setback over permitting

approvals for ong>theong> base power plant earlier in ong>2011ong>. The Institute understands that ENEL has requested ong>theong> Ministry for

ong>theong> Environment to re-examine ong>theong> objections to ong>theong> project raised in ong>theong> earlier ruling issued by ong>theong> Council ong>ofong> State.

PROJECTS

21


The EIB will assess ong>theong> NER300 submissions against a number ong>ofong> criteria, including importantly ong>theong> cost ong>ofong> CO 2

abatement and ong>theong> financial viability ong>ofong> ong>theong> project. Separately, ong>theong> EC will confer with Member States as to what

financial support ong>theong>y will give to ong>theong> project, as well as assess ong>theong> ability ong>ofong> ong>theong> submissions (and available funding)

to demonstrate ong>theong> different technologies specified in ong>theong> funding call.

Oong>theong>r developments include:

••

ong>theong> ROAD project in ong>theong> Neong>theong>rlands plans to use ong>theong> €180 million received through ong>theong> EEPR (and an additional

€150 million from ong>theong> Dutch Government) to be in a position to decide on wheong>theong>r to progress to a FID early in

2012 and has not provided a submission to ong>theong> NER300 program;

••

ong>theong> United Kingdom continues to move to finalise negotiations in relation to program support for Longannet,

with final decisions expected by ong>theong> end ong>ofong> ong>2011ong>. In addition, ong>theong> government has announced support from

general revenue for two to four projects with competition arrangements to be announced in early 2012; and

••

ong>theong> Compostilla Project in Spain also received €180 million ong>ofong> EEPR funding. However, ong>theong> Spanish authorities

did not submit ong>theong> project developer’s proposal for funding under ong>theong> NER300 program to ong>theong> EC.

Australia

Near-term storage options are not readily available in Australia, which does not have significant (nor near-term access to)

EOR potential or depleted oil and gas fields. Because ong>ofong> this, ong>theong> search for suitable saline formation storage is

a requirement for all large-scale CCS projects. Saline formation storage is being used in ong>theong> only Australian project in

ong>theong> Execute stage – ong>theong> Gorgon Carbon Dioxide Injection Project. A detailed case study on this project is provided at

ong>theong> end ong>ofong> this chapter.

Against this background, in June ong>2011ong> ong>theong> Australian Government announced AU$60.9 million in funding for a National

CO 2

Infrastructure Plan to study potentially suitable sites to store captured CO 2

and speed up ong>theong> development ong>ofong>

transport infrastructure near major CO 2

emission sources. The plan includes ong>theong> development ong>ofong> a national CO 2

drilling

rig deployment strategy and an assessment ong>ofong> infrastructure needs.

The Australian Government also announced that it had selected ong>theong> Collie Hub project for funding under ong>theong> AU$1.68bn

CCS Flagships Program. The ‘base case’ for ong>theong> Collie Hub project aims to capture around 2.5Mtpa ong>ofong> CO 2

from an industrial

source south ong>ofong> Perth in Western Australia. The Australian Government is to provide up to AU$52 million to support

ong>theong> studies required to move ong>theong> project to ong>theong> next phase ong>ofong> decision making. A key aspect ong>ofong> ong>theong> next phase ong>ofong> project

development is ong>theong> completion ong>ofong> a detailed storage viability study. Initial studies have identified ong>theong> Lesueur formation

in ong>theong> Souong>theong>rn Perth Basin as ong>theong> best potential CO 2

storage site.

The Australian Government also announced that it will continue to progress oong>theong>r large-scale Australian CCS projects,

including ong>theong> CarbonNet project in Victoria and ong>theong> Wandoan project in Queensland. As with ong>theong> Collie Hub project,

ong>theong>se two projects will initially focus on ong>theong> development ong>ofong> CO 2

storage reservoirs and associated community engagement.

China

China continues to be one ong>ofong> ong>theong> most important and challenging markets for CCS deployment. The high cost and

energy penalty and ong>theong> immaturity ong>ofong> CCS technologies at large scale are commonly cited as ong>theong> major concerns to

Chinese stakeholders. The current measures for reducing China’s GHG emissions are focused on improving energy

efficiency, energy conservation and increasing ong>theong> share ong>ofong> non-fossil fuel energy sources. However, ong>theong>re is growing

recognition by ong>theong> Chinese central government that while ong>theong>se technological options remain important, ong>theong>y will only

go so far and CCS will also need to play a key role in China’s climate change abatement strategies, particularly in

ong>theong> medium to long term. This recognition, coupled with ong>theong> desire to foster indigenous low carbon technologies,

will continue to drive CCS development in China.

The Institute identified six LSIPs in China that are largely in ong>theong> planning stages. These projects are generally being

undertaken by China’s large state-owned power utilities and oil and gas companies. Some ong>ofong> ong>theong> most prominent projects

are ong>theong> Greengen IGCC project and ong>theong> Shenhua Coal-to-Liquids (CTL) Plant (Ordos City). These projects have ong>theong> support

ong>ofong> government agencies such as ong>theong> National Development and Reform Commission (NDRC), as well as involvement from

international partners such as development banks, non-government organisations (NGOs) and industry.

CO 2

utilisation is considered to be critical to making CCS a commercially viable option. A number ong>ofong> companies in

China are already capturing and using CO 2

, including in ong>theong> production ong>ofong> food and beverages, fertiliser, algae and

for EOR. China’s focus in ong>theong> near term in this regard is likely to be unchanged. For example, Sinopec is currently

operating an integrated pilot plant that captures 0.04Mtpa ong>ofong> CO 2

for EOR. Based on this experience, Sinopec has

started a program to expand ong>theong> capacity ong>ofong> this facility up to 1Mtpa CO 2

capture (Phase II). A series ong>ofong> research

programs will be conducted on petroleum geology investigation, environment impact and oong>theong>r areas concerning

CO 2

EOR. Phase II ong>ofong> this EOR facility is expected to be completed in 2014.

22 THE GLOBAL STATUS OF CCS: ong>2011ong>


Japan

The Japanese Government is committed to reducing its CO 2

emissions. Since ong>theong> March ong>2011ong> earthquake and tsunami,

ong>theong> Government has revised its Basic Energy Plan, which will likely include an increased reliance on fossil fuels, at least in

ong>theong> short term. The revision ong>ofong> ong>theong> plan is being considered in line with ong>theong> emissions reduction target, and could include

ong>theong> adoption ong>ofong> CCS.

The Ministry ong>ofong> Economy, Trade and Industry (METI) is currently funding ong>theong> development ong>ofong> a demonstration project in

Hokkaido. The project aims to capture more than 100 000 tonnes per year ong>ofong> CO 2

for storage in an ong>ofong>fshore deep saline

formation more than 1 000 metres under ong>theong> seabed in ong>theong> North ong>ofong> Japan. In support ong>ofong> this project, Japan CCS Co. Ltd

is undertaking a 3D seismic survey and drilling a test borehole to identify and explore suitable formations for CO 2

storage.

The budget to develop ong>theong> project is approximately ¥5.9bn in Japanese Fiscal Year (JFY) 2010 and ¥4.9bn in JFY ong>2011ong>.

Korea

Korea aims to achieve commercial deployment ong>ofong> CCS plants and ong>globalong> technology competitiveness by 2020.

Two LSIPs are currently under development:

CHAPTER 2

••

Korea-CCS 1 proposes to use post-combustion technology to capture up to 1.2Mtpa ong>ofong> CO 2

from a 300MW

coal-fired power plant and store in a deep saline formation by 2017; and

••

Korea-CCS 2 proposes to use oxyfuel combustion or IGCC with pre-combustion technology to capture

1.2Mtpa ong>ofong> CO 2

and store in a deep saline formation by 2019.

The Korean Government has commenced a storage capacity assessment and geological survey ong>ofong> ong>theong> ong>ofong>fshore

Ulleung basin and is exploring shipping transport.

Middle East

The Middle East is a region ong>ofong> strong promise for CCS. This region possesses a range ong>ofong> drivers and natural advantages

for CCS, including:

••

significant EOR and deep saline storage potential, accompanied by a wealth ong>ofong> geological data;

••

strong and growing demand for power that is unlikely to be satisfied by natural gas and will require use ong>ofong> oong>theong>r

fuels, especially coal;

••

a rapidly expanding industrial base, especially in a number ong>ofong> high CO 2

emission sectors, such as gas processing,

refining, steel making, chemical processing, and fertilisers;

••

significant overlap between ong>theong> location ong>ofong> existing CO 2

sources and potential CO 2

sinks; and

••

growing awareness and action to address climate change.

While ong>theong>re is large potential, ong>theong> demonstration ong>ofong> CCS in ong>theong> region is seen as an important precursor to deployment.

The key initiative designed to contribute towards ong>theong> regional demonstration ong>ofong> CCS is Abu Dhabi’s Masdar program.

As a whole this program is a clean-energy initiative designed to explore a range ong>ofong> renewable and alternative fuel

options for ong>theong> United Arab Emirates. Through Masdar, three CCS projects are being supported, all focusing on using

CO 2

for EOR:

••

Emirates Steel Industries – iron and steel;

••

Emirates Aluminium CCS – power generation (post-combustion); and

••

Hydrogen Power Abu Dhabi (a joint venture between Masdar and BP) – power generation (pre-combustion).

For several years ong>theong> region has actively advocated for ong>theong> inclusion ong>ofong> CCS in ong>theong> UNFCCC’s Clean Development

Mechanism (CDM). Such an inclusion could furong>theong>r fuel CCS development in ong>theong> Middle East by tipping near

commercial projects into viable business opportunities.

PROJECTS

23


Developing Countries

The absence ong>ofong> LSIPs in developing countries is noticeable. If projects struggle to build a business case in developed

countries, developing countries will have an even greater challenge, especially in ong>theong> face ong>ofong> oong>theong>r priorities.

In ong>theong> current context, a key avenue for support ong>ofong> CCS demonstration projects in developing countries is ong>theong> expected

inclusion ong>ofong> CCS into ong>theong> CDM (or any future mechanism post ong>theong> Kyoto Protocol). Key decision text was adopted in late

2010 at ong>theong> COP 16 climate change talks in Cancun, Mexico that legitimises ong>theong> merit ong>ofong> CCS as a mitigation option within

ong>theong> context ong>ofong> ong>theong> UNFCCC objectives, as well as its capacity to be able to systematically generate tradable credits under

ong>theong> CDM. This decision will ultimately see a framework established that could provide for ong>theong> institutional arrangements

ong>ofong> CCS under any future UNFCCC mechanism (including Technology; Financial; and Future Markets) and/or adopted

within national government policy settings.

The inclusion ong>ofong> CCS in future UNFCCC mechanisms could assist ong>theong> mobilisation ong>ofong> funds to CCS projects.

Access to capital would help encourage a greater level ong>ofong> interest by both developing and developed countries in CCS

demonstration projects in ong>theong> developing world.

Using ong>theong> CO 2

is expected to be a key component ong>ofong> large-scale CCS demonstration projects in emerging and developing

economies, where ong>theong>re is strong demand for energy and construction materials and less likelihood ong>ofong> ong>theong> early adoption

ong>ofong> carbon pricing. The main focus is likely to be EOR due to its technical maturity and potential CO 2

utilisation capacity but

oong>theong>r technologies may also be ong>ofong> interest such as carbonate mineralisation, concrete curing, bauxite residue carbonation,

enhanced coal bed methane, urea yield boosting and renewable methanol.

Capacity development

A key factor that will constrain CCS demonstration in developing countries is human resource capacity. In order to

deploy CCS a technical and expert workforce will be required to facilitate project operation. Developing ong>theong> existing

technical expertise ong>ofong> ong>theong> oil and gas sector represents an early opportunity to develop CCS expertise within a country,

as ong>theong>y may already be familiar with related processes. As developing countries move furong>theong>r along ong>theong> CCS lifecycle

ong>theong> need for technology based capacity development activities will increase.

LSIPs by industry sector

There has been little change over ong>theong> past three years in ong>theong> distribution ong>ofong> LSIPs by industry sector (Figure 14).

Power generation projects dominate (42 LSIPs) because ong>theong>y represent high levels ong>ofong> stationary source emissions and

consequently have attracted ong>theong> largest proportion ong>ofong> government funding for abatement. The number ong>ofong> gas processing

projects has also remained reasonably stable and in some cases ong>theong> drivers for deployment in this sector are well advanced.

Figure 14 LSIPs by industry sector and year

Power generation

Natural gas processing

Synong>theong>tic natural gas

Fertiliser production

Coal-to-liquids (CTL)

Hydrogen production

Iron and steel production

Oil refining

Chemical production

Cement production

Pulp and paper

Oong>theong>r

5 10 15 20 25 30 35 40 45

Number ong>ofong> projects

ong>2011ong> 2010 2009

24 THE GLOBAL STATUS OF CCS: ong>2011ong>


Since ong>theong> 2010 report, ong>theong>re has been an overall increase in ong>theong> volume ong>ofong> CO 2

being stripped out through natural gas

processing as well as a major shift from volumes in ong>theong> Execute stage to Operate (Figure 15). The former reflects ong>theong>

addition ong>ofong> ong>theong> Riley Ridge project to ong>theong> list (2.5Mtpa, Evaluate stage) and an increase in CO 2

capture capacity at ong>theong>

Shute Creek facility (from 4Mtpa to 7Mtpa). This increase in capacity at Shute Creek, togeong>theong>r with ong>theong> start-up ong>ofong> ong>theong>

first phase ong>ofong> Century Plant in late 2010, accounts for ong>theong> large increase in CO 2

capture capacity in ong>theong> Operate stage.

Figure 15 Volume ong>ofong> CO 2

captured by industry sector and year

Power generation

ong>2011ong>

2010

Natural gas processing

CHAPTER 2

ong>2011ong>

2010

Oong>theong>r industries

ong>2011ong>

2010

10 20 30 40 50 60 70 80 90

Potential volume ong>ofong> CO 2

(Mtpa)

Planned Execute Operate

As noted earlier, it is a positive development that ong>theong>re are now two projects in ong>theong> power industry in ong>theong> Execute stage

with a number indicating that a decision on wheong>theong>r to proceed to a FID is likely within ong>theong> next 12 months.

The ong>statusong> ong>ofong> CCS demonstration in oong>theong>r industries currently lacks significant funding and hence momentum.

Though ong>theong>re are some projects in operation, ong>theong>se occur in ong>theong> fertiliser and synfuels sectors where CO 2

is stripped out

as part ong>ofong> ong>theong> process, and has been for decades. While ong>theong>re is interest in CCS deployment in ong>theong>se oong>theong>r sectors, from a

volume perspective ong>theong> level ong>ofong> activity is minimal. There are very few or even no projects in high emitting sectors such as

iron and steel, cement and pulp and paper production. Since large-scale demonstration projects can take considerable

time to move from identification to reach operation, lack ong>ofong> momentum in ong>theong>se oong>theong>r industries may prove problematic

for future abatement. Without dedicated funding to ong>theong>se oong>theong>r industries, it is unlikely that CCS will be demonstrated in

ong>theong>se sectors by 2020.

LSIPs by capture technology

Pre-combustion capture is ong>theong> most frequently chosen capture technology by LSIPs in ong>theong> Operate and Execute stages

(Figure 16). Pre-combustion capture has a long history in gas processing, synfuels and fertiliser production but its

application in power generation is more recent. For example, Kemper County is ong>theong> first pre-combustion power project

with CCS that has entered construction and intends to capture 3.5Mtpa ong>ofong> CO 2

.

Post-combustion capture technologies in ong>theong> power sector have also recently moved into construction with Boundary Dam

aiming to capture 1Mtpa ong>ofong> CO 2

. Beyond this project, ong>theong> application ong>ofong> post-combustion capture in oong>theong>r sectors and

large-scale operations is yet to be widely tested.

Most CCS projects in development planning are proposing to use pre-combustion or post-combustion capture technology,

representing 55 per cent and 27 per cent respectively ong>ofong> ong>theong> number ong>ofong> all planned projects. Although oxyfuel combustion

capture is not as widely planned, it is maturing with five projects utilising this technology in ong>theong> Define or Evaluate stage.

Furong>theong>r details regarding ong>theong> maturity levels ong>ofong> CO 2

capture technologies can be found in section 3.1 ong>ofong> this report.

PROJECTS

25


Figure 16 Volume ong>ofong> CO 2

captured by capture type and capture asset lifecycle stage

Pre-Combustion

Post-Combustion

Oxyfuel Combustion

Industrial Separation

Not Speci ed / Various

20 40 60 80 100 120

Potential volume ong>ofong> C0 2

(Mtpa)

Identify

Define

Operate

Evaluate

Execute

Pre-combustion capture is ong>theong> most frequently chosen CO 2

capture technology in North America and China (88 per cent

ong>ofong> all projects in ong>theong> United States, 67 per cent in Canada and 83 per cent in China), while post-combustion capture is

ong>theong> most widely pursued in Europe, representing 48 per cent ong>ofong> all CCS projects (Figure 17). This pattern is reflective ong>ofong>

government grant allocation differences between North America and Europe, and ong>theong> large number ong>ofong> gas processing and

SNG projects in ong>theong> United States.

Figure 17 LSIPs by capture type and region

United States

Europe

Canada

Australia and New Zealand

China

Middle East

Oong>theong>r Asia

Africa

Number ong>ofong> projects

5 10 15 20 25

Pre-combustion

Oxyfuel combustion

Not specified/various

Post-combustion

Industrial separation

LSIPs by transport type

Almost 95 per cent ong>ofong> all LSIPs use or propose to use pipelines to transport CO 2

to ong>theong> storage site. Transportation

appears to remain a lower order priority for proponents as ong>theong> integration challenges are assumed to be well understood.

This understanding is exemplified by ong>theong> numerous CO 2

capture projects that outsource ong>theong>ir transportation and storage

needs through existing EOR pipelines and fields. While such an approach streamlines ong>theong>se aspects ong>ofong> ong>theong> CCS chain,

ong>theong> creation ong>ofong> new pipeline routes, especially in non-industrial areas, to tap into geological storage options is not as

straightforward. This will most likely require detailed planning and public consultation in ong>theong> associated land acquisition

and permitting.

Shipping is still marginal with only four LSIPs currently pursuing this option. Neverong>theong>less shipping is increasingly being

investigated as a more flexible option for matching CO 2

sources and sinks, for example in situations where ong>ofong>fshore storage

is preferred and where ong>theong> capture facilities are not in ong>theong> immediate vicinity ong>ofong> a pipeline entry point. Transport by truck

is still limited to smaller scale injection testing projects, and could well be included in large-scale projects to deliver CO 2

to industrial customers as a niche revenue source.

26 THE GLOBAL STATUS OF CCS: ong>2011ong>


LSIPs by storage type

In ong>theong> United States and Canada, almost 80 per cent ong>ofong> LSIPs in each country are eiong>theong>r using or intend to use CO 2

for EOR purposes (Figure 18). Similarly, all LSIPs being developed in ong>theong> Middle East are EOR-driven and China is

strongly focused on EOR and oong>theong>r industrial uses ong>ofong> CO 2

. On ong>theong> oong>theong>r hand, CO 2

storage in deep saline formations

and depleted oil and gas reservoirs is prevalent in Europe and Australia.

Figure 18 Volume ong>ofong> CO 2

by storage type and region

United States

Europe

Australia and New Zealand

CHAPTER 2

Canada

China

Middle East

Oong>theong>r Asia

Africa

10 20 30 40 50 60 70 80

Potential volume ong>ofong> CO 2

(Mtpa)

Enhanced oil recovery

Deep saline formations

Depleted oil and gas reservoirs

Various/not specified

Full project integration with aligned capture and storage lifecycle stages is easier to achieve for EOR-driven projects than

for those intending to use geologic storage solutions. This is important because it is unlikely that EOR/depleted oil and

gas fields have ong>theong> required capacity to be a major long-term contributor to CO 2

abatement. Current assessments strongly

suggest deep saline formations will provide ong>theong> bulk ong>ofong> storage potential.

Two-thirds ong>ofong> projects with EOR, whose capture component is in ong>theong> Define stage, have a commercial agreement in

place for CO 2

ong>ofong>f-take or are in advanced negotiations with potential EOR customers (Figure 19). As CO 2

EOR systems

have been in operation in ong>theong> United States for around four decades, new projects can feed into existing pipeline

and EOR networks (or planned extensions to those) and permitting and contractual arrangements are well known.

This considerably shortens ong>theong> development timeframes for ong>theong> storage end ong>ofong> ong>theong> CCS chain. The capture element

becomes ong>theong> key risk to project progression in conventional EOR operations.

In comparison, where deep saline formations or depleted oil/gas reservoirs are to be used, only one-third ong>ofong> projects,

whose capture component is in ong>theong> Define stage, have ong>theong> same level ong>ofong> storage definition (undertaking detailed site

characterisation).

This dynamic ong>ofong> synchronising capture and storage definition becomes much more complex when applied to greenfield

geologic storage solutions. Here ong>theong> challenges for optimising limited budgets across capture desktop studies and

potentially more expensive and lengthy storage exploration/appraisal/testing work scopes are magnified, particularly under

timing constraints. This is especially true if ong>theong> project is part ong>ofong> a competitive process and ong>theong>re is no history ong>ofong> exploration

management in ong>theong> managing organisation. Where ong>theong>re is considerable uncertainty as to wheong>theong>r a compelling business

case can be made in support ong>ofong> ong>theong> capture ong>ofong> CO 2

, ong>theong>re is little incentive for project proponents to expend potentially

large sums ong>ofong> capital on storage exploration or appraisal activities, especially if ong>theong>re is a significant chance ong>ofong> failure.

Project proponents may seek to delay potentially large expenditures on storage characterisation until uncertainties on ong>theong>

capture business case are addressed, and ong>theong>n in turn mitigate storage risk through several years ong>ofong> site assessment,

characterisation and modelling. Such a strategy may however significantly delay project implementation. Early storage

data acquisition would also better inform regulatory and public engagement activities by project proponents.

The role for government may well extend beyond financial support for capture facilities to include supporting ong>theong>

timely provision ong>ofong> storage (and transportation) infrastructure. The hub models being developed in Australia with

CarbonNet and ong>theong> Collie Hub projects involve state governments supporting ong>theong> development ong>ofong> ong>theong> necessary

storage infrastructure to support capture project proponents. Likewise, as mentioned previously, ong>theong> Australian

Government has recently announced funding for a National CO 2

Infrastructure Plan.

PROJECTS

27


Figure 19 Comparison ong>ofong> capture asset lifecycle with ong>theong> progress ong>ofong> EOR and storage in deep saline formations

or depleted oil and gas reservoirs

De ne

Evaluate

Projects with enhanced oil recovery

Capture asset lifecycle stage

Identify

De ne

Identification ong>ofong> prospective customers

Preliminary negotiations

Advanced negotiations

Commercial agreement in place

Projects with storage in deep saline formations or depleted oil and gas fields

Evaluate

Identify

Number ong>ofong> projects

5 10 15

Exploration ong>ofong> prospective sites

Assessing suitability ong>ofong> site/s

Detailed site characterisation

Approved storage permit

Portfolio distribution ong>ofong> LSIPs

A portfolio distribution mapping ong>theong> key industries, technologies and regions where current LSIPs are being considered

is a useful mechanism to summarise much ong>ofong> ong>theong> previous discussion in this chapter (Table 3). Many ong>ofong> ong>theong> salient

points have been made previously, including ong>theong> geographical dominance ong>ofong> a few regions, ong>theong> dominance ong>ofong> power

generation projects and pipeline systems within ong>theong>se regions, and geographical differences in ong>theong> type ong>ofong> storage

options being pursued.

28 THE GLOBAL STATUS OF CCS: ong>2011ong>


Table 3 LSIPs by region, by technology and by industry

NORTH

AMERICA EUROPE ASIA

AUSTRALIA –

NEW ZEALAND

MENA

SUB-

TOTAL

Pre-combustion 9 3 3 1 1 17

Post-combustion 4 10 2 1 17

CAPTURE

POWER

OTHER

Oxyfuel combustion 1 4 5

Various/oong>theong>r 1 2 3

Gas processing 6 2 2 1 11

Iron and steel 1 1 2

Cement 0

Various/oong>theong>r 14 1 2 2 19

CHAPTER 2

Point-to-point onshore

pipeline

Point-to-point ong>ofong>fshore

pipeline

14 6 5 4 1 30

1 8 1 10

TRANSPORT

Network pipeline 19 5 2 3 29

Oong>theong>r pipeline 1 1

Ship/tanker 2 2 4

Onshore deep saline

formations

Offshore deep saline

formations

6 6 1 4 1 18

1 6 2 1 10

GEOLOGIC

Onshore depleted oil and

gas reservoirs

Offshore depleted oil and

gas reservoirs

5 1 6

0

Enhanced oil recovery 26 3 2 3 34

STORAGE

OTHER

Enhanced gas recovery 0

Oong>theong>r reuse 0

Combination/ TBD 1 1 2 2 6

Key: ≥ 10 projects 3-9 projects 1-2 projects No projects

PROJECTS

29


CASE STUDY

Gorgon Carbon Dioxide Injection Project

Significant progress is being made on ong>theong> AU$2bn Gorgon Carbon Dioxide Injection Project since ong>theong>

Chevron-operated project passed its FID in September 2009, a milestone that represented ong>theong> culmination

ong>ofong> almost two decades ong>ofong> studies and a significant pre-investment.

Initial consideration ong>ofong> managing ong>theong> Gorgon Project’s reservoir CO 2

started in 1992, before ong>theong> commissioning in

1998 ong>ofong> regional desktop studies seeking to identify potential storage sites within 300km ong>ofong> ong>theong> proposed project

site. This work culminated in 2003 with ong>theong> publication ong>ofong> ong>theong> Environmental, Social and Economic Review ong>ofong> ong>theong>

Gorgon Gas Development on Barrow Island (ESE Review), which voluntarily proposed that reservoir CO 2

be injected

into ong>theong> Dupuy Formation below Barrow Island and provided ongoing studies confirmed it was technically feasible

and not cost prohibitive. The Dupuy Formation was favoured as some 27 nearby well penetrations and existing 3D

seismic coverage indicated suitable geology to permanently trap ong>theong> injected CO 2

.

The Gorgon Project is operated by Chevron Australia and is a joint venture ong>ofong> ong>theong> Australian subsidiaries ong>ofong> Chevron

(approximately 47 per cent), ExxonMobil (25 per cent), Shell (25 per cent), Osaka Gas (1.25 per cent),

Tokyo Gas (one per cent) and Chubu Electric Power (0.417 per cent).

Legislative development

Shortly after publication ong>ofong> ong>theong> ESE Review it was recognised that ong>theong>re was no legislation to enable government

to approve ong>theong> proposed injection operations. To address this gap, ong>theong> Barrow Island Act 2003 (WA) was passed

by ong>theong> Western Australian Parliament in late 2003. The Act contains provisions dealing with ong>theong> conveyance and

underground disposal ong>ofong> CO 2

and is believed to be ong>theong> world’s first GHG storage legislation. The provisions in

ong>theong> Act are brief but enable ong>theong> Minister to place conditions on ong>theong> approval. In effect, ong>theong> Ministerial conditions

establish ong>theong> regulatory framework under which ong>theong> project must operate. This was done intentionally, as in

2003 it was not fully understood what issues would require regulation. Barrow Island Act 2003 approvals for ong>theong>

underground disposal ong>ofong> reservoir CO 2

were obtained at ong>theong> same time as ong>theong> Gorgon Joint Venture made its FID

in 2009. A key component ong>ofong> ong>theong> approvals imposed by ong>theong> Minister is ong>theong> requirement for a Site Management

Plan. This document outlines how all aspects ong>ofong> ong>theong> project will be undertaken. The concept ong>ofong> a site

management plan has been subsequently adopted in ong>theong> Australian Offshore Petroleum and Greenhouse Gas

Storage Act 2006 (Commonwealth).

Environmental approvals

Prior to FID, environmental approvals were required under ong>theong> Environmental Protection Act 1986 (WA)

and ong>theong> Environmental Protection and Biodiversity Conservation Act 1999 (Commonwealth). In September

2005, ong>theong> Gorgon Joint Venture published its Environment Impact Statement and Environmental Review

and Management Plan (EIS/ERMP) for a 10Mtpa liquefied natural gas (LNG) project on Barrow Island.

Importantly, this document represented ong>theong> first publication ong>ofong> an environmental impact assessment for a

major GHG storage project. This document detailed ong>theong> nature ong>ofong> ong>theong> geology below Barrow Island, how GHG

storage works and how ong>theong> injected CO 2

becomes trapped. It also outlined risks and potential impacts on

environmental receptors. An important aim was producing a document with sufficient background data for

ong>theong> general public, as well as scientific community, to have confidence in ong>theong> project’s assessment ong>ofong> ong>theong>

environmental risk associated with ong>theong> injection and storage ong>ofong> CO 2

. Following public submissions to ong>theong>

EIS/ERMP, both Federal and Western Australian environmental approvals were granted in October 2007.

Shortly after receiving ong>theong>se environmental approvals, ong>theong> Gorgon Joint Venture made ong>theong> decision that ong>theong>y

wished to expand ong>theong> scope ong>ofong> ong>theong> project from 10Mtpa LNG to 15Mtpa LNG. This required ong>theong> original

environmental impact assessment process to be revisited, including a revision to ong>theong> risks study published

previously. Federal and WA approvals for ong>theong> expanded project were obtained in August 2009.

Throughout this process it was recognised that, despite ong>theong> existing well penetrations and 3D seismic, significant

additional data collection was required in order to improve ong>theong> geological understanding ong>ofong> ong>theong> proposed injection

location. Indeed, ong>theong> data required was comparable to ong>theong> field appraisal activities that would be undertaken to

appraise an oil and gas discovery.

30 THE GLOBAL STATUS OF CCS: ong>2011ong>


Case study, Gorgon Carbon Dioxide Injection Project continued

Since 2003 ong>theong> Gorgon Joint Venture has invested over AU$150 million in storage appraisal. This included ong>theong>

drilling ong>ofong> a data well in which ong>theong> entire 300 metre reservoir section and overlying seals were cored, conducting

extensive well testing and a series ong>ofong> seismic acquisition pilots including ong>theong> acquisition ong>ofong> a new 3D seismic survey.

Throughout this period ong>theong> Western Australian Government undertook a series ong>ofong> independent expert reviews

to assure ong>theong> quality ong>ofong> ong>theong> technical work being undertaken by ong>theong> Gorgon Joint Venture. These assurance

(or due diligence) reviews were timed to provide independent advice to government at ong>theong> time it was making

important decisions about ong>theong> project.

Since FID, work has continued on refining ong>theong> project’s geological and dynamic simulation models and

planning for ong>theong> commencement ong>ofong> ong>theong> drilling ong>ofong> ong>theong> injection and pressure management wells in late 2012.

The design ong>ofong> ong>theong> wells is largely complete and contracts are currently being negotiated for ong>theong> drilling rig

and associated equipment to drill ong>theong>se wells.

CHAPTER 2

Following FID, one ong>ofong> ong>theong> first contracts to be awarded was for ong>theong> detailed design, construction and assurance

testing ong>ofong> six CO 2

injection compressor trains at a cost ong>ofong> AU$415 million. The compressors represent a

significant piece ong>ofong> equipment with two compressors coupling togeong>theong>r to form a module more than five stories

high (Figure 20). Each compressor will be equipped with a four stage compressor comprising two compressor

casings (each casing comprising two compressor stages) coupled through gearboxes on eiong>theong>r side ong>ofong> a

double-ended variable frequency drive electric drive motor. Intercoolers/aftercoolers will be installed after each

compression stage. Factors requiring consideration in designing ong>theong> compressors include:

••

ergonomic design focusing on improving maintenance and operational access;

••

equations ong>ofong> state for ong>theong> CO 2

rich gas stream;

••

ong>theong> presence ong>ofong> incidental associated substances in ong>theong> CO 2

stream;

••

compressor aerodynamics, rotodynamics, material selection, drive technologies, system integration and

maintenance factors;

••

each compressor train is designed to be modularised and must meet very stringent space constraints;

••

ong>theong> ability to control ong>theong> 3rd stage discharge pressure to within ong>theong> range ong>ofong> 50 to 65 bar to allow

ong>theong> maximum dropout ong>ofong> liquid water as part ong>ofong> measures to manage corrosion downstream ong>ofong> ong>theong>

compressors; and

••

ong>theong> need to minimise fugitive emissions around ong>theong> compressor seals.

