Defining CCS Ready: An Approach to An International Definition

More documents

Recommendations

Info

Appendix C: Policy Considerations and Assessments of CCS Ready EconomicsAppendix C: Policy Considerations and Assessments ofCCS Ready EconomicsC.1 Policy Considerations for CCS ReadyBy geologically storing CO 2 emissions from fossil-fuel based plants, global CO 2 emissions canbe reduced even with an increased consumption of fossil fuels. CCS will likely be a keycomponent of a portfolio of technologies needed to achieve significant emissions reductionsin major energy-consuming nations. Yet CCS has not been widely deployed on thecommercial scale, and there are still technical, economic, regulatory, and policy barriers toits deployment, despite the fact that governments and industry have been working togetherfor several years to resolve these barriers.While barriers to CCS are gradually being reduced, new fossil-fuel power plants andindustrial facilities continue to be designed and built worldwide. Unless new plants aredesigned with eventual CCS in mind, higher lifecycle costs could be incurred by projectdevelopers in a carbon-constrained future. Therefore, in the interim, governments andindustry may adopt a CCS Ready policy to prepare for the future and provide potential costsavings, while CCS technology is being developed and more knowledge is gained on CCScost and performance. CCS Ready planning and plant design, and perhaps some incrementalequipment pre-investment in order to reduce potential CO 2 lock-in, can be adoptedwithout fully committing to CCS before it has been commercially proven. If cost-effectivepreparatory measures to reduce GHG emissions are taken now, this may potentially lead toreduced costs and less business interruption in the future.A jurisdiction may decide to have a CCS Ready policy when it believes such a policy willfurther its existing or expected GHG goals. Even if the absence of clear GHG goals, a CCSReady policy may be adopted to help create and preserve the option for future low-costCCS retrofits, in case a general GHG policy is later adopted. The policy decision to adopt aCCS Ready policy, and when and how to apply it, will usually be based on economic analysesindicating that the CCS Ready policy will reduce costs and/or lead to faster and more certainGHG reductions. Such a finding is usually based on the presumption that, left on its own,industry will not quickly and adequately make the proper choices in siting and designingplants to be CCS Ready, and so government intervention is justified. These policyconsiderations are discussed below in terms of key questions that can be posed.Is CCS a Viable Option for GHG Mitigation?A significant part of the decision-making process is an investigation into the economics ofCCS as a GHG mitigation measure and how it compares with other options. A CCS Readypolicy is most appropriate in jurisdictions where CCS is likely to be a substantial GHGmitigation measure due to the nature of fossil fuel use, the availability of geologic storagecapacity, a legal and regulatory framework conducive to CCS, and limited amounts of lessexpensive alternatives to CCS. A jurisdiction in which CCS is unlikely to ever be applied, dueto technical, legal, and economic reasons, is a poor candidate for a CCS Ready policy.Will there be Policy Drivers to CCS?A CCS Ready policy would usually be based on the anticipation that CCS will beimplemented sometime in the foreseeable future due to technology mandates, emissions23 February 2010 100
Appendix C: Policy Considerations and Assessments of CCS Ready Economicsperformance standards, economic penalties, or economic incentives. In other words, thereis good reason to believe that CCS Ready plants will be sometime in the future retrofittedto CCS. CCS Ready is most favourable when the drivers toward CCS are expected tocome into force soon, so that discounting of future savings will not be too large. If suchdrivers toward CCS are not in place and are not expected, then CCS Ready policy maynot be needed.Is it Important to Preserve an Option for Low-Cost CCS Retrofits?Even in the absence of existing or expected drivers to CCS, a CCS Ready policy may bedesirable if the jurisdiction wants to create and preserve the option