global status ccs 2011

THE GLOBAL STATUS OF CCS: 2011

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THE GLOBAL STATUS OF CCS: 2011

Global CCS Institute, 2011

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ISBN 978-0-9871863-0-0

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CONTENTS

Preface v

Abbreviations vi

Executive summary vii

1 Introduction 2

1.1 Scope of this report 21.2 The role of CCS in CO2 emission reductions 31.3 What is CCS? 5

2 Projects 8

2.1 Key project developments 82.2 Detailed project breakdown 15

3 Technology 34

3.1 Capture 343.2 Transport 473.3 Storage and use 543.4 Technology costs and challenges 65

4 Policy, legal and stakeholder issues 70

4.1 Policy, legal and regulatory context 714.2 Status of funding support 894.3 Public engagement 95

5 Making the Business Case for CCS 100

Appendices

Appendix A Overview of data analysis process 106Appendix B Asset Lifecycle Model 107Appendix C Large-scale integrated projects 109Appendix D Reconciliation of project changes since 2010 Status Report 122Appendix E Policy context 125Appendix F Public engagement quality factors 138

References 139

Tables

Table 1 LSIPs in the Operate and Execute stages 11Table 2 CCS project submissions for NER300 to the European Commission 21Table 3 LSIPs by region, by technology and by industry 29Table 4 Technology Readiness Levels (TRLs) 36Table 5 Transport cost estimates for CCS demonstration projects, 2.5Mtpa 54Table 6 Transport cost estimates for large-scale networks of 20Mtpa 54Table 7 ZEP cost estimates for storage 58Table 8 Summary of recently completed CCS design cost studies 66Table 9 CCS cost estimates from ZEP 67Table 10 Country status of emission reduction aspirations 72Table 11 International groupings for countries 80Table 12 CCS policy landscape 81

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

Table 13 Project survey responses to policy question 87Table 14 Project survey responses to legal and regulatory question 88Table 15 Public engagement resources 97Table 16 Key business features of LSIPS in operation or construction 101Table 17 Comparison of risks between a new build CCS demonstration power project with a conventional power project 102Table C-1 2011 large-scale integrated CCS projects 110Table D-1 Reconciliation of LSIPs with 2010 Status Report 122Table E-1 Project responses to questions on high level policy, legal and regulatory issues 136

Figures

Figure 1 Global CO2 atmospheric concentrations and temperature 3Figure 2 Global CO2 emissions and GHG emission reductions 4Figure 3 Avoided costs of CO2 by technology in the power sector 5Figure 4 Geological storage options for CO2 6Figure 5 LSIPs by asset lifecycle and region/country 9Figure 6 LSIPs by asset lifecycle and year 9Figure 7 Timing of FID of LSIPs in the Define and Evaluate stages 10Figure 8 Changes in LSIPs from 2010 to 2011 13Figure 9 LSIPs by region and year 15Figure 10 Volume of CO2 potentially stored by region or country 15Figure 11 World map of LSIPs by industry 16Figure 12 North American map of LSIPs by industry 18Figure 13 European map of LSIPs by industry 20Figure 14 LSIPs by industry sector and year 24Figure 15 Volume of CO2 captured by industry sector and year 25Figure 16 Volume of CO2 captured by capture type and capture asset lifecycle stage 26Figure 17 LSIPs by capture type and region 26Figure 18 Volume of CO2 by storage type and region 27Figure 19 Comparison of capture asset lifecycle with the progress of EOR and storage in deep saline formations or depleted oil and gas reservoirs 28Figure 20 Layout of Gorgon CO2 compressor train 31Figure 21 Technical options for CO2 capture from coal-power plants 35Figure 22 Summary of TRL for capture technologies 36Figure 23 Applications of capture technologies to LSIPs 37Figure 24 Typical post-combustion capture process for power generation 38Figure 25 Post-combustion capture TRL rankings 38Figure 26 Projected performance of post-combustion capture technologies 39Figure 27 TRL of pre-combustion capture components 40Figure 28 IGCC developments to recover energy losses from CO2 capture 41Figure 29 TRL for oxyfuel combustion components 42Figure 30 Oxyfuel combustion developments to recover energy losses from CO2 capture 43Figure 31 Cost of CO2 avoided for capture technologies 46Figure 32 Existing and planned CO2 pipelines in North America 48Figure 33 European CO2 transport corridors and volumes, CO2Europipe reference scenario 2050 49Figure 34 Western Canadian CCS potential 51Figure 35 Ship-based CO2 carrier: Submerged Loading System general arrangement 53Figure 36 Current status of country-scale storage screening assessments 54Figure 37 Brazil sedimentary basins 55Figure 38 Schematic risk profile for a storage project 61Figure 39 CO2 use technologies, feedstock concentration and permanence 64Figure 40 Scope of policy landscape 70Figure 41 Linkages between the UNFCCC, the CEM and G8 76Figure 42 CCS policy index 78Figure 43 Public funding support commitments to CCS demonstrations by country 90Figure 44 Public funding committed to large-scale CCS demonstration projects 92Figure 45 Public funding to large-scale projects 93Figure B-1 Asset Lifecycle Model 107

vvPREFACE

PREFACE

Since 2009, the Global CCS Institute has produced a series of major reports which aim to provide a comprehensive worldwide overview of the state of development of carbon capture and storage projects and technologies, and of actions by governments to facilitate the demonstration of those technologies at a large scale.

This report is the latest in that series, and covers developments up until August 2011. It draws on the results of the Institutes annual project survey, completed by lead proponents of major CCS projects around the world. Survey results were supplemented by interviews with personnel from many of these projects, and by research undertaken by Institute staff.

The assistance of project proponents in completing survey questionnaires and taking part in interviews is particularly acknowledged. The Institute is grateful for the very high degree of cooperation received.