Figure 20 Layout ong>ofong> Gorgon CO 2

compressor train

Image courtesy ong>ofong> Chevron Australia

PROJECTS

31


Case study, Gorgon Carbon Dioxide Injection Project continued

Once ong>theong> first compressor train has been constructed it undergoes a full speed full load validation test in a

purpose designed and built test loop using CO 2

as ong>theong> test gas. The main focus ong>ofong> ong>theong>se tests is to validate

ong>theong> expected mechanical performance (torsional response, vibration, bearing temperature, and so on)

and ong>theong>rmodynamic performances in terms ong>ofong> developed differential pressure, efficiency and absorbed power

for each state. The test will maximise ong>theong> use ong>ofong> ong>theong> actual contract components including lubrication oil systems,

electric motor controls and ong>theong> compressor seal equipment. The full-speed, full-load, string testing commenced

validation testing in June ong>2011ong>.

Each compressor is ong>theong>n integrated into a module including all necessary pipe work and intercoolers before

shipping to ong>theong> project site on Barrow Island. The first compressor module is due to arrive on Barrow

Island in ong>theong> second half ong>ofong> 2013.

The lead time to undertaking ong>theong> detailed design, construction and full speed, full load testing ong>ofong> ong>theong> CO 2

compressors is significant and reinforces ong>theong> long lead times and investment requirement to successfully

execute a GHG storage project ong>ofong> this scale.

The Australian Government has committed $60 million to ong>theong> Gorgon Project as part ong>ofong> ong>theong> Low Emissions

Technology Demonstration Fund (LETDF).

32 THE GLOBAL STATUS OF CCS: ong>2011ong>


3

TECHNOLOGY

3.1 Capture 34

3.2 Transport 47

3.3 Storage and use 54

3.4 Technology costs and challenges 65


3 TECHNOLOGY

KEY MESSAGES

• It is vital that power projects proceed to demonstrate CCS on a commercial-scale and operating in an

integrated mode, in a real power grid environment and with storage at sufficient scale to provide ong>theong>

confidence and benchmarks critical for future widespread deployment.

• In capture, while ong>theong>re have been component level technological improvements and promising new capture

concepts, more capture facilities scalable to commercial levels need to enter development planning to

support ong>theong> technological advancement and cost reductions needed for deployment.

• While transport ong>ofong> CO 2

by pipeline is a well established technology, ong>theong> scale ong>ofong> infrastructure and

investment required for future CCS deployment will be a challenge but it is not insurmountable. In addition,

significant economies ong>ofong> scale can result from shared transport infrastructure.

• Project developers need to build long lead times into project planning for storage site assessments,

especially for greenfield deep saline formation storage sites. Understanding ong>theong> storage risks over ong>theong>

lifecycle ong>ofong> ong>theong> project and post-closure will lead to safer and more efficient outcomes.

While ong>theong> focus in this report is on LSIPs, ong>theong> different components ong>ofong> ong>theong> CCS chain all have separate challenges and

are ong>theong>mselves made up ong>ofong> several different technologies that can be used in various combinations in any given project.

This chapter reviews ong>theong> different components ong>ofong> CCS and provides an update ong>ofong> ong>theong>ir current ong>statusong> ong>ofong> development.

The overall focus ong>ofong> government and industry efforts on CCS is to demonstrate ong>theong> integration ong>ofong> ong>theong> different components

at large-scale across a range ong>ofong> industries and technologies. At ong>theong> level ong>ofong> individual components ong>ofong> ong>theong> CCS chain, ong>theong>

challenges are more related to continuing R&D to achieve process and technology improvements, efficiency gains or cost

reductions and a better understanding ong>ofong> options.

Each ong>ofong> ong>theong> different components ong>ofong> ong>theong> chain, being capture, transport and storage or use, is treated separately,

including a discussion ong>ofong> ong>theong>ir costs. This chapter concludes with a discussion ong>ofong> current understanding ong>ofong> ong>theong> overall

costs ong>ofong> applying CCS, particularly in power generation.

3.1 Capture

Capturing CO 2

that would oong>theong>rwise be emitted to ong>theong> atmosphere, treating it and compressing it to ong>theong> point where

it can be transported, in most cases represents ong>theong> greatest component ong>ofong> ong>theong> additional costs ong>ofong> CCS. This section

outlines ong>theong> current ong>statusong> ong>ofong> development ong>ofong> ong>theong> various capture technologies and techniques, across ong>theong> different

industries in which CCS can be applied. Furong>theong>r details can be found in a study commissioned for this report by

ong>theong> Electric Power Research Institute (EPRI ong>2011ong>a) as well as a series ong>ofong> studies produced by ong>theong> United Nations

Industrial Development Organization (UNIDO 2010a, b, c, ong>2011ong>) as part ong>ofong> a project sponsored by ong>theong> Institute and

ong>theong> Norwegian Ministry ong>ofong> Petroleum and Energy.

34 THE GLOBAL STATUS OF CCS: ong>2011ong>


Major technology options for CO 2

capture

The main technology options for CO 2

capture from fossil fuel usage are:

••

post-combustion capture (PCC) from combustion flue gas;

••

pre-combustion capture from fuel gases; and

••

oxyfuel combustionong>theong> direct combustion ong>ofong> fuel with oxygen.

These three approaches are shown for coal-based power systems in Figure 21.

Figure 21 Technical options for CO 2

capture from coal-power plants

Post-combustion

Coal

Power and heat

N 2

CO 2

separation

CHAPTER 3

Air

Pre-combustion

Air/O 2

Steam

CO 2

CO 2

Coal

Gasification

Shift , gas cleanup

+ CO 2

separation

Air

H 2

N 2

Power

and heat

CO 2

compression

and

dehydration

Oxyfuel combustion

Air

Air separation

Coal

Power and heat

O 2

O 2

CO 2

Source: EPRI (ong>2011ong>a, p1-1)

PCC can be applied to newly designed fossil fuel power plants, or retrong>ofong>itted to existing plants. Absorption processes

are currently ong>theong> most advanced ong>ofong> ong>theong> PCC technologies. The PCC technologies can also be used in oong>theong>r industries

including cement, oil refining, and petrochemicals.

Pre-combustion capture in IGCC power plants comprises gasification ong>ofong> ong>theong> fuel with oxygen or air under high pressure,

followed by CO 2

removal using an acid gas removal (AGR) process. The resulting hydrogen rich synong>theong>sis gas (syngas)

is supplied to a gas turbine power block. The pre-combustion capture ong>ofong> CO 2

using AGR processes is also practised

commercially in oil, gas and chemicals plants.

Oxyfuel combustion is ong>theong> combustion ong>ofong> fuel with oxygen, instead ong>ofong> air, to eliminate ong>theong> nitrogen contained in combustion

air. The flue gas containing mostly CO 2

is cleaned, dried and compressed. In a coal-fired oxyfuel power plant some flue

gas is recycled to use in ong>theong> oxygen-fired boiler, effectively replacing nitrogen from air to keep ong>theong> temperature at a level

acceptable for boiler tube materials.

Within each ong>ofong> ong>theong> three major capture categories ong>theong>re are multiple pathways using different technologies which

may find particular application more favourably in certain climate conditions, locations and fuel types.

TECHNOLOGY

35


Technology readiness level

In this section ong>theong> term Technology Readiness Level (TRL) will be used to indicate ong>theong> development level ong>ofong> ong>theong>

technologies described (WorleyParsons et al. 2009). This TRL approach can be particularly useful in tracking ong>theong> ong>statusong>

ong>ofong> individual technologies in ong>theong> earlier stages ong>ofong> ong>theong> R&D timeline. The nine TRLs are listed in Table 4.

Table 4 Technology Readiness Levels (TRLs)

READINESS LEVEL

TRL-9

TRL-8

TRL-7

TRL-6

TRL-5

TRL-4

TRL-3

TRL-2

TRL-1

DESCRIPTION

Full-Scale Commercial Deployment

Sub-Scale Commercial Demonstration Plant (>25 per cent commercial-scale)

Pilot Plant (>5 per cent commercial-scale)

Process development unit (0.1-5 per cent ong>ofong> full-scale)

Component Validation in relevant environment

Laboratory Component Testing

Analytical, ‘Proong>ofong> ong>ofong> Concept’

Application Formulated

Basic Principles Observed

The achievement ong>ofong> a given TRL will inform process developers and organisations ong>ofong> ong>theong> resources required to achieve

ong>theong> next level ong>ofong> readiness. An achievement ong>ofong> TRL-9 indicates that ong>theong> first successful operation at a scale normally

associated with commercial deployment has been achieved. Progressively higher technical and financial risks are

required to achieve ong>theong> TRLs up to and including TRL-9.

It is important to note that ong>theong> description in TRL-9 ong>ofong> ‘commercial deployment’ refers to ong>theong> physical scale ong>ofong> deployment

(that is, at ong>theong> scale required in a commercial application). Thus, a technology may reach TRL-9 and be technically

mature and still not meet project economic requirements in existing markets. The TRL system does not address ong>theong>

commercial or economic feasibility ong>ofong> deploying ong>theong> technology (EPRI ong>2011ong>a).

In this context ong>theong> TRL classification is not intended to express overall project development risk. This is project specific

and progress on first-ong>ofong>-a-kind projects may be influenced by ong>theong> extent to which sophisticated project proponents have

gained confidence in technology components and ong>theong>ir ability to integrate ong>theong>se into a viable process. This may mean

ong>theong> project proponent may select a particular technology component with a lower TRL if ong>theong> project specific business

case is better than an alternative technology component with a higher TRL.

Figure 22 summarises ong>theong> current technical readiness ong>ofong> some ong>ofong> ong>theong> main capture technologies.

Figure 22 Summary ong>ofong> TRL for capture technologies

Post-combustion capture

Pre-combustion capture

Hydrogen red gas turbine

Oxyfuel combustion

1 2 3 4 5 6 7 8 9

Technology Readiness Level (max. 9)

Source: EPRI (ong>2011ong>a)

36 THE GLOBAL STATUS OF CCS: ong>2011ong>


In recent years, ‘full-scale’ coal-fired power plants purchased by utilities have a new capacity exceeding 400MWe and

mostly greater than 600MWe. For ong>theong> purposes ong>ofong> a TRL assessment ong>ofong> advanced coal technology, it is suggested that

TRL-9 would be achieved by a power plant in ong>theong> capacity range 400 to 800MW(net). By this metric, successful operation

ong>ofong> Kemper County air blown IGCC with capture (582MW) would achieve TRL-9 for this particular technology, while

Boundary Dam (110MWe) using amine based PCC and FutureGen 2.0 (200MWe) using oxy-firing would achieve

TRL-8 for ong>theong>se technologies.

These TRLs for carbon capture generally indicate ong>theong> technologies are in ong>theong> late development and early demonstration

stage overall in relation to power generation, with some applications more advanced than this. By contrast, ong>theong>re is

no TRL ranking available for renewable technology. However, an assessment ong>ofong> technology deployment by EPRI

indicates that, by way ong>ofong> example, some solar technologies using molten salt are in ong>theong> late development phase, while

concentrating photovoltaics are in ong>theong> early demonstration phase. Onshore wind (less than 3MW capacity) is a mature

technology while large-scale ong>ofong>fshore wind technologies using fixed foundations in greater than 30 metres water depth

are also in ong>theong> demonstration phase. Large-scale floating platform ong>ofong>fshore wind systems are in very early development.

CHAPTER 3

In natural gas or chemical processing, carbon capture is a mature technology. This maturity is reflected in ong>theong> number

ong>ofong> active industrial projects in ong>theong> Execute or Operate stage (Figure 23). The less mature ong>statusong> ong>ofong> capture technologies

when applied to ong>theong> power sector is evident, with most projects in ong>theong> planning stages (Identify, Evaluate or Define).

Figure 23 Applications ong>ofong> capture technologies to LSIPs

Power generation

Pre-combustion capture

Post-combustion capture

Oxyfuel combustion capture

Various/not speci ed

Industry

Pre-combustion capture

Industrial separation

Number ong>ofong> projects

5 10 15 20 25 30

Planned

Execute

Operate

Projects in ong>theong> natural gas or chemical processing industries produce a relatively pure CO 2

by-product stream suitable

for storage, while power projects carry ong>theong> significant additional costs ong>ofong> installing capture equipment for separation ong>ofong>

CO 2

from ong>theong> combustion gases or synong>theong>sis gas.

For power generation no single CO 2

capture technology outperforms available alternate capture processes in terms ong>ofong>

cost and performance (Finkenrath ong>2011ong>). The range ong>ofong> applications worldwide, be it for new build or retrong>ofong>it, for ong>theong> many

types ong>ofong> coal and natural gas fuels, combined with ong>theong> local geographical, business, commercial, public acceptability and

regulatory conditions means that all three methods, appropriately integrated into power generation plants will ultimately

be required.

Post-combustion capture

Power sector PCC applications

In ong>theong> case ong>ofong> coal-based power, a typical PCC process is shown in Figure 24. Coal is combusted in air and ong>theong> liberated

heat is converted to electricity by steam-driven turbines connected to generators. The combustion results in a flue

gas mixture which is treated using existing pollution control technologies to reduce or eliminate oxides ong>ofong> nitrogen and

sulphur, and ash. A PCC process ong>theong>n aims to selectively separate CO 2

from ong>theong> remaining gas mixture, which can be

done at relatively low concentrations, in ong>theong> range five to 15 per cent. PCC has ong>theong> advantage in that it can be retrong>ofong>itted

to existing plants, where its end-ong>ofong>-pipe nature provides ong>theong> potential flexibility to operate without capture if required

by market conditions.

TECHNOLOGY

37


Figure 24 Typical post-combustion capture process for power generation

Fresh water Reduces NO x

Reduces ash Reduces sulphur Captures CO 2

Coal

Air

Pulverised

coal boiler

Selective

catalytic

reduction

Electrostatic

precipitator

Flue gas

desulphurisation

CO 2

removal

Flue gas

to stack

Steam

turbine

Power

Fly ash

Gypsum/waste

CO 2

for

compression and

storage, EOR,

or oong>theong>r use

Source: EPRI (ong>2011ong>a, p2-1)

The three main PCC processes are:

••

Absorption: ong>theong> uptake ong>ofong> CO 2

into ong>theong> bulk phase ong>ofong> anoong>theong>r material, for example dissolving CO 2

molecules into

a liquid solution. Virtually all near-term and mid-term PCC processes under development are absorption based.

••

Adsorption: ong>theong> selective uptake ong>ofong> CO 2

molecules onto a solid surface. The adsorbent selectively adsorbs CO 2

from

ong>theong> flue gas, and is ong>theong>n regenerated by lowering pressure and/or increasing temperature to liberate ong>theong> adsorbed

CO 2

. A claimed advantage ong>ofong> adsorption is that ong>theong> regeneration energy should be lower relative to absorption solvents.

••

Membranes: ong>theong> separation ong>ofong> CO 2

from flue gas by selectively permeating it through ong>theong> membrane material.

Like adsorbents, membranes are claimed to potentially ong>ofong>fer low energy capture processes.

There are currently no LSIPs operational in ong>theong> power sector utilising PCC technology, although Boundary Dam with

PCC is under construction, with planned operation in 2014. While ong>theong>re are no oong>theong>rs under construction at this scale

ong>theong>re are 16 PCC power projects in ong>theong> planning stages (Appendix C).

PCC technologies for power generation are derived from commonly available amine absorption processes which are

currently at a relatively small scale. Considerable re-engineering and scale-up is needed to apply ong>theong>se commercially.

Technologies that can be considered near-term, all utilising ong>theong> absorption process, have been tested at scale on

slipstreams no larger than five to 25MWe from coal-fired power plants.

Adsorbent and membrane technologies promise improved energy consumption, but ong>theong>se are in ong>theong> earlier phases

ong>ofong> development (Figure 25). Adsorption processes for PCC are still in ong>theong> small-scale kW range ong>ofong> demonstration while

little data exists on membrane systems for PCC, for which testing has been conducted at scales less than one tonne per

day with results that are not yet publicly available (Freeman and Rhudy 2007; Bhown and Freeman 2008, 2009, 2010).

Figure 25 Post-combustion capture TRL rankings

Absorption

Adsorption

Membrane

1 2 3 4 5 6 7 8 9

Technology Readiness Level (max. 9)

Source: Data from Freeman and Rhudy (2007) and Bhown and Freeman (2008, 2009, 2010)

The major challenges in PCC and much ong>ofong> ong>theong> R&D trends revolve around ong>theong> relatively large parasitic load CCS

imposes on a power plant, mainly due to capture and compression. Hence, development ong>ofong> new solvent chemistry,

new process designs, and novel power plant integration schemes are largely aimed at reducing ong>theong> parasitic load ong>ofong>

CCS. Early-stage research is also being conducted into more novel chemistries (EPRI ong>2011ong>a).

Figure 26, incorporating data from EPRI, shows ong>theong> potential to improve ong>theong> energy demand from PCC technologies for

a new build 595°C power plant using Powder River Basin (PRB) coal with various improvements in solvent regeneration

energies ong>ofong> an aqueous amine solvent (Dillon et al. 2010). The final bar shows that increasing ong>theong> steam temperature to

705°C with an advanced amine solvent increases ong>theong> net plant efficiency.

38 THE GLOBAL STATUS OF CCS: ong>2011ong>


Figure 26 Projected performance ong>ofong> post-combustion capture technologies

Technology improvements

Base power plant

With full post-combustion capture

Add improved amine

Add advanced amine

Add advanced ultra-supercritical boiler

24 26 28 30 32 34 36 38 40 42

Thermal efficiency (per cent)

Source: Dillon et al. (2010) as cited in EPRI (ong>2011ong>a, p4-13)

CHAPTER 3

Efficient integration ong>ofong> PCC into existing power plants to effectively utilise waste heat is a high priority if retrong>ofong>it is to be

viable for older plants. Recent studies show that even for lower efficiency power plants ong>theong> opportunity exists to significantly

reduce parasitic energy use, because ong>theong> capture process provides a sink for low temperature waste heat which was

uneconomic to recover in a power plant without capture. Such modifications utilise existing heat exchange technology

and in fact could be applied in near-term demonstration scale projects (Harkin et al. 2010).

There are also process operational challenges. Steam extraction for solvent regeneration reduces flow to ong>theong> low-pressure

turbine with significant power-plant production and operational impact. In addition, water use is increased significantly

with ong>theong> addition ong>ofong> PCC, particularly for water cooled plants. These situations will improve as ong>theong> energy efficiency ong>ofong>

capture improves.

The IEA Greenhouse Gas R&D Programme (IEAGHG) has identified ong>theong> need to better understand ong>theong> environmental

impact ong>ofong> emissions from PCC. Some absorption based PCC processes use organic bases, amines, in an aqueous solution

which react with CO 2

present in ong>theong> flue gas. It is recognised that certain flue gas components form by-products which

result in a loss ong>ofong> absorbent and an increase in operating costs. Pre-treatment ong>ofong> ong>theong> flue gas can limit ong>theong> absorbent losses.

In Europe, it is now recognised that atmospheric emissions from amine based PCC processes must be fully understood

and quantified as part ong>ofong> PCC deployment on a large scale, signalling ong>theong> need for increased research in this area.

Non-power PCC applications

For oil refineries, ong>theong> two most developed technologies likely to be used for emissions reduction from process heaters

(and utility boilers) are PCC and oxyfuel combustion. There has been limited development recently regarding PCC in oil

refinery applications. In one scenario ong>theong> 196 000 barrel a day Grangemouth refinery in Scotland studied capture ong>ofong> ong>theong>

CO 2

emissions from ong>theong> fired heaters and boilers on ong>theong> site (UNIDO 2010a).

PCC in cement manufacture is an ‘end-ong>ofong>-pipe’ option that would not require fundamental changes in ong>theong> clinker-burning

process and so could be available for new kilns and in particular for retrong>ofong>its to existing plants. In addition to absorption

and membrane technologies, anoong>theong>r area ong>ofong> promise in cement is carbonate which is an adsorption process in which

calcium oxide is put into contact with ong>theong> combustion gas containing CO 2

to produce calcium carbonate from which ong>theong>

CO 2

is ong>theong>n released to yield calcium oxide, hence closing ong>theong> loop. This is a technology currently being assessed by

ong>theong> cement industry as a potential retrong>ofong>it option for existing kilns and in ong>theong> development ong>ofong> new oxy-firing kilns.

It is understood that pilot projects are being discussed within ong>theong> cement industry but ong>theong>re have been few public

announcements. Research on CCS within ong>theong> cement sector is still at an early stage, with ong>theong>se activities focused

on both post-combustion and oxyfuel combustion capture technologies (UNIDO 2010b).

Pre-combustion capture

Pre-combustion capture has application for power generation, oil, gas and chemicals and where not oong>theong>rwise noted

this section references Booras (ong>2011ong>).

Current commercially available pre-combustion CO 2

capture processes are based on ong>theong> use ong>ofong> solvents. There are two

major generic types ong>ofong> CO 2

removal solvents for pre-combustion capture – chemical and physical. Typically all ong>theong> solvents

can accomplish greater than 90 per cent CO 2

removal. Pre-combustion capture ong>ofong> ong>theong> CO 2

under pressure incurs less ong>ofong>

an energy penalty (around 20 per cent) than current PCC technology (around 30 per cent) at 90 per cent CO 2

capture.

TECHNOLOGY

39


Pre-Combustion Capture Applications

CO 2

capture from oil, gas and chemical industries

The oil, gas and chemical industries have been separating CO 2

from gas streams for decades at commercial scale.

Many ong>ofong> ong>theong> world’s sources ong>ofong> natural gas contain CO 2

. In most cases ong>theong> CO 2

must be removed to meet ong>theong> purity

requirements ong>ofong> ong>theong> gas customers.

Steam methane reforming, autoong>theong>rmal reforming and partial oxidation (with oxygen) are widely used commercially

for ong>theong> production ong>ofong> hydrogen and chemicals such as ammonia and methanol from natural gas, refinery gas, propane,

butanes or naphtha. The CO 2

can be removed by using commercially available pre-combustion capture solvent

processes.

The gasification ong>ofong> coal, petroleum coke and heavy oils with oxygen is in widespread commercial use for ong>theong> production ong>ofong>

chemicals such as ammonia, urea, methanol, dimethyl eong>theong>r, SNG, gasoline and oong>theong>r transportation fuels. CO 2

removal

from coal gasification derived synong>theong>sis gas (syngas) is a mature commercial process widely practised throughout ong>theong>

world. Again, ong>theong> CO 2

can be removed by using commercially available pre-combustion capture solvent processes.

CO 2

capture from IGCC power plants

An IGCC plant is a facility which gasifies carbonaceous material (fossil or biomass or both) to produce a syngas which is

sent to a combined cycle gas turbine to generate electricity. The gasification and combined cycle sections are integrated

with each oong>theong>r to improve ong>theong>rmal efficiency. There are several IGCC plants in operation in several countries but to date

none ong>ofong> ong>theong>m has incorporated CO 2

capture.

In an IGCC plant CO 2

capture is accomplished by chemically modifying ong>theong> syngas (using a catalytic process known as

a ‘shift’ which produces hydrogen and CO 2

), ong>theong>n removing CO 2

using commercially available pre-combustion capture

solvent processes. In ong>theong> event ong>ofong> a need to vent ong>theong> CO 2

, additional purification may be needed to remove oong>theong>r

associated substances.

If CO 2

capture was to be retrong>ofong>itted to an IGCC plant that did not envisage ong>theong> future addition ong>ofong> capture ong>theong>re are

additional cost and performance penalties over a new built plant with capture. The extent ong>ofong> cost and performance

penalties is highly dependent on ong>theong> gasification technology and ong>theong> type ong>ofong> syngas treatment deployed.

For an IGCC plant with capture based on current technology ong>theong> TRL ong>ofong> ong>theong> major components is listed in Figure 27.

While many ong>ofong> ong>theong> component technologies are considered mature, ong>theong>re is an underlying need to construct and

operate at commercial-scale IGCC facilities with carbon capture to demonstrate ong>theong> host power-generation technology

integrated with capture.

Figure 27 TRL ong>ofong> pre-combustion capture components

Chemical capture solvents

Physical capture solvents

ASU/gasification/shift/sulphur removal

Hydrogen- red gas turbines

CO 2

compression/drying

1 2 3 4 5 6 7 8 9

Technology Readiness Level (max. 9)

Source: EPRI (ong>2011ong>a, p3-5)

40 THE GLOBAL STATUS OF CCS: ong>2011ong>


Pre-combustion CO 2

capture – development pathway

The major thrust in research, development and deployment for IGCC designs with capture is to reduce ong>theong> energy

penalty. While ong>theong> additional capital cost ong>ofong> capture equipment is not insignificant, it is net power output loss that is

ong>theong> most significant economic detriment ong>ofong> capture addition (EPRI ong>2011ong>a).

EPRI and ong>theong> United States DOE have identified a roadmap (Schong>ofong>f ong>2011ong>) ong>ofong> IGCC technology developments that

can potentially improve ong>theong> IGCC efficiency (with capture) to a level that matches or exceeds that ong>ofong> ong>theong> current IGCC

technology without capture, as illustrated in Figure 28. Oong>theong>r efficiency improvement paths are possible with oong>theong>r

combinations ong>ofong> technology enhancements for a range ong>ofong> different IGCC technologies.

Figure 28 IGCC developments to recover energy losses from CO 2

capture

Technology improvements

Base power plant

With full IGCC and capture

Add G Frame gas turbine

Add membrane-based air separation unit

Add coal feed as CO 2

slurry

Add advanced CCS

CHAPTER 3

24 26 28 30 32 34 36 38 40 42

Thermal efficiency (per cent)

Source: Schong>ofong>f (ong>2011ong>) as cited in EPRI (ong>2011ong>a, p3-11)

Oxyfuel combustion with CO 2

capture

In oxyfuel combustion processes, bulk nitrogen is removed from ong>theong> air before combustion. The resulting combustion

products will have CO 2

content up to about 90 per cent (dry basis). If regulations and geochemistry permit, ong>theong> raw,

dehydrated flue gas may be stored directly without ong>theong> need for furong>theong>r purification. Oong>theong>rwise, ong>theong> flue gas impurities

(predominantly oxygen, nitrogen and argon) may be removed. The added process equipment consists ong>ofong> equipment

largely familiar to power plant owners and operators. No chemical operations or significant on-site chemical inventory is

required. As a different technology can be used for final clean up, ong>theong> incremental cost (per tonne) to capture at least

98 per cent CO 2

is lower than ong>theong> incremental cost to capture 90 per cent CO 2

. Current information indicates that oxyfuel

combustion with CO 2

capture is at least competitive with pre and post-combustion CO 2

capture and may have a slight cost

advantage (EPRI ong>2011ong>a).

Oxyfuel combustion plants will include ong>theong> following major component systems:

••

Air Separation Unit (ASU) – This system separates oxygen from air and supplies ong>theong> oxygen for combustion;

••

Combustion/Heat Transfer/Gas Quality Control system – The components ong>ofong> this system are nearly ong>theong> same as

components for a corresponding air-fired plant; and

••

CO 2

Purification Unit (CPU) – The CPU will include a flue gas drying sub-system and compressors. If required,

it will also include a partial condensation process to purify ong>theong> product CO 2

and remove impurities to specified levels.

In addition, ong>theong>re will be material handling and ong>theong>rmal power utilisation systems, but ong>theong>se are unlikely to differ significantly

from ong>theong>ir air-fired counterparts. Plot space requirements are significant for ong>theong> ASU and CPUs.

Oxyfuel combustion may be employed with solid fuels such as coal, petroleum coke, and biomass, as well as liquid and

gaseous fuels. Ultra-low emissions ong>ofong> conventional pollutants can be achieved largely as a fortuitous result ong>ofong> ong>theong> CO 2

purification processes selected, and at little or no additional cost.

TECHNOLOGY

41


Oxyfuel combustion applications and ong>statusong>

Oxyfuel process for power generation

A ‘synong>theong>tic air’ approach is generally used for oxyfuel combustion processes proposed for steam-electric power plants.

In ong>theong> synong>theong>tic air approach, flue gas is recycled and introduced with oxygen in proportions that mimic ong>theong> combustion

and heat transfer properties ong>ofong> air.

The gross power production (turbo-generator output) from an oxy-fired power plant will be essentially ong>theong> same as a

comparable air-fired power plant. However, ong>theong> oxy-fired plant will have increased auxiliary power use. This will reduce

ong>theong> net power production (by approximately 23 per cent) and decrease net efficiency compared to an air-fired plant

with comparable gross output (EPRI ong>2011ong>a).

The TRL ong>ofong> oxyfuel component technologies is shown in Figure 29.

Figure 29 TRL for oxyfuel combustion components

ASU

Oxy- red boiler

CO 2

puri cation

CO 2

compression/drying

Oxy- red boiler with capture

1 2 3 4 5 6 7 8 9

Technology Readiness Level (max. 9)

Source: EPRI (ong>2011ong>a, p4-10)

The greatest remaining technical challenge is integrating ong>theong>se systems into a complete steam-electric power plant.

There is an underlying need to construct and operate an oxyfuel power generation facility with carbon capture at

commercial scale to demonstrate ong>theong> host power generation technology integrated with capture.

Two integrated oxyfuel combustion pilot plants (TRL-7) have been operated over ong>theong> past two years. Vattenfall has

operated a dried lignite-fuelled 30MWth pilot plant at ong>theong>ir Schwarze Pumpe power plant in Germany since mid-2009

and Total’s Lacq project in France, an oxy-natural gas 30MWth boiler has been in service since early 2010. Two additional

facilities will be brought into service in ong>2011ong>, ong>theong> CS Energy conversion ong>ofong> a 30MWe pulverised coal power plant to oxyfuel

combustion in Queensland, Australia and CIUDEN’s oxy-coal test facility in Spain that includes a 20MWth oxy-pulverised

coal (PC) boiler and a 30MWth oxy-Circulating Fluidised Bed (CFB) boiler (EPRI ong>2011ong>a).

Five larger scale demonstration plants (TRL-8) are in development worldwide. All ong>ofong> ong>theong>se are in ong>theong> planning/engineering

stages and ong>theong> decision to proceed to construction has yet to be made (Appendix C).

There are currently no full-scale (TRL-9) oxy-fired projects under development.

Oxyfuel process in oong>theong>r industries

Combustion in process heaters accounts for up to 60 per cent ong>ofong> an oil refinery’s CO 2

emissions. For an existing refinery,

all heaters and boilers on site would be modified for firing with pure oxygen, produced at a central location, and flue

gases from ong>theong> combustion plants would be initially treated at locations local to ong>theong> stacks (UNIDO 2010a).

Two different options for oxyfuel technology within ong>theong> cement industry have been proposed (UNIDO 2010b).

Partial capture is based on burning fuel in an oxygen/CO 2

environment (with flue gas recycling) in ong>theong> pre-calciner but

not in ong>theong> rotary kiln in order to recover a nearly pure CO 2

stream at ong>theong> end ong>ofong> one ong>ofong> ong>theong> dual preheaters. Total capture

is based on burning fuel in an oxygen/CO 2

environment (with flue gas recycling) in both ong>theong> pre-calciner and ong>theong> rotary

kiln to produce a nearly pure CO 2

stream from ong>theong> whole process.

Laboratory and process development unit activities are underway to achieve TRL-6 in ong>2011ong>. Construction and operation

ong>ofong> an oxyfuel combustion cement manufacture pilot plant is planned in ong>theong> ong>2011ong>-2014 time frame, achieving TRL-7

(UNIDO 2010b).