for future low-cost CCSretrofits, if and when a general GHG policy is adopted. This may be appropriate injurisdictions with uncertain GHG mitigation plans but for whom CCS would have to be animportant part of any potential GHG mitigation strategy due to the jurisdiction’s heavyreliance on coal and other fossil fuels at power plants and industrial facilities. The adoption ofa CCS Ready policy in these circumstances would be justified in terms of keeping open theoption for significant near-term GHG controls, which in the absence of CCS Ready plantsmight otherwise be cost-prohibitive.Will there be Significant Cost Savings if Plants are CCS Ready?An economic case for CCS Ready can be made when the higher upfront costs relative tobuilding a business-as-usual (BAU) plant are offset by the present value of lower adaptationcosts for the plant to later add CCS to mitigate GHG emissions. In other words, byinvesting early in making a plant CCS Ready, the developer could experience a lower-costGHG compliance option that can be (but does not have to be) exercised sometime duringthe plant’s operating life. A CCS Ready policy is most justified when such savings are large.Will there be More Certain or Faster CO 2 Reductions from CCS Ready Plants?A CCS Ready plant can be expected to more quickly adopt CCS compared with abusiness-as-usual plant, because some of the CCS-related planning for capture, transport,and storage is done upfront; obstacles to CCS are avoided in plant design and siting; andretrofit costs are lower, meaning that the economic threshold for retrofit—brought on byrising carbon prices—can be realized more quickly. The CCS Ready policy may be justifiedwhere faster adoption to CCS can be expected to lead to faster and more certainreductions to GHG emissions.Will Plants be CCS Ready in the Absence of a CCS-Ready Policy?Developers of new power plant and industrial projects could themselves undertake (even inthe absence of any national CCS Ready policies) to create a “real option 152 ” for lateradoption of CCS in their new facilities. In other words, the developers might anticipate thatsome time in the future the new facility may need to adopt CCS as a GHG mitigationstrategy, and so could make their facility CCS Ready in order to reduce the cost of a futureretrofit. By investing early in making a facility CCS Ready, the developer would create the“real option” of a lower-cost CCS retrofit that can be (but does not have to be) exercisedsome time during the facility’s operating life.152 A “real option” is distinct from a “financial option” in that it concerns a physical asset such as a power plant.23 February 2010 101
Page 1:
Defining CCS Ready: AnApproach to A
Page 4 and 5:
PrefacePrefaceThe Global CCS Instit
Page 6 and 7:
Acknowledgements and CitationsThe c
Page 8:
Executive SummaryThe components spe
Page 12 and 13:
Executive SummaryExhibit ES-3: Illu
Page 15 and 16:
Chapter 1: IntroductionDevelopers o
Page 17 and 18:
Chapter 1: Introductionor more, lic
Page 19 and 20:
Chapter 1: Introductionrelatively n
Page 21 and 22:
Chapter 1: IntroductionExhibit 1-3:
Page 23 and 24:
Chapter 1: IntroductionJustificatio
Page 25 and 26:
CO2 Transport Ready PlantExhibit 1-
Page 27 and 28:
Chapter 2: Capture Ready Plant Defi
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
Page 37 and 38:
Page 39 and 40:
Page 41 and 42:
Page 43 and 44:
Chapter 3: Transport Ready Plant De
Page 45 and 46:
Page 47 and 48:
3.3.2 Environmental, Safety, and Ot
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56: Chapter 4: Storage Ready Plant Defi
Page 57 and 58: • Site DesignChapter 4: Storage R
Page 75 and 76: Appendix A: Summary of Reviewed Exi
Page 83 and 84: Appendix B: Technology Design Optio
Page 105: Appendix B: Technology Design Optio
Page 109 and 110: Appendix C: Policy Considerations a
Page 131 and 132: Appendix D: AcronymsAppendix D: Acr
Page 133 and 134: Appendix D: AcronymsNGONO XNSBTFNSP
Page 135 and 136: Appendix E: ReferencesInternational
Page 137 and 138: Appendix E: ReferencesIntergovernme
Page 139 and 140: Appendix E: ReferencesNational Coal
Page 141 and 142: Appendix E: Referencesfrom http://w
show all

Defining CCS Ready: An Approach to An International Definition

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?