Preparation of the report was led by Edlyn Gurney and many Institute staff contributed by authoring individual sections or reviewing the document. Material in the sections on capture technologies, the policy context and legal and regulatory developments also draw on studies by other organisations specifically commissioned for this report, as detailed in those sections. The Institute also acknowledges the many helpful comments provided by external reviewers on drafts of the report.

vi THE GLOBAL STATUS OF CCS: 2011

ABBREVIATIONS

TERM DESCRIPTION

AGR Acid gas removal

ASU Air separation unit

AWG Ad-Hoc Working Group

CCEP Climate Change and Energy Package

CCS Carbon capture and storage

CCS-R CCS Ready

CDM Clean Development Mechanism

CEM Clean Energy Ministerial

CER Certified emission reduction unit

CMP Conference of the Major Parties

CO2 Carbon dioxide

CO2-e CO2 equivalent

CO2CRC Cooperative Research Centre for Greenhouse Gas Technologies

COP Conference of Parties

CPU CO2 purification unit

CSLF Carbon Sequestration Leadership Forum

CTL Coal-to-liquids

EB CDM Executive Board

EC European Commission

EEPR European Energy Programme for Recovery

EIB European Investment Bank

EOR Enhanced oil recovery

EPA Environmental Protection Agency

EPRI Electric Power Research Institute

ETS Emission trading scheme

EU European Union

FGD Flue gas desulphurisation

FID Final investment decision

GHG Greenhouse gas

IEA International Energy Agency

IEAGHG IEA Greenhouse Gas R&D Programme

IGCC Integrated gasification combined cycle

IPCC Intergovernmental Panel on Climate Change

TERM DESCRIPTION

kW Kilowatt

km Kilometre

LSIP Large-scale integrated project

MENA Middle East and North Africa

METI Ministry of Economy, Trade and Industry

MMV Monitoring, measurement and verification

Mtpa Million tonnes per annum; million tonnes a year

MW Megawatt

MWe Megawatts electrical capacity or output

MWth Megawatt thermal

NDRC National Development and Reform Commission

NER New Entrants Reserve

NGO Non-government organisation

NOx Nitrogen oxides

OECD Organisation for Economic Cooperation and Development

PCC Post-combustion capture

psia Pound-force per square inch absolute

ppm Parts per million

R&D Research and development

SACCCS South African Centre for Carbon Capture and Storage

SBSTA Subsidiary Body for Scientific and Technological Advice

SCR Selective catalytic reduction

SNG Synthetic natural gas

SO2 Sulphur dioxide

SOx Sulphur oxides

TRL Technology readiness level

UNFCCC United Nations Framework Convention on Climate Change

UNIDO United Nations Industrial Development Organization

ZEP European Technology Platform for Zero Emission Fossil Fuel Power Plants

viiEXECUTIVE SUMMARY vii

EXECUTIVE SUMMARY

Carbon capture and storage (CCS) has an essential role in reducing global greenhouse gas emissions. As part of a portfolio of low-carbon technologies, CCS is needed to stabilise atmospheric greenhouse gas concentrations at levels consistent with limiting projected temperature rises to 2C by 2050, as recommended by the United Nations Intergovernmental Panel on Climate Change.

The specific challenge for the CCS industry is to demonstrate the entire chain at commercial scaleincorporating CO2 capture from large point sources, CO2 compression and then transportation and injection into suitable storage sites or for a use that results in permanent emissions abatement.

Progress is being madeIn 2011 the CCS industry exhibited measured progress, with an increase in the number of large-scale integrated projects (LSIPs) in operation or under construction and a clustering of projects around the advanced stages of development planning.

There are eight large-scale projects in operation around the world and a further six under construction. Three of these projects have recently commenced construction. Importantly, these include a second power project, Boundary Dam in Canada, and the first project in the United States that will store CO2 in a deep saline formation, the Illinois Industrial Carbon Capture and Sequestration (ICCS) project.

The total CO2 storage capacity of all 14 projects in operation or under construction is over 33million tonnes a year. This is broadly equivalent to preventing the emissions from more than six million cars from entering the atmosphere each year.

In the Institutes annual project survey for 2010, ten projects reported that they could be in a position in the next 12 months to decide on whether 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, the Texas Clean Energy project in the United States and the ROAD project in Europe.

While the prospect of a number of power projects moving to a FID in the next year is a positive development, this is contrasted with other high-emitting industries such as iron and steel and cement, where there is a paucity of projects being planned at large-scale.

In total there are 74 LSIPs recorded in this report, compared with 77 reported in the Global Status of 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 the 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 these countries can eventually deploy CCS.

Factors influencing a projects successAs with most industrial projects, building a viable business case for a CCS demonstration project is a complex and time consuming process that requires both the project economics and the risks to be understood prior to a FID.

All projects in operation use CO2 separation technology as part of an already established industry process and either use CO2 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 of the eight operating projects are in natural gas processing, while the other two are in synthetic fuel production and fertiliser production, and five of these projects use EOR.

A number of projects in operation or under construction are undertaking CCS in response to, or anticipation of, longer-term climate policies and/or potential carbon offset markets. While this is promising, developing a business case is challenging especially when projects do not have access to either revenue streams, such as EOR or other opportunities, or where CO2 capture is not already part of an established industrial process.

viii THE GLOBAL STATUS OF CCS: 2011

There are 11 LSIPs that are considered on-hold or cancelled since the Institutes 2010 report, with eight in the 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 of financial support to continue to the next stage of project development, and uncertainty regarding carbon abatement policies and regulations were critical factors that led several project proponents to reprioritise their investments, either within their 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 then 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 the private sector have a role in resolving and bringing greater transparency to business case issues so that the demonstration of CCS progresses and associated learnings and benefits are realised.