42 THE GLOBAL STATUS OF CCS: ong>2011ong>


Oxyfuel combustion future direction/challenges

An oxyfuel combustion power plant is an integrated plant and oxyfuel combustion technology development will require

commitment ong>ofong> ong>theong> whole power plant to ong>theong> technology. Thus, ong>theong> technology development path for oxyfuel combustion

may be more costly than that for eiong>theong>r pre-combustion or post-combustion capture which can be developed on slip

streams ong>ofong> existing plants.

While retrong>ofong>it/repowering schemes have been proposed, it has yet to be shown that ong>theong>y can result in an oxy-fired plant

that is lower in cost than an optimised, new-build plant. The large fleet ong>ofong> air-fired power plants in service, however,

calls for more study ong>ofong> this option.

Future efficiency improvements to ong>theong> oxyfuel combustion process for power generation include (EPRI ong>2011ong>b):

••

employing an advanced ultra supercritical steam turbine cycle: 680oC/700oC/352 bar (1256oF/1292oF/5100psia),

for an approximately 3.5 percentage point improvement;

••

gas pressurised oxyfuel combustion – reduction ong>ofong> recycle fan auxiliary power use and improvement ong>ofong> boiler

efficiency, approximately 1.4 percentage point improvement; and

CHAPTER 3

••

Chemical Looping Combustion for oxygen separation – dramatic reduction ong>ofong> auxiliary power used in air separation,

approximately five percentage point improvement.

These data are shown in Figure 30. However, ong>theong> benefits ong>ofong> both gas pressurised oxyfuel combustion and chemical

looping combustion may be difficult to achieve togeong>theong>r. Noneong>theong>less, chemical looping combustion combined with an

advanced ultra-supercritical steam turbine cycle may well be more than adequate to make up for ong>theong> added auxiliary

power in ong>theong> CO 2

purification unit and recycle fan. This could result in an oxyfuel combustion plant with near zero

emissions ong>ofong> conventional pollutants, up to 98 per cent CO 2

capture, and efficiency comparable to ong>theong> best power

plants currently being built (EPRI ong>2011ong>a).

Figure 30 Oxyfuel combustion developments to recover energy losses from CO 2

capture

Technology improvements

Base power plant

With oxyfuel combustion

Add advanced ultra supercritical boiler

Add pressurised oxy- red combustion

Add chemical looping combustion

24 26 28 30 32 34 36 38 40 42

Thermal efficiency (per cent)

Source: EPRI (ong>2011ong>a, p4-13)

TECHNOLOGY

43


Oong>theong>r industrial CO 2

capture

Most industrial CO 2

capture can be accomplished using ong>theong> previously described pre-, post- and oxyfuel approaches

to carbon capture.

However, in ong>theong> case ong>ofong> iron and steel manufacture, and biochemical biomass conversion, ong>theong> combination ong>ofong> technologies

used in ong>theong>se industries does not neatly fit ong>theong> strict pre-, post- and oxyfuel carbon capture approaches.

Iron and steel manufacture

There is no simple process available ong>ofong>f ong>theong> shelf that can currently accomplish low emissions in ong>theong> iron and steel

industry (UNIDO 2010c).

Three families ong>ofong> process routes involving carbon capture are being investigated for eventual scale-up to a size suitable

for commercial implementation:

••

A blast furnace variant, where ong>theong> top gas ong>ofong> ong>theong> blast furnace goes through CO 2

capture, but ong>theong> remaining reducing

gas is reinjected at ong>theong> base ong>ofong> ong>theong> reactor, which is operated with pure oxygen raong>theong>r than air. This has been called

ong>theong> Top Gas Recycling Blast Furnace (TGR-BF). The CO 2

-rich stream is sent to storage.

••

A smelting reduction process based on ong>theong> combination ong>ofong> a hot cyclone and ong>ofong> a bath smelter called HIsarna,

incorporating some ong>ofong> ong>theong> technology ong>ofong> ong>theong> HIsmelt process. The process also uses pure oxygen and generates

ong>ofong>f-gas which is almost ready for storage.

••

A direct reduction process, called ULCORED, which produces Direct Reduced Iron in a shaft furnace, eiong>theong>r from

natural gas or from coal gasification. Off-gas is recycled into ong>theong> process after CO 2

has been captured, which leaves

ong>theong> plant in a concentrated stream and goes to storage (UNIDO 2010c).

In ong>theong> nearer term, ong>theong> TGR-BF technology seems ong>theong> most promising solution, as existing blast furnaces can be retrong>ofong>itted

to ong>theong> new technology. Where natural gas is available, ULCORED is an attractive option, but requires ong>theong> construction

ong>ofong> purpose-built new technology shaft kilns. For greenfield steel mills, ong>theong> HIsarna process will also be an option.

The TGR-BF concept has been tested on a large-scale laboratory blast furnace with positive outcomes. For ong>theong> ULCORED

process, a one tonne per hour pilot is planned to be erected in ong>theong> next few years by Luossavaara-Kiirunavaara Aktiebolag

(LKAB) to fully validate ong>theong> concept. For ong>theong> HIsarna process, an eight tonne per hour pilot is to be erected and tested

in ong>theong> course ong>ofong> ong>theong> ULCOS (Ultra Low CO 2

Steelmaking) program.

ULCOS has been running in ong>theong> European Union (EU) since 2004. There are also oong>theong>r programs addressing this

challenge. Along with ULCOS, ong>theong>y are part ong>ofong> ong>theong> CO 2

Breakthrough Program, a forum where ong>theong> various national

and regional research and development programs on identifying breakthrough technologies for steel manufacture

can exchange information on ong>theong>ir projects.

Biochemical biomass conversion

Biochemical biomass conversion processes, for example fermentation, use living microorganisms to break down ong>theong>

feedstock and produce liquid and gaseous fuels. The CO 2

-rich ong>ofong>f-gases from ong>theong> fermentation tanks are dried and

compressed to facilitate transport and storage. However, CO 2

capture and storage from biomass-based industrial sources

is a mitigation technology that only receives little interest at present. There has been limited recent development regarding

capture in biochemical biomass conversion applications (UNIDO ong>2011ong>).

A common first generation process to produce bio-ethanol is ong>theong> fermentation ong>ofong> biomass, where a by-product is a

relatively pure stream ong>ofong> CO 2

. The CO 2

-rich ong>ofong>f-gases are dried and compressed to facilitate transport and storage.

One ong>ofong> ong>theong> first commercially operated ethanol plants integrated with CCS, and thus biomass-based industrial CO 2

capture and storage project, started operation at ong>theong> Arkalon bioethanol plant in Kansas, United States, during ong>theong> third

quarter ong>ofong> 2009 (UNIDO ong>2011ong>). A similar pilot project in ong>theong> United States, managed by ong>theong> MGSC, is expected to start

operation in ong>theong> second half ong>ofong> ong>2011ong>. From ong>theong> same CO 2

source as MGSC’s injection test project, ong>theong> larger scale

Illinois-ICCS project commenced construction in ong>2011ong>, with operation expected in 2013.

44 THE GLOBAL STATUS OF CCS: ong>2011ong>


Pathway to commercial deployment ong>ofong> capture technologies

Important role ong>ofong> demonstration projects

Capture technologies applied in ong>theong> current first-ong>ofong>-a-kind demonstration projects in ong>theong> power industry are as yet far

from optimal in ong>theong>ir performance. However, it is vital that such projects proceed urgently as ong>theong>y will demonstrate CCS

on a commercial-scale operating in an integrated mode, in a real power grid environment and with storage at sufficient

scale. Importantly, ong>theong>se will provide an understanding ong>ofong> ong>theong> economics and performance ong>ofong> commercial scale plants

in an overall sense, providing ong>theong> confidence that will be critical for future widespread deployment ong>ofong> ong>theong> technology.

Optimisation and enhanced integration, combined with technology improvements, will undoubtedly be necessary to

reduce cost and improve performance at a system and component basis. Progress at ong>theong> commercial CCS demonstration

scale has a key role to play in indicating ong>theong> priority areas to be addressed and in providing ong>theong> confidence for continued

investment in R&D for second and third generation technologies.

CHAPTER 3

If multiple CCS demonstrations with improved technologies and performance are to be achieved at large-scale (TRL-9)

by 2020 to address scaling uncertainties and allow commercial deployment to proceed at some time after that, ong>theong>n many

technologies need to be approaching ong>theong> pilot-plant stage (TRL-7) today. Applications ong>ofong> CO 2

capture in ong>theong> power sector

appear to be receiving enough funding to achieve pilot-plant scale, but advancing to sub-commercial scale demonstrations

and larger will require an order ong>ofong> magnitude greater level ong>ofong> funding. There are very few organisations funding

demonstrations at one-tenth to full commercial-scale. While this may not currently be constraining ong>theong> advancement

ong>ofong> improved CCS technologies, it soon will (EPRI ong>2011ong>a).

Each technology has particular implementation hurdles to overcome. Pre-combustion systems are ‘integrated’ by nature

and so operational problems in capture could impact on plant performance through lower reliability and availability.

Oxyfuel combustion systems also result in an integrated plant with potentially ong>theong> same issues as pre-combustion

systems. There is also a need to improve boiler design/performance and to have lower-cost processes for oxygen

production. Although post-combustion capture can be retrong>ofong>itted, significantly reducing ong>theong> capital investment at risk,

ong>theong>re is a continuing need to reduce cost and ong>theong> detrimental impact that ong>theong> technology has on ong>theong> performance ong>ofong> ong>theong>

plant. These issues mean that PCC’s application to older subcritical plants may not be appropriate due to ong>theong> current

high energy penalty increasing dispatch costs, thus impacting ong>theong>ir capacity factor and reducing consequent revenue.

However, ong>theong> ability to retrong>ofong>it to newly installed plants or to be installed at high-efficiency plants will be a critical aspect

in ensuring that assets are not stranded and are able to operate in an increasingly carbon constrained world.

The emphasis in capture from power plants has been on coal but ong>theong>re is an increasing recognition that CCS will have

to be applied to natural gas-fired plants as well. The relatively recently identified increase in worldwide gas reserves

(exemplified by shale gas) will mean that ong>theong>re will be a greater use ong>ofong> gas and for longer. If ong>theong> desired levels ong>ofong> atmospheric

CO 2

are to be achieved by 2050, CCS will have to be applied to gas-fired power plants as well as those using coal.

Importance ong>ofong> improving performance

Cost reductions for all types ong>ofong> capture remain paramount and key technology development actions are increasingly

focused on this issue, both for capital and operating costs. The detrimental impact ong>ofong> capture on ong>theong> performance ong>ofong>

a power plant, combined with ong>theong> high cost issue, remains anoong>theong>r key area to be addressed.

The cost per tonne ong>ofong> CO 2

avoided for each ong>ofong> ong>theong> technology types when applied to power generation with coal is

shown in Figure 31. The reference plant used for each case is a commercial supercritical PC plant. The fuel component

represents ong>theong> portion ong>ofong> ong>theong> CO 2

abatement cost attributable to ong>theong> additional fuel charges necessary to operate carbon

capture relative to ong>theong> reference plant. The figure suggests that a focus on reducing energy loss is warranted, with significant

potential improvement possible, particularly for PCC. Given ong>theong> uncertainties involved, at this stage it is difficult to identify

any single technology with a clear cost advantage.

TECHNOLOGY

45


Figure 31 Cost ong>ofong> CO 2

avoided for capture technologies

Oxyfuel combustion

IGCC

Post-combustion capture

10 20 30 40 50 60 70 80 90

US$/tonne

Capital costs Operating and storage costs Fuel costs

Source: Global CCS Institute analysis

The analysis in this section has been focused on CO 2

capture technologies and potential improvements to reduce ong>theong>

energy losses and capital costs associated with capture. However, a major contribution to ong>theong> reduction ong>ofong> CO 2

emissions

from fossil based plants will be achieved through increases in ong>theong> efficiency ong>ofong> ong>theong> basic technologies ong>ofong> pulverised

coal combustion and combustion (gas) turbines. Improving this best-available technology in an efficiency sense,

be it component and/or system based, will partially ong>ofong>fset ong>theong> energy impact ong>ofong> capture on ong>theong> performance ong>ofong> ong>theong> plant,

especially if second and third generation capture technologies are also embraced. Optimisation and integration on

a component and system level is a key area which will result in improvements in performance.

For all technologies, ong>theong>re is an underlying need to construct and operate commercial-scale facilities with carbon

capture to demonstrate ong>theong> host power generation technology integrated with capture.

Within pre-combustion capture, ong>theong>re is a need to improve ong>theong> CO-shift and CO 2

-capture with new adsorption media,

new catalysts and by optimising process integration.

For post-combustion capture, ong>theong> emphasis needs to be on improving first generation solvents through catalysts

and chemical modifications to improve loading efficiency, solvent loss and environmental impacts. In addition,

second generation solvents need developing to combine CO 2

and SO 2

removal. Longer term third generation capture

processes are also needed based upon phase change solvents, ionic liquids and adsorption based developments.

For oxyfuel combustion ong>theong>re is a need for more efficient cycles, such as chemical looping for coal and oxy-cycles

for gas turbines, and for a reduction in ong>theong> energy penalty for oxygen production.

CO 2

specifications and ong>theong> impact ong>ofong> impurities need to be better understood as ong>theong>se affect ong>theong> magnitude ong>ofong> CCS

deployed, especially in a hub concept that brings togeong>theong>r CO 2

from different sources prior to storage.

Consequently, ong>theong>re are development routes for all ong>theong> three main types ong>ofong> capture. In addition, ong>theong> ability to retrong>ofong>it

future generation technologies to an existing highly efficient plant that already has capture incorporated but still has

substantial residual life will also need to be understood. This would address ong>theong> minimisation ong>ofong> ‘stranded assets’

within a power company’s portfolio.

Importance ong>ofong> R&D and pilot scale projects in technology development

Small to medium-sized technology demonstration projects, even if not fully integrated, provide a number ong>ofong> benefits

that materially support progress ong>ofong> CCS towards commercialisation. These projects are essential to decrease technical

uncertainty with modest investment, but also lay ong>theong> foundation for building ong>theong> regional familiarity, skills and capacity

necessary for ong>theong> demonstration and deployment ong>ofong> CCS, including:

••

on-ong>theong>-job learning opportunity for technicians, engineers, scientists and managers;

••

testing ong>theong> legal and regulatory system and familiarising regulators with new technologies;

••

testing equipment and boundaries in a way that could not be contemplated at large scale;

••

providing opportunities for a real-world working relationship when pursued through an industry partnership;

••

comparative assessment ong>ofong> ong>theong> progress ong>ofong> technology development; and

••

opportunity for real community engagement.

46 THE GLOBAL STATUS OF CCS: ong>2011ong>


There is substantial activity being undertaken ong>globalong>ly by research organisations, technology providers and industry to

test CCS technology at pilot scale under industrial conditions. These projects face significant financial hurdles. This type

ong>ofong> R&D is expensive when compared with laboratory scale activities, due to its scale, operating costs, insurance and

legal costs. It requires long-term funding, in ong>theong> order ong>ofong> five to 10 years, with certainty ong>ofong> cash flows, and provision ong>ofong>

contingency allowance. These circumstances are not a neat fit with traditional R&D funding models. Long-term funding

support for CCS R&D pilot projects is an essential element for technology commercialisation.

Both demonstration at industrial scale and ongoing R&D focused on improvement ong>ofong> component performance is necessary

for successful technology evolution. The early demonstration projects will identify unanticipated construction and operating

problems through ‘learning by doing’. For ong>theong>se reasons, ong>theong>y are usually conservative in design. While ‘learning by doing’

can result in improvements over time, it may not provide ong>theong> significant step changes in cost and performance required to

make CO 2

capture more economically viable (DOE NETL 2010b). R&D complementary to demonstration programs is

essential to promote step changes and manage ong>theong> complexity and risk with new components so that ong>theong>y can contribute

to improved performance in ong>theong> next generation ong>ofong> large-scale CCS projects.

CHAPTER 3

3.2 Transport

Transport ong>ofong> CO 2

from its place ong>ofong> capture to where it will be finally stored is a vital link in ong>theong> CCS chain. While for some

projects ong>theong> two sites may be almost co-located, requiring ong>theong> CO 2

to be moved over very short distances point-to-point,

for most projects ong>theong> transport will extend to tens or even hundreds ong>ofong> kilometres. As this distance increases, so does ong>theong>

cost and, in many instances, so do ong>theong> number ong>ofong> challenges that need to be met. These challenges include securing

rights-ong>ofong>-way and public acceptance as well as technological issues such as re-compression and monitoring.

It has been estimated that to support ong>theong> 3 400 industrial scale CCS projects by 2050 in ong>theong> IEA BLUE map scenario,

over 200 000km ong>ofong> pipeline would need to be constructed, at a cost ong>ofong> US$2.5 to 3 trillion (Insight Economics ong>2011ong>).

This means that ong>theong> transport ong>ofong> CO 2

will become an important industrial sector requiring very significant planning and

investment over a relatively short period ong>ofong> time. In addition, under certain conditions, some transport is likely to be

in specially designed and built ships.

In oong>theong>r industries ong>theong>re is extensive experience in moving very large quantities ong>ofong> liquids and gases over long

distances, by both pipeline and ship, for example in transporting natural gas and LNG. Specifically for CO 2

ong>theong>re are

many years ong>ofong> experience in building and operating pipelines and vessels for transport, particularly in ong>theong> United States.

As a result, ong>theong>re is well developed knowledge ong>ofong> ong>theong> necessary technology and experience in dealing with many

ong>ofong> ong>theong> challenges that need to be addressed. However, it is ong>theong> scale ong>ofong> ong>theong> future CO 2

transport task that poses

a major challenge.

It is likely that full commercial deployment ong>ofong> CCS will rely on a complex transport infrastructure with many carbon sources

being linked to storage sinks through a shared network using pipelines and in some cases ships. Establishing such

networks will result in many environmental and commercial benefits but will require early and close cooperation between

all ong>theong> stakeholders, in particular industry and governments.

Pipelines

Pipelines are—and are likely to continue to be—by far ong>theong> main method ong>ofong> transporting ong>theong> very large quantities ong>ofong> CO 2

involved in CCS. Pipelines generally are an established technology, both on land and under ong>theong> sea. In ong>theong> United States

alone ong>theong>re are approximately 800 000km ong>ofong> hazardous liquid and natural gas pipelines, in addition to 3.5 million kilometres

ong>ofong> natural gas distribution lines.

There are currently nearly 6 000km ong>ofong> pipelines actively transporting CO 2

, ong>theong> large majority being in ong>theong> United States

network (Figure 32). This network transports approximately 50Mtpa ong>ofong> CO 2

and has been developed over ong>theong> past 40 years.

TECHNOLOGY

47


Figure 32 Existing and planned CO 2

pipelines in North America

CO 2

pipelines in North America

In service

Proposed

Different colours represent

different pipeline operations

CO 2

Sources

Source: Data supplied by Ventyx, United States Department ong>ofong> Energy’s National Energy Technology Laboratory and National Sequestration Database and

Geographic Information System

48 THE GLOBAL STATUS OF CCS: ong>2011ong>


The scale ong>ofong> pipeline infrastructure needed to support CCS deployment in ong>theong> United States is estimated to range from

approximately 8 000 to 21 000km (5 000 to 13 000 miles) in 2020 and from approximately 35 000 to 58 000km

(22 000 to 36 000 miles) in 2050 (Dooley et al. 2009; ICF International 2009). Given that ong>theong> United States natural

gas industry built 33 521km (20 829 miles) ong>ofong> pipeline between 1998 and 2007 (EIA 2008), ong>theong>se CO 2

construction

rates seem achievable. While achievable, CO 2

pipeline development will compete for resources, training needs,

and commodities such as steel with oong>theong>r pipeline construction needs.

In Europe, ong>theong> CO 2

Europipe consortium has estimated ong>theong> total pipeline length required to meet ong>theong> existing plans for

CCS development in ong>theong> EU and Norway—using both onshore and ong>ofong>fshore storage—would be around 2 300km by

2020, 15 000km by 2030 and 22 000km by 2050 (Figure 33, Neele et al. 2010). These estimates do not include ong>theong>

pipeline length required for linking individual projects to ong>theong> main pipeline grid. According to ong>theong> CO 2

Europipe report,

ong>theong> countries with ong>theong> largest amount ong>ofong> pipeline to be constructed are Germany, Norway and Poland mainly due to ong>theong>

large quantities ong>ofong> CO 2

to be transported, requiring several parallel pipelines in some cases. However, France, ong>theong> countries

around ong>theong> Baltic Sea, ong>theong> United Kingdom and Romania would need to be particularly active in ong>theong> period to 2030.

In fact, for many EU Member States ong>theong> largest effort in ong>theong> construction ong>ofong> pipelines would be expected between 2020

and 2030, since ong>theong> larger part ong>ofong> ong>theong> network needs to be in place by 2030. For this scale ong>ofong> development ong>theong> rate

ong>ofong> construction would need to be around 1 200 to 1 500km a year. As with ong>theong> United States, Europe could meet this

pipeline construction capacity.

CHAPTER 3

Figure 33 European CO 2

transport corridors and volumes, CO 2

Europipe reference scenario 2050

Reference Scenario 2050

Indicative CO transport volumes (Mtpa)

2

Gas field clusters

Aquifer clusters

Source clusters

Source: Neele et al. (2010)

TECHNOLOGY

49


Clusters, hubs and networks

As mentioned previously, early mover projects are likely to rely mainly or exclusively on point-to-point transport through

dedicated pipelines. However, ong>theong> estimates ong>ofong> future CO 2

transport capacities above take into account ong>theong> development

ong>ofong> clusters, hubs and networks. The identification ong>ofong> potential clusters, hubs and networks is normally based on a

comprehensive review and matching ong>ofong> sources (CO 2

emitters) and sinks (CO 2

storage sites). Such work has already

been undertaken in many regions ong>ofong> ong>theong> world and furong>theong>r studies are continuing.

Large-scale deployment ong>ofong> CCS should result in ong>theong> linking ong>ofong> clusters ong>ofong> proximate CO 2

sources, through a hub,

to clusters ong>ofong> sinks by trunk pipelines. Then shorter collection, feeder or distribution pipelines would link ong>theong> individual

sources and sinks into ong>theong> network. A simple network would consist ong>ofong> a ‘tree’ where each ong>ofong> ong>theong> branches represented

feeder pipelines from sources ong>ofong> CO 2

, ong>theong> trunk ong>ofong> ong>theong> tree would be ong>theong> main CO 2

pipeline and ong>theong> roots would be ong>theong>

distribution pipelines linking to ong>theong> various sinks.

There are significant economies ong>ofong> scale that can result from a shared infrastructure. A clustered transport system could

potentially save well over 25 per cent ong>ofong> expenditure compared to a point-to-point system, depending on ong>theong> scale ong>ofong> ong>theong>

cluster (McKinsey 2008; Mikunda et al. 2010). In addition, developing such a network can significantly reduce barriers

to future investment. The participation ong>ofong> multiple stakeholders and industries has ong>theong> potential to develop business and

financing structures to underpin future commercial CCS markets. Networks can also encourage and increase ong>theong> speed

ong>ofong> deployment in ong>theong> region, for example by reducing ong>theong> total number ong>ofong> permits that would need to be issued for pipelines.

As a result, creation ong>ofong> networks can reduce ong>theong> financial risks associated with CCS projects and improve business cases

for individual CCS projects. Networks also open ong>theong> opportunity to connect small emitters for whom point-to-point solutions

may be too expensive and to build up regional employment and expertise in ong>theong> necessary technologies.

However, one major difficulty faced when establishing a network that initially invests in over-sized pipelines is that ong>theong>

large investment needed can add considerable financial risk to early mover projects. While ong>theong> spare pipeline capacity

is anticipated to eventually be taken up by new entrants, this risk needs to be understood, in particular by governments

when providing incentives for demonstration. This issue is also closely linked to that ong>ofong> third-party access to ong>theong>

network pipeline infrastructure and ong>theong> likely need to regulate such access. Finally, ong>theong>re can be issues related to ong>theong>

composition ong>ofong> ong>theong> gases, in particular ong>theong> different incidental associated substances in ong>theong> CO 2

stream that will vary

from source to source and how ong>theong>y interact when combined in ong>theong> pipeline. All ong>theong>se issues require close cooperation

between all ong>theong> different industrial partners and ong>theong> local and national authorities. This needs to start early as timing can

be critical.

There are a number ong>ofong> hubs and clusters being proposed or developed in Australia, Europe and North America.

In Australia, ong>theong> Collie Hub project is a joint venture which is currently being led by ong>theong> Western Australian state

government working with its multiple industry partners. The Collie Hub is currently concentrating on its storage and

transport issues in order to progress ong>theong> feasibility study. Work has commenced on ong>theong> feasibility study for ong>theong> pipeline

network that will support ong>theong> project’s enabling and base cases. Provided ong>theong> enabling case (test sequestration)

demonstrates that ong>theong> target storage site is suitable for ong>theong> long term storage ong>ofong> CO 2

ong>theong> base case will proceed. The base

case first entails ong>theong> capture ong>ofong> up to 2.5Mtpa ong>ofong> CO 2

from ong>theong> proposed Perdaman ammonia and urea plant in 2015 and

ong>theong> hub is ong>theong>n planned to furong>theong>r expand its capacity to up to 9Mtpa from coal-based industries in ong>theong> Collie region.

Also in Australia, ong>theong> CarbonNet CCS network, which is currently being led by ong>theong> Victorian state government, is planning

to integrate multiple CCS projects and proponents across ong>theong> entire CCS value chain within ong>theong> next 10 years, and in doing

so progressively lower barriers to entry for new participants. Initially sized to capture and store 1.2Mtpa ong>ofong> CO 2

emissions

before 2018, ong>theong> network will have ong>theong> potential to scale-up to support over 20Mtpa ong>theong>reafter, and potentially with furong>theong>r

growth to service Australia’s eastern seaboard.

In Europe, ong>theong> most developed CCS network project to date is in ong>theong> area around Rotterdam. RCI started in 2006 and

now 18 major companies are cooperating to provide feasibility level engineering studies for capture projects and a CCS

infrastructure business case (RCI ong>2011ong>). There has also been a feasibility study conducted on ong>theong> CO 2

Liquid Logistics

Shipping Concept that will provide emitters with a complete logistical transportation solution for captured CO 2

from ong>theong>ir

site to an ong>ofong>fshore storage location (Vopak and Anthony Veder ong>2011ong>). Eventually ong>theong> project aims to collect CO 2

from many

ong>ofong> ong>theong> sources, collect it in an intermediate hub by means ong>ofong> a common transport infrastructure and ong>theong>n deliver ong>theong> CO 2

by pipeline or ship to ong>theong> end-user (including for EOR) or to store in deep geological formations under ong>theong> North Sea.

Initially ong>theong> network would scale-up rapidly from a demonstration phase starting capturing and storing around 2015 to

handling as much as 20Mtpa ong>ofong> CO 2

from ong>theong> area by 2025. It is expected that ong>theong> network will create economies ong>ofong> scale

and help lower ong>theong> overall cost ong>ofong> CCS in ong>theong> Rotterdam region.

50 THE GLOBAL STATUS OF CCS: ong>2011ong>


Anoong>theong>r important European network is developing in ong>theong> South Yorkshire and Humber region ong>ofong> ong>theong> United Kingdom.

This geographically relatively small region has many similarities with Rotterdam with several major carbon emitting

facilities (power plants, refineries and steel plants) in a relatively small area with good access to ong>theong> North Sea. The total

emissions for ong>theong> region are ong>theong> highest in ong>theong> United Kingdom at around 60Mtpa. Storage could initially take place in one

ong>ofong> two ong>ofong>fshore clusters ong>ofong> gas fields and later in a saline aquifer in ong>theong> norong>theong>rn sector ong>ofong> ong>theong> souong>theong>rn North Sea. There is

also some EOR potential that could be realised in ong>theong> region. A terminal for shipping ong>ofong> CO 2

could also be included in ong>theong>

planning for export ong>ofong> CO 2

for use for EOR or for import ong>ofong> CO 2

for storage in ong>theong> region. Three ong>ofong> ong>theong> power plants in ong>theong>

region have been put forward by ong>theong> Government ong>ofong> ong>theong> United Kingdom for support from ong>theong> EU’s NER300 program.

In ong>theong> United States, ong>theong> approach to networks has been somewhat different with ong>theong> emphasis being on identification,

characterisation and testing ong>ofong> potential large storage sites. In ong>theong> United States ong>theong> RCSP form ong>theong> core ong>ofong> a nationwide

network to address climate change by assessing ong>theong> technical and economic viability ong>ofong> various approaches for

capturing and permanently storing CO 2

. One ong>ofong> ong>theong> Regional Partnerships—ong>theong> Plains CO 2

Reduction Partnership

(PCOR)—also covers ong>theong> important plains area ong>ofong> Canada (including ong>theong> Weyburn-Midale site).

CHAPTER 3

Based on ong>theong> outcome ong>ofong> ong>theong> work ong>ofong> ong>theong> Partnerships, regional pipeline networks are expected to be established which

could eventually become a national network. For example, one such regional network could be in ong>theong> Midwest region

where, in ong>theong> period 2020 to 2030, 2 282 miles (over 3 600km) ong>ofong> CO 2

trunk pipelines would be established to collect

CO 2

from as many as 95 relatively small high-purity sources and possibly eight power plants, and transport it to one ong>ofong>

three storage sites in ong>theong> region. By 2040 basically ong>theong> same pipeline network would be collecting CO 2

from ong>theong> same

small sources but also from over 40 power plants. By 2050 ong>theong> trunk pipeline network would have increased to around

4 300 miles (around 6 800km) and be capturing CO 2

from over 80 power plants.

The Integrated CO 2

Network (ICO 2

N) in Western Canada is a working group bringing togeong>theong>r many large industrial

companies, including power plants and coal and oil sands producers. It is taking a lead role in advocating for ong>theong>

development ong>ofong> integrated CCS infrastructure, whose benefits are expected to include ong>theong> reduction ong>ofong> unit costs through

economies ong>ofong> scale, reduced infrastructure, and increased safety, as well as minimising environmental impact during

construction, standardising and streamlining development and easing ong>theong> regulatory burden. Four CCS projects are being

developed in Alberta as part ong>ofong> ong>theong> Government ong>ofong> Alberta’s CCS funding program. One ong>ofong> ong>theong>se is ong>theong> development ong>ofong> ong>theong>

Alberta Carbon Trunk Line, a pipeline system that will be used to collect CO 2

from different sources and deliver it for use

in EOR in central Alberta and ong>theong>n south to ong>theong> Red Deer area (Figure 34).

Figure 34 Western Canadian CCS potential

Alaska

Yukon

Northwest Territories

Nunavut

British Columbia

Alberta

Saskatchewan

Manitoba

Operational Projects

1 Great Plains Synfuels

and Weyburn-Midale

Fort Nelson

5

Fort McMurray

Proposed Projects

2 Agrium Fertiliser with ACTL

3 Quest

4 Pioneer

5 Spectra Fort Nelson

6 Boundary Dam

7 Swan Hills Synfuels

8 Northwest Upgrader Refinery with ACTL

Legend

General EOR locations

Operational CO 2

pipelines

Proposed CO 2

pipelines

Potential CO 2

transport routes

Large CO 2

emissions locations

7

3

4 8

2

Edmonton

Lloydminster

Red Deer

Saskatoon

Calgary

Medicine Hat

Regina

Vancouver

1 6

Estevan

Washington

Montana

North Dakota

Beulah

Source: Integrated CO 2

Network; modified by ong>theong> Global CCS Institute

TECHNOLOGY

51


Shipping

Though ong>theong> majority ong>ofong> transport networks will mainly use pipelines, for some transport corridors ship transportation

can be an alternative option.

Shipment ong>ofong> CO 2

already takes place, but on a very small scale. At present, only four small ships transport food-quality CO 2

(around 1 000 tonnes) from large point sources to coastal distribution terminals in Europe. However, ong>theong> shipment ong>ofong> CO 2

in larger quantities is likely to have much in common with ong>theong> shipment ong>ofong> liquefied petroleum gas (LPG) or LNG, an area

in which ong>theong>re is already a great deal ong>ofong> expertise and which has developed into a worldwide industry over a period ong>ofong>

70 years. Design work on larger CO 2

carrier vessels is already underway in Norway and Japan. It is expected that ong>theong> CO 2

carriers will be very similar in design to that ong>ofong> semi-refrigerated LPG carriers which carry ong>theong>ir cargoes at temperatures

around minus 50°C. The likely capacities are in ong>theong> range ong>ofong> 10 000 to 40 000m 3 (typically 20 000 to 30 000m 3 ).

