Defining CCS Ready: An Approach to An International Definition

Chapter 2: Capture Ready Plant Definition2.4.1 Acceptable Economic CostThe proposed definition notes that technical capability of the capture plant retrofit needs tobe “at an acceptable economic cost.” This term refers to whether the cost of a CCS Readyplant and the eventual CCS retrofit is acceptable under the expected economic conditionswithin a jurisdiction. In other words, if the plant can be converted to CCS only at anastronomical cost, then it cannot for any practical purposes be considered CCS Ready.As mentioned in Chapter 1, this might mean, for example, that a reasonable probabilityexists during the operating life of the plant for it to be retrofitted and operated with CCSat a total cost comparable to the GHG mitigation costs expected to be borne by otherplants in a jurisdiction. “Economically acceptable” could also be defined to mean that thetotal cost of a plant’s products with CCS (for example, X$/kWh) is acceptable to and canbe absorbed by the marketplace. The plant’s total cost for capture, transport, and storagewould include costs for planning, construction capital, and operating costs, including thetime value of money.The proposed definition deliberately does not specify a definite criterion for economicacceptability; as such a definition would vary across jurisdictions. Policymakers andregulators in each jurisdiction would need to decide what would constitute aneconomically feasible plant.A study of upfront costs of a Capture Ready plant—and the subsequent benefits of loweredretrofit costs in the future—is critical to determining the level of acceptability of these costsfor the project developer, policymakers, and the public. High upfront costs, or a very longtime lag between building a Capture Ready plant and retrofitting the plant, may not providesufficient economic incentives for developers to make plants Capture Ready.An assessment of economic feasibility is also considered by several existing sources in theCCS Ready literature. Article 33 of the EU Directive 2009/31/EC notes that the economicfeasibility of retrofitting (for plants more than 300 MWe) needs to be demonstrated beforesuitable space for capture and compression of CO 2 is set aside. The UK CCR Guidance alsorequires applicants to assess the economic barriers for retrofitting CCS technologies. 31Applicants are expected to produce a detailed economic analysis for retrofitting the entireCCS infrastructure (capture, transport, and storage) onto the plant. One method forindicating feasibility, according to the UK CCR Guidance, is to model the total lifetime costof electricity as a function of carbon prices and indicate whether the crossover carbon pricefor the cost of electricity for plants with and without CCS is feasible over the plant’slifetime. 32 If the economic assessment indicates that the CCS retrofit is feasible, then theconsent application can be granted.The cost for any specific plant will vary based on the jurisdiction in which the plant islocated, and will depend heavily on assumptions used for the cost analysis. Details of the31 Paragraph 6, page 8, of U.K. Department of Energy and Climate Change (U.K. DECC). (2009a). Carbon capturereadiness (CCR): A guidance note for Section 36 Electricity Act 1989 consent applications (Publication no. URN 09D/810).London, UK: Author..32 Page 26 of U.K. Department of Energy and Climate Change (U.K. DECC). (2009a). Carbon capture readiness (CCR): Aguidance note for Section 36 Electricity Act 1989 consent applications (Publication no. URN 09D/810). London, UK: Author..23 February 2010 28