CCS in the power sectorPower generation projects have significant additional costs and risks from scale-up and the first-of-a-kind nature of incorporating capture technology. Electricity markets do not currently support these costs and risks, even where climate policies and carbon pricing are already enacted. A major cost for CCS is the energy penalty or parasitic load involved in applying the technologies. Going forward a major emphasis in pre-, post- and oxyfuel combustion capture applied to power stations (and other industrial applications) is on research into reducing this cost.

Despite these challenges, construction of a post-combustion capture project (Boundary Dam in Canada) and an integrated gasification combined cycle (IGCC) project (Kemper County) is proceeding. This indicates that the technology risk for these applications is considered manageable and the technical barriers are not insurmountable, if other conditions are right, such as allowance for the added cost into the rate base and other incentives. Both these projects received government support and will be selling CO2 for EOR, thus tapping into another revenue stream. They are also demonstrating some elements of risk mitigation in the project design, by either having a relatively low CO2 capture rate from the flue gas stream (in the case of Kemper County) or capturing CO2 from a relatively small power unit (in the case of Boundary Dam).

It is vital these and other 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 the confidence and benchmarks critical for future widespread deployment.

Capture, transport and storage issuesThe eight operating CCS projects in the natural gas processing, synthetic fuels and fertiliser production industries attest to the proven nature of the capture technology in these applications. As noted above, while there are projects proceeding to construction in the power sector, there is a need for more projects to demonstrate the range of possible capture technologies that could be applied. There have been limited recent developments in iron and steel sector demonstrations of capture technologies. In the cement sector, capture technology is still at an early stage. Both these industries are major emitters and further developments are expected and necessary.

Pipeline transport of CO2 is a proven and well developed technology, but it is the scale of the future CO2 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 offers greater flexibility to serve multiple CO2 sources and sinks. Significant economies of 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 of CO2 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 the design and methodologies of measurement, monitoring and verification of storage in effective and appropriate regulatory environments.

ixEXECUTIVE SUMMARY

Information from project proponents indicates that storage assessment and characterisation requires considerable investment and can have long lead times of five to 10 years or more for a greenfield storage site, depending on the existing available geologic information about the site. Policymakers need to factor these lead times into their assessment of a projects 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 of the project, including its possible and potential impacts and benefits. Project proponents need to continuously review their public engagement approach to identify and mitigate potential challenges.

Policy and legal developmentsCCS applied in new and large-scale applications is at the 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 of transitioning towards commercial deployment. Some project proponents perceive policy uncertainty as a major risk to project development and it is of particular concern when governments articulate policy intent without implementation.

In the past year the development of CCS laws and regulations has continued, with a number of jurisdictions completing framework legislation and commencing implementation of secondary regulations and guidance. Effective regulatory regimes on a national level play a significant role in the development of CCS projects globally. Notwithstanding these efforts, project proponents have identified a number of issues that in some cases have yet to be adequately addressed, including regulation that is incomplete in nature or delayed. A number of proposals, amendments and review exercises have already been put in motion by regulators and policymakers across several jurisdictions to address such issues. Whether or not these activities will sufficiently address projects concerns will be an important consideration in the forthcoming years.

Many of the countries and regions that have been acknowledged as leaders in the deployment of laws and regulation for CCS have continued in these roles. In the past year, several European Union Member States, Australia, the United States and Canada have all sustained their regulatory momentum and delivered a number of new proposals, laws, regulations and initiatives. The importance of effective regulation has also been recognised by the many countries that are to become the second generation of CCS lawmakers. Korea is one such example. While many of these countries have yet to pass legislation, or complete the design of their regulatory frameworks, it is clear that significant actions are being taken to facilitate their development. This is particularly noticeable in a number of developing countries that are keen to integrate CCS into future climate change mitigation strategies.

This year, the Seventeenth session of the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP 17) in Durban, South Africa, could see an international framework established that provides for the institutional arrangements of CCS under any future UNFCCC mechanism and/or adopted within national government policy settings. Inclusion of CCS in the Clean Development Mechanism (CDM) or any future mechanism post the Kyoto Protocols first commitment period (2008 to 2012) is of particular importance for the future demonstration of the technology in developing countries.

Government funding to support large-scale CCS demonstration projects has remained largely unchanged in 2011. In total, approximately US$23.5bn has been made available by governments worldwide. Competitive funding programs designed to measure and fund the gap required to make projects financially viable have been widely adopted by governments internationally. This approach will be taken by the European Unions NER300 program where 13 CCS projects, together with 65 innovative renewable projects, were identified as meeting the criteria to go forward to the next stage with decisions on funding allocation expected in the second half of 2012.

In the near-term, government policy and funding levels will impact strongly on the rate at which demonstration projects progress and their overall viability. For this to be done effectively, ongoing cooperation between government and industry is required to address the complex challenges in establishing early-mover CCS projects. In the long-term, the value of CCS demonstration can only be realised and supported through sustained forward looking climate change policies and carbon-price signals that will underpin the future deployment of CCS.

x THE GLOBAL STATUS OF CCS: 2011

INTRODUCTION

1.1 Scope of this report 21.2 The role of CCS in CO2

emission reductions 31.3 What is CCS? 5

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2 THE GLOBAL STATUS OF CCS: 2011

1 INTRODUCTION

1.1 Scope of this reportTechnologies that prevent or minimise carbon dioxide (CO2) being emitted into the atmosphere from the production or use of 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) of carbon capture and storage (CCS) technologies, and governments around the world have committed funds to assist in demonstrating CCS technologies at large scale. Such large-scale demonstration, across a range of technologies and in different operating environments, is a necessary precursor to commercial deployment of CCS.