The collaborative project, CO 2

Europipe, examined ong>theong> relative merits ong>ofong> pipelines compared with shipping for CO 2

transport

(Neele et al. 2010). It concluded that shipping can play an important role in two types ong>ofong> projects:

••

at ong>theong> start-up ong>ofong> CCS, deployed during ong>theong> planning and construction ong>ofong> pipeline projects and infrastructures.

––

Once ong>theong> pipeline(s) become(s) available, ong>theong> ship(s) can eiong>theong>r be redeployed into anoong>theong>r trade, complement

ong>theong> pipeline to mitigate network downtime risks, and/or seize opportunities in developing CO 2

storage in easily

accessible smaller capacity fields; or

••

for ‘shipping-only’ projects in which shipping is ong>theong> most cost-effective solution.

The location ong>ofong> ong>theong> source is important when deciding if shipping could play an important role in transport. Sources would

normally be near ong>theong> coast so that ong>theong> CO 2

can be immediately liquefied prior to being stored and loaded into ong>theong> ships

(such as RCI); close to oong>theong>r CO 2

sources, thus increasing CO 2

supply capacity and decreasing ong>theong> risk ong>ofong> ships being idle

(as is ong>theong> case in ong>theong> South Yorkshire/Humber cluster); or near an important inland waterway (CO 2

from inland sources near

ong>theong> waterway can be collected in ships or barges and brought to ong>theong> primary loading facility before being transported to a sink).

Shipping is generally an interesting option where sources will have a relatively low capture rate at start up but ong>theong>n

increase ong>theong>ir volume over time, as shipping can adequately cope with fluctuating transport volumes. Concerning sinks,

relatively small ong>ofong>fshore fields which are remotely located, and for which a connection to ong>theong> pipeline network is not

feasible or economically attractive, may be assumed to be candidates for ship transport. However, such fields still need

to have sufficient storage capacity to support a shipping project for a minimum lifetime to justify ong>theong> investments on ong>theong>

subsea and port infrastructure enabling ong>theong> ship to discharge at ong>theong> fields. Injection rates also tend to be important

as fields with relatively low injection rates result in extended round trip durations which will decrease ong>theong> feasibility ong>ofong>

transport by ship. As maximum injection rates generally decrease over time, due to ong>theong> reservoir filling up, transport

by ship is expected to be more viable early in a storage site’s lifetime.

Comparing ong>theong> unit costs ong>ofong> CO 2

transport between ships and pipelines would indicate that pipelines are ong>theong> most

cost-effective solution when sources and sinks are located close to each oong>theong>r. With increasing distance, ong>theong> cost ong>ofong>

pipelines (especially capital expenses) gradually increases and can make shipping an economically more competitive

solution (ZEP ong>2011ong>). For ong>theong> development ong>ofong> CO 2

projects, it can be assumed that trades with ong>theong> shorter distance

between source and sink are developed first and implemented with a pipeline network. On ong>theong> oong>theong>r hand, shipping

is a more flexible solution and a ship can serve several different sources or hubs and transport to different storage

sites. In Europe, where a great part ong>ofong> ong>theong> potential storage is ong>ofong>fshore both in and around ong>theong> oil and gas fields ong>ofong> ong>theong>

North Sea, growing attention is being paid to ship transport because ong>ofong> this flexibility, ong>ofong>ten linked to ong>theong> use ong>ofong> CO 2

for EOR (even for fields with a relatively limited storage capacity).

While much ong>ofong> western Europe’s storage capacity is ong>ofong>fshore, ong>theong>re is already an extensive network ong>ofong> oil and gas pipelines

under ong>theong> North Sea, some ong>ofong> which may, in future, be used for transporting CO 2

. So, while shipping may eventually

play a significant role in transport in ong>theong> region, it is likely that pipelines will continue to be ong>theong> first choice solution

in most instances. This, however, is not ong>theong> case in many countries that have major sources close to ong>theong> coast but

do not have large potential storage areas in ong>theong>ir surrounding seas. For example, in Japan ship transport may be ong>theong>

preferred option.

The Institute is sponsoring a preliminary feasibility study by ong>theong> Chiyoda Corporation and ong>theong> University ong>ofong> Tokyo on

a CO 2

Carrier for Ship-based CCS. In Japan, as in many oong>theong>r countries, transportation ong>ofong> CO 2

by ocean going vessels

may provide an attractive and viable alternative to ong>theong> limitations imposed by sink/source matching conditions in ong>theong>

region. As also found by ong>theong> CO 2

Europipe study, ship-based CCS provides flexibility in changing ong>theong> capture site,

ong>theong> transportation route and storage site in a CCS project. The flexibility ong>ofong> time, place and size ong>ofong> each project component

in ong>theong> CCS chain provides for flexible decision-making by ong>theong> stakeholders, thus bringing about a smooth introduction ong>ofong>

CCS in ong>theong> area. This is particularly pertinent in a country where ong>theong> oil and gas industry is relatively undeveloped or weak,

unlike in some regions where ong>theong> industry has exploration data that can help in site selection. In addition, a transportation

52 THE GLOBAL STATUS OF CCS: ong>2011ong>


network ong>ofong> ship-based CCS in ong>theong> east Asian region might be attractive if ocean storage sites in this region are identified

to be at depths greater than 200m, where access by ship could be easier than access by pipeline.

The objective ong>ofong> ong>theong> Chiyoda study is to demonstrate ong>theong> technical and economic feasibility ong>ofong> a CO 2

shuttle ship equipped

with injection facilities. In such a system (Figure 35) no ocean platform (manned or un-manned) with buffer storage

would be necessary. In addition to providing a detailed engineering study for ong>theong> vessel, its storage tanks, flexible pipe

mechanism, ong>theong> pick-up buoy system and ong>theong> relevant communication systems, ong>theong> report will also review all relevant

international and national (Japanese) regulations covering ong>ofong>fshore storage ong>ofong> CO 2

.

Figure 35 Ship-based CO 2

carrier: Submerged Loading System general arrangement

Pick up buoy

Satellite

CHAPTER 3

Pick up

rope

Pick up float

Messenger line

Transponder

Pick up wire

Sinker

Tele communication

CO 2

Carrier

Coupler winch

(Sheer mount)

Battery

Communication buoy

Riser end fitting

Mooring wire

Bend

Signal & Battery charging wire

Flexible riser + Umbilical cable

Bend restrictor

Pipe protector

Anchor Christmas tree

Image courtesy ong>ofong> Chiyoda and University ong>ofong> Tokyo

Cost ong>ofong> transport

A number ong>ofong> studies have been carried out on ong>theong> cost ong>ofong> transporting CO 2

. Most ong>ofong> ong>theong>se cover pipelines but some also

cover shipping. The most recent study is that prepared by ong>theong> European Technology Platform for Zero Emission Fossil

Fuel Power Plants (ZEP ong>2011ong>).

The approach was to describe three methods ong>ofong> transportation and for each ong>ofong> ong>theong>se present detailed cost elements

and key cost drivers. The three methods are:

••

onshore pipeline transport;

••

ong>ofong>fshore pipeline transport; and

••

ship transport, including utilities.

For each method ong>ofong> transportation, ong>theong> capital costs and operating costs have been estimated using information

internally available to ong>theong> members ong>ofong> ZEP. Calculations were made for ong>theong> case ong>ofong> demonstration plants; when ong>theong>

transport was for a demonstration project with a capacity ong>ofong> 2.5Mtpa ong>ofong> CO 2

and would be point-to-point (Table 5);

and for commercially deployed CCS in large-scale networks would be in ong>theong> range ong>ofong> 10 to 20Mtpa from a cluster

ong>ofong> sources (Table 6).

In brief, ZEP found that ong>theong> unit cost (in € per tonne ong>ofong> CO 2

) is significantly less during commercial deployment than

during ong>theong> demonstration phase (typically 60 to 70 per cent less) for both onshore and ong>ofong>fshore pipelines. Not surprisingly,

ong>theong> cost ong>ofong> onshore pipeline transport is less than that for ong>ofong>fshore pipelines. During ong>theong> demonstration phase ong>theong>

cost ong>ofong> ong>ofong>fshore shipping is less than for ong>ofong>fshore pipelines, though this is not ong>theong> case where ong>theong> distances are short

(below 200km) and ong>theong> costs ong>ofong> liquefaction for shipping are taken into account. During commercial deployment where

quantities to be transported are in ong>theong> 10 to 20Mtpa range, shipping is more expensive than pipelines for distances

ong>ofong> 1 500 km or less.

TECHNOLOGY

53


Table 5 Transport cost estimates for CCS demonstration projects, 2.5Mtpa

DISTANCE (KM) 180 500 750 1500

Onshore pipe (€/t ong>ofong> CO 2

) 5.4 n/a n/a n/a

Offshore pipe (€/t ong>ofong> CO 2

) 9.3 20.4 28.7 51.7

Ship (€/t ong>ofong> CO 2

) 8.2 9.5 10.6 14.5

Liquefaction (for ship transport) (€/t ong>ofong> CO 2

) 5.3 5.3 5.3 5.3

Source: ZEP ong>2011ong>

Table 6 Transport cost estimates for large-scale networks ong>ofong> 20Mtpa

SPINE DISTANCE (KM) 180 500 750 1500

Onshore pipe (€/t ong>ofong> CO 2

) 1.5 3.7 5.3 n/a

Offshore pipe (€/t ong>ofong> CO 2

) 3.4 6.0 8.2 16.3

Ship (including liquefaction) (€/t ong>ofong> CO 2

) 11.1 12.2 13.2 16.1

Source: ZEP ong>2011ong>

3.3 Storage and use

This section provides an update to ong>theong> fundamental overview ong>ofong> storage which was provided in ong>theong> 2010 Status Report

(Global CCS Institute ong>2011ong>a) and covers ong>theong> progress ong>ofong> storage, resource assessments and ong>ofong> work on storage issues

and methods. It also covers some developments in ong>theong> use or utilisation ong>ofong> CO 2

, which is increasing in importance,

particularly to provide commercial drivers for CCS demonstration projects.

Progress in regional/national storage assessment

There has been additional progress on screening ong>ofong> potential deep saline formations in some nations since ong>theong> beginning

ong>ofong> ong>2011ong>. Grant programs, for example, ong>theong> EU NER300 and ong>theong> Australian Flagships program, including ong>theong> National CO 2

Infrastructure Plan, are stimulating new storage screening and more detailed site assessments. Brazil’s Centre ong>ofong>

Excellence in Research and Innovation in Petroleum, Mineral Resources and Carbon Storage (CEPAC) has also

progressed a storage atlas program. This progress by Brazil is reflected in ong>theong> current ong>statusong> ong>ofong> country-scale storage

screening assessments shown in Figure 36.

Figure 36 Current ong>statusong> ong>ofong> country-scale storage screening assessments

Deep saline formations

capacity assessment initiatives

Capacity

Characterised

Under development

Theoretical

Source: IEAGHG ong>2011ong>, modified by ong>theong> Global CCS Institute

54 THE GLOBAL STATUS OF CCS: ong>2011ong>


Brazil

Brazil has taken a multidisciplinary approach to its source-sink matching for assessment ong>ofong> potential applications ong>ofong>

CCS. CEPAC completed a Geographic Information System (GIS) based database ong>ofong> CO 2

sources and sinks in 2010.

CEPAC is currently reviewing and refining database content within its Brazilian Carbon Geological Sequestration

Map (CARBMAP) program, which commenced in 2007 (Rockett et al. ong>2011ong>). The project has ranked onshore and

ong>ofong>fshore basins and delineated ong>theong> greatest potential as being in ong>theong> Campos and Parana basins (petroleum reservoirs,

deep saline formations and coal beds). Theoretical capacity estimates have been established for depleted petroleum

reservoirs, with ong>theong> majority share (1.7Gt) in ong>theong> Campos Basin (Figure 37).

In March ong>2011ong>, Petrobras commenced reinjecting associated CO 2

(up to 0.7Mtpa at peak production) into ong>theong> Lula

giant oil field in 2150m ong>ofong> water depth ong>ofong>fshore ong>ofong> Rio de Janeiro. This injection occurs within ong>theong> Santos Basin pre-salt

fairway and follows onshore pilot testing in 2009 (Elsworth ong>2011ong>).

Figure 37 Brazil sedimentary basins

CHAPTER 3

75° W

60° W

45° W

30° W

Tacutu

Foz do

Amazonas

N

1:25.000.00


Amazonas

Marajó

São Luis

Solimões

Parnaíba

Acre

Araripe

Tucano Norte e

Jatobá

Tucano Sul e

Central

Parecis

Recôncavo

15° S

São Francisco

Espírito

Santo

Paranà

Campos

Santos

30° S

Sedimentary basins

Km

0 250 500 1.000

Image courtesy ong>ofong> CARBMAP, Brazil

TECHNOLOGY

55


China

China’s storage potential assessments are very high level in nature as ong>theong> focus has been largely on using CO 2

for

EOR and oong>theong>r industrial applications, raong>theong>r than permanent geological storage. Despite this, efforts to assess and

characterise China’s CO 2

storage capacity continue. The Chinese Geological Survey is currently conducting a survey

ong>ofong> China’s storage capacity, which is scheduled for completion in 2012 (MOST 2010).

At a project level, China is making good progress in developing and applying ways to utilise CO 2

. For example,

China Petroleum and Chemical Corporation Limited (Sinopec) has captured and injected 0.04Mtpa ong>ofong> CO 2

into Shengli

oil field. Similarly, PetroChina has been injecting 0.12Mtpa ong>ofong> CO 2

into Jinlin oil field since 2009. China Huaneng ong>Groupong>

have two PCC projects that capture CO 2

for use in song>ofong>t drink production and oong>theong>r industrial uses, including a 3 000tpa

PCC pilot (Beijing) and 0.12Mtpa PCC project (Shanghai). The ENN ong>Groupong> China is currently operating a pilot project

that uses CO 2

microalgae production with plans to scale-up to a 0.32Mtpa pilot facility in Inner Mongolia that will use

ong>theong> microalgae for production ong>ofong> bio-diesel and oong>theong>r biong>ofong>uels.

The Shenhua ong>Groupong> have commenced injection at ong>theong> CTL Plant (Ordos City) in Inner Mongolia, aiming to reach

0.1Mtpa ong>ofong> CO 2

injected into a saline formation. Sinopec plans to develop a 1Mtpa CCS project where ong>theong> captured

CO 2

will be used in EOR at ong>theong> Shenli oil field.

Europe

In Europe storage capacity assessments have continued at a national level.

In ong>theong> United Kingdom ong>theong> UK Energy Technologies Institute (ETI) funded a comprehensive assessment ong>ofong> national

CO 2

ong>ofong>fshore storage capacity at a cost in excess ong>ofong> £3.5 million. The CO 2

Storage Appraisal Project (UKSAP) identifies

ong>theong> storage units, ong>theong>ir ong>theong>oretical storage capacity and ong>theong> associated containment risks and economics. Started in

October 2009, results were expected to be available around ong>theong> end ong>ofong> August ong>2011ong> (UKSAP 2010).

The EC continues to support research into better defining storage capacity through ong>theong> issue ong>ofong> tenders and ong>theong>

Framework Programme 7 (FP7) call for projects. Their ‘SiteChar’ three year research projects were launched in

January and May ong>2011ong> and ong>theong> FP7 call also includes new storage related topics.

Of ong>theong> thirteen project proposals submitted to ong>theong> EIB under ong>theong> NER300 funding program on 9 May ong>2011ong>, four onshore

and nine ong>ofong>fshore storage projects have been proposed to investigate CO 2

storage in deep saline formations or depleted

hydrocarbon reservoirs and through EOR/enhanced gas recovery.

In Europe six European projects (Jänschwalde, Don Valley, Porto Tolle, ROAD, Bełchatów and Compostilla) signed an

agreement with ong>theong> EEPR (2010) in 2009-2010 to share and disseminate ong>theong> results ong>ofong> ong>theong>ir technological advances

and project progress through ong>theong> EC initiated European CCS Demonstration Project Network.

The Global CCS Institute is supporting storage programs including ong>theong> RCI depleted field assessment in ong>theong> souong>theong>rn

North Sea and ong>theong> Romanian Getica project (see case study textboxes).

Finally, ong>theong> Norwegian Government continues to support R&D, transport and subsea storage solutions and mapping

ong>ofong> relevant sites. By 2010 ong>theong> Norwegian operating projects, Snøhvit and Sleipner, had stored 1.0Mt and 13Mt ong>ofong> CO 2

respectively in deep saline formations (Ringrose et al. ong>2011ong>).

CASE STUDY

Romania

The GETICA CCS demonstration project was initiated by ong>theong> Romanian Government in 2010. It is located in ong>theong>

Oltenia region, ong>theong> most energy intensive region in Romania which is responsible for about 40 per cent ong>ofong> ong>theong>

country’s total CO 2

emissions. CO 2

captured from ong>theong> Turceni power plant is to be stored in deep saline aquifers

approximately 50km from ong>theong> power plant.

• A storage feasibility study was conducted in 2010 and ong>2011ong> by GeoEcoMar with technical support from

Schlumberger Carbon Services where existing geological, geophysical and well data was collected.

• Preliminary site screening included eleven sites ong>ofong> which two are considered suitable (Zone 1 and Zone 5)

for storage and will be ong>theong> object ong>ofong> furong>theong>r characterisation studies.

http://www.ong>globalong>ong>ccsong>institute.com/resources/projects/romanian-ong>ccsong>-demo-project-Getica

56 THE GLOBAL STATUS OF CCS: ong>2011ong>


CASE STUDY

The Neong>theong>rlands

The Rotterdam Climate Initiative (RCI) was launched in 2006 by ong>theong> port and city ong>ofong> Rotterdam for municipal

and regional authorities to work with ong>theong> corporate sector and cut CO 2

emissions by half by ong>theong> year 2025 while

adapting to climate change and promoting ong>theong> regional economy.

To evaluate storage options by 2015, RCI initiated in 2010 an ‘Independent Storage Assessment’ ong>ofong> ong>theong> Dutch

ong>ofong>fshore depleted hydrocarbon fields, carried out by TNO and published in ong>2011ong> (Neele et al. ong>2011ong>).

• In ong>theong> first phase existing data was collected and reviewed, leading to a detailed and comprehensive

database on ong>theong> P and Q Blocks ong>ofong> ong>theong> Dutch Continental Shelf, including its geology, wells and

well-related data and hydrocarbon production history.

CHAPTER 3

• In ong>theong> second phase a detailed feasibility study was conducted for ong>theong> most promising fields: P18, Q8-A

and K12-B.

• P18 is ong>theong> main candidate for ong>theong> ROAD (Rotterdam Opslag en Afvang Demonstratieproject)

CCS demonstration project. Total investment costs for P18 is estimated to be €65 million, for workover

ong>ofong> platform and six wells, excluding onshore installations and pipeline construction. Operational costs are

ong>ofong> ong>theong> order ong>ofong> €3.2 million a year; ong>theong>se do not include ong>theong> costs ong>ofong> (remotely) operating ong>theong> platform.

Progress in LSIP Storage

The Institute’s ong>2011ong> project survey has tried to identify ong>theong> stages that individual components (capture, transport and

storage) have reached to understand ong>theong> relative progress within an LSIP between ong>theong>se components. As storage

characterisation is site dependent, and arguably requires ong>theong> longest lead times, it can ong>ofong>ten end up lagging behind ong>theong>

progress on capture. However, it is important that storage assessment is at least as advanced or even more advanced

than oong>theong>r components in ong>theong> CCS chain, particularly for greenfield deep saline formation sites, as opposed to EOR

or depleted oil and gas reservoirs which have previously been investigated.

In Canada, ong>theong> Boundary Dam project moved into ong>theong> Execute stage in April ong>2011ong> and is expected to begin capturing

1Mtpa ong>ofong> CO 2

in 2014. While much ong>ofong> ong>theong> captured CO 2

will be targeted towards EOR activities, a significant portion

initially captured is expected to be integrated into ong>theong> Aquistore geological storage project. Aquistore will target basal

Cambrian-Ordovician strata within ong>theong> Williston Basin as ong>theong> storage complex. The Illinois-ICCS project has also

commenced construction in ong>2011ong> and plans to initially store ong>theong> CO 2

in a deep saline formation.The Quest project is

anticipated to move to Execute in 2012 and plans to store CO 2

in ong>theong> basal Cambrian deep saline formation sandstone,

similar to Aquistore.

Project development complexities and timeframes will constrain ong>theong> likelihood ong>ofong> more than one or two additional deep

saline formation LSIPs operating in ong>theong> next three years, regardless ong>ofong> funding or grant conditions.

When projects are less advanced in storage than in ong>theong> oong>theong>r components, this misalignment may lead to a delay in

ong>theong> timelines for ong>theong> integrated projects. Notably, ong>theong> Quest project is very advanced in its understanding ong>ofong> its storage

component and is ong>theong>reby enhancing its chances ong>ofong> meeting delivery timeframes.

Timelines for storage assessment

Based on results from ong>theong> ong>2011ong> project survey, ong>theong> estimated lead times for greenfield storage assessment remain at

five to 10 years or more. Often it is ong>theong> project risks and activities required to progress from ong>theong> Define to ong>theong> Execute

stage which creates ong>theong>se extended timeframes.

Many countries (Figure 36) have now undertaken storage screening and have addressed ong>theong> fundamental questions

concerning ong>theong> opportunity for adequate storage within ong>theong>ir jurisdictions. In many countries it is known that ong>theong>re is

reasonable potential for CO 2

storage. While national-scale screening remains important, ong>theong>re is an increasing need

to focus on maturing demonstration project storage sites and ‘learn by doing’.

TECHNOLOGY

57


Costs ong>ofong> storage

A recent study by ZEP (ong>2011ong>) identified ong>theong> magnitudes by which onshore storage presents lower costs relative to

ong>ofong>fshore storage, as well as ong>theong> extent to which depleted oil and gas fields present cost savings relative to deep saline

formations, particularly if ong>theong>re are re-usable legacy wells (Table 7). Despite ong>theong> relative cost advantages ong>ofong> certain options,

ZEP noted that ong>theong> lowest cost storage reservoirs contribute ong>theong> least to total available capacity. That is, given ong>theong> current

understanding ong>ofong> reservoir capacity in Europe, ong>theong>re is more storage capacity ong>ofong>fshore than onshore, and ong>theong>re is more

storage capacity in deep saline formations than in depleted oil and gas fields. Overall, while characterising storage remains

an essential part ong>ofong> CCS, ong>theong> estimated costs ong>ofong> storage remain low in relation to capture.

Table 7 ZEP cost estimates for storage 1 ONSHORE OFFSHORE

€ per tonne ong>ofong> CO 2

€ per tonne ong>ofong> CO 2

Depleted oil and gas fields (legacy wells) 3 6

Depleted oil and gas fields (no legacy wells) 4 10

Deep saline formation 5 14

1 Medium (or most likely) values from ong>theong> ZEP scenarios presented.

Source: ZEP (ong>2011ong>)

Continuing and emerging issues in storage

The significance ong>ofong> CO 2

EOR

While it is difficult to obtain precise quantities, it is clear that at present more anthroprogenic CO 2

is geologically stored

through EOR processes than through any oong>theong>r method ong>globalong>ly. There is also considerable interest in both developing

and OECD nations in CO 2

EOR for domestic oil production. This is particularly true for China, MENA and increasingly,

ong>theong> North Sea. Although ong>theong> vast majority ong>ofong> EOR has occurred within ong>theong> United States, many oong>theong>r countries including

Canada, China, Brazil, Hungary, Trinidad, and Turkey have a history ong>ofong> CO 2

EOR operations (Tzimas et al. 2005).

Not all oil fields are suited to CO 2

EOR. Generally speaking, fields are suitable if ong>theong>y contain oils that are moderate to

light, and relatively low in wax, and oong>theong>r precipitates. Furong>theong>r, ong>theong> fields should operate at pressures high enough to

enable CO 2

to mix with ong>theong> oil and form a single phase liquid, and have access to significant volumes ong>ofong> water, which

is injected alternately with ong>theong> CO 2

in most current EOR operations to minimise ong>theong> use ong>ofong> what is presently costly CO 2

.

The oil recovery process should operate above ong>theong> minimum miscible (mixing) pressure throughout ong>theong> entire reservoir.

Sufficient oil saturation in ong>theong> reservoir (at least 35 per cent) should be present. In general, ong>theong> more homogeneous ong>theong>

reservoir, ong>theong> more effective ong>theong> CO 2

flood will be.

Approximately 80 per cent ong>ofong> CO 2

used for EOR in ong>theong> United States at present is from naturally occurring sources

produced from ong>theong> subsurface (Global CCS Institute and Parsons Brinkerhong>ofong>f ong>2011ong>), which leads to a net contribution

raong>theong>r than abatement ong>ofong> CO 2

from ong>theong> atmosphere.

Alternatively, in souong>theong>rn Saskatchewan, Canada, as ong>ofong> early ong>2011ong>, a cumulative total ong>ofong> approximately 20Mt ong>ofong>

anthropogenic CO 2

has been stored in ong>theong> Weyburn and Midale fields. Over ong>theong> life ong>ofong> a CO 2

EOR program, CO 2

is

produced from ong>theong> oil, separated and reinjected, reducing ong>theong> requirement for new CO 2

supplies. Ultimately a field may

require almost no new CO 2

, relying on ong>theong> recycled CO 2

. Currently ong>theong> Weyburn field injects about half ‘new’ CO 2

and

half ‘recycled’ CO 2

. Essentially, all ong>ofong> ong>theong> CO 2

injected will remain in ong>theong> reservoir zone aside from minor losses from

operations or when intentional flaring is required.

Where recycling is not undertaken (for example ong>theong> Jong>ofong>fre field in Alberta, Canada) approximately 30 to 40 per cent ong>ofong> ong>theong>

injected CO 2

is permanently retained underground after ong>theong> CO 2

has migrated through ong>theong> formation or ‘broken through’

to ong>theong> oil producing wells. When a CO 2

EOR field is no longer producing enough oil to merit continuing EOR, ong>theong>re is an

opportunity to convert it to dedicated storage, should ong>theong> incentives to store raong>theong>r than extract and reuse CO 2

be in place.

In many cases though, ong>theong> end ong>ofong> EOR production is many years in ong>theong> future (between 15 and 35 years for example

with respect to ong>theong> Weyburn and Midale fields under present conditions).

58 THE GLOBAL STATUS OF CCS: ong>2011ong>


Generally, current EOR operations are not set up for ong>theong> detailed accounting anticipated for crediting permanent storage

ong>ofong> CO 2

. Although many operators may measure ong>theong> volumes ong>ofong> CO 2

injected into ong>theong> reservoir and ong>theong> amount ong>ofong> CO 2

recycled, ong>theong>y largely monitor ong>theong> movement ong>ofong> ong>theong> CO 2

in ong>theong> subsurface to optimise production. EOR operations are,

in many jurisdictions, required to perform wellbore integrity testing and prevent any oil field influence on ong>theong> soil or potable

aquifer systems but not to monitor CO 2

subsurface distribution.

For EOR to lead to abatement ong>ofong> atmospheric CO 2

, ong>theong> following factors should be in place:

••

ong>theong> CO 2

that is injected should be produced from human activity (anthropogenic) that would have oong>theong>rwise been

released to ong>theong> atmosphere; and

••

a system ong>ofong> crediting backed up by a monitoring system that demonstrates and measures net CO 2

permanently

stored must be established, including baseline monitoring.

There are a number ong>ofong> insights for CO 2

storage that can be derived from EOR including:

1. The easiest way to commence a CO 2

project at present onshore is through EOR, as ong>theong>re are existing regulations

and infrastructure in place. Moreover, EOR is presently ong>theong> most cost-effective option to store anthropogenic CO 2

.

CHAPTER 3

2. Providing ong>theong> knowledge is shared, CO 2

EOR provides an understanding ong>ofong> ong>theong> subsurface response to CO 2

injection.

There are more than 30 years ong>ofong> history ong>ofong> CO 2

injection in oil fields as well as ong>theong> lessons learned from long-distance

CO 2

pipeline transport. In addition, monitoring, measuring and verification methodologies can be tested if ong>theong>re are

regulatory and/or economic incentives in place for ong>theong> operator.

3. The requirements and expectations for dedicated CO 2

storage need to consider ong>theong> pragmatic approach taken for

EOR. For example, to what resolution do we need to know ong>theong> extent ong>ofong> ong>theong> CO 2

or how far it may migrate and what

are sufficient protocols to manage ong>theong> impacts ong>ofong> variations from expected responses

The Institute is currently examining ong>theong> potential ong>ofong> EOR to impact on storage with reviews being undertaken ong>ofong> ong>theong> technical,

regulatory and commercial issues. In providing a revenue source for ong>theong> CO 2

, EOR, with adequate MMV, can improve

ong>theong> viability ong>ofong> CCS projects while ensuring permanent storage.

Resource interaction, assessment and management

Sedimentary basins contain many different resources, eiong>theong>r as part ong>ofong> ong>theong> rock mass or as associated fluids, including coal,

coal bed methane, oil, natural gas, shale gas, geoong>theong>rmal energy, water, salt and oong>theong>r minerals ong>ofong> value. The incursion ong>ofong>

fluids such as CO 2

can impact directly on oong>theong>r resources and also connected pressure systems, which may have both good

and bad effects. These include, but are not limited to, assisting in production through increasing pressure (good) or mingling

with ong>theong> fluid and changing its chemical and physical properties (both good for example in EOR and potentially bad

for example in decreasing ong>theong> pH ong>ofong> water).

Resources extracted including petroleum, water or even heat have a more direct and immediate revenue value to

a jurisdiction, through resource rents, production sharing or royalties, when compared to ong>theong> broader environmental

benefit derived through storage ong>ofong> atmospheric CO 2

that is difficult to allocate. As a consequence, CO 2

storage is ong>ofong>ten

treated as ong>theong> lowest value use ong>ofong> pore space by individual jurisdictions, particularly in ong>theong> absence ong>ofong> a price on CO 2

emissions, and must also demonstrate little or no risk ong>ofong> adverse impact on oong>theong>r resources.

World population pressures and climate change are increasing ong>theong> scarcity and value ong>ofong> potable surface and near

surface water. There is also increasing competition for deeper potable groundwater resources and concern about ong>theong>

impacts that resource activities may have upon ong>theong>m. However, CO 2

storage will largely occur at greater than 800m

below ong>theong> ground surface, as below this depth ong>theong> CO 2

will be in a dense state. This is normally well below depths

typically accessed for groundwater production (zero to 300m).

Production ong>ofong> hydrocarbons in ong>theong> same area as carbon storage can and does occur successfully near current

CCS projects (for example Sleipner, Snøhvit, In Salah, and Weyburn-Midale). In areas ong>ofong> active exploration for,

or production ong>ofong>, energy resources, including coal bed/coal seam methane (CBM), shale gas, geoong>theong>rmal as well

as more conventional petroleum, concerns can be raised about issuing multiple property rights over ong>theong> same area.

Specifically, ong>theong>se issues can include ong>theong> hierarchy ong>ofong> those rights, as well as ong>theong> potential impact on producing

and non-producing wells as well as impacts on oong>theong>r resources in ong>theong> vicinity.

TECHNOLOGY

59


In some cases ong>theong> storage and resource extraction activities will occur at widely separated depths, in different strata

and have little or no impact upon one anoong>theong>r. For example, high temperature geoong>theong>rmal heat production for power

generation will exploit zones where ong>theong> subsurface temperatures are well above 120°C. This is generally at 3 000m

or more depth, beyond ong>theong> depths at which CO 2

storage will usually occur. Conversely, hydrocarbon exploration and

production, CBM production and shale gas production, can all occur at similar depths to CO 2

storage. But when

conventional hydrocarbon production is separated from ong>theong> CO 2

injection interval by sealing rocks eiong>theong>r above or below

ong>theong> producing interval, CO 2

injection and production can overlap in an area and be active at ong>theong> same time, as is seen

at Sleipner and oong>theong>r fields (Eiken et al. 2010).

