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Is It Time To Take A Second Look At Carbon Capture?

For a technology which has been around since 1938, carbon capture technology is having a delayed moment. Part of the reason for this is that carbon capture and sequestration (CCS), as it is generally known, hasn’t lived up to its earlier promise. It gained prominence under President George W. Bush  administration, when several large project involving the technology were announced. But its trajectory has been unlike that of renewable energy sources, which have achieved parity with fossil fuel sources in recent times. Instead, CCS has been deemed as an expensive and inefficient method for controlling carbon emissions. The high-profile closures of recent plants have also put a question mark on CCS’s efficacy.  

But its fortunes are set to change. A spate of media reports are providing momentum to re-evaluate the technology’s role and use in curbing carbon emissions. The impetus for current interest in the technology is the impossibility of reaching climate change goals by 2100. A 2014 report by the Intergovernmental Panel on Climate Change (IPCC) set the ball rolling for CCS by highlighting its role among emerging technologies in mitigating carbon emissions.

The Business Case For Carbon Capture

The business case for carbon capture relies on its utility as a method for capturing the carbon dioxide from industrial and power plants. While these plants are necessary to fuel civilization, they are also responsible for the bulk of carbon emissions. CCS captures carbon emitted from the plants and buries them deep within the earth and, subsequently, repurposes them for other uses.

According to EIA statistics, there were 1,457 coal and petroleum plants in the United States last year. A decade ago, that figure was 1,764 plants. In the meanwhile, natural gas plants have multiplied from 1,659 to 1,801. But that multiplication is not exactly good news since even they also emit carbon (although in almost half the quantity emitted by coal and petroleum). The emergence of India and China, countries that rely on the fossil fuel to power their development, is only expected to increase carbon dioxide levels in the atmosphere.

A variant of carbon capture called Bio-Energy Carbon Capture Storage (BECCS) takes the idea of carbon capture further by finding out uses for the captured carbon in other production processes. For example, enhanced oil recovery, which uses a mix of carbon dioxide and water to extract oil, is gaining prominence as a major use case for CCS.  

But There Are Problems

The benefits of CCS should make the technology attractive to power plants. But they are still hesitant to adopt it because CCS lacks a coherent business model that justifies investment into the technology. It requires a substantial amount of money to integrate CCS technology into power plants. A 2014 DOE study estimated that addition of CCS technology into an existing coal plant would add $1 billion to its overall costs.

The problem is further exacerbated by the absence of subsidies for the technology. “People know what a windmill looks like. But they don’t actually know what CCS is. So it’s hard to get traction in a policy context,” said Dr. Julio Friedmann, who worked as a Principal Deputy Assistant Secretary for the Office of Fossil Energy under President Obama.   

But CCS expenses do not stop there.

According to some estimates, coal plants that use CCS cost nearly two-thirds more than a regular coal plant to produce the same amount of electricity. This is because of the additional operational costs required to run the plant. A viable transportation and storage infrastructure to store and move the captured carbon dioxide is also absent. A New Yorker article about carbon capture states the following: “Capturing CO2 from a smoke stack consumes a lot of power - upto 25% of the total produced at a typical coal-burning plant. And this translates into costs. What company is going to assume such costs when it can dump CO2 into the air for free?” Contrast that situation with the one for new solar PV and wind power plants, which are cheaper to build as compared to a coal plant. What’s more, the energy produced at these sources is free of the inflated costs associated with CCS.   

Recent research from Imperial College questions the wisdom of using CCS to aid in carbon dioxide capture for the oil industry. The researchers there developed a model called MIICE ((Model of Iterative Investment In Carbon EOR (Enhanced Oil Recovery)) to test the technology’s effectiveness in the oil industry. They concluded that high oil prices could temporarily offset the costs of CCS technology until punitive carbon taxes are implemented. The price points that justify CCS investment in the oil industry are as follows: a price greater than $85/barrel and carbon tax incentives being raised to above $75 per tonne of carbon dioxide by 2050. Oil prices have stayed below the levels mentioned in the report this year. In the New Yorker article, David Keith, founder of Carbon Engineering in British Columbia and a Harvard lecturer, is quoted as saying that it is almost certainly cheaper to cut emissions now than to do large scale carbon removal.   

Does This Mean That CCS Is An Unsustainable Technology?

Not quite. Carbon capture’s greatest utility lies in the industrial sector, in cement and petroleum plants, where there is no defined method to take out carbon as a pollutant. A 2015 report by the International Energy Agency (IEA) calls for between 25% and 40% of global production of steel, cement and chemicals to be equipped with CCS by 2050 because almost half of the CO2 captured between 2015 and 2050 will come from industrial applications. Non-OECD markets, such as China and India, will account for a majority of these deployments.

Before that happens, however, intervention is needed in the form of policy measures as well as growth of an innovation ecosystem around the technology to bring down costs.

Some of that is already happening.

There’s a steady stream of funding all over the world making its way into the CCS ecosystem. The Oil and Gas Climate Initiative last year announced spending of $1 billion on CCS technology. Startups have mushroomed in the space and developing countries have become big buyers of the technology. For example, China and India have become big markets for CCS technology even though nine out of the 17 total CCS plants in operation are located in the United States.

Over a long term, CCS technology is also proving to be competitive with other forms of energy. For example, the Sleipner gas facility located in offshore Norway was the first energy plant to be equipped with the technology. According to reports, the plant finds it more cost-effective to capture carbon rather than pay a carbon tax.

On the policy front, two bills - one in the House and another in the Senate - are aimed at rewarding CCS installation with a performance tax credit. They intend to provide between $30 and $50 per metric ton of CO2 in tax credits. The New Carbon Economy Consortium (NCEC) recently released a report that discussed the economics of a new carbon economy. Among other things, it discusses the creation of global hotspots or regions of the world that are especially suitable for certain types of storage. The report also discusses creation of supply chains and workforce development plans to enable the new economy. In its current form, the report is mostly generic and couched in buzzwords. It will take some time before CCS technology truly becomes feasible for implementation on a large scale.  

Rakesh  Sharma's picture

Thank Rakesh for the Post!

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Scott Brooks's picture
Scott Brooks on Feb 7, 2018 3:29 am GMT

The carbon particulate problem is pretty much whipped. CO2 is an important plant food as plants survive and produce best at 600ppm. No real scientific basis for a significant forcing effect in regards to global warming has been established or shown with CO2, it's pseudo science.

Studies on past climate change, even within the present climate optimum have shown no link to a climate forcing factor of CO2 or even water vapor. They both are secondary effects of solar variability factors.

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