This report aims to provide a global overview of the current status of CCS projects that are intended to demonstrate the technology at large scale. The spread of projects across industries and countries is detailed, in addition to the gaps in large-scale demonstration efforts.

There are different technologies being developed and planned to be demonstrated at each stage of the CCS chain capture, transport, and storage or use. The current state of development of these various technologies is also summarised, along with the priorities for future research or demonstration efforts.

Demonstration of CCS depends not only on technology, but also on adequate funding and other government support, financing and commercial considerations around building a business case for CCS, public acceptance, and the existence of a policy, legal and regulatory environment conducive to large-scale and long-term investments. All of these factors are covered.

Drawing on this overview of the status of the technology and the underlying policy and business environment, this report also addresses the factors needed for CCS to play its part in meeting CO2 reduction targets. It is becoming apparent that a key constraint to the large-scale demonstration of CCS is not the level of technology development, but the existence of issues such as inadequate financial support to continue to the next stage of project development and uncertainty regarding carbon abatement policies in key jurisdictions, which acts to constrain investment decisions. This report draws out these issues.

The remainder of this chapter provides a brief background on the potential role for CCS in GHG emission reduction efforts, a basic overview of the technology, and an indication of how CCS costs compare with those of other technologies in the electric-power generation sector, which is where the bulk of eventual CCS deployment is expected to occur.

Chapter 2 discusses the current status of large-scale integrated projects (LSIPs), the 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 of CO2. Changes in the nature and number of such projects since the previous Status Reports (WorleyParsons et al. 2009; Global CCS Institute 2011a) are explained. The characteristics and distribution of projects by country, industry, stage of development and technology type are described.

In chapter 3, the different components of the CCS chain are separately described and discussed. It is important for project proponents and governments to understand not only the state of development of the individual technologies that make up CCS, but also the considerations around linking the different components into integrated projects. This chapter concludes with a discussion of the current understanding of the costs of CCS technologies.

Chapter 4 outlines recent developments in government policy, law, legislation and regulation affecting CCS. In the case of policy, this not only includes developments specific to CCS, but also in the broader climate change, energy and innovation policy arenas. A summary is provided of funding and other financial incentives and support available for projects. Finally, given the importance of public awareness and acceptance of CCS as a new technology, the chapter includes a brief discussion of issues around public engagement.

The report concludes with some observations on the current business case for CCS, and the steps needed to facilitate further projects entering construction or operation.

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1.2 The role of CCS in CO2 emission reductionsAnthropogenic CO2 emissions have increased greatly over the past 150 years or so, leading to significantly increased atmospheric concentrations of the gas (Figure 1). Associated with this increase has been a significant rise in average global temperatures.

Figure 1 Global CO2 atmospheric concentrations and temperature

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

In 2010, the United Nations Framework Convention on Climate Change (UNFCCC) Conference of Parties 16 (COP 16) approved a non-legally binding commitment to cap global average temperature rises to 2C. A 2C rise is considered consistent with capping atmospheric CO2 equivalent (CO2-e) concentration levels to 450 parts per million (ppm) by 2050 (IPCC 2007). The recorded mean level of global CO2 in the atmosphere for 2010 measured at the Mauna Loa Observatory in Hawaii was 390ppm, with an increase of 2.42ppm for that year (ESRL 2011). CO2 emissions are the chief contributor to the current approximate CO2-e level of 430ppm, which is only 20ppm away from the recommended target of 450ppm.

On current projections, by 2050 CO2 emissions must reduce significantly below not only business as usual levels, but also current levels in order to reach the cap of 450ppm. This particularly applies to emissions of CO2 resulting from the use of fossil fuels coal, oil and natural gas.

Energy emission scenarios developed by the International Energy Agency (IEA 2010a) give a least cost GHG emissions reduction pathway (Figure 2). The IEA demonstrates that a portfolio of low-carbon technologies is needed to reduce emissions to half their current levels by 2050. Among these technologies are energy efficiency gains, renewables, fuel switching and nuclear. The next ten years will see the majority of the most cost-effective reductions coming from energy efficiency. After then, renewable technology starts taking a more significant role, with most of the increased growth in deployment projected to come from emerging energy technologies such as wind, solar (both photovoltaic and thermal systems), biomass, and to a lesser extent geothermal.


Figure 2 Global CO2 emissions and GHG emission reductions

CCS 19% Renewables 17% Nuclear 6%

Power generation efciency and fuel switching 5%End-use fuel switching 15% End-use fuel and electricity efciency 38%

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Between 2025 and 2030, while there is continuing rapid growth in the deployment of renewable technologies and in energy end-use efficiency gains, the IEA least cost scenario also has a rapidly increasing role for CCS. Once the lower cost options for energy efficiency and renewable technologies have been pursued, CCS becomes more competitive. By 2050 the IEA scenario has CCS contributing 19 per cent of least cost emission reductions. This contribution is more than from renewables and more than triple the 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, the 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 the current costs of CCS relative to other low-carbon technologies, particularly in the electric power generation sector.

Relative costs of CCSMany of the low-carbon technologies that will be required in coming decades are at an early stage of development or deployment, and significant effort will need to be put into R&D and demonstration to both prove their capability and reduce costs. For some industrial processes which produce CO2, there are currently very few options available to reduce or abate emissions. Adequate pricing of emissions to reflect the environmental impacts of CO2 or other GHGs would assist in the R&D, demonstration and ultimate deployment of all emission-reduction technologies.

To present a comparison of low-carbon technology costs in the electric power sector, the Institute (2011b) has undertaken a review of studies around technology costs by the IEA (2010b), IPCC (2011), United States Energy Information Administration (EIA 2011), United States Department of Energy National Renewable Energy Laboratory (DOE NREL 2010), DOE National Energy Technology Laboratory (NETL 2010), and WorleyParsons (2011). As these studies each use differing methodologies and assumptions regarding key economic and technology criteria, care has been taken to compare the data on the same economic basis and similar resource quality.