The activities associated with oong>theong>r subsurface resources can impact on ong>theong> suitability ong>ofong> areas for secure CO 2

storage.

For example, some ong>ofong> ong>theong> hydraulic fracturing (fraccing) methods used in developing shale gas can impair ong>theong>

containment properties for CO 2

storage to ong>theong> point where CO 2

can no longer be stored under ong>theong> fracced interval.

CBM production requires de-watering to depressurise ong>theong> producing interval and free up methane through desorption

from ong>theong> coal. If ong>theong> produced water is not suited to treatment for furong>theong>r use at surface, it may be disposed ong>ofong> in

anoong>theong>r interval in ong>theong> subsurface. CBM may also compete for storage pore space for disposal ong>ofong> its waste water.

In summary, ong>theong>re are challenges in multiple resource use in ong>theong> subsurface, but as long as that interaction is understood,

CO 2

injection and storage can be compatible with oong>theong>r subsurface resource activities. Modelling ong>ofong> fluid flow is vital

to address and manage competing demands on a prospective injection target, particularly if ong>theong>re are concerns about

impact on oong>theong>r resources.

Open, closed and partly closed systems

Deep saline formations are considered to have ong>theong> greatest potential by far to store large quantities ong>ofong> CO 2

. In saline

formations, ong>theong> pressures have not been depleted through production ong>ofong> hydrocarbons, unless ong>theong>y are in pressure

communication with a hydrocarbon interval that has been produced.

Concerns about ong>theong> ability to sustain long-term injection ong>ofong> CO 2

in closed systems were discussed ong>theong> 2010 Status Report.

Pressure increases associated with injection ong>ofong> CO 2

may attain a high enough level where ong>theong> seal can fracture,

ong>theong>reby compromising ong>theong> integrity ong>ofong> ong>theong> storage complex. While this threshold can be accurately modelled and pressure

monitored downhole, ong>theong> large scale injection being considered in some projects necessitates careful monitoring

ong>ofong> pressures within ong>theong> deep saline formation.

An ‘open’ saline system has little or no barrier for some distance, so that CO 2

injected can displace ong>theong> saline water

through ong>theong> pore system. Modelling can predict ong>theong> rates ong>ofong> pressure build-up and dissipation and be used to optimise ong>theong>

rate ong>ofong> CO 2

injection. Zhou and Birkholzer (ong>2011ong>) have simulated injection into ong>theong> Mount Simon Sandstone in ong>theong> Illinois

Basin, considered by ong>theong> authors to be an ‘open’ system where ong>theong>re are no major lateral barriers to ong>theong> movement ong>ofong>

fluids (including CO 2

). They set up 20 hypoong>theong>tical injection ‘projects’ about 30km apart. Using properties consistent

for sealing formations in ong>theong> basin ong>theong> maximum pressure buildup over a 50 year period caused by 5Gt ong>ofong> CO 2

injection

does not breach ong>theong> seal and is safely contained.

Zhou and Birkholzer (ong>2011ong>) argue that naturally closed systems are rare (a fault-bounded oil field being an example).

Even in closed systems, seal integrity can be maintained through careful monitoring ong>ofong> pressures within and beyond

ong>theong> CO 2

plume and if necessary by releasing some salty water through designated wells.

Monitoring Measuring and Verification for risk management

Wright (ong>2011ong>) presented a schematic risk prong>ofong>ile through time illustrating that ong>theong> risks during ong>theong> lifecycle ong>ofong> a CO 2

storage project are arguably at ong>theong>ir highest near ong>theong> later stages ong>ofong> injection, towards ong>theong> end ong>ofong> ong>theong> maximum injection

rate plateau and ong>theong>n reducing rapidly following ong>theong> closure ong>ofong> a facility (Figure 38). This prong>ofong>ile is similar to that

presented by Benson (2007) and points to ong>theong> progressive reduction ong>ofong> risk post injection with time. Processes that

occur over time to reduce ong>theong> risk include pressure dissipation and residual trapping ong>ofong> ong>theong> CO 2

in ong>theong> pore spaces.

60 THE GLOBAL STATUS OF CCS: ong>2011ong>


Figure 38 Schematic risk prong>ofong>ile for a storage project

Risk

Baseline

data

acquisition

and initial

QRA

M&V

QRA

M&V

QRA

M&V

QRA

Monitoring

Operator

Operation

(injection)

Closure

Nation/

landowner

Post-closure

Maximum risk in

developer stewardship

Stewardship

Project phase

CHAPTER 3

Construct Operate Close

Note: Monitoring and verification (M&V) and quantified risk assessment (QRA)

Source: Note: Wright Monitoring (ong>2011ong>), based and verification In Salah (M&V) and quantified risk assessment (QRA)

Source: Wright (ong>2011ong>), based on In Salah

Maximum risk in

national stewardship

Time

Dodds et al. (ong>2011ong>) identified, as have oong>theong>rs, ong>theong> need for both environmental and geological baseline data, initial and

ongoing risk assessment and monitoring strategies suited to ong>theong> specific site prior to injection. This process will

help ensure that changes in ong>theong> subsurface potentially affecting ong>theong> risk prong>ofong>ile can be detected and addressed in

a timely manner.

The fundamental objectives ong>ofong> a MMV program are to identify and manage risks by providing data to ensure operational

procedures are progressing appropriately, to update predictive modelling and to identify any deviation in ong>theong> injection

field behaviour. The methodologies that provide ong>theong> most effective coverage and detection ong>ofong> movement ong>ofong> CO 2

in ong>theong>

subsurface will need to be developed on a site by site basis. For example, in some cases this may mean that monitoring

for pressures will provide an earlier and better understanding ong>ofong> ong>theong> location and impact ong>ofong> ong>theong> CO 2

plume than seismic

imaging, particularly where ong>theong> signal quality is poor.

The monitoring strategy should be directed by ong>theong> risk assessment and be fit for purpose—not unnecessarily prescribed.

From ong>theong> safety perspective, ong>theong> fundamental outcomes should be minimising risk and ensuring containment.

If ong>theong>re is no methodology and protocol which can effectively monitor CO 2

at a given site, ong>theong>n injection ong>ofong> large volumes

ong>ofong> CO 2

should not be pursued at that location until those methods are available and tested.

There is an expectation that early movers will pay a ‘precautionary premium’ to ensure safety but requirements should

be based more on risk assessments and mitigations, raong>theong>r than prescribed.

Storage risks for an individual project will generally decrease as time passes after injection ceases. The risk prong>ofong>ile has

reduced to a point that is an order, or orders ong>ofong> magnitude less than ong>theong> maximum level during operation. It is expected that

some monitoring will be required by ong>theong> regulator during ong>theong> post injection phase until it is established that ong>theong> system is

behaving as predicted and furong>theong>r risks are minimal. The assumption ong>ofong> risk/long term liability – wheong>theong>r it is ong>theong> operator,

jurisdiction or through some trust arrangement – should consider ong>theong> decreasing risk prong>ofong>ile when assessing ong>theong>ir exposure.

TECHNOLOGY

61


Storage capacity development and training in developing nations

Given ong>theong> importance ong>ofong> moving beyond desktop studies toward site specific characterisation, ong>theong>re is a need to increase

skills and capacity in ong>theong> storage disciplines; particularly in developing countries that still need to build a case for CCS.

In ong>theong> first instance capacity development activities can focus upon supporting countries to undertake initial desktop

storage studies, and ong>theong>re are examples ong>ofong> this taking place. South Africa released its National Storage Atlas in 2010

and has received funding from international funding bodies to undertake more specific desktop site studies.

However, ong>theong> type ong>ofong> activities will need to expand as developing countries make ong>theong> transition from national screening

to characterisation. They could include: undertaking a technical capacity analysis ong>ofong> a country’s geoscience departments

to identify technical strengths and gaps; addressing gaps by providing technical training for geologists through

storage workshops and courses; providing opportunities to visit test injection sites; and engaging existing geotechnical

networks and projects.

There are already a range ong>ofong> storage specific courses and programs including ong>theong> Geologic Carbon Sequestration

Program at Lawrence Berkeley National Laboratory and ong>theong> Carbon Capture and Storage Masters Program at ong>theong>

University ong>ofong> Edinburgh. Organisations such as CO2CRC’s CCS Otway Demonstration Project in Victoria, Australia, ong>ofong>ten

hosts site visits, as do oong>theong>r companies with CCS projects. The British Geological Survey has previously undertaken

‘skills gap’ analysis in developing countries and provides storage expertise in oong>theong>r international collaboration

projects such as ong>theong> Near Zero Emissions Coal (NZEC) and ong>theong> Cooperation Action within CCS China-EU (COACH),

both ong>ofong> which have a focus on China. The EuroGeoSurvey is an example ong>ofong> an existing knowledge-sharing network

ong>ofong> 32 geological surveys which can be utilised to provide support to European based geosciences departments.

Gaps in storage understanding and future areas for work

Research gaps

Although petroleum exploration and production provides a sound and highly sophisticated foundation ong>ofong> tools and

workflows in CCS, it also creates a bias that may restrict consideration ong>ofong> techniques outside ong>ofong> ong>theong> current petroleum

toolkit. At ong>theong> highest level, petroleum explorers are focussed on ong>theong> oil or gas producing qualities ong>ofong> ong>theong> reservoir.

By contrast ong>theong> most important consideration for CCS storage is seal or containment ‘caprock’ above ong>theong> storage formation.

There has been significant progress in understanding ong>theong> response on subsurface equipment and materials to CO 2

and ways

ong>ofong> managing ong>theong> impact (for example Smith et al. ong>2011ong>). There is also a much better understanding ong>ofong> how different

impurities will impact on ong>theong> subsurface infrastructure (such as well casing and cements), and injection performance,

as well as a recently internationally released framework for risk management ong>ofong> existing wells (DNV 2010).

Finding alternative methods ong>ofong> measuring ong>theong> extent ong>ofong> ong>theong> stored CO 2

in formation and its far field effects is an important

area that requires field testing. Reflection seismic has been successful as a tool to directly measure ong>theong> extent ong>ofong> CO 2

in

some thick intervals with high porosities (such as Sleipner) but generally has been less successful in thinner intervals with

lower porosities (such as In Salah). Seismic acquisition can be intrusive onshore—for example, it can require temporary

removal ong>ofong> fencing—particularly if it is undertaken repeatedly in areas ong>ofong> multiple use. All seismic monitoring is costly.

Satellite methods such as InSAR are attractive as ong>theong>y are low in cost and unobtrusive. They have been used at In Salah

to measure at a millimetre scale ong>theong> slight land surface deformation caused by injection, but require quite specific surface

conditions including limited or no vegetation cover. Dedicated permanent markers and oong>theong>r tools are being developed to

cope with vegetation cover (for example at ong>theong> MGSC’s Decatur project).

62 THE GLOBAL STATUS OF CCS: ong>2011ong>


Areas suggested by ong>theong> Institute for furong>theong>r storage research:

• coupled non-linear geological, geomechanical and geochemical processes;

• plume prong>ofong>iles in heterogeneous reservoirs to determine capacity factors;

• modelling trapping mechanisms;

• develop and refine ong>theong> numerical simulators needed to design and interpret ong>theong> pilot test data;

• compare a number ong>ofong> simulators to develop confidence in numerical approaches;

• fault stability assessment and analysis;

• transport properties – trap integrity and trapping mechanisms;

• rock deformations;

CHAPTER 3

ong>theong>rmodynamics ong>ofong> complex fluids and solids;

• chemical properties and geochemical transport understanding in different formations;

• understand current models and ong>theong>ir limitations;

• experiments to define improvements;

• monitoring – dynamic imaging ong>ofong> plume;

• remote sensing – non invasive techniques; and

• reliability ong>ofong> 4D monitoring.

The challenge remains to develop alternative less costly and intrusive methods ong>ofong> assurance monitoring ong>ofong> CO 2

containment

and have ong>theong>m accepted by regulating agencies and oong>theong>r stakeholders. This may involve redefining ong>theong> problem from

optimising direct image quality ong>ofong> ong>theong> CO 2

plume to confident but indirect detection methods ong>ofong> determining plume effects.

Solutions may involve less direct imaging techniques, greater integration ong>ofong> different tools that can help constrain

results and a greater focus on early warning systems for potential future containment problems, coupled with robust

responses to avert leakage. For example, pressure monitoring beyond ong>theong> plume with slimhole monitors may be both

a more effective and cost effective alternative, or possibly complementary to, lower quality seismic data.

Storage assessment and monitoring strategies must be adapted to ong>theong> specific site. The clear need now is to operate

storage in real geological systems to test and broaden ong>theong> number ong>ofong> methods available for measuring and monitoring

ong>theong> response ong>ofong> ong>theong> Earth to ong>theong> injection ong>ofong> CO 2

. Matching ong>theong> predicted outcomes with ong>theong> actual results will improve

ong>theong> predictions and increase ong>theong> knowledge and confidence in storage. Most importantly, ong>theong> extent ong>ofong> ong>theong> impacts ong>ofong>

CO 2

injection (including far field pressure effects) needs to be predictable, measureable and understood with mutually

agreed limits between ong>theong> operator and regulator.

When ong>theong> CO 2

is injected a number ong>ofong> responses still need to be better understood, including but not limited to:

••

The response at ong>theong> intersection ong>ofong> ong>theong> sealing ‘caprock’ and ong>theong> top ong>ofong> ong>theong> storage reservoir when CO 2

reaches ong>theong>

interface, as ong>theong>re is a possibility that ong>theong> cooler CO 2

could lead to some fracturing.

••

The inelastic behaviour ong>ofong> rocks when storage occurs in depleted reservoirs, as ong>theong> rocks do not necessarily return

to ong>theong> same state when ong>theong>y are ‘repressured’ again using CO 2

. In some cases this may mean that ong>theong>re is a greater

risk ong>ofong> fracturing when CO 2

is injected.

Use ong>ofong> CO 2

and ‘Novel’ CCS

Algal biong>ofong>uels, reforestation, increased wood based construction, mineral fixing and soil sequestration have been

considered as potential ways ong>ofong> storing CO 2

as well as providing oong>theong>r resource benefits. The key differences

between ong>theong>se methods and geological storage, at least for ong>theong> present, is ong>theong> ‘permanence’ and quantity ong>ofong> storage.

Unless ong>theong> CO 2

is removed from ong>theong> carbon cycle it does not remove ong>theong> carbon from ong>theong> atmosphere in ong>theong> long term.

However, it may reduce net extraction ong>ofong> fossil fuels if it provides alternative fuels or materials that require lower

fossil energy input.

TECHNOLOGY

63


Combining geological storage with capture ong>ofong> CO 2

derived from ong>theong> production or utilisation ong>ofong> biong>ofong>uels has ong>theong> overall

effect ong>ofong> removing CO 2

from ong>theong> atmosphere. Bio-energy combined with CCS (BECCS) ong>theong>refore goes beyond zero

emissions and achieves ‘negative emissions’. The most viable projects in this category are likely to be those, such as

ethanol plants, that produce a high concentration stream ong>ofong> by-product CO 2

. CCS achieves its optimum cost efficiency

at relatively large scale whereas biong>ofong>uels projects are generally limited in scale by ong>theong>ir access to feedstock. However a

number ong>ofong> BECCS projects are now being considered in Europe and North America (Biorecro ong>2011ong>).

CO 2

use has an initial role to play in supporting ong>theong> demonstration ong>ofong> CCS, especially in ong>theong> absence ong>ofong> strong carbon

prices. This role is clearly visible in ong>theong> use ong>ofong> CO 2

for EOR, as has already been described.

EOR is a commercial CO 2

use application. Oong>theong>r use opportunities (Figure 39) are not as far progressed as industrial

applications, as ong>theong> source process does not supply concentrated CO 2

or ong>theong> use is a less permanent method ong>ofong> storage.

Figure 39 CO 2

use technologies, feedstock concentration and permanence

CO 2

storage

Permanent

Not permanent

EOR

Urea

CO 2

feedstock

Captured high

concentration CO 2

Dilute CO 2

flue gas

ECBM

EGS

Bauxite residue

ECBM

Mineral carbonation

Concrete curing

Polymers

Renewable methanol

Formic acid

Algae cultivation

Algae cultivation

Source: Global CCS Institute and Parsons Brinckerhong>ofong>f (ong>2011ong>)

The Australian National Low Emissions Coal Research & Development (ANLEC R&D) and Brown Coal Innovation

Australia (BCIA) along with ong>theong> Institute have commissioned a study to look more closely at ong>theong> alternatives to geological

storage ong>ofong> CO 2

in Australia. With ong>theong> obvious exception ong>ofong> wood-based construction ong>theong>se technologies are largely at a

very early stage and ong>theong> permanence ong>ofong> storage/fixing ong>ofong> CO 2

ranges from months to decades raong>theong>r than thousands to

millions ong>ofong> years for geological storage. The surface footprint ong>ofong> some ong>ofong> ong>theong>se methods ong>ofong> carbon storage can also be

very large. Still, niche opportunities and potential for alternative fuel production may well see novel storage play some

role in ong>theong> future.

An example ong>ofong> CO 2

use without permanent removal from ong>theong> carbon cycle can be found in ong>theong> RCI Organic Carbon for

Assimilation (OCAP) joint venture. The Shell Pernis Refinery delivers roughly 300kt a year ong>ofong> high purity low nitrogen and

low sulphur ‘waste’ CO 2

to about 500 greenhouses in ong>theong> region. OCAP aspire to expansion to 1Mtpa for greenhouse

supply. Although greenhouse use is an early application for CO 2

and in ong>theong> RCI case has helped develop ong>theong> CO 2

pipeline infrastructure, horticulture applications are considered to be a relatively minor source ong>ofong> future CO 2

usage

when compared with oong>theong>r industrial applications (Global CCS Institute and Parsons Brinckerhong>ofong>f ong>2011ong>).

Storage Guidelines

The Institute commissioned a desktop review ong>ofong> publicly available storage guidelines (CO2CRC ong>2011ong>) which showed

that a reasonably comprehensive suite ong>ofong> guidelines has been published, with ong>theong> preeminent being ong>theong> CO2WELLS’s

CO2QUALSTORE Guideline (DNV 2010). However, ong>theong>re is probably scope for guidelines that centre on ong>theong> geomechanical

impacts, and risks/opportunities and treatments ong>ofong> exploration and development decisions ong>ofong> CO 2

storage.

64 THE GLOBAL STATUS OF CCS: ong>2011ong>


3.4 Technology costs and challenges

A key policy goal in providing funding support for CCS demonstration projects is to gain information on ong>theong> effect on ong>theong>

performance and cost ong>ofong> certain products, predominantly electricity, when CCS is applied at commercial scale in ong>theong>ir

production. Some information on ong>theong> costs ong>ofong> individual components in ong>theong> CCS chain was presented in ong>theong> capture,

transport and storage sections. This section will focus on overall CCS costs.

In ong>theong> past year detailed CCS cost studies have been released by ong>theong> IEA (2010b), WorleyParsons (ong>2011ong>),

DOE NETL (2010a), and ZEP (ong>2011ong>). These studies compare ong>theong> costs ong>ofong> different technologies using ong>theong>

measures ong>ofong> levelised cost and avoided cost ong>ofong> CO 2

.

The levelised cost ong>ofong> electricity is a measure ong>ofong> ong>theong> average cost ong>ofong> electricity that needs to be recovered over all output for

ong>theong> entire economic life ong>ofong> a generating plant in order to justify ong>theong> original investment. Receiving this value, on average,

would ensure that all costs including ong>theong> initial capital investment, ong>theong> return on that investment as well as fuel and oong>theong>r

variable costs, togeong>theong>r with fixed operation and maintenance costs would be covered.

CHAPTER 3

The cost ong>ofong> CO 2

avoided reflects ong>theong> cost ong>ofong> reducing CO 2

emissions to ong>theong> atmosphere while producing ong>theong> same

amount ong>ofong> product, such as electricity, from a reference plant that does not include CCS technologies. The cost ong>ofong> CO 2

avoided allows ong>theong> different technologies to be ranked and compared on an equivalent basis with respect to anticipated

carbon prices.

The first three ong>ofong> ong>theong>se studies have been previously analysed (Global CCS Institute ong>2011ong>a) with ong>theong> major

conclusions being:

••

The largest uncertainty in ong>theong> cost ong>ofong> large-scale demonstration plants occurs in ong>theong> up-front capital costs.

Incorporating CCS facilities increases capital investment costs by around 30 per cent for an IGCC facility and

by 80 to 100 per cent for ong>theong> oong>theong>r coal and gas-based technologies.

••

Total installed investment costs, including capture technology, represent approximately 45 to 50 per cent ong>ofong> ong>theong>

cost ong>ofong> electricity from coal-based CCS plants.

••

Oxyfuel combustion has a lower relative cost on both levelised electricity costs and avoided CO 2

costs compared

with oong>theong>r CCS technologies. At ong>theong> same time, oxyfuel technologies are ong>theong> least mature technologies and have

a higher level ong>ofong> uncertainty.

••

Given ong>theong> uncertainties, at this stage, it is difficult to identify any single technology with a clear cost advantage.

••

The levelised cost estimates in ong>theong> three studies are consistently higher than those estimated three or more years

ago. Due to changing methodologies and ong>theong> inclusion ong>ofong> previously omitted items, costs are now suggested to

be 15 to 30 per cent higher than earlier estimates.

••

The economics ong>ofong> CO 2

storage is affected by ong>theong> geology ong>ofong> ong>theong> target storage formation. Without an appropriate

storage site that is accessible by effective transport options, CCS may not be an appropriate option in certain

circumstances. With ideal storage conditions, storage costs contribute less than five per cent to total costs,

increasing to around 10 per cent for storage sites with ‘poorer’ geologic properties.

••

The different cost estimates observed in ong>theong> various studies arise due to differences in assumptions regarding

technology performance, cost ong>ofong> inputs or ong>theong> methodology used to convert ong>theong> inputs into levelised costs.

Many ong>ofong> ong>theong>se differences disappear when ong>theong> assumptions are normalised and a common methodology is applied.

The effect ong>ofong> any individual assumption from each ong>ofong> ong>theong> three studies on ong>theong> estimated levelised cost for power

generation is generally ong>ofong> ong>theong> order ong>ofong> five per cent.

These three studies focused primarily on estimates based on technologies that would be demonstrated in ong>theong>

United States (summary information is presented in Table 8). The Institute study also ‘regionalised’ ong>theong> estimates to all

ong>theong> regions ong>ofong> ong>theong> world through ong>theong> use ong>ofong> adjustments to capital, labour and technology costs as well as including cost

estimates for steel, cement, natural gas processing and fertiliser production.

In July ong>2011ong>, ZEP (ong>2011ong>) published a study focused specifically on ong>theong> power sector in Europe today (Table 9) as well

as estimates for ong>theong> period post-2025. The cost estimates were developed around project and technology cost data

provided by ong>theong> industrial members ong>ofong> ZEP. As with ong>theong> studies discussed above, ong>theong> costs reported in this study had

also increased, by between 15 to 20 per cent in constant dollar terms from a similar study by ZEP in 2006 (ZEP 2006).

ZEP has also noted that, when compared with ong>theong> recent studies by NETL and ong>theong> Institute, ong>theong> ZEP cost estimates

are lower. Noneong>theong>less, ong>theong> cost estimates that reflect ong>theong> costs ong>ofong> technologies available today from all four studies are

broadly consistent, particularly given ong>theong> inherent uncertainty around individual technology elements for key parts ong>ofong> a

project. Design studies ong>ofong> ong>theong> type produced by ZEP and NETL have a range ong>ofong> uncertainty ong>ofong> around ±30-40 per cent.

The ZEP study also provided costing options across a wide variety ong>ofong> transport options togeong>theong>r with different storage

TECHNOLOGY

65


configurations. These costs were briefly discussed in ong>theong> respective sections earlier in this chapter.

Table 8 Summary ong>ofong> recently completed CCS design cost studies

POST COMBUSTION IGCC OXYFUEL NGCC

WORLEY PARSONS

NETL

IEA 1

WORLEY PARSONS

(SHELL)

NETL (SHELL)

NETL

(CONOCO PHILLIPS)

NETL (GE)

WORLEY PARSONS

WORLEY PARSONS

DOE NETL

Base year 2 2010 2007 2008 2010 2007 2007 2007 2010 2010 2007

Capacity

Total

overnight cost

O&M 3

Fuel cost

MW

(net)

US$/

kW

US$/

MWh

US$/

MWh

546 550 474 517 497 514 543 550 482 474

4701 3570 3838 4632 3904 3466 3334 4430 1964 1497

16 22 14 18 12 6

34 20 13 33 18 18 17 44 72 52

Capture rate % 90 90 90 90 90 90 90 90 90 90

Efficiency 4 % 27.2 26.2 34.8 32.0 31.2 31.0 32.6 29.3 43.7 42.8

Capacity

factor

% 85 85 85 85 80 80 80 85 85 85

Lead time Years 4 5 4 4 5 5 5 4 3 3

Lifetime Years 30 30 40 30 30 30 30 30 30 30

Discount rate % 8.8 9.1 10 8.8 9.1 9.1 9.1 8.8 8.8 9.1

Transport 5

Storage 6

LCOE 7

Avoided cost

ong>ofong> CO 2

8

US$/

MWh

US$/

MWh

US$/

MWh

US$/

tonne

1 - n/a 1 - - - 1 1 -

6 5.6 n/a 6 5.7 5.6 5.3 6 6 3.2

131 135 90 125 151 140 134 121 123 109

81 87 ~75 67 77 93 109 57 107 106

1 IEA estimates only include ong>theong> cost ong>ofong> capture and compression.

2 Base year in which current dollars are reported.

3 The NETL study includes payroll and property taxes, ong>theong>se taxes are not included in ong>theong> oong>theong>r studies.

4 The IEA report lower heating value (LHV) net heat efficiency rates, whereas ong>theong> oong>theong>r two studies report higher heating value (HHV) net heat

efficiency rates.

5 Transport distances are assumed to be 100km and 80km by Worley Parsons and DOE NETL studies respectively. For DOE NETL

transport costs are included in ong>theong> storage item.

6 The NETL study includes payments for liability for 30 years.

7 Levelised cost ong>ofong> electricity.

8 Reference facility in all coal technologies is supercritical pulverised coal within each study. Values for DOE NETL studies calculated by Global

CCS Institute.

Source: IEA (2010b), DOE NETL (2010a), WorleyParsons (ong>2011ong>)

66 THE GLOBAL STATUS OF CCS: ong>2011ong>


Table 9 CCS cost estimates from ZEP

COAL

GAS

REFERENCE:

ULTRA-SUPERCRITICAL

POST-COMBUSTION

CAPTURE

IGCC

OXYFUEL

REFERENCE:

F-CLASS TURBINE

Base year 1 2009 2009 2009 2009 2009 2009

Capacity MW (net) 736 616 900 568 420 350

POST COMBUSTION

CAPTURE

CHAPTER 3

Total overnight cost €/kW 1711 2860 3300 4060 786 1829

O&M €/MWh 7 14 15 13 6 13

Fuel cost €/MWh 18.3 26.6 28.3 28.6 56.4 68.1

Capture rate % - 90 90 90 - 86

Efficiency 2 % 46 38 36 35 58 48

Capacity factor % 85 85 85 85 85 85

Lead time Years n/a n/a n/a n/a n/a n/a

Lifetime Years 40 40 40 40 25 25

Discount rate % 8 8 8 8 8 8

Transport 3 €/MWh - 2 2 2 - 2

Storage €/MWh - 4 4 4 - 2

LCOE €/MWh 44.5 80 87 94 71.9 104

Avoided cost ong>ofong> CO 2

€/tonne - 46 54 65 - 114

1 Base year for ong>theong> current dollar estimates ong>ofong> cost components.

2 LHV net heat efficiency rate.

3 ZEP estimated transport costs for 29 different transport network configurations. The values selected here are for a 2.5 Mtpa point-to-point,

onshore 180km network in order to be consistent with ong>theong> results presented in Table 8.

Source: ZEP (ong>2011ong>)

Cost lessons from previous environmental technology innovations

Government funding for CCS demonstration is partly aimed at accelerating ong>theong> rate ong>ofong> technology innovation. This presents

many challenges, as does accurately estimating ong>theong> costs ong>ofong> large-scale operation on ong>theong> basis ong>ofong> existing pilot projects.

The impact ong>ofong> adding technologies to existing systems can affect ong>theong> performance and reliability ong>ofong> oong>theong>r technology elements

in ong>theong> system in ways that are difficult to predict given limited data at smaller scales. The initial cost estimates for new

technologies based on experience from smaller-scale projects or pilot plants are typically lower than ong>theong> costs subsequently

observed for ong>theong> initial large-scale applications (Yeh and Rubin 2010). Costs are ong>ofong>ten added through design changes and

product performance improvements in ong>theong> early stages ong>ofong> commercialisation (Neij 1997). However, it is ong>theong>n equally common

for costs to subsequently decline as technologies mature and learning is incorporated into subsequent designs.

While ong>theong> technology ong>ofong> capturing CO 2

emitted from power generation is still in its infancy, ong>theong>re have been a number

ong>ofong> oong>theong>r environmental technologies developed and applied to dealing with ong>theong> emissions from fossil fuel power plants

These include flue gas desulphurisation (FGD) systems for sulphur dioxide (SO 2

) control and selective catalytic

reduction (SCR) systems for nitrogen oxides control.

TECHNOLOGY

67


Development ong>ofong> FGD systems commenced in ong>theong> early 1950s in response to funding authorised under ong>theong>

Air Pollution Control Act in ong>theong> United States, assisted with grants from oong>theong>r agencies including health departments

(Hamilton 2009). Over ong>theong> period from ong>theong> late 1960s through to ong>theong> 1990s, innovation and development activities

increased (Taylor 2003), driven by both increased funding support and ong>theong> development ong>ofong> a number ong>ofong> policies

designed to stimulate ong>theong> demand for ong>theong> technology as governments sought to limit ong>theong> level ong>ofong> SO 2

emissions.

The capital costs ong>ofong> early FGD demonstration projects more than doubled between 1972 and 1982 as designs were

modified to achieve ong>theong> system reliability and performance needed to comply with regulatory requirements. After a

decade ong>ofong> experience and learning, costs began to decline, falling by almost half by ong>theong> mid-1990s (Yeh and Rubin

2010). Similarly, ong>theong> costs ong>ofong> early SCR systems deployed in Europe and Japan were also higher than initially forecast

based on smaller pilot-scale plants, particularly as ong>theong>se cost studies ong>ofong>ten did not include contingencies to manage ong>theong>

risk associated with limited commercial scale experience. After nearly 15 years ong>ofong> experience, capital costs eventually

ended up lower in constant dollar terms for SCR systems than even ong>theong> initial design studies estimated.

A similar pattern can be observed in ong>theong> costs ong>ofong> oong>theong>r technologies related to power generation. For example, natural gas

combined cycle power plant development commenced in ong>theong> middle ong>ofong> ong>theong> 20th century, and was not ready for

commercial deployment with high levels ong>ofong> availability until ong>theong> late 1970s and early 1980s. Noneong>theong>less, early deployment

ong>ofong> commercially available plants had costs increasing for ong>theong> period 1981-1991 before costs subsequently declined

(Colpier and Cornland 2002).

Some lessons from ong>theong>se experiences have been taken on board for CCS cost estimation by those undertaking detailed

project costings or generic cost studies. Studies have made increasing allowance for contingencies around system

processes as well as integration and project management challenges. With a limited number ong>ofong> commercial-scale

CCS projects in operation in some sectors, and none yet in operation for coal-fired power generation, steel or cement

production, it has been estimated that early mover projects carry process cost contingencies upward ong>ofong> 20 per cent

(WorleyParsons 2009). Anecdotal information from project developers has suggested contingencies ong>ofong> up to 40 per cent

in some cases.