The technologies that are expected to provide most of the future abatement in the power sector have relatively high costs (Figure 3). For most of the emerging technologies applied at large scale, particularly CCS and the solar technologies, the 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 of the emerging technologies.

This analysis shows that for avoiding CO2 emissions, CCS is a cost-competitive technology with other future large-scale abatement options in the electric-power generation sector. For example, the CO2 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 thermal systems have cost of CO2 avoided ranging from US$184 to US$307 per tonne, and from US$219 to US$273 per tonne, respectively.

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Figure 3 Avoided costs of CO2 by technology in the power sector1

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1 The costs presented in this chart are for technologies operating in the United States, and have been derived by the Institute based on reviewing a range of studies. Technology costs vary regionally due to a range of local factors including resource availability, as well as the costs of labour and capital inputs. Also, some options are very site specific (for example geothermal and hydropower).

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

1.3 What is CCS?CCS is a technology that can reduce the amount of CO2 released into the atmosphere from the use of fossil fuel in power plants and other industries. CCS involves:

collecting or capturing the CO2 produced at large industrial plants using fossil fuel (coal, oil and gas) or other carboniferous fuels (such as biomass);

transportation of the CO2 to a suitable storage site; and

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

Capturing the CO2Capturing CO2 emissions from industrial processes is easiest at large industrial plants where CO2-rich flue gas can be captured at the facility. The separation of CO2 is already performed in a number of industries as part of the standard industrial process. For example, in natural gas production, CO2 needs to be separated from the natural gas during processing. Similarly, in industrial plants that produce ammonia or hydrogen, CO2 is removed as part of the production process.

As the largest contribution to CO2 emissions is from the burning of fossil fuel, particularly in producing electricity, three main processes are being developed to capture CO2 from power plants that use coal or gas. These are:

post-combustion capture;

pre-combustion capture; and

oxyfuel combustion capture.

Further details of these capture processes and their current state of development is provided in section 3.1.


In other 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 of CO2 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 the CO2 Once separated from other components of the flue gas, CO2 is compressed to make it suitable to transport and store. It is then transported to a suitable storage site. Today, CO2 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 of transportation required for widespread deployment of CCS is far more significant than at present, and will involve the transportation of pure or nearly pure CO2 in a dense phase.

Storing the CO2The final stage of the CCS process sees CO2 injected into deep underground rock formations, often at depths of one kilometre or more. At this depth, the temperature and pressure keep the CO2 as a dense fluid. The CO2 slowly moves through the porous rock, filling the 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 them. The seal and other geological features prevent CO2 from returning to the surface.

Such sites have securely contained fluids and gases (such as oil, natural gas, and naturally occurring CO2) for millions of years, and with careful selection, they are expected to securely store injected CO2 for just as long. Once injected, a range of sensing technologies is used to monitor the movement of CO2 within the rock formations. Monitoring, measurement and verification (MMV) processes are important to assure the public and regulators that the CO2 is safely stored.

It is also possible to use the CO2 in industrial applications, however any use of CO2 must result in permanent storage or it will not contribute to GHG mitigation.

Figure 4 Geological storage options for CO2

Image courtesy of the CO2CRC

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2.1 Key project developments 82.2 Detailed project breakdown 15

2


2 PROJECTS

KEY MESSAGES Overall the CCS industry exhibits measured progress over the past year with one project completing

construction and moving into operation, another three projects entering construction and a clustering of projects in advanced stages of development planning.

Of the 74 large-scale integrated CCS projects around the world, 14 projects are either in operation or construction and have a total CO2 storage capacity of over 33 million tonnes a year.

A second power project, in addition to Kemper County in the United States, is now under construction, being Boundary Dam in Canada. The United States also has its first project under construction that will store CO2 in a deep saline formation, being the Illinois Industrial Carbon Capture and Sequestration (ICCS) project.

A number of projects in advanced stages of development planning, including several power plants, indicated in the Institutes 2011 annual project survey that they could be in a position in the next 12 months to decide on whether to take a final investment decision.

There remains a paucity of large-scale demonstration projects under development in the iron and steel, cement and other high emitting industries where CCS needs to be applied.

This chapter provides an overview of the global status of LSIPs, and is based largely on the Institutes annual survey undertaken in May-August 2011 (Appendix A). A detailed assessment of LSIP status is provided, including analysis of project dynamics, challenges and opportunities. The assessment includes comparisons with the Institutes 2010 and 2009 Status Reports (Global CCS Institute 2011a, WorleyParsons et al. 2009).

LSIPs are defined as those which involve the capture, transport and storage of CO2 at a scale of:

not less than 800000 tonnes of CO2 annually for a coal-based power plant; and

not less than 400000 tonnes of CO2 annually for other emission-intensive industrial facilities (including natural gas-based power generation).

There are many more projects around the world which are of a smaller scale or only focus on part of the CCS chain. These projects are important for R&D, demonstrating individual elements of CCS, or building local capacity. However, if CCS is to play a substantial role in global GHG reduction, then it is essential to demonstrate and deploy large-scale projects that involve all parts of the CCS chain from capture through to permanent storage or other sequestration. For this reason the Institutes project survey focuses on LSIPs.

2.1 Key project developments The Institute has listed 74 LSIPs across the world in 2011 (Figure 5). This is a small net reduction of three projects from the 2010 report but remains above the 64 LSIPs reported in the inaugural 2009 report (Figure 6). An explanation of the Asset Lifecycle Model used to classify the stage of development of LSIPs is in Appendix B. The full project listing is provided in Appendix C.

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Figure 5 LSIPs by asset lifecycle and region/country

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The most significant recent developments in the movement of projects through the development stages are:

The first gas processing train of the Century Plant in Texas moved into the Operate stage in late 2010. This first train has a CO2 capture capacity of around five million tonnes per annum (Mtpa). A second train is under construction and is expected to be operational in 2012, incorporating additional CO2 capture potential of around 3.5Mtpa. Note that this addition to the Operate stage does not result in a net change in the number of projects in this stage from the 2010 report. This is because the previously included Rangely and Salt Creek (EOR) projects are now represented by their shared capture source, the Shute Creek Gas Processing Facility.

The number of projects in the Execute stage increased from two in 2009 to four in 2010 and is now at six in 2011 (Figure 6). The most recent additions to the Execute stage include the Boundary Dam power project in Canada, the Illinois Industrial Carbon Capture and Separation (ICCS) project and the Lost Cabin Gas Plant, both in the United States.


Ten projects in the Define stage have indicated they could be in a position within the next 12 months to decide whether to take a positive FID and thus move into the Execute stage (Figure 7). Power generation projects are prominent in this group and include the ROAD project in Europe, Project Pioneer in Canada and the Texas Clean Energy project in the United States. The CCS component of these power projects, together with the Kemper County integrated gasification combined cycle (IGCC) and the Boundary Dam projects already in the Execute stage, is being underpinned by broad government support, especially capital grants. The North American capture projects in this group also demonstrate the importance of multiple revenue sources [and especially the reuse of CO2 for enhanced oil recovery (EOR) purposes] in providing a driver for development.

While the prospect of a number of power projects potentially moving to a FID in the next year is a positive development, this is contrasted with other high-emitting industries such as iron and steel, for example, where there is a paucity of projects at large-scale. This lack of representation is the result of a combination of factors, including higher government funding allocations to power generation and weak economic conditions in many countries forcing a focus on core business profitability.

The low number of projects in the Identify stage should not necessarily be viewed as an adverse development. Some projects are advancing through the asset lifecycle, moving out of the Identify stage. At the 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 the project development funnel is constantly being replenished. This would require continuing infusions of significant government financial support.

Figure 7 Timing of FID of LSIPs in the Define and Evaluate stages1

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Table 1 lists the 14 projects in the Operate and Execute stages. The total CO2 storage capacity of all these projects combined is over 33Mtpa. This is equivalent to preventing the emissions from more than six million cars from entering the atmosphere each year and shows the significant contribution that CCS can make to reduce GHGs (conversion factor from US Environmental Protection Agency (EPA), website cited July 2011).

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Nearly all of the operating or committed capture projects listed in Table 1 are either CO2 EOR related and/or based on gas processing (the sole exception is the Illinois-ICCS project though it has indicated that after a period of storage in a deep saline formation, revenue opportunities from CO2 for EOR will be sought). This illustrates the challenge that presently confronts projects which do not have access to either EOR revenues and/or capture which is already part of the 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 of the large-scale early mover capture projects are likely to include CO2 for EOR to support a positive business case.

CO2 EOR systems act as a substitute for exploration and development drilling to increase proved oil reserves, especially in the United States. The increasing prevalence of this practice has attracted a range of oil and gas companies, pipeline operators and CO2 source companies to forge mutually attractive business opportunities. This momentum will continue in the United States as long as CO2 EOR suitable fields are available and oil prices remain at the levels that encourage such investments. Over the past few years, companies such as Denbury and Kinder Morgan have built a strong portfolio of CO2 sources, pipelines and EOR fields in the United States and opportunities for expansion are emphasised in investor briefings.

Table 1 LSIPs in the Operate and Execute stages

NAME LOCATION CAPTURE TYPEVOLUME CO2 (MTPA)

STORAGE TYPE

DATE OF OPERATION

Operate stage

Shute Creek Gas Processing Facility

United States Pre-combustion (gas processing)

7 EOR 1986

Sleipner CO2 Injection Norway Pre-combustion (gas processing)

1 Deep saline formation

1996

Val Verde Natural Gas Plants United States Pre-combustion (gas processing)

1.31 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 CO2 Storage Algeria Pre-combustion (gas processing)


2004

Snhvit CO2 Injection Norway Pre-combustion (gas processing)

0.7 Deep saline formation

2008

Century Plant United States Pre-combustion (gas processing)

5 (and 3.5 in construction)2

EOR 2010

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)


2013

Boundary Dam with CCS Demonstration

Canada Post-combustion (power)

1 EOR 2014

Agrium CO2 Capture with ACTL Canada Pre-combustion (fertiliser)

0.6 EOR 2014

Kemper County IGCC Project United States Pre-combustion (power)

3.5 EOR 2014

Gorgon Carbon Dioxide Injection Project

Australia Pre-combustion (gas processing)

3.4-43 Deep saline formation

2015

1 The Institute understands that part of the natural gas supply to the Val Verde Natural Gas Plants has been diverted to the Century Plant. At the time of publication, the Institute is determining the impact, if any, this diversion has had on CO2 capture from Val Verde.

2 All charts and calculations using CO2 volumes have used 5Mtpa for the Operate stage and 3.5Mtpa for the Execute stage.

3 3.4Mtpa has been used for all charts and calculations using CO2 volume values.


Of the 14 projects in the Operate and Execute stages, there are six projects considered full CCS projects in that they demonstrate the capture, transport and permanent storage of CO2 utilising sufficient MMV systems and processes to demonstrate permanent storage Sleipner, Great Plains/Weyburn-Midale, In Salah, Snhvit, 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 the capture, transport and injection of CO2 but would need to implement further MMV systems and processes to be consistent with the demonstration of permanent storage. Similar needs exist for enhancement around the implementation of adequate MMV systems for many of the projects in the development planning stages.