At ong>theong> same time, ong>theong>re are differences in ong>theong> costing methods used by different organisations concerned with CO 2

capture and storage. For ong>theong> studies in ong>theong> public domain ong>theong>re is no consistent set ong>ofong> cost categories or nomenclature

to define ong>theong> various cost components (Rubin ong>2011ong>). The time frame for cost estimates ong>ofong>ten varies between current

technology understanding (so called first-ong>ofong>-a-kind) and future technologies which may be after process and project

contingencies have been reduced (so called nth-ong>ofong>-a-kind). There are also differences in wheong>theong>r or even when new

technology developments such as improved capture methods have been included, or wheong>theong>r ong>theong> transport and storage

element is part ong>ofong> a larger infrastructure development with a transport network and multiple storage opportunities,

or a single pairing from a capture source through to a single storage site with a dedicated point-to-point pipeline.

The challenges involved in improving ong>theong> understanding ong>ofong> CCS costs in ong>theong> public domain through better reporting

and transparency ong>ofong> costing methods led to ong>theong> establishment ong>ofong> a CCS Costs Network in early ong>2011ong>. This network

brings togeong>theong>r approximately 50 cost experts from capture through transport (both pipeline and shipping) to storage.

The Network aims to improve consistency and transparency in CCS cost estimates through development ong>ofong> common

terminology and methodologies, including characterisation ong>ofong> uncertainty, togeong>theong>r with improving ong>theong> public

communication ong>ofong> CCS costs. The Institute is a member ong>ofong> ong>theong> Network and actively supports its activities through

its web-based Knowledge Sharing Platform.


4

POLICY, LEGAL AND

STAKEHOLDER ISSUES

4.1 Policy, legal and regulatory context 71

4.2 Status ong>ofong> funding support 89

4.3 Public engagement 95


4 POLICY, LEGAL AND

STAKEHOLDER ISSUES

KEY MESSAGES

• Substantial, timely and stable policy support, including a carbon price signal, is needed for CCS to be

demonstrated and ong>theong>n broadly deployed. This in turn will give industry confidence to continue to invest

in CCS and drive innovation.

• This year, decisions at ong>theong> UNFCCC’s Conference ong>ofong> ong>theong> Parties (COP 17) in Durban, South Africa, could

furong>theong>r assist CCS realise its mitigation potential in helping deliver on ong>theong> objective ong>ofong> stabilising ong>globalong>

atmospheric emissions by establishing an international framework that provides for ong>theong> institutional

arrangements ong>ofong> CCS under any future UNFCCC mechanism.

• The development ong>ofong> CCS laws and regulations has continued at a reasonable pace with a number ong>ofong>

jurisdictions completing framework legislation and commencing implementation ong>ofong> secondary regulations

and guidance. Notwithstanding ong>theong>se efforts, project proponents have identified a number ong>ofong> issues that

have yet to be adequately addressed, including incomplete or delayed regulation.

• Government funding to support large-scale CCS demonstration projects has remained largely

unchanged in ong>2011ong>. In total, approximately US$23.5bn has been made available to date.

• Project proponents need to continuously review ong>theong>ir public engagement approach to identify and mitigate

potential challenges. As with storage, public engagement is situation and site specific, and on a local level

must address project impacts, including benefits.

As with any industry, ong>theong> policy and legal environment is an important consideration in ong>theong> development ong>ofong> CCS.

This is even more important for CCS, however, given ong>theong> stage ong>ofong> its development. As with several oong>theong>r greenhouse gas

mitigation technologies, CCS requires substantial implicit and explicit policy support, including government funding,

to make it commercially attractive to ong>theong> private sector. The nature ong>ofong> policy support for CCS is typically expressed in

a country’s climate change strategy and/or energy plans.

This chapter characterises ong>theong> policy landscapes currently affecting CCS activities, and provides a ong>globalong> scan ong>ofong> ong>theong>

prevailing and evolving CCS-related policies ong>ofong> climate change, energy markets, industry and innovation, as illustrated in

Figure 40 below. Recent developments in legal and regulatory issues are also outlined. A particularly important area ong>ofong>

policy support for CCS is government funding for demonstration projects, and ong>theong> second section in ong>theong> chapter details

ong>theong> current levels ong>ofong> support available around ong>theong> world. The chapter concludes with a discussion on public engagement.

Public acceptance ong>ofong> ong>theong> technology is essential, and this is an area where governments and industry must work togeong>theong>r.

Figure 40 Scope ong>ofong> policy landscape

Climate

change

policy

International

National

Sub-national

Energy

policy

Projects

Industry

policy

Innovation

policy

70 THE GLOBAL STATUS OF CCS: ong>2011ong>


In addition to its own analysis on ong>globalong> policy and regulatory environments, and surveying project proponents on

related matters, ong>theong> Institute also commissioned Baker & McKenzie (ong>2011ong>) and Ernst & Young (ong>2011ong>) to undertake

independent scans ong>ofong> ong>theong> legal and policy initiatives respectively. These sections draw on those studies.

4.1 Policy, legal and regulatory context

The current early stage ong>ofong> integrated CCS solutions coupled with climate change policy uncertainty more generally has

meant that ong>theong>re are currently few commercial investors. The impediments for new entrants over ong>theong> short term are

largely due to high capital costs associated with CCS technologies and ong>theong> nature ong>ofong> ong>theong> risks ong>theong>y face, which are mostly

ong>ofong> a policy and regulatory nature.

Notwithstanding ong>theong>se factors, as discussed earlier in this report, ong>theong> private sector has demonstrated a willingness to

invest in CCS projects in some situations, for example where a value for CO 2

, such as in EOR use, can provide a revenue

stream that helps enhance ong>theong> overall economics ong>ofong> a project. Discussions with project proponents reveal that policy

uncertainty is perceived as a major risk, and ong>ofong> particular concern is where governments articulate policy intent without

implementation.

CHAPTER 4

The United States Interagency Task Force on CCS (2010) has noted that, to address CCS related market failures,

policy makers should:

••

have regard to ong>theong> nature and magnitude ong>ofong> ong>theong> market failure being targeted;

••

design policies capable ong>ofong> adjusting to changing circumstances over time;

••

provide policies that allow for maximum flexibility ong>ofong> private sector response;

••

ensure policies are complementary with oong>theong>r incentives; and

••

dependably deliver on policy objectives at least cost to ong>theong> taxpayer and/or consumer.

These principles embrace a broad mix ong>ofong> possible policy approaches and apply at all levels ong>ofong> policy, including:

••

negotiated agreements (specific sectoral treatment);

••

information based instruments (best practice);

••

regulations and standards (emissions or technology performance standards);

••

capacity development (enhanced capacity ong>ofong> institutions and/or infrastructure);

••

price based instruments (carbon pricing mechanisms);

••

research and development policies (funding for innovation); and

••

financing support (grants, tax concessions and/or tax credits).

International policy and legal environment

The United Nations Framework Convention on Climate Change (UNFCCC)

The international effort to address climate change has been in earnest for over 20 years. In 1992, ong>theong> UNFCCC was

adopted, entering into legal force in 1994. There are currently 194 countries that have committed to help stabilise ong>globalong>

atmospheric greenhouse gas concentrations at a level that prevents dangerous, ‘man-made’ climate change. In 1997,

ong>theong> world moved to establish emissions reduction commitments that cap absolute ong>globalong> emissions over time – ong>theong>se

commitments are stipulated for ong>theong> period 2008 to 2012 in ong>theong> Kyoto Protocol, which entered into legal force in 2005.

At ong>theong> last major climate change meeting in Cancun in December 2010 (COP 16), countries agreed “to hold ong>theong> increase

in ong>globalong> average temperature below 2°C above preindustrial levels” (UNFCCC 2010). Such a vision provides ong>theong> basis for

a better understanding ong>ofong> ong>theong> role CCS must play within a context ong>ofong> ong>theong> climate change challenge confronting ong>theong> world.

In ong>theong> context ong>ofong> ong>theong> international climate change agenda, ong>theong> ong>statusong> ong>ofong> ong>theong> Institute’s national government Members

under ong>theong> UNFCCC and Kyoto Protocol and any emission reduction aspiration is illustrated in Table 10.

POLICY, LEGAL AND STAKEHOLDER ISSUES

71


Table 10 Country ong>statusong> ong>ofong> emission reduction aspirations

EMISSION REDUCTION TARGETS AND PLEDGES

UNFCCC

Kyoto

Protocol

KYOTO PROTOCOL

COMMITMENTS

(2008-12 RELATIVE

TO 1990)

BY 2020

(UNCONDITIONAL)

BY 2020

(CONDITIONAL)

BY 2050

(CONDITIONAL)

OTHER

RATIFICATION

Australia 8% -5% relative to

2000

Up to -15% or

-25% relative

to 2000

-80% relative

to 2000

30 Dec

1992

12 Dec

2007

Brazil -36% to -39%

relative to

forecast

emissions

Bulgaria -8% -20% relative

to 2005

12 May

1995

12 May

1995

15 Aug

2002

15 Aug

2002

Canada -6% -17% relative

to 2005

-20% relative

to 2006

-60 to -70%

relative to 2006

4 Dec

1992

17 Dec

2002

China -40 to -45%

ong>ofong> CO 2

per unit

ong>ofong> GDP relative

to 2005

-17% ong>ofong> CO 2

per unit ong>ofong> GDP

by 2015 relative

to 2005

5 Jan

1993

30 Aug

2002

Egypt

5 Dec

1994

12 Jan

2005

European

Union

-8% -20% relative

to 1990

-30% relative

to 1990

-80% to -90%

relative to 1990

21 Dec

1993

31 May

2002

France 0% -14% relative

to 2006

25 Mar

1994

31 May

2002

Germany -21% -14% relative

to 2005

-60 to -70%

relative to

2006

9 Dec

1993

31 May

2002

India -20% to -25%

emission

intensity per

unit ong>ofong> GDP

relative to 2005

1 Nov

1993

26 Aug

2002

Indonesia

-26% relative

to business as

usual (BAU)

-25 to -30% ong>ofong> CO 2

relative to BAU

over 2012-15

-40% ong>ofong> CO 2

relative by 2025

23 Aug

1994

3 Dec

2004

Italy -6.5% -13% relative

to 2006

15 Apr

1994

31 May

2002

Japan -6% -25% relative

to 1990

-80% relative

to 1990

reduce energy

related emissions

by -30% or more

by 2030 relative

to 1990

28 May

1993

4 Jun

2002

Korea

-4% relative

to 2005

-30% relative

to ‘prospective

estimates’ by

2020

14 Dec

1993

8 Nov

2002

72 THE GLOBAL STATUS OF CCS: ong>2011ong>


Table 10 continued

EMISSION REDUCTION TARGETS AND PLEDGES

UNFCCC

Kyoto

Protocol

KYOTO PROTOCOL

COMMITMENTS

(2008-12 RELATIVE

TO 1990)

BY 2020

(UNCONDITIONAL)

BY 2020

(CONDITIONAL)

Malaysia Up to -40%

per unit ong>ofong>

GDP relative

to 2005

BY 2050

(CONDITIONAL)

OTHER

13 Jul

1994

RATIFICATION

4 Sep

2002

CHAPTER 4

Mexico Up to -30%

relative to

business as

usual

Neong>theong>rlands -6% -30% relative

to 1990

11 Mar

1993

20 Dec

1999

7 Sep

2000

31 May

2002

New

Zealand

0% -10% relative

to 1990

-20% relative

to 1990

-50% relative

to 1990

16 Sep

1993

19 Dec

2002

Norway 1% -30% relative

to 1990

-40% relative

to 1990

carbon neutrality

within 2030

9 Jul

1993

30 May

2002

Papua

New Guinea

carbon

neutrality

at least -50%

relative to

business as

usual by 2030

16 Mar

1993

28 Mar

2002

Romania -8% -20% relative

to 1990

8 Jun

1994

19 Mar

2001

Russian

Federation

0% -15 to -25%

relative to 1990

‘called for’

-50% relative

to 1990

28 Dec

1994

18 Nov

2004

Saudi Arabia

28 Dec

1994

31 Jan

2005

South Africa

-34% relative

to BAU

-42% by 2025

relative to 2005

and emissions

to peak

between 2020

and 2025

29 Aug

1997

31 Jul

2002

Sweden 4% -17% relative

to 2006

Trinidad and

Tobago

United Arab

Emirates

23 Jun

1993

24 Jun

1994

31 May

2002

28 Jan

1999

United

Kingdom

-12.5% at least -80%

by 2050

relative to

1990

-22% relative

to 1990 over

2008-12

8 Dec

1993

31 May

2002

United States -17% by 2020

relative to 2005

towards a goal

ong>ofong> -83% relative

to 2005

-30% in 2025,

-42% in 2030

relative to 2005

15 Oct

1992

Key: Acting in common Copenhagen Accord Pledge

POLICY, LEGAL AND STAKEHOLDER ISSUES

73


There are five main areas ong>ofong> interest for ong>theong> CCS community arising from ong>theong> December 2010 Cancun Agreements

for ong>theong> COP 17 meeting that will be held in Durban, South Africa, in December ong>2011ong>:

••

registration ong>ofong> Nationally Appropriate Mitigation Actions (NAMAs) – it was agreed that countries requiring international

support in ong>theong> form ong>ofong> technology, finance or capacity building will be recorded in a registry where ong>theong> action and

ong>theong> support for that action can be matched;

••

adoption ong>ofong> a Technology Mechanism – it was agreed that this would be fully operational in 2012 to strengong>theong>n ong>theong>

development and deployment ong>ofong> new technologies (including demonstration and diffusion) in developing countries.

Governance includes a Technology Executive Committee (TEC) which will assist in providing an overview ong>ofong> needs

(including policies and actions) for ong>theong> development and transfer ong>ofong> technologies, and a Climate Technology Centre and

Network (CTCN) to facilitate national, regional, sectoral and international technology networks, organisations and initiatives;

••

adoption ong>ofong> a Financial Mechanism – includes ong>theong> provision ong>ofong> agreed Fast-Start finance for developing countries

approaching US$30bn up to 2012; and ong>theong> establishment ong>ofong> a Green Climate Fund worth US$100bn a year by

2020 administered (initially) by ong>theong> World Bank to support adaptation and mitigation actions (projects, programs,

policies and oong>theong>r activities) in developing countries (ong>theong> UN Secretary General’s High Level ong>Groupong> on Financing

judges ong>theong>se funding levels as possible);

••

inclusion ong>ofong> project level CCS projects/abatement under ong>theong> CDM – it was agreed that governments will allow CCS

projects in ong>theong> CDM, provided that a range ong>ofong> technical issues and safety requirements are resolved and fulfilled

(discussed furong>theong>r below); and

••

market mechanisms – it was agreed that governments will continue work towards establishing one or more new

market-based mechanisms to enhance and promote ong>theong> cost-effectiveness ong>ofong> mitigation actions (and this will

be considered at COP 17).

The institutionalisation ong>ofong> CCS project level activity is currently being scrutinised under ong>theong> UNFCCC, particularly through

ong>theong> CDM. The CDM is a ong>globalong> carbon ong>ofong>fsets market established under ong>theong> Kyoto Protocol. Since 2006, it has been

rewarding ong>theong> investment ong>ofong> developed countries (Annex I Parties to ong>theong> Kyoto Protocol) in emission reduction projects

in developing countries (Non-Annex I Parties) with a tradable instrument called a Certified Emission Reduction unit

(CER). Each CER is equivalent to one tonne ong>ofong> CO 2

. CERs can be eiong>theong>r be sold or acquitted against emission obligations.

CDM is clearly making a difference when it comes to mobilising financial support for local projects in developing countries.

The eligibility ong>ofong> CCS projects to generate CERs for ong>theong> associated abatement is currently being considered in ong>theong> CDM,

under ong>theong> negotiating track called ong>theong> Ad-hoc Working ong>Groupong> (AWG) on Furong>theong>r Commitments for Annex I Parties under

ong>theong> Kyoto Protocol (see Appendix E.1 for background on UNFCCC negotiations).

Final decisions surrounding ong>theong> inclusion ong>ofong> CCS in CDM are expected to be made at COP 17 at Durban. The process

to adopt CCS in CDM in ong>theong> lead up to Durban is:

1. The UNFCCC Secretariat is to:

a. prepare a ‘synong>theong>sis’ report based on ong>theong> submissions received from accredited observers in ong>theong> submission

process ending 21 February ong>2011ong>;

b. host a legal and technical experts technical workshop (scheduled for early September ong>2011ong> in Abu Dhabi); and

c. prepare ong>theong> draft modalities and procedures for consideration by ong>theong> Subsidiary Body for Scientific and

Technological Advice (SBSTA) at its 35th session in December ong>2011ong>.

2. The SBSTA is to elaborate furong>theong>r on ong>theong> issues raised by ong>theong> COP serving as ong>theong> meeting ong>ofong> ong>theong> Parties to ong>theong>

Kyoto Protocol (CMP) decision in Cancun last year as well as ong>theong> UNFCCC Secretariat’s draft modalities and

procedures, with a view to putting recommendations to ong>theong> CMP at CMP 7.

3. The Parties to ong>theong> UNFCCC and Kyoto Protocol will formally negotiate in Durban ong>theong> drafting ong>ofong> ong>theong> legal text contained

in such recommendations to CMP; and ong>theong>n ong>theong> CMP must decide wheong>theong>r to adopt SBSTA’s recommendations.

Despite an already extensive and transparent prosecution ong>ofong> ong>theong> limited number ong>ofong> issues identified, ong>theong>re is no guarantee

that ong>theong> CMP will adopt CCS in CDM at COP 17. The CMP may choose instead to furong>theong>r task SBSTA to provide additional

counsel on specific issues and/or decide on alternate arrangements.

The limited number ong>ofong> issues stalling ong>theong> inclusion ong>ofong> CCS in ong>theong> CDM are predominantly storage related. As ong>theong> Institute

cited in its ong>2011ong> submission (Global CCS Institute ong>2011ong>c) to ong>theong> UNFCCC on CCS in ong>theong> CDM, a legitimate approach

for managing ong>theong>se issues is on a risk management basis raong>theong>r than imposing overly prescriptive approaches.

Assuming that CCS projects are ultimately adopted as registrable activities capable ong>ofong> generating CERs, proponents must

ong>theong>n present and have approved by ong>theong> CDM Executive Board (EB) ong>theong> supporting baseline and estimation methodologies.

The situation at ong>theong> moment is that ong>theong> EB is not considering submissions on CCS methodologies until CMP adopts a

formal position.

74 THE GLOBAL STATUS OF CCS: ong>2011ong>


The ong>Groupong> ong>ofong> Eight (G8)

The G8 is an informal group ong>ofong> advanced economies that meets once a year at a Summit ong>ofong> Heads ong>ofong> State and Government.

Members ong>ofong> ong>theong> G8 are France, ong>theong> United States, ong>theong> United Kingdom, Russia, Germany, Japan, Italy and Canada.

The G8 first announced its commitment to and support ong>ofong> CCS in 2005 when it released ong>theong> ‘Gleneagles Plan ong>ofong> Action:

Climate Change, Clean Energy and Sustainable Development Declaration’ which included ong>theong> statement:

“We will work to accelerate ong>theong> development and commercialisation ong>ofong> Carbon Capture and Storage technology…”

(G8 Summit 2005).

This support was followed up in its 2006 St Petersburg and 2007 ‘Growth and Responsibility in ong>theong> World Economy’

Declarations. A milestone in ong>theong> G8’s support for CCS was reached in June 2008, when both ong>theong> G8 Energy Ministers

(including ong>theong> People’s Republic ong>ofong> China, India and ong>theong> Republic ong>ofong> Korea) and Environment Ministers expressed support

for both a target number ong>ofong> CCS projects and a timeframe in which to deliver. The G8 Energy Ministers jointly stated:

“… strongly support ong>theong> launching ong>ofong> 20 large-scale CCS demonstration projects ong>globalong>ly by 2010,

taking into account various national circumstances, with a view to beginning broad deployment ong>ofong> CCS by 2020…”

(G8 Summit 2008).

CHAPTER 4

Under its 2009 Declaration, ong>theong> G8 stated:

“The development and deployment ong>ofong> innovative technologies such as Carbon Capture and Storage (CCS)

is ong>theong>refore expected to contribute substantially to reducing emissions…” (G8 Summit 2009).

In addition to reaffirming its 2008 commitment to launch 20 large-scale CCS demonstration projects ong>globalong>ly by 2010,

a number ong>ofong> actions were also identified to support CCS including accelerating ong>theong> design ong>ofong> policies, regulatory

frameworks and incentive schemes focused on ong>theong> development and deployment ong>ofong> CCS technology.

In 2010, ong>theong> G8 met in Canada and in its Muskoka Declaration stated:

“To address climate change and increase energy security, we are committed to building low carbon and climate

resilient economies … CCS can play an important role in transitioning to a low-carbon emitting economy.

ong>theong> progress already made on [its] Toyako commitments to launch ong>theong> 20 large-scale CCS demonstration

projects ong>globalong>ly by 2010 and to achieve ong>theong> broad deployment ong>ofong> CCS by 2020, in cooperation with developing

countries. Several ong>ofong> us commit to accelerate ong>theong> CCS demonstration projects and set a goal to achieve ong>theong>ir full

implementation by 2015…” (G8 Summit 2010).

The IEA and Carbon Sequestration Leadership Forum (CSLF), with ong>theong> cooperation ong>ofong> ong>theong> Institute, submitted a report

on CCS to ong>theong> 2010 Muskoka G8 Summit (IEA and CSLF 2010). In this report eight high-level recommendations were

advanced to accelerate ong>theong> development and uptake ong>ofong> CCS, as well as a series ong>ofong> next steps. These recommendations are

highlighted in Figure 41.

In ong>2011ong>, ong>theong> G8 met in Deauville, France. No references to CCS were contained in ong>theong> publicly-released declarations.

The 2012 summit is scheduled to be held in Chicago, United States.

Clean Energy Ministerial (CEM)

The second CEM forum was held in Abu Dhabi in April ong>2011ong> with some 25 countries represented at ong>theong> ministerial

level. The CEM grew from ong>theong> Major Economies Forum (MEF) on Energy and Climate leaders’ decision in 2009 with ong>theong>

aim ong>ofong> accelerating ong>theong> transition to clean energy technologies. In regard to CCS, ong>theong> initiative aims to create greater

political momentum for advancing ong>theong> deployment ong>ofong> CCS required to meet ong>theong> ong>globalong> mitigation challenge.

A Carbon Capture, Use and Storage (CCUS) Action ong>Groupong> has been established by ong>theong> CEM (along with 10 oong>theong>r

working groups). The membership ong>ofong> ong>theong> CCUS includes Australia, Canada, China, France, Japan, Korea, Mexico,

Norway, South Africa, ong>theong> United Arab Emirates, ong>theong> United Kingdom and ong>theong> United States.

Eight recommendations from ong>theong> CCUS Action ong>Groupong> (ong>2011ong>) were adopted at CEM2 and will be reported on at CEM3

which is scheduled for London in April 2012. These recommendations are also highlighted in Figure 41.

The Institute continues to play a substantive role in ong>theong> CEM along with ong>theong> IEA by supporting its work plan to implement

ong>theong> CCUS Action ong>Groupong> recommendations. The Institute is leading ong>theong> effort under recommendation two to identify a

funding mechanism to support CCS projects in developing countries, in partnership with ong>theong> Asian Development Bank,

ong>theong> CSLF, ong>theong> World Bank, and ong>theong> World Resources Institute.

Figure 41 illustrates ong>theong> relationships between all ong>ofong> ong>theong> CCS related recommendations and issues arising from ong>theong>

UNFCCC, G8, and CEM. As can be seen, all three international agendas are well harmonised in addressing outstanding

barriers that are stalling accelerated ong>globalong> deployment ong>ofong> CCS.

POLICY, LEGAL AND STAKEHOLDER ISSUES

75


Figure 41 Linkages between ong>theong> UNFCCC, ong>theong> CEM and G8

G8 RECOMMENDATIONS (IEA/CSLF REPORT TO THE MUSKOKA 2010 G8 SUMMIT)

1 2 3 4 5 6 7 8

DEMONSTRATING CCS

TAKING CONCERTED

INTERNATIONAL

ACTION

BRIDGING THE

FINANCIAL GAP FOR

DEMONSTRATION

CREATING VALUE

FOR CO 2

ESTABLISHING LEGAL

AND REGULATORY

FRAMEWORK

COMMUNICATING

WITH THE PUBLIC

INFRASTRUCTURE

RETROFIT WITH

CCS CAPTURE

CLEAN ENERGY MINISTERIAL (2ND CEM, ABU DHABI APRIL ong>2011ong>)

RECOMMENDATIONS

1 reduce ong>theong> financial gap

2 funding support in developing

economies

3 develop legal and regulatory

frameworks

4 acknowledge importance ong>ofong>

marine treaty amendments

5 share knowledge

6 investigate carbon dioxide

storage

7 support CCS in industry

8 report on progress

UNFCCC SBSTA ISSUES (COP 16/CMP 6)

LIMITED ISSUES TO BE RESOLVED FOR COP 17/CMP 7

a

b

c

d

e

f

g

h

i

storage site selection (integrity

ong>ofong> permanence)

monitoring plans (to enhance

environmental integrity ong>ofong>

storage site)

suitability ong>ofong> modelling for

monitoring plans

project boundaries (for all

associated CO 2

sources/

migratory pathways)

measurement and accounting

ong>ofong> emissions in monitoring plans

appropriateness ong>ofong>

transboundary projects

risk/safety assessment

(in monitoring plans to include

mitigation options)

liability

provisions to redress liability

Key: Consistent Strongly consistent

76 THE GLOBAL STATUS OF CCS: ong>2011ong>


International marine and waste agreements

At ong>theong> international level, major regulations ong>ofong> note that affect CCS are international conventions dealing with or possibly

applying to transboundary shipments ong>ofong> CO 2

.

Two such agreements are ong>theong> Protocol to ong>theong> Convention on ong>theong> Prevention ong>ofong> Marine Pollution by Dumping ong>ofong> Wastes

and Oong>theong>r Matter (London Protocol), and ong>theong> Convention for ong>theong> Protection ong>ofong> ong>theong> Marine Environment ong>ofong> ong>theong> North-East

Atlantic (OSPAR Convention). The London Protocol establishes a scheme to prevent and control ong>theong> pollution ong>ofong> ong>theong>

international marine environment, while ong>theong> OSPAR Convention works to identify threats to ong>theong> marine environment

ong>ofong> ong>theong> North-East Atlantic and has programs and measures to ensure effective national action to combat ong>theong>m.

Despite early and unwavering support for CCS as a mitigation technology through amendments to both agreements,

subsequent revisions and ratifications have been slow to progress amongst ong>theong> signatory parties. In June ong>2011ong> however,

ong>theong>re was a significant breakthrough with regard to ong>theong> OSPAR agreement. Spain, Denmark and Luxembourg notified ong>theong>

Convention secretariat that ong>theong>ir national ratification processes had been completed. Ratification ong>ofong> ong>theong> amendments by a

required seven parties will now enable ong>theong> 2007 revisions to enter into force. These revisions will specifically allow for CCS

under ong>theong> Convention, including to allow for ong>theong> storage ong>ofong> CO 2

in geological formations under ong>theong> seabed.

CHAPTER 4

Steps towards ong>theong> full ratification ong>ofong> an amendment to Article 6 ong>ofong> ong>theong> London Protocol, which would allow for ong>theong> export

ong>ofong> CO 2

streams in certain circumstances, remain more tentative. Twenty-seven ong>ofong> ong>theong> current 40 contracting parties to

ong>theong> Protocol are required to ratify ong>theong> amendment for it to enter into force. To date however, only Norway has completed

ong>theong> ratification process. The failure to ratify ong>theong>se amendments means that transboundary transportation ong>ofong> CO 2

for ong>theong>

purpose ong>ofong> geological storage still remains proscribed under ong>theong> Protocol. For a small number ong>ofong> countries and project

proponents, whose anticipated projects include transboundary elements, this will continue to be viewed as a major

uncertainty and barrier to furong>theong>r development.

While ong>theong> regulation ong>ofong> transboundary shipments ong>ofong> wastes and its relevance to CCS activities has already been extensively

negotiated under ong>theong> London Protocol, some lawyers, experts and NGOs have recently raised ong>theong> issue ong>ofong> wheong>theong>r ong>theong>

Basel Convention’s provisions also apply to ong>theong> transboundary movement ong>ofong> CO 2

and that ong>theong> position ong>ofong> CCS under ong>theong>

treaty may require furong>theong>r clarification.

The Basel Convention establishes a regime for ong>theong> control ong>ofong> ong>theong> international trade in hazardous wastes, with a view

to ensuring ong>theong> protection ong>ofong> human health and ong>theong> environment. The Convention places emphasis on ong>theong> principle ong>ofong>

proximity, requiring that hazardous wastes are to be disposed ong>ofong> in ong>theong> state in which ong>theong>y are produced. Were CO 2

to

be included within ong>theong> definition ong>ofong> hazardous wastes covered by ong>theong> Convention, a number ong>ofong> provisions would apply

to its transportation for ong>theong> purposes ong>ofong> CCS.

Transportation between Parties to ong>theong> Convention and non-Parties is prohibited and a furong>theong>r ‘Ban Amendment’ was

ratified in 1995, which prohibits OECD countries from exporting hazardous waste to non-OECD countries for final disposal.

Transportation ong>ofong> CO 2

is only permitted under ong>theong> Convention subject to ong>theong> prior consent ong>ofong> ong>theong> receiving country, which is

also entitled to prohibit this transport to, or across, its territory. As such, it remains unclear as to wheong>theong>r ong>theong> Convention’s

provisions could seriously impact upon CCS operations.

A decision as to wheong>theong>r CO 2

falls within ong>theong> scope ong>ofong> ong>theong> Basel Convention has yet to be made and an interpretative

note from ong>theong> Contracting Parties would be necessary. CCS has yet to be addressed by ong>theong> Contracting Parties and

remains outside ong>theong> Convention’s Working ong>Groupong> program for 2012-2013.

POLICY, LEGAL AND STAKEHOLDER ISSUES

77


National and regional policy settings

While ong>theong> development ong>ofong> a CCS industry as a whole can be considered to be in ong>theong> early stages, some countries have

implemented or have indicated interest in a suite ong>ofong> policies that support more advanced CCS industries. To illustrate,

Figure 42 presents a very simple index indicating ong>theong> nature ong>ofong> ong>theong> current CCS relevant policy environments for a

select number ong>ofong> countries.

Figure 42 CCS policy index

comprehensive

7

6

25

20

Mtpa CO 2

-e per capita

5

Coverage ong>ofong> CCS supporting policies

4

3

2

15

10

5

1

conceptual

India

Brazil

Indonesia

Mexico

Romania

China

Malaysia

Norway

South Africa

United Kingdom

Germany

Japan

Korea

Australia

Neong>theong>rlands

Canada

United States

Saudi Arabia

R&D policies

international collaboration/capacity development

information based instruments

negotiated agreements

regulations and standards

financing arrangements

carbon pricing instruments

emissions per capita (RHS)

Index

1.00 = a policy exists

0.75 = a policy is currently being implemented

0.50 = a policy exists at sub-national level

0.25 = a policy is currently being considered

0.00 = a policy does not exist

78 THE GLOBAL STATUS OF CCS: ong>2011ong>


Most countries recognise that CCS is still very much in ong>theong> demonstration stage, and this partly explains why ong>theong> focus

ong>ofong> most governments to date has been on providing public funding for pilot and demonstration-scale projects.

It is likely that in a carbon constrained world, where countries implement economy-wide policies to fully value carbon,

CCS would be commercially attractive relative to oong>theong>r prospective large-scale, clean-energy technologies without

ong>theong> need for separate support. In ong>theong> absence ong>ofong> such policies however, specific support is needed so that CCS can

continue to be developed alongside oong>theong>r technologies in order to realise its mitigation potential within a portfolio ong>ofong>

prospective mitigation solutions.