The operating or under construction projects which do not include the full MMV regime demonstrating permanent storage are included in the Institutes listing because experience, especially from the capture element, can critically inform future developments. The capture element of CCS projects is usually by far the largest absolute cost component of CCS demonstration. It is where the need for cost reduction and production learning efficiencies are greatest. That two power projects have moved into the Execute stage and several others are close to being in a position to decide whether to take a FID represents a significant milestone for the large-scale demonstration of capture technology. For many of these power projects, CO2 for EOR purposes (and, in some cases, other additional revenue sources) is currently an important part of the business case for proceeding.

Learnings do not just come from the capture elements. The four decades of CO2 EOR operating experience in the United States (and, more recently, from elsewhere) has developed a set of tools, techniques and experiences that can be adapted to other storage options being pursued. These include some of the workflows for site characterisation, injection and well integrity guidance, detailed predictive reservoir simulation models and a range of monitoring techniques during and after CO2 injection operations.

CO2 EOR experience is therefore best viewed as providing an initial facilitator role in the demonstration of CCS in regions with EOR potential. This role, coupled with MMV of injected CO2, is important to the establishment of practical legal and regulatory regimes, to fostering community acceptance and to demonstrate permanent storage. These issues were explored in a recent Institute report on CO2 use (Global CCS Institute and Parsons Brinckerhoff 2011).

The eight operating CCS projects in the natural gas and chemical processing industries attest to the proven nature of capture technology in these applications. In the power sector, despite the challenges of scale-up and improving the energy efficiency of the capture process, construction of a post-combustion capture project (Boundary Dam) and an IGCC project (Kemper County) is proceeding. This indicates that the technology risk for these applications is considered manageable and the technical barriers are not insurmountable. Similarly, the operating projects demonstrate storage of CO2 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 of the global momentum of 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 CO2 separation inherent to an industrial process combines with opportunities for CO2 reuse, specifically for EOR, CCS project opportunities are forthcoming. However, in the absence of a national carbon abatement mandate, the 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 the outcome of the present New Entrants Reserve (NER300) funding round, for which results are expected in the second half of 2012;

Australia a focus on storage characterisation among all projects that qualify under the governments CCS Flagships Program;

China a focus on domestic research and development into CCS technologies, with particular emphasis on CO2 utilisation; and

Middle East and North Africa (MENA) few projects at present but promising longer term opportunities, particularly utilising CO2 for EOR.

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LSIP changes in 2011There are 11 LSIPs that are considered on-hold or cancelled since the 2010 Status Report, with eight in the United States and three in Europe (Figure 8). A full reconciliation of project changes since the 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 of financial support to continue to the next stage of project development and uncertainty regarding carbon abatement policies were critical factors that led several project proponents to reprioritise their investments, either within their CCS portfolio or to alternative technologies. For example, Shell cancelled the Shell CO2 project in Mississippi in order to focus on developing its Quest project in Canada (which is in the Define stage). Rio Tinto decided to convert its Lynemouth power plant in the United Kingdom (previously defined within the North East CCS Cluster) to biomass instead of retrofitting it with CCS at this time.

In the United States, both the Boise White Paper Mill and CEMEX cement projects were put on-hold after failing to be selected for the second phase of funding by the United States DOE. As a result there are currently no large-scale CCS projects being developed in the pulp and paper or cement industries anywhere in the world. In the case of the Mountaineer power project, American Electric Power cited regulatory and policy uncertainties as key factors contributing to its decision not to progress to the Execute stage.

Figure 8 Changes in LSIPs from 2010 to 2011

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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 of CO2 for EOR.

2. Kentucky NewGas (United States Evaluate stage) a coal gasification synthetic 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 of CO2 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 of CO2 for storage in an offshore 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 of CO2 for storage in an offshore saline formation.

6. Pegasus Rotterdam (Netherlands Evaluate stage) a new build oxyfuel natural gas-fired combustor (340MWe), to be developed by SEQ International BV as part of the Rotterdam Climate Initiative (RCI), capturing 2.5Mtpa of CO2 for storage in an offshore depleted oil and gas reservoir.

7. Maritsa TPP CCS (Bulgaria Identify stage) a retrofit power project aiming to capture 2.5Mtpa of CO2 for storage in a deep saline formation.

8. Sinopec Shengli Oil Field EOR (China Evaluate stage) with plans to capture 1Mtpa CO2 from the Shengli Power Plant and transport it to the Shengli Oil Field for EOR.

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

Project clusters or hubs in Europe, Canada and the Middle East regions are no longer represented singularly. Instead, each cluster is split into its constituent parts. For example, the Masdar CCS cluster is now split into the Emirates Steel Industries project (Define stage) and the Emirates Aluminium CCS project (Evaluate stage). Similarly, the Enhance Energy EOR project in Canada and the North East CCS Cluster in the United Kingdom have been separated into their constituent capture projects. Accounting for projects in this way does not diminish the importance of cluster or hub developments in influencing the deployment of CCS projects globally.

The Rangely and Salt Creek EOR projects in the United States (both in the Operate stage) are now represented by their single capture source the Shute Creek Gas Processing Facility, which supplies anthropogenic CO2 for EOR to these and other fields. This is consistent with the Institutes accounting for other project listings to emphasise the CO2 capture facility. Importantly, this change results in a net increase in CO2 volume potentially stored. This is because the capture capacity of the Shute Creek facility (expanded to 7Mtpa) is larger than the combined off-take indicated previously for the Rangely and Salt Creek EOR operations (around 3.5Mtpa of CO2 combined). The effect of this reclassification is that the number of projects in the Operate stage remains at eight even though there is a new entry in that category (Occidentals Century gas processing plant).

The Rotterdam CCS Network entry (the Netherlands Evaluate stage: 3.4Mtpa of CO2) was deleted as its main constituent large-scale projects are already listed in the Institutes database and maintaining a separate listing would have led to double-counting.