It is vitally important that governments continue to send strong policy signals during ong>theong> demonstration phase and that

ong>theong> institutional arrangements (including incentives and legislative and regulatory frameworks) can and will be in place

in a timely manner to efficiently support both ong>theong> continued demonstration efforts and ong>theong> early stages ong>ofong> commercial

deployment. Such signals are needed to provide industry with medium to longer term certainty that investing in CCS

as a mitigation option is both sensible and affordable as far as hedging ong>theong>ir future emission risks is concerned.

Many countries are currently engaging in a dynamic public policy discussion on major next-generation climate change

policies. Most notable are Australia, China, South Africa, ong>theong> United Kingdom and Japan. There are also innovative

private/public led initiatives such as ong>theong> recently-launched United States National Enhanced Oil Recovery Initiative,

which aims to secure broad support for policies that increase domestic oil supply through EOR while limiting emissions

through CCS. This initiative will develop recommendations for United States federal and state policy makers in early 2012.

CHAPTER 4

The extent to which ong>theong> policy objectives ong>ofong> environment protection (decarbonising ong>theong> energy system), energy security

(preserving energy independence), and economic prosperity (optimising ong>theong> value ong>ofong> indigenous resource endowments)

differ between countries depends on localised circumstance. As such, governments and ong>theong> private sector face many

choices when settling on alternative policy options in which to hedge future carbon risks and support CCS innovation.

It is this ‘localised circumstance’ ong>ofong> countries that drives governments to implement nationally appropriate transition

pathways to less emission intensive economies.

While ong>theong>re is a commercial imperative to reduce ong>theong> costs ong>ofong> capture given that this component can constitute over

70 per cent ong>ofong> ong>theong> total cost ong>ofong> an integrated CCS solution (as indicated in Figure 31 ong>ofong> section 3.1), a major focus for

policy makers over ong>theong> medium term could be more on issues associated with maturing CCS markets. This includes

ong>theong> challenges ong>ofong> transitioning publicly-funded CCS activities to more integrated and complex market structures.

Examples could include:

••

ong>theong> creation ong>ofong> common-user CO 2

distribution networks;

••

ong>theong> transitioning ong>ofong> competitive storage exploration efforts to monopolistic, multi-user and fee for service

storage facilities; or

••

transposing ong>theong> regulatory conditions ong>ofong> a demonstration CCS project or an EOR operation to a commercial

CO 2

storage operation.

A qualitative evaluation is provided in Appendix E.2 ong>ofong> ong>theong> CCS policy environment for a select number ong>ofong> countries

identified in Table 11. These countries were selected on ong>theong> basis that ong>theong>ir ‘localised circumstance’ indicates a high

order interest in CCS mitigation, as characterised by:

••

ong>globalong> share ong>ofong> CO 2

-e emissions from fossil fuel consumption (indicating ong>theong> scale ong>ofong> future abatement required);

••

ong>globalong> share ong>ofong> fossil fuel production (indicating ong>theong> importance ong>ofong> export markets); and/or

••

ong>globalong> share ong>ofong> fossil fuel consumption (indicating a reliance on fossil fuels to drive local economic prosperity).

Within ong>theong> context ong>ofong> ong>theong> upcoming COP 17 in Durban, countries have been grouped according to ong>theong>ir UNFCCC regional

classification. This may indicate to policy makers ong>theong> extent ong>ofong> commonality among and between ong>theong> groups on CCS.

POLICY, LEGAL AND STAKEHOLDER ISSUES

79


Table 11 International groupings for countries

UNFCCC GROUPINGS

OTHER INTERNATIONAL

ARRANGEMENTS

COUNTRY

UN REGIONAL

GROUPINGS

ANNEX I

ECONOMIES IN

TRANSITION (ANNEX I-EIT)

ANNEX II

NON ANNEX I

ANNEX B

AFRICAN REGIONAL

GROUP

ALLIANCE OF SMALL

ISLAND STATES (AOSIS)

GROUP OF 77 & CHINA

OPEC

OECD

G8

G20

Egypt

African States

South Africa

China

Asian States

India

Indonesia

Japan

Malaysia

Papua New

Guinea

Korea

Saudi Arabia

United Arab

Emirates

Bulgaria

Romania

Eastern

European States

Russian

Federation

Brazil

Mexico

Trinidad

and Tobago

Latin America &

The Caribbean

States

Australia

Oong>theong>r States

Canada

New

Zealand

Norway

United

States

France

Germany

Western

European States

Italy

Neong>theong>rlands

Sweden

United

Kingdom

European Union

Key: Members Observers Oong>theong>r member countries

80 THE GLOBAL STATUS OF CCS: ong>2011ong>


Almost all countries analysed contain a financing measure as ong>theong> primary enabler for ong>theong> development ong>ofong> projects at

this stage. The type ong>ofong> financing arrangements (upfront capital grants, loan guarantees, low interest loans, procurement

preferences and so on) tends to differ depending on ong>theong> extent to which oong>theong>r complementary policies and regulations

support CCS. Table 12 characterises ong>theong> prevailing and prospective policy environments by region and for selected

countries. Government funding for CCS is discussed furong>theong>r in section 4.2.

Table 12 CCS policy landscape

UNFCCC

GROUP

COUNTRY

CARBON

PRICING

INSTRUMENTS

FINANCING

ARRANGEMENTS

CCS RELEVANT POLICY LANDSCAPE

REGULATIONS

AND STANDARDS

POLICY

NEGOTIATED

AGREEMENTS

INFORMATION

BASED

INSTRUMENTS

INTERNATIONAL

COLLABORATION

/CAPACITY

DEVELOPMENT

RESEARCH AND

DEVELOPMENT

POLICIES

CHAPTER 4

AFRICAN

STATES

Egypt

South

Africa

Carbon Tax




China


Regional

✔ ✔ ✔

Mandatory ETS

India ✔ ✔ ✔

Indonesia



Carbon Tax

Japan






ASIAN STATES

VETS

TMG ETS

Carbon Tax

Coal Tax

CCS-R

Malaysia



CCS SG

Papua New

Guinea


Korea





Trial ETS

ETS

Mandatory ETS

Saudi Arabia ✔ ✔

POLICY, LEGAL AND STAKEHOLDER ISSUES

81


Table 12 continued

CCS RELEVANT POLICY LANDSCAPE

POLICY

UNFCCC

GROUP

COUNTRY

CARBON

PRICING

INSTRUMENTS

FINANCING

ARRANGEMENTS

REGULATIONS

AND STANDARDS

NEGOTIATED

AGREEMENTS

INFORMATION

BASED

INSTRUMENTS

INTERNATIONAL

COLLABORATION

/CAPACITY

DEVELOPMENT

RESEARCH AND

DEVELOPMENT

POLICIES

Bulgaria


EU ETS



EASTERN EUROPE

Romania


EU ETS

Oong>theong>r



GEO

#64/11

CCS

Directive



Russian

Federation



LATIN AMERICA AND

THE CARIBBEAN

Brazil ✔ ✔

Mexico

Trinidad

and Tobago



Australia

✔ ✔ ✔ ✔

Fixed Carbon

Price

ETS

Canada


✔ ✔ ✔ ✔ ✔

OTHER STATES

New

Zealand

Western Climate

Initiative


ETS



Norway


✔ ✔ ✔ ✔ ✔

Carbon Tax

United

States


Western Climate

Initiative

✔ ✔ ✔ ✔ ✔

82 THE GLOBAL STATUS OF CCS: ong>2011ong>


Table 12 continued

CCS RELEVANT POLICY LANDSCAPE

POLICY

UNFCCC

GROUP

COUNTRY

France

CARBON

PRICING

INSTRUMENTS


EU ETS

FINANCING

ARRANGEMENTS

REGULATIONS

AND STANDARDS

NEGOTIATED

AGREEMENTS

INFORMATION

BASED

INSTRUMENTS

INTERNATIONAL

COLLABORATION

/CAPACITY

DEVELOPMENT

✔ ✔ ✔ ✔

RESEARCH AND

DEVELOPMENT

POLICIES

CHAPTER 4

Germany



✔ ✔ ✔

EU ETS

EC

Directives

Italy


✔ ✔ ✔ ✔

WESTERN EUROPE

Neong>theong>rlands

EU ETS

Carbon Tax


EU ETS

Carbon Tax

✔ ✔ ✔ ✔ ✔

Sweden


✔ ✔ ✔ ✔

EU ETS

Carbon Tax

United

Kingdom


EU ETS

✔ ✔ ✔

Climate

Change

Levy







✔ ✔ ✔

EU

EU ETS

DIRECTIVES

EUETS

CCS

IPPC

allowance

allocation

Key: Considered Proposed/planned Being Implemented ✔ Exists

POLICY, LEGAL AND STAKEHOLDER ISSUES

83


National and regional legislation

The proliferation ong>ofong> CCS-specific regulation continues in many jurisdictions worldwide, as governments continue to

reflect on and, in some instances re-address, ong>theong>ir policy approaches to climate change mitigation. Recently ong>theong>re have

been several key developments in Europe, as well as at ong>theong> state and provincial level in ong>theong> US, Australia and Canada.

Also encouraging, is ong>theong> number ong>ofong> developing countries who are also moving ahead with studies into ong>theong> potential

mitigation opportunities ong>ofong>fered by CCS. In many instances, ong>theong>se investigations include a focus on ong>theong> establishment

and jurisdictional requirements ong>ofong> legal and regulatory frameworks for ong>theong> technology. The following sections examine ong>theong>

progress made to date in a number ong>ofong> key jurisdictions, as well as providing some illustrative country-specific activities.

‘Early mover’ countries continue to lead ong>theong> way in ong>theong> development ong>ofong> primary legislation (such as Acts), supporting

regulations (ong>ofong>ten referred to as secondary legislation) and guidance. Many ong>ofong> ong>theong>se countries appear to be adopting

logical and iterative processes for developing ong>theong>ir regimes, which follow a clear trajectory by way ong>ofong> a series ong>ofong> key stages

and outcomes. It is ong>theong> view ong>ofong> Baker & McKenzie that ong>theong> approach adopted by a jurisdiction when implementing a CCS

regulatory regime has tended to follow one ong>ofong> two distinct paths; assuming eiong>theong>r a fully integrated or piecemeal approach.

The EU for example, has chosen a model that addresses ong>theong> novel aspects ong>ofong> ong>theong> technology, while simultaneously adapting

existing environmental and energy legislation to regulate particular aspects ong>ofong> ong>theong> process, while oong>theong>r jurisdictions have

selected a process which updates or amends existing legislation governing ong>theong> extractive, oil and gas industries.

It remains to be seen wheong>theong>r ong>theong> second generation ong>ofong> regulators and law makers, including those in some developing

countries, will also adopt similar processes and methodologies for ong>theong> development ong>ofong> ong>theong>ir policies and regulatory frameworks.

Europe

Europe remains a region at ong>theong> forefront ong>ofong> legal and regulatory developments for CCS, for ong>theong> most part by virtue ong>ofong> ong>theong>

EU Member States’ obligations to transpose ong>theong> requirements ong>ofong> ong>theong> CCS Directive into ong>theong>ir domestic laws. In order to

meet ong>theong> transposition deadline ong>ofong> 25 June ong>2011ong>, Member States quickened ong>theong>ir regulatory activities and by 31 July ong>2011ong>

around twelve countries had communicated to ong>theong> Commission ong>theong> actions ong>theong>y had taken towards implementation ong>ofong>

legislation to transpose ong>theong> requirements ong>ofong> ong>theong> Directive. Austria, Belgium, Denmark, France, Ireland, Latvia, Lithuania,

Luxembourg, Romania, Spain and ong>theong> United Kingdom were all posted on ong>theong> Commission’s webpage as countries that

had met ong>theong> deadline. However, it must be noted that notification to ong>theong> Commission does not necessarily mean that ong>theong>

actions taken satisfy all ong>theong> requirements ong>ofong> comprehensive transposition. A number ong>ofong> oong>theong>r States reported that ong>theong>y are

close to transposing ong>theong> requirements ong>ofong> ong>theong> Directive, but ong>theong>y had until 11 August ong>2011ong> to prepare formal reports on ong>theong>

success or oong>theong>rwise ong>ofong> ong>theong>ir implementation processes.

The Commission will now begin ong>theong> process ong>ofong> examining ong>theong> national execution measures for conformity and

comprehensiveness and it is reported that ong>theong> Commission has issued a number ong>ofong> formal letters to those States

that have not fully transposed ong>theong> legislation.

The process ong>ofong> transposing legislation appears to have varied considerably between Member States. For some States,

strong political support for ong>theong> technology has meant ong>theong> transposition process being expedited in an efficient and

detailed manner—as is ong>theong> case in ong>theong> United Kingdom where ong>theong> recent Electricity Market Reform White Paper has again

signalled ong>theong> government’s commitment to ong>theong> technology. For oong>theong>r jurisdictions however, ong>theong> process has highlighted

a number ong>ofong> difficult domestic policy considerations around ong>theong> technology, not least continuing public opposition in

certain States to what is seen as perpetuation ong>ofong> traditional fossil fuel power generation. Nowhere is this more evident than

Germany, where resistance at ong>theong> Lander (state level) to ong>theong> technology has consistently frustrated ong>theong> adoption ong>ofong> national

CCS legislation. The recent adoption ong>ofong> a CCS Bill in ong>theong> lower legislative house (ong>theong> Bundestag) includes provisions which

would allow individual Lander to opt-out ong>ofong> its requirements, thus preventing CCS activities from taking place within ong>theong>ir

jurisdiction. Industry has criticised ong>theong> inclusion ong>ofong> ong>theong> clause, however if unopposed by ong>theong> second legislative chamber

(ong>theong> Bundesrat) ong>theong> Bill will pass into law by ong>theong> end ong>ofong> ong>theong> year.

A different perspective can be found in Romania, one ong>ofong> ong>theong> more recent European accession States, where CCS has

received substantial government support through its National Reform Programme. The Romanian Government has

already informed ong>theong> Commission that it has transposed ong>theong> CCS Directive into national law (Governmental Emergency

Ordinance No.64 ong>ofong> 29 June ong>2011ong>) and is expected to pass furong>theong>r secondary legislation to ensure ong>theong> full implementation

ong>ofong> its requirements. The new Ordinance adopts a similar format to ong>theong> Directive and focuses upon ong>theong> permitting

procedure for CO 2

storage and transportation. Amendments have been made to existing water, waste and liability

laws and Parliament also made amendments to national integrated pollution prevention and control legislation to

facilitate capture activities. The new Ordinance does not however, address land and access rights, issues ong>ofong> conflicting

use and wheong>theong>r fees may be payable for undertaking CCS activities.

The Romanian Government is presently undertaking ong>theong> Institute’s regulatory test toolkit exercise, with a view to

assessing ong>theong> scope ong>ofong> its nascent permitting regime. A final report will be completed by ong>theong> end ong>ofong> ong>2011ong> and it is

hoped that this report and ong>theong> earlier workshop process will assist in resolving any remaining gaps in ong>theong> regime.

84 THE GLOBAL STATUS OF CCS: ong>2011ong>


United States

There have been few significant federal-level regulatory accomplishments in ong>theong> United States during ong>2011ong>.

Discussions around CCS and climate change more broadly in ong>theong> United States remain protracted and stalled in

political disagreement. State legislatures however, have continued to advance new proposals around various aspects

ong>ofong> ong>theong> CCS chain. To date, a number ong>ofong> states have introduced legislation that eiong>theong>r regulates some aspect ong>ofong> ong>theong> CCS

process, or supports its inclusion in wider environmental or energy policies.

At ong>theong> federal level, major legislative proposals have been advanced in recent times to establish an emissions trading

scheme, with most advocating for some tranche ong>ofong> allowances to CCS applications. Examples are ong>theong> American Clean

Energy and Security Act (HR2454) – ong>theong> Waxman-Markey Bill; and ong>theong> Clean Energy Jobs and American Power Act

(S1733) – ong>theong> Kerry-Boxer Bill (which also sought to establish emission performance standards for new coal-fired

power plants).

The US Senate Committee on Energy and Natural Resources has also been very active in ong>theong> area ong>ofong> CCS.

In mid-ong>2011ong>, two furong>theong>r CCS-specific Bills have been introduced including ong>theong> Department ong>ofong> Energy Carbon

Capture and Sequestration Program Amendments Act ong>ofong> ong>2011ong> (S.699) – Bingaman, and ong>theong> Carbon Dioxide

Capture Technology Prize Act ong>2011ong> (S.757) – Barrasso-Bingaman, to provide financial awards for CCS.

CHAPTER 4

In late 2010, ong>theong> EPA finalised its reporting rule governing aspects ong>ofong> ong>theong> CCS process, as well as its final rule for

CO 2

geologic sequestration wells as part ong>ofong> its Underground Injection Control Program, as established under ong>theong>

Safe Drinking Water Act. The former, ong>theong> Mandatory Reporting ong>ofong> Greenhouse Gases from Carbon Dioxide Injection and

Geological Sequestration, Subparts RR and UU, sets out monitoring, reporting and verification objectives for all facilities

conducting geological sequestration and ong>theong> injection ong>ofong> CO 2

, while ong>theong> latter creates a new Class VI well specifically for

long-term, incremental storage ong>ofong> CO 2

. On 4 August ong>2011ong>, ong>theong> EPA released a proposed rule to modify ong>theong>ir pre-existing

hazardous waste legislation. The proposed amendments will remove injected CO 2

streams from ong>theong> scope ong>ofong> ong>theong>

hazardous waste regulations, provided ong>theong>y are to be injected into wells designated under ong>theong> Safe Drinking Water Act.

The rule document states that ong>theong> EPA is proposing this course ong>ofong> action because “it believes that ong>theong> management

ong>ofong> ong>theong>se CO 2

streams under ong>theong> proposed conditions does not present a substantial risk to human health and ong>theong>

environment”.

The EPA has also published draft guidance documents to assist operators and owners ong>ofong> ong>theong> new Class VI well.

Guidance documents for financial responsibility have already been finalised, while draft documents addressing site

characterisation, corrective action, well construction and ong>theong> content ong>ofong> well plans were opened for public consultation

in early ong>2011ong>.

A number ong>ofong> states have introduced or enacted legislation to regulate discrete aspects ong>ofong> ong>theong> storage process,

or to provide financial incentives or security to operators. In ong>theong> state ong>ofong> Mississippi a new Bill (2723) sets out a

regulatory framework for CCS, which also allows existing EOR operations to continue without conflicting with ong>theong> EPA’s

underground injection control program. Under ong>theong> Bill, regulatory authority for ong>theong> storage ong>ofong> CO 2

is divested in ong>theong>

environmental and oil and gas authorities and provisions are introduced governing ong>theong> title to CO 2

, ong>theong> approval ong>ofong>

storage reservoirs and ong>theong> establishment ong>ofong> a fund to manage ong>theong> long-term liabilities associated with storage sites.

In Illinois ong>theong> legislature recently passed ong>theong> Clean Coal FutureGen for Illinois Act ong>ofong> ong>2011ong>, which seeks to establish a

comprehensive liability regime for ong>theong> FutureGen 2.0 project. Under ong>theong> Act ong>theong> FutureGen Alliance is required to hold

a private insurance policy for ong>theong> duration ong>ofong> ong>theong> operational phase, as well as establish a trust fund to supplement ong>theong>ir

insurance. Of particular note is ong>theong> Act’s transfer to ong>theong> State ong>ofong> Illinois, ong>ofong> all liabilities surrounding ong>theong> stored CO 2

at

ong>theong> end ong>ofong> ong>theong> operational phase ong>ofong> ong>theong> project. The Act has yet to be signed by ong>theong> Governor, although it is expected

to enter into force in ong>theong> next 6 to 12 months.

Australia

Australia’s regulators continue to lead ong>theong> way in developing law and regulations for CCS activities and ong>theong>ir momentum

has not been allayed despite a significant shift in federal government climate change policy and ong>theong> reduction and

deferment ong>ofong> CCS funding.

There continued to be considerable regulatory activity at ong>theong> federal level during ong>2011ong>, with consequential amendments

to key legislation governing ong>ofong>fshore CCS activities and ong>theong> development ong>ofong> furong>theong>r secondary legislation. The Offshore

Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Act, entered into force

in late 2010 and made a number ong>ofong> amendments to ong>theong> Offshore Petroleum and Greenhouse Gas Storage Act 2006

(OPGGS Act), most notably by expanding ong>theong> powers ong>ofong> ong>theong> National Offshore Petroleum Safety Authority to cover

some aspects ong>ofong> greenhouse gas facilities.

POLICY, LEGAL AND STAKEHOLDER ISSUES

85


A number ong>ofong> regulations have also been developed under ong>theong> auspices ong>ofong> ong>theong> OPGGS Act, including: ong>theong> Offshore

Petroleum and Greenhouse Gas Storage (Management ong>ofong> Greenhouse Gas Injection and Storage) Regulation ong>2011ong>,

ong>theong> Offshore Petroleum and Greenhouse Gas Storage (Resource Management and Administration) Regulation ong>2011ong>,

and ong>theong> Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulation ong>2011ong>.

These regulations address a range ong>ofong> issues related to ong>theong> rights and obligations ong>ofong> titleholders under ong>theong> OPGGS Act,

including management and administrative responsibilities related to CCS operations.

Furong>theong>r amendments to ong>theong> OPGGS Act are anticipated under Bills introduced into Parliament in May ong>2011ong>.

These proposals introduce, amongst oong>theong>r items, new regulatory bodies, cost recovery levies and oong>theong>r consequential

amendments to support government policy.

In ong>2011ong> a number ong>ofong> state jurisdictions have also commenced work on regulatory frameworks for CCS. Western Australia

is presently drafting a Greenhouse Gas Storage Bill, which will amend ong>theong> Petroleum and Geoong>theong>rmal Energy Resources

Act 1967 and adopt a similar approach to ong>theong> federal OPGGS Act. The Bill is expected to be introduced to Parliament

in ong>theong> latter half ong>ofong> ong>2011ong>. The Government ong>ofong> New South Wales also introduced its Greenhouse Gas Storage Bill to

Parliament in November 2010, however, it failed to pass as a result ong>ofong> a delay to ong>theong> legislative process caused by ong>theong>

subsequent state elections. The proposed legislation provided a full permitting and licensing regime for ong>theong> permanent

storage ong>ofong> CO 2

, including provisions for ong>theong> post-closure transfer ong>ofong> liabilities to ong>theong> Crown.

Canada

Canada’s provincial governments continue to lead national efforts in ong>theong> development ong>ofong> law and regulation for CCS.

The Governments ong>ofong> Alberta and Saskatchewan have both introduced furong>theong>r legislation to regulate CCS at ong>theong>

provincial level in late 2010 and into ong>2011ong>.

Alberta’s Carbon Capture and Storage Statutes Amendment Act 2010 entered into force in December 2010 and makes

several amendments to provincial statutes to provide clarification around ong>theong> regulation ong>ofong> CCS activities in Alberta.

The Act does not present a full regulatory framework, however, it does address a number ong>ofong> key issues, including a

determination that pore space in ong>theong> province is owned by ong>theong> government. The Act includes provisions for ong>theong> transfer

ong>ofong> long-term liabilities to ong>theong> government upon ong>theong> provision ong>ofong> data demonstrating ong>theong> containment ong>ofong> ong>theong> injected CO 2

as well as establishing a post-closure stewardship fund. The adoption ong>ofong> ong>theong> Carbon Sequestration Tenure Regulation

in April ong>2011ong>, established a furong>theong>r process for those seeking pore space tenure rights for carrying out CO 2

geological

storage. The Regulation sets out furong>theong>r guidance around ong>theong> terms, areas and boundaries and MMV requirements

associated with evaluation permits and carbon sequestration leases.

Alberta is also undertaking a Regulatory Framework Assessment to examine ong>theong> regulatory regime in Alberta, in particular

ong>theong> environmental, safety and assurance processes and requirements, and determine wheong>theong>r ong>theong>y meet ong>theong> requirements

ong>ofong> ong>theong> commercial deployment ong>ofong> ong>theong> technology. The process is a considerable achievement and draws upon both domestic

and international expertise. The final report and recommendations are to be provided to ong>theong> Ministry ong>ofong> Energy in 2012.

The Government ong>ofong> Saskatchewan has also begun work to address CCS activities within its provincial regulatory regime.

The provincial government has sought to include CCS within its existing regulatory portfolio and as such, has adapted a

number ong>ofong> existing laws to accommodate ong>theong> technology. Recent amendments to ong>theong> Pipelines Act, Crown Minerals Act

and Oil and Gas Conservation Act are expected to adequately facilitate ong>theong> transportation and storage phases ong>ofong> ong>theong>

process. Saskatchewan’s participation in Alberta’s Regulatory Framework Assessment may also lead to ong>theong> development

ong>ofong> furong>theong>r legislation or ong>theong> adoption ong>ofong> a more holistic and integrated approach to regulation.

‘Second generation’ CCS lawmakers and capacity development

As a part ong>ofong> incorporating CCS within national and sub-national policies, governments and policy-makers have inevitably

sought to examine ong>theong> potential structure and essential components ong>ofong> a domestic regulatory regime for ong>theong> technology.

Many ong>ofong> ong>theong> jurisdictions discussed in ong>theong> preceding sections have both pioneered particular approaches to regulation,

and led ong>theong> way in securing relevant amendments to international agreements. A second wave ong>ofong> law and policymakers

now appear to be commencing similar processes, as ong>theong>y try to reconcile ong>theong>ir future policy commitments and ong>theong>

restrictions posed by existing regulatory regimes.

Korea is one country that has made substantial commitments to CCS in recent years, including ong>theong> release ong>ofong> a

Comprehensive National CCS Implementation Plan in July 2010, which highlighted a number ong>ofong> proposed activities

around ong>theong> need for ong>theong> development ong>ofong> ong>theong> technology and government investment. Although Korea has yet to establish

an integrated legal framework for ong>theong> technology, it adopted a Ministerial Decree to ong>theong> Marine Environment Management

Law Amendment in late 2010, to permit captured CO 2

streams to be disposed ong>ofong> at sea. The Korean Carbon Capture

and Storage Association has also commenced a review ong>ofong> ong>theong> domestic legal and regulatory system for CCS in Korea.

The report, which is to be released in ong>theong> next twelve months, is expected to include a number ong>ofong> recommendations

for regulatory development.

86 THE GLOBAL STATUS OF CCS: ong>2011ong>


Beyond ong>theong> many developed countries that have already commenced ong>theong> development ong>ofong> regulatory regimes, a number

ong>ofong> developing countries are also paying increasing attention to ong>theong> need to examine ong>theong> capacity ong>ofong> ong>theong>ir regulatory regimes

to incorporate CCS activities. CCS has advanced in ong>theong> policy agendas, to a lesser or greater extent, in a number ong>ofong>

developing countries, with South Africa, Indonesia, Malaysia, Brazil, India and China all indicating considerable interest

in ong>theong> technology. Among ong>theong>se nations, South Africa has already taken a number ong>ofong> steps in recent years to advance

ong>theong> uptake ong>ofong> ong>theong> technology. Attention within government has also shifted towards designing regulation for CCS and

several activities have been completed under ong>theong> auspices ong>ofong> technical assistance programs with ong>theong> IEA and World Bank.

An analysis ong>ofong> South Africa’s legal and regulatory capacity will also be included in a scoping study, presently underway

to assess ong>theong> South African Centre for Carbon Capture and Storage (SACCCS) test injection exercise.

Regional analyses have been undertaken by ong>theong> Asian Development Bank (ADB) in several countries in South East Asia.

The ADB is working with stakeholders, through its technical assistance program, in Indonesia, ong>theong> Philippines, Thailand

and Vietnam to complete a legal and regulatory analysis for CCS in those jurisdictions. The Asia Pacific Economic

Cooperation (APEC) has also commenced a project titled ‘Permitting Issues Related to Carbon Capture and Storage for

Coal-Based Power Plant Projects in Developing APEC Economies’ which will require an analysis ong>ofong> ong>theong> existing permitting

regimes in relevant countries.

CHAPTER 4

In addition, organisations such as ong>theong> Institute and ong>theong> IEA have supported developing countries in seeking opportunities

to learn from work that has been undertaken internationally. For example in July ong>2011ong>, South African delegates met with

ong>ofong>ficials from ong>theong> Australian and ong>theong> Victorian governments to discuss ong>theong> process that was undertaken and issues ong>theong>se

jurisdictions considered when developing CCS legislation. Anoong>theong>r benefit ong>ofong> speaking with different jurisdictions is to gain

insight into how ong>theong>y managed ong>theong> relationships between different governance bodies.

Providing furong>theong>r opportunities for developing countries to learn from ong>theong> experiences ong>ofong> oong>theong>r jurisdictions would

be beneficial. Facilitating access to insights would help to ensure that developing countries understand ong>theong> thought

processes that underpinned ong>theong> development ong>ofong> existing CCS legislation and assist ong>theong>m in tackling similar challenges.

Project level issues

In ong>theong> Institute’s ong>2011ong> project survey, project proponents were asked to respond to ong>theong> following questions:

••

Does ong>theong> current policy environment provide adequate policy support for your project over ong>theong> short,

medium and long term

••

Do ong>theong> current regulatory requirements facilitate an investment decision within your organisation

Responses to ong>theong>se open-ended questions have been consolidated into a number ong>ofong> high level policy issues in

Table 13 and Table 14. The countries where ong>theong> projects reside have been categorised into regional groupings

to observe confidentiality ong>ofong> project identity.

Table 13 Project survey responses to policy question

QUESTION: DOES THE CURRENT POLICY ENVIRONMENT PROVIDE ADEQUATE POLICY SUPPORT FOR YOUR PROJECT

OVER THE SHORT, MEDIUM AND LONG TERM

% OF RESPONSE IF NO, WHAT ARE THE NATURE OF THE ISSUES

UNFCCC

GROUPS

Yes No No

comment

Uncertain

or lack ong>ofong>

carbon value

High cost

project

economics

Insufficient

government

support

Uncertainty

legislation/

regulations

Uncertain policy

environment or

implementation

Asian States

Eastern Europe

Western Europe

Oong>theong>r States

Key: 0% > 0% to 25% > 25% to 50% > 50% to 75% > 75% to 100%

POLICY, LEGAL AND STAKEHOLDER ISSUES

87


Table 14 Project survey responses to legal and regulatory question

QUESTION: DO THE CURRENT REGULATORY REQUIREMENTS FACILITATE AN INVESTMENT DECISION WITHIN YOUR

ORGANISATION

ISSUES RAISED BY PROJECTS

EUROPE

NORTH

AMERICA

MIDDLE

EAST ASIA AUSTRALASIA

Delays in project approvals

General site-specific regulatory issues

(eg. permitting and planning regulations)

Uncertainty surrounding ong>theong> regulation ong>ofong> CO 2

(eg. lack ong>ofong> a carbon price or policy support for CCS)

Incomplete in nature or delay to regulation

International marine legislation

Uncertainty surrounding long-term liability

Trans-boundary transportation ong>ofong> CO 2

Monitoring requirements

Uncertainty surrounding CO 2

transport and storage

Uncertainty around financial guarantees and insurance

Authorised under project-specific or pre-existing

legislation (eg. regulated as an EOR activity)

Activity excluded from scope ong>ofong> implemented

legislation (eg. R&D project)

Enacted legislation provides sufficient certainty

Positive response received, but no clarification

provided by ong>theong> project

Key: Positive Negative

The nature ong>ofong> ong>theong> issues identified as key challenges to projects included:

••

uncertainty and/or slow implementation ong>ofong> supporting climate change and energy policies;

••

uncertainty over ong>theong> future value ong>ofong> carbon, and/or current lack ong>ofong> a carbon price;

••

uncertain access to, and/or insufficient level ong>ofong> government funding over ong>theong> medium to longer term;

••

high upfront capital costs ong>ofong> CCS;

••

insufficient government financial support; and

••

uncertainty over ong>theong> implementation ong>ofong> supporting regulations.

These observations are strongly reinforced by ong>theong> Institute’s follow-up interviews with eight major CCS project proponents

held after ong>theong> ong>2011ong> project survey. Appendix E.3 provides a list ong>ofong> ong>theong> more substantive comments freely ong>ofong>fered by project

proponents, as classified into five major policy related categories including: policy challenges, carbon pricing issues, project

specific challenges, project economics and legal and regulatory issues.

The responses suggest that ong>theong> regulatory environment continues to provide a significant challenge to project activity,

with many ong>ofong> ong>theong> projects surveyed highlighting a range ong>ofong> issues requiring additional regulatory intervention. Despite ong>theong>

growth in regulation for CCS activities over ong>theong> past few years across many jurisdictions, particularly those previously

detailed, it would appear that furong>theong>r improvements are required to provide projects with ong>theong> security ong>theong>y want.

A broader or high-level consideration surrounding ong>theong> price to be placed upon carbon and enduring policy incentives for

ong>theong> technology continues to affect ong>theong> confidence ong>ofong> project proponents in several jurisdictions, while for many projects in

Europe a more select grouping ong>ofong> concerns have been raised. Uncertainty or ong>theong> failure ong>ofong> regimes to sufficiently address

long-term liability for stored CO 2

and ong>theong> perceived delay or incomplete nature ong>ofong> regulation, have also been emphasised

by projects as critical to ong>theong>ir future investment decisions.

A positive perspective may be found in ong>theong> ability ong>ofong> pre-existing or project-specific legislation to address ong>theong> needs

ong>ofong> some projects, with a number ong>ofong> jurisdictions citing successful examples. The legislation already enacted in Canada

would also appear to provide an example ong>ofong> regulators successfully addressing ong>theong> needs ong>ofong> projects.

88 THE GLOBAL STATUS OF CCS: ong>2011ong>


Observations and outlook

The development ong>ofong> law and regulation for CCS activities has continued at a considerable pace since ong>theong>

2010 Status Report, with a number ong>ofong> jurisdictions completing work on ong>theong>ir framework legislation and commencing

ong>theong> implementation ong>ofong> secondary regulations and guidance documents. It is also noticeable, however, that political

pressures, changes in governmental policy and public opposition continue to impact upon ong>theong> pace ong>ofong> development

and ong>theong> desire to enact CCS legislation.

Many ong>ofong> ong>theong> countries and regions that have been acknowledged as leaders in ong>theong> deployment ong>ofong> laws and regulation for

CCS have continued in ong>theong>se roles. European Member States, Australia, ong>theong> United States and Canada have all sustained

ong>theong>ir regulatory momentum and delivered a number ong>ofong> new proposals, laws, regulations and initiatives in ong>theong> past twelve

months. The importance ong>ofong> effective regulation has also been recognised by ong>theong> many countries that are to become ong>theong>

second generation ong>ofong> CCS lawmakers. While many ong>ofong> ong>theong>se countries have yet to pass legislation, or complete ong>theong> design

ong>ofong> ong>theong>ir regulatory frameworks, it is clear that significant actions are being taken to facilitate ong>theong>ir development. This is

particularly noticeable amongst a number ong>ofong> developing countries who are keen to integrate CCS into future climate change

mitigation strategies. The inclusion ong>ofong> CCS in ong>theong> CDM, or under any future UNFCCC mechanism, could also aid CCS

demonstration in developing countries.

CHAPTER 4

Internationally ong>theong> picture remains less clear, with a number ong>ofong> issues still unresolved or pending. The ratification ong>ofong> ong>theong>

OSPAR Convention by ong>theong> requisite number ong>ofong> parties will finally see ong>theong> entry into force ong>ofong> ong>theong> 2007 amendments and is a

positive sign for those seeking to undertake ong>ofong>fshore CCS activities. This achievement must however, be tempered with ong>theong>

failure ong>ofong> ong>theong> majority ong>ofong> ong>theong> Parties to ong>theong> London Protocol to ratify ong>theong> amendment to article 6 ong>ofong> ong>theong> agreement, a factor

that continues to prevent ong>theong> Parties from cooperating on ong>ofong>fshore storage.

Effective policy and regulatory regimes clearly have a significant role to play in ong>theong> development ong>ofong> CCS projects ong>globalong>ly.

Notwithstanding ong>theong> significant efforts ong>ofong> governments around ong>theong> world to develop and implement regulatory

frameworks, ong>theong> project responses clearly indicate a core ong>ofong> issues, which for project proponents have yet to be adequately

addressed. The pace ong>ofong> regulation, or its incomplete nature, long-term liability and ong>theong> sufficiency ong>ofong> incentives are all

identified as areas ong>ofong> deficiency and it will be important for regulators and policymakers to address ong>theong>se concerns in a

timely manner. A number ong>ofong> proposals, amendments and review exercises have already been put in motion by regulators

and policymakers across several jurisdictions. Wheong>theong>r or not ong>theong>se activities will sufficiently address projects’ concerns will

be an important consideration in ong>theong> forthcoming years.

4.2 Status ong>ofong> funding support

Governments around ong>theong> world have provided a range ong>ofong> different types ong>ofong> funding support to CCS demonstration

projects. The discussion in this section refers to all direct financial support, including tax credits, not just allocations

such as grants. Government support arrangements for ong>theong> large-scale demonstration program currently under

way were primarily developed and announced in 2008 and 2009. The funding is associated with both a desire to

accelerate innovation activities for CCS as a low-carbon technology and ong>theong> need for economic stimulus activities.

In total, approximately US$23.5bn has been made available to support large-scale CCS demonstration projects (Figure 43).

At ong>theong> end ong>ofong> 2010, approximately 55 per cent ong>ofong> ong>theong> available funding had been allocated to specific projects. In ong>2011ong>,

this has remained largely unchanged. Canada (including Alberta), ong>theong> Neong>theong>rlands and ong>theong> United States have

allocated all grant arrangements to specific projects, with some tax credit arrangements in ong>theong> United States still

to be allocated. Australia, ong>theong> United Kingdom and ong>theong> European Commission are working through competitive

tendering processes.

POLICY, LEGAL AND STAKEHOLDER ISSUES

89


Figure 43 Public funding support commitments to CCS demonstrations by country 1

United States

6.1

1.3

European Union

1.4

4.2

Australia

0.5

3.6

Canada

2.9

United Kingdom 2

1.6

Norway

Korea

Neong>theong>rlands 3

0.8

0.3

1.0

1 2 3 4 5 6 7

US$bn

Allocated

Unallocated

1 Projects in China are supported by state-owned enterprises 1 Projects togeong>theong>r in China with support are supported from ong>theong> by state-owned international enterprises community. togeong>theong>r Funding with arrangements support from for

ong>theong>se projects are not included.

ong>theong> international community. Funding arrangements for ong>theong>se projects are not included.

2 The UK has committed to supporting three additional projects beyond ong>theong> current

2 The United Kingdom has committed to supporting three additional demonstration projects competition beyond ong>theong> process. current The demonstration funding commitment competition to support process. this The policy funding is yet

commitment to support this policy is yet to be announced, to but be announced, according to but estimates according made to estimates in 2009, made ong>theong> in total 2009, support ong>theong> total required support for required a program for

ong>ofong> four demonstration projects could be in ong>theong> range ong>ofong> £7.2-9.5bn. a program ong>ofong> four demonstration projects could be in ong>theong> range ong>ofong> £7.2-9.5bn.

3 Includes a Dutch government funding commitment to Air Liquide that is conditional on

3 Includes a Dutch government funding commitment to Air being Liquide selected that is in conditional ong>theong> NER300 on funding being program. selected in ong>theong> NER300 funding program.

With ong>theong>se remaining tendering processes still being worked through, ong>theong>re has been little change in overall funding

arrangements in ong>2011ong>. In June, ong>theong> Australian Government selected ong>theong> Collie Hub project for funding under

ong>theong> AU$1.68bn (US$1.84bn) Carbon Capture and Storage Flagships Program. A provisional AU$333 million

(US$365 million) has been provided. This comprises AU$52 million (US$57 million) for funding ong>theong> first key phase ong>ofong>

ong>theong> project development, ong>theong> completion ong>ofong> a detailed storage viability study. Should this first phase ong>ofong> ong>theong> Collie Hub

project be successful, ong>theong> Australian Government anticipates contributing anoong>theong>r AU$281 million (US$308 million)

in funding with ong>theong> aim ong>ofong> leveraging over AU$660 million (US$723 million) in industry and state government funding

required to complete ong>theong> project.

North America

In North America, ong>theong>re are mixed outcomes in ong>2011ong> in relation to total funding available to projects. In ong>theong> United States,

total funding for demonstration projects was significantly increased in 2009 under ong>theong> American Recovery and

Reinvestment Act (ARRA). Over 90 per cent ong>ofong> ong>theong> US$3.4bn made available under ong>theong> ARRA has been allocated

to large-scale projects with power (seven projects) or industrial (three projects) applications. The rest ong>ofong> ong>theong> funding has

been directed towards supporting storage site characterisation and research and development in capture technologies.

Should any ong>ofong> ong>theong>se projects not proceed, ong>theong> funding received under ong>theong> ARRA is returned to ong>theong> United States Treasury

and used for oong>theong>r purposes. At ong>theong> moment, ong>theong> near halt in climate change policy development by ong>theong> United States

legislature is affecting many projects. Since ong>theong> 2010 Status Report, ong>theong>re have been eight projects put on-hold or

cancelled (not all ong>ofong> which receive United States government funding support), with one ong>ofong> ong>theong> key reasons for this being

uncertainty regarding public carbon abatement policies and ong>theong> lack ong>ofong> a national carbon mandate. Two ong>ofong> ong>theong>se projects,

Mountaineer project and Antelope Valley are not going forward, ong>theong> former being suspended and ong>theong> latter being cancelled

with its funds rescinded and returned to ong>theong> United States Treasury. In addition to ARRA funding, Mountaineer also received

US$188 million under ong>theong> Clean Coal Power Initiative (CCPI) administered by ong>theong> Department ong>ofong> Energy. In contrast to ARRA

funding, which by statute must be returned to ong>theong> Treasury if a project is cancelled, ong>theong> availability ong>ofong> returned funding

under CCPI for oong>theong>r CCS projects is decided on a case-by-case basis by ong>theong> United States’ Office ong>ofong> Management and

Budget unless stipulated oong>theong>rwise by ong>theong> Congress.

90 THE GLOBAL STATUS OF CCS: ong>2011ong>


In contrast, projects in Canada continued to move forward with funding arrangements and expanding support during

ong>2011ong>. The Governments ong>ofong> Canada and Alberta are seeking to exploit ong>theong> abundant oil sand resources within Alberta

and are providing support to abate ong>theong> associated large emissions through using CCS technologies. The governments

finalised funding arrangements totalling C$1.7bn (US$1.8bn) for three projects earlier this year. At ong>theong> same time, ong>theong>

Government ong>ofong> Alberta increased support for all refining or bitumen upgrading projects that capture and store CO 2

in

geological (non-EOR) storage through changes to ong>theong> Specified Gas Emitters Regulation. The change effectively doubles

ong>theong> level ong>ofong> support provided through ong>theong> ong>ofong>fset credit mechanism currently available, and also provides opportunities

for furong>theong>r support if credit prices in Alberta increase.

Europe

In May ong>2011ong>, 13 CCS projects, togeong>theong>r with 65 innovative renewable projects, were identified as meeting ong>theong> criteria

to go forward to ong>theong> next stage ong>ofong> ong>theong> NER300 program. The NER300 is a funding instrument where 300 million carbon

allowances under ong>theong> EU Emissions Trading System (ETS) are set aside (or reserved for new entrants also known as

ong>theong> ‘new entrant reserve’). It is expected that ong>theong>se permits will be sold from late ong>2011ong> through to late 2012 to provide

funding for innovative renewable and CCS projects. For CCS projects, ong>theong> funds can cover up to 50 per cent ong>ofong> relevant

CCS costs which includes ong>theong> incremental investment costs as well as ong>theong> net present value ong>ofong> operating costs less

revenue streams.

CHAPTER 4

As at August ong>2011ong>, ong>theong> price ong>ofong> a December 2012 futures contract for a carbon allowance under ong>theong> EU ETS is

approximately €13. At this price, ong>theong> total funds raised under NER300 would be approximately €3.9bn (US$5.6bn).

This funding is for both CCS and innovative renewable projects. Assuming 75 per cent ong>ofong> ong>theong> NER300 funds are used

for CCS projects, this would provide total funds around €2.9bn (US$4.2bn).

The maximum any project can receive is 15 per cent ong>ofong> ong>theong> funds raised by NER300, or €585 million (US$840 million)

under ong>theong> above assumptions. If each project were to receive this maximum amount, up to five projects could be

funded if ong>theong>y meet ong>theong> criteria. More projects could be funded if less than ong>theong> maximum is provided. Some projects

being considered received funding under ong>theong> European Energy Programme for Recovery (EEPR). Total funding from

ong>theong> European Commission cannot exceed 50 per cent for both funds combined, and any allocation from ong>theong> NER300

fund will be adjusted for any EEPR funding to remain below ong>theong> 50 per cent limit.

The EIB is currently carrying out financial and technical due diligence ong>ofong> ong>theong> project proposals and will pass ong>theong>

information on to ong>theong> European Commission. Togeong>theong>r with ong>theong> Member States, ong>theong> Commission will ‘rank’ each ong>ofong> ong>theong>

projects, with those ranking highest being those with ong>theong> lowest cost per tonne ong>ofong> carbon stored. The ranking ong>ofong> ong>theong>

projects will be adjusted to take into consideration ong>theong> need to demonstrate ong>theong> different CCS technologies available.

Up to eight ong>ofong> ong>theong> highest ranked CCS projects can receive funding under ong>theong> NER300 program. However, as noted

above, ong>theong> final number ong>ofong> projects supported will depend on ong>theong> total additional cost for each project that has been

put forward, and ong>theong> maximum amount ong>ofong> funding that can be provided to any particular project. Final decisions

as to which projects will be funded are expected in ong>theong> second half ong>ofong> 2012. Overall, ong>theong> Institute anticipates that ong>theong>

NER300 program will support between four to six CCS projects in Europe.

Funding arrangements by industry, technology and storage

Over 75 per cent ong>ofong> all ong>theong> funding allocated to CCS activities to date has been allocated to large-scale demonstrations.

Of this, US$8.1bn, or 76 per cent, has been allocated to power projects (Figure 44a), with projects in ong>theong> fertiliser,

oil or coal gasification industries accounting for a furong>theong>r 20 per cent.

Pre-combustion technologies are used in both ong>theong> power industry and for gasification ong>ofong> fossil fuels for a variety ong>ofong>

purposes including fertiliser production. Consequently, pre-combustion technologies account for 50 per cent ong>ofong> all

funding awarded to large-scale demonstrations (Figure 44b).

POLICY, LEGAL AND STAKEHOLDER ISSUES

91


Figure 44 Public funding committed to large-scale CCS demonstration projects

(a) by industry

Power generation

Oil refining and/or fertiliser

Chemical production

Oong>theong>r industrial

Ethanol

Gas processing

1 2 3 4 5 6 7 8

US$bn

(b) by capture technology

Pre-combustion

Post-combustion

Oxyfuel combustion

Gas processing

To be decided

1 2 3 4 5 6 7 8

US$bn

(c) by capture technology for power generation projects

Pre-combustion

Post-combustion

Oxyfuel combustion

1 2 3 4 5 6 7 8

US$bn

(d) by storage type

EOR

Deep saline formations

Depleted oil/or gas fields

Not specified

Combination

1 2 3 4 5 6 7 8

US$bn

However, in considering only ong>theong> power sector, pre-combustion technologies (that is, IGCC) account for around

40 per cent (Figure 44c). With a stated desire by a number ong>ofong> governments, such as ong>theong> United States, to switch more

recent funding activities towards post-combustion approaches in ong>theong> power sector, ong>theong>se technologies also account

for 40 per cent.

92 THE GLOBAL STATUS OF CCS: ong>2011ong>


The IPCC has estimated that ong>theong>re is 1 700 to 11 000Gt ong>ofong> storage potentially available across a variety ong>ofong> storage types

with deep saline formations making up more than 90 per cent ong>ofong> suitable geological formations (IPCC 2005). In ong>theong>

distribution ong>ofong> funding to date, projects using deep saline formations account for 41 per cent ong>ofong> funding allocation

where a storage type has been identified (Figure 44d). In contrast, projects using EOR in active oil fields accounts

for almost 50 per cent ong>ofong> allocated funding to date. The share ong>ofong> funding allocated to projects associated with EOR

storage operations may reflect ong>theong> extent that CO 2

EOR is providing an initial ‘facilitator’ role in ong>theong> demonstration ong>ofong> CCS

in regions ong>ofong> EOR potential, as discussed earlier.

Nearly 40 large-scale demonstration projects have received government funding totalling more than US$10bn worldwide.

Not all ong>ofong> ong>theong>se projects are considered to be fully integrated CCS projects with storage options. Also, some ong>ofong> ong>theong>se

projects have since been cancelled or put on-hold, and some have only received relatively small funding for early

stage assessment. However, ong>theong> bulk ong>ofong> funding allocated to date has been awarded to twenty-one projects receiving

US$200 million or more each. In total, ong>theong>se LSIPs have been allocated US$9.6bn, accounting for some 89 per cent

ong>ofong> total CCS project funding awarded (Figure 45). FutureGen 2.0 is ong>theong> largest single project recipient receiving

US$1.048bn.

CHAPTER 4

Figure 45 Public funding to large-scale projects 1 200 400 600 800 1000

FutureGen 2.0

Quest

Project Pioneer

Kemper County

Texas Clean Energy

Alberta Carbon Trunk Line 2

ROAD

Taylorville Energy Center

Lake Charles Gasi cation

Korea-CCS 1 3

Korea-CCS 2 3

Collie Hub

HECA

Swan Hills Synfuels

Mongstad (CCM)

Bełchatów CCS

Compostilla

Don Valley

Jänschwalde

Air Products

Boundary Dam

US$ million

Power

Industry

1 Variable year dollars.

1 Variable year dollars.

2 The Alberta Carbon Trunk Line, while recipient ong>ofong> ong>theong> funding from ong>theong> Canadian and

2 The Alberta Carbon Trunk Line, while recipient ong>ofong> ong>theong> funding Alberta from governments, ong>theong> Canadian forms and part Alberta ong>ofong> two projects governments, – Agrium forms and part ong>theong> Northwest ong>ofong> two projects Upgrader. –

Agrium and ong>theong> Northwest Upgrader.

3 Funding amounts attributed to ong>theong> Korean CCS-1 and CCS-2 projects were evenly split

based on ong>theong> total Korean Government funding for demonstration activities, although

3 Funding amounts attributed to ong>theong> Korean CCS-1 and CCS-2 projects were evenly split based on ong>theong> total Korean Government funding

project-specific allocation decisions are yet to be made.

for demonstration activities, although project-specific allocation decisions are yet to be made.

POLICY, LEGAL AND STAKEHOLDER ISSUES

93


Capacity development funding arrangements

Over ong>theong> past three years ong>theong>re has been a concerted effort by several countries and organisations to advance capacity

development activities in developing countries. Organisations and countries that have contributed significant funds in this

space include ong>theong> European Union, ong>theong> Institute, ong>theong> Norwegian Government, and ong>theong> United Kingdom Government.

These contributors have provided direct support by financing specific activities as well as contributing to CCS capacity

development funding mechanisms. For example, Norway has contributed or allocated over US$200 million to be spent

between 2009 and 2014.

Contributions have been made to capacity development funding mechanisms that are managed by ong>theong> World Bank and

ong>theong> Carbon Sequestration Leadership Forum. In terms ong>ofong> individual projects (amongst oong>theong>rs) Norway provides financial

support to ong>theong> IEAGHG international summer school, SACCCS and ong>theong> UNIDO Global CCS Industrial Roadmap which

will provide relevant information on actions and milestones to government and industry decision-makers to facilitate ong>theong>

deployment ong>ofong> CCS in industry.

The Institute has provided over US$25 million to capacity development activities, including ong>theong> UNIDO roadmap.

The Institute has also contributed to ong>theong> Asian Development Bank, World Bank and CSLF funds. In addition to committing

to funding mechanisms and activities managed by oong>theong>rs, ong>theong> Institute also has its own capacity development program.

The Government ong>ofong> ong>theong> United Kingdom has been particularly active in providing support to capacity development

activities in China. Events such as ong>theong> Local Clean Coal Seminar and ong>theong> CCS Symposium in South West China have

raised CCS awareness with Chinese stakeholders, including generation companies and local and regional government.

Activities such as ong>theong>se and ong>theong> China Low-carbon Energy Action Network have brought togeong>theong>r relevant industries

and academics to introduce and discuss in detail ong>theong> issues related to CCS with target audiences. Additionally,

ong>theong> United Kingdom has provided strong support to ong>theong> CSLF capacity development fund and SACCCS.

Who should pay for demonstration activities

Firms in ong>theong> energy supply sector, particularly equipment suppliers undertake strong R&D programs to innovate

in both existing as well as new technologies, including CCS technologies. Governments also support ong>theong> R&D efforts

ong>ofong> private firms through tax arrangements, and oong>theong>r funding opportunities as well as funding much ong>ofong> ong>theong> so-called

‘basic research’ that occurs in universities. The policy rationale for this funding is driven by ong>theong> existence ong>ofong> ‘spillovers’

from research. These are benefits to society from innovation that cannot be fully captured by those undertaking costly

research and development. Investments in innovation generate knowledge that spills over to oong>theong>r firms and users,

reducing ong>theong> returns to innovators and hence ong>theong> incentives to marshal sufficient resources to fully support innovation

in new technologies. This leads to underinvestment in developing new technologies and a slower and less efficient

path ong>ofong> innovation.

This provides a rationale for governments to increase ong>theong> total flow ong>ofong> funds to innovation activities through use ong>ofong>

general revenues arising from taxation, or through taxation concessions. A key challenge in designing policies to support

innovation is to encourage private investments that would not oong>theong>rwise occur and that generate total returns, both private

and spillover (or societal), that are sufficiently positive to exceed ong>theong> costs associated with ong>theong> policy measures.

In ong>theong> absence ong>ofong> policies that effectively address this market failure, ong>theong> challenge ong>ofong> addressing ong>theong> risks ong>ofong> climate

change would lead to higher total costs to society than oong>theong>rwise, particularly if innovation in low-carbon technologies

is left solely to ong>theong> incentives associated with pricing carbon through market measures to reduce greenhouse

gas emissions.

Governments, in anticipation ong>ofong> large potential returns for managing climate change risks, have provided ong>theong> funding

to support a large-scale CCS demonstration program across ong>theong> world. The anticipated benefits relate to achieving

commercialisation ong>ofong> CCS technologies earlier than oong>theong>rwise through cost reductions and performance improvements.

These benefits arise from actions to support and exploit ong>theong> knowledge spillovers through accelerated knowledge

sharing requirements associated with ong>theong> funding support.

In addition to ong>theong> benefits to society that arise from accelerating innovation for low-carbon technologies, firms that

supply inputs for use by low carbon technologies can also benefit from accelerated development ong>ofong> CCS technologies.

Any technology innovation along a supply chain that supports or increases demand for a particular set ong>ofong> inputs may

convey a benefit to ong>theong> owners ong>ofong> those inputs. In some cases, ong>theong> owners ong>ofong> those inputs may have an incentive

to support technology innovation. Sometimes such support arrangements may require ong>theong> coordinating support ong>ofong>

governments to manage potential free rider issues.

In a world where ong>theong>re is ong>globalong> or even partial, policy action that constrains CO 2

emissions, CCS technologies increase

ong>theong> demand for fossil fuels relative to ong>theong> absence or reduced availability ong>ofong> ong>theong> technology. To ong>theong> extent that ong>theong>

94 THE GLOBAL STATUS OF CCS: ong>2011ong>


increased demand creates, or increases, any economic surplus associated with ong>theong> production ong>ofong> fossil fuels, this can

create an incentive for owners ong>ofong> fossil fuel resources to also contribute to innovation activities for CCS, including

demonstration activities. One example ong>ofong> this is ong>theong> COAL21 fund established by ong>theong> Australian Coal Association in

2006. Through a voluntary levy on ong>theong> production ong>ofong> black coal, ong>theong> industry aims to raise approximately AU$1bn

(US$1.1bn) over ten years. As at December 2010, ong>theong> levy had raised AU$234 million (US$256 million) with

approximately AU$141 million (US$154 million) expended (Australia, Senate Standing Committee on Economics, ong>2011ong>).

In ensuring sufficient resources are directed to support research and demonstration projects, an issue arises over ong>theong>

extent to which coordinating payments from beneficiaries ong>ofong> research or demonstration outcomes can be improved

through government involvement, leading to more efficient outcomes overall.

As an extractive resource industry ong>theong>re is also potential to draw on ong>theong> resource rents generated in ong>theong> industry

without altering eiong>theong>r ong>theong> production or use ong>ofong> fossil coal and gas resources as a potential funding source for

innovation activities. At ong>theong> same time, ong>theong> changing patterns ong>ofong> resource extraction in anticipation ong>ofong> future changes

in consumption patterns due to both climate change policy as well as ong>theong> developments ong>ofong> competing renewable

technologies, presents challenges in identifying wheong>theong>r changes to those arrangements will result in improvements

to both ong>theong> industry and to ong>theong> community more generally.

CHAPTER 4

4.3 Public engagement

Continued need for effective management ong>ofong> public engagement

Public engagement continues to present risks and opportunities to CCS projects. The area covers interaction with

stakeholders able to influence project progress and success such as regulators and site communities, as well as ong>theong>

broader public, including media and NGOs. CCS industries seek balance between levels ong>ofong> general public awareness

that help project communications to become more effective, and collaboration with local communities to understand

and address ong>theong>ir specific concerns.

As more projects progress through ong>theong> final stages ong>ofong> development planning, it is important to continuously review

ong>theong>ir approach to identify and mitigate potential public engagement challenges. These stages are where ong>theong> majority

ong>ofong> work to reduce and manage public engagement risk should be conducted and where CCS projects will continue

to require support from each oong>theong>r, as well as from tools to effectively plan and deliver stakeholder engagement that

comprehensively addresses any ong>ofong> ong>theong> public’s concerns.

Identification and utilisation ong>ofong> ong>theong> lessons learnt from existing projects will help oong>theong>r project proponents or developing

country governments to implement more effective approaches.

CASE STUDY

The Collie South West Geosequestration Hub –

Community consultation with ong>theong> local communities

As part ong>ofong> its public engagement approach, ong>theong> Collie South West Geosequestration Hub – located in ong>theong>

south west ong>ofong> Western Australia – engaged CSIRO to assist with a local community consultation workshop

(Jearnneret et al. ong>2011ong>). The aims ong>ofong> ong>theong> workshop were to:

1. assess ong>theong> public’s knowledge and attitudes towards climate change science and low emissions energy

technologies, particularly CCS;

2. establish a framework for future public participation in studies and evaluation ong>ofong> ong>theong> Collie Hub concept; and

3. explore ong>theong> effectiveness ong>ofong> a participatory one-day workshop process to enable more informed dialogue

about ong>theong> issues and risks regarding climate change science and energy technology options.

The aggregated outcomes ong>ofong> ong>theong> workshop provides Collie Hub with a deeper understanding ong>ofong> ong>theong> local

community’s perceptions and attitudes, in order to develop an appropriate strategy for providing fact-based

information on ong>theong> key areas ong>ofong> interest. Furong>theong>rmore, CSIRO is able to collate ong>theong> information from oong>theong>r workshops

conducted throughout Australia, enabling comparisons between different regions and communities, and a more

holistic understanding ong>ofong> climate change views and low-carbon energy technology. This type ong>ofong> information is

valuable to governments and project proponents for evaluating what types ong>ofong> communications can assist in

informing different audiences and potentially changing attitudes.

POLICY, LEGAL AND STAKEHOLDER ISSUES

95


Institute furong>theong>r monitors public engagement activities

To better understand ong>theong> ong>statusong> ong>ofong> public engagement strategies, ong>theong> Institute sought specific information from project

proponents in this year’s project survey. The aim was to allow ong>theong> industry to identify indicators ong>ofong> a quality strategy,

test ong>theong> quality ong>ofong> ong>theong>ir relevant approaches and begin to share depth around ong>theong>se indicators for a more accurate

assessment ong>ofong> overall industry progress and risk exposure.

Of ong>theong> projects that responded to ong>theong> question ong>ofong> wheong>theong>r or not a public engagement strategy was ‘in place’,

‘in development’, ‘still required’ or ‘not required’, 75 per cent indicated that one was eiong>theong>r ‘in place’ or in ‘development’.

This represents a quite positive outcome.

Furong>theong>r survey questions centred around four main areas, including:

••

understanding ong>ofong> ong>theong> site community;

••

interpreting data for effective strategic planning;

••

activities to mitigate risks; and

••

ong>theong> ongoing monitoring ong>ofong> public engagement risks.

Each ong>ofong> ong>theong>se areas focus largely on ong>theong> community hosting ong>theong> storage site, as this is ong>ofong>ten where ong>theong> greatest uncertainty

exists for stakeholders, which leads to ong>theong> highest risks around building relationships and trust. Projects were asked to

self-assess against each quality factor by identifying sets ong>ofong> corresponding outputs. Details ong>ofong> ong>theong>se quality factors and

outputs are given in Appendix F. They highlight ong>theong> difficulty in attempting to generalise results in an area which requires a

customised approach for each project community location. This limits comparability ong>ofong> detailed activities from one project

to anoong>theong>r. However, it can inform data around high-level progress and provide oong>theong>r observations which can potentially

be used to furong>theong>r advance ong>theong> tools and support instruments available for public engagement activities.

Finally, it is clear that data collection for projects in developing countries is in its early stages. As ong>theong> number ong>ofong> projects in

developing countries grows, ong>theong> skills and resources required to successfully complete a project will also need to take

into account public engagement.

CASE STUDY

ScottishPower – A unique approach to educating key

audiences on CCS

As part ong>ofong> ong>theong>ir public engagement strategy, ScottishPower supported ong>theong> implementation ong>ofong> a grassroots approach

in engaging specific audiences within local communities, to broaden knowledge ong>ofong> CCS within ong>theong> context ong>ofong>

climate change mitigation and an energy portfolio strategy. ScottishPower and ong>theong> Scottish Government jointly

funded a project to create an ambitious high school education program focussed on CCS. This program was built

on ong>theong> earth sciences education programs developed by ong>theong> Scottish Earth Sciences Education Forum (SESEF)

at Edinburgh University, and had a dual purpose:

• to improve understanding ong>ofong> CCS in ong>theong> local communities near Longannet Power Station

(ong>theong> site ong>ofong> ScottishPower’s flagship CCS demonstration); and

• to use a real life example ong>ofong> cutting edge science and technology to bring to life traditional subjects like

chemistry, maths, physics and geography for high school pupils in ong>theong> process ong>ofong> choosing ong>theong>ir future

study options.

One ong>ofong> ong>theong> most important elements ong>ofong> ong>theong> program was using ong>theong> SESEF team as ong>theong> independent delivery partner.

This meant that ong>theong> students’ initial introduction to ong>theong> concept ong>ofong> CCS was presented in ong>theong> context ong>ofong> one ong>ofong>

many options for climate change mitigation, and ong>theong>y ong>theong>n had access to ong>theong> expertise ong>ofong> ong>theong> CCS team at ong>theong>

power station.

96 THE GLOBAL STATUS OF CCS: ong>2011ong>


Resources to assist public engagement strategy development

As CCS industries continue to develop, so too has ong>theong>re been measured progress in ong>theong> sophistication and quality ong>ofong>

tools and resources developed by various organisations, including ong>theong> Institute, to assist CCS stakeholders with engaging

various audiences.

Table 15 below highlights recent publications designed to inform and assist project proponents and oong>theong>r interested

stakeholders.

Table 15 Public engagement resources

PUBLICATION

Communications

& Engagement Tool

for CCS Projects

DESCRIPTION

A practical guide to help project proponents

more effectively plan ong>theong>ir engagement activities.

It provides a range ong>ofong> methods and activities to

guide public engagement approaches for addressing

social considerations for successful CCS project

demonstration.