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2.2 Detailed project breakdown

LSIPs by region and numberNorth America and Europe contain most of the listed LSIPs (Figure 9). Specifically, the United States and Europe account for 25 and 21 projects respectively, or 62 per cent of all LSIPs, followed by Canada (nine projects), Australia (six projects) and China (six projects). Within Europe, the United Kingdom has the largest number of projects (seven) followed by the Netherlands (four) and Norway (three). There are currently no LSIPs identified in other key emitting countries such as Japan, India or Russia.

Figure 9 LSIPs by region and year

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Europe

United States

Number of projects

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The amount of CO2 that is intended to be stored in any given year from the 74 LSIPs provides another indicator of the level of potential activity across location and asset lifecycle stage.

The United States is the most active area not only with regard to project numbers but also the amount of CO2 captured (Figure 10). Six countries the United States, the United Kingdom, the Netherlands, Australia, Canada and China combined account for 86 per cent of CCS activity on the basis of potentially stored CO2 each year.

Figure 10 Volume of CO2 potentially stored by region or country

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Potential volume of CO2 (Mtpa)

OperateExecutePlanned

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 the industry sector and storage types of the project. In these figures, the projects are identified by a reference number that corresponds to the detailed project listing in Appendix C.


Figure 11 World map of LSIPs by industry

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The United States is the most dynamic market as it is characterised by the following:

the highest number of projects in operation (four), in construction (three) and in development planning (18);

three projects indicating they will be in a position to decide on whether to take a final investment decision in the next 12 months;

the largest number of projects being put on-hold (five) or cancelled (three) over the past year; and

significant government funding for demonstration projects.

This current level of project activity is underpinned by the opportunities provided by CO2 EOR systems as described earlier in this chapter and by the United States having allocated the highest amount of government grants to specific projects (section 4.2). This is in contrast to many other jurisdictions around the world which are still occupied with funding allocation processes and have less mature EOR opportunities.

In the US there is momentum in industries where CO2 is already captured as part of the industrial process, such as gas processing and fertiliser production, and where an opportunity is found to use that CO2. With a high purity stream of CO2 at hand, the effort in these industries is centred on compression, transport and storage. In the US, where EOR opportunities are strongest, there is a strong incentive for deals to be done among these CO2 capture sources, pipeline and oil field operators.

However, where the cost of 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 the Texas Clean Energy project. Such multiple products can include electricity, high value chemicals and CO2.

One United States power project to dateKemper Countyhas developed a viable business case and moved into the Execute stage. Other projects, like the Antelope Valley and AEPs Mountaineer projects, have not been able to progress to Execute and have been placed on-hold, even with substantial government funding allocated. In the absence of national carbon legislation (and given the higher relative capture costs), the evidence suggests that for CCS to be applied to a power project a suite of incentives may be required to make the business case. This suite may include all or some of the following:

1. Continuation of significant federal government grants (in the order of hundreds of millions of dollars or more) and often with tax concessions for qualifying project owners as early movers.

2. States that are prepared to offer electricity rate recovery (in part or full) to help cover the higher operating costs of the capture plant or to meet a low carbon portfolio state mandate (for example, Californias Climate Legislation AB32).

3. Incentives such as loan guarantees and tax credits to help offset the higher capital and operating cost of the project with CCS.

4. Off-take agreements to generate revenue through the sale of other valued products, including CO2 for EOR.

A significant development in 2011 is the exit of Rio Tinto and BP from the Hydrogen Energy California project, with expectations that a deal can be closed with prospective new owner SCS Energy LLC. This company intends to reconfigure the project as a poly-generation plant similar to the Texas Clean Energy project.

It is important to note the work being undertaken by the seven Regional Carbon Sequestration Partnerships (RCSP) in the United States. The Partnerships form a nationwide network that is investigating the comparative merits of numerous CCS approaches to determine those best suited for different regions of the country and to develop a set of best practices for CCS in North America that could be broadly applicable to other regions globally. NETL manages the Partnership program.

One Partnership projectthe Midwest Geological Sequestration Consortiums (MGSC) Illinois Basin-Decatur Test Injectionis expected to commence injection in the second half of 2011. The CO2 will be captured from the Archer Daniels Midland (ADM) ethanol plant in Decatur, Illinois, compressed and then injected into a nearby deep saline formation. The planned capture and injection rate, at 1000 tonnes of CO2 per day or 365000 tonnes per year, is significant and very close to the Institutes LSIP scale criteria for an industrial facility. This test injection project is expected to operate for three years, for a total CO2 injected of around one million tonnes. A second project at larger scale the Illinois-ICCS project with 1Mtpa of CO2 captured from the ADM plant is included in the Institutes LSIP listing, in the Execute stage.


Figure 12 North American map of LSIPs by industry

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CCS continues to play a major role in Canadas carbon emission reduction strategy, and significant strides have been made at the provincial level in advancing the policy regime and financial support base for projects. The possibility for CO2 EOR and oil sands continues to motivate CCS project development.

Major factors which have affected project development in the past 12 months include:

In May 2011, Shell filed for its Carbon Sequestration Lease for the Quest project under the 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 2011, SaskPower received approval from the Saskatchewan Government to proceed with the CCS component of Boundary Dam.

In March 2011, the Alberta Government launched its Regulatory Framework Assessment process, an ambitious project to develop world class regulations for all elements of CCS.

In February 2011, the Alberta Government finalised its C$495 million grant agreement with Enhance Energy for the Alberta Carbon Trunk Line (ACTL). This decision is reinforced by approval from the Alberta Energy Resources Conservation Board to construct the pipeline.

In November 2010, the Alberta Government introduced the Carbon Capture and Storage Statutes Amendment Act to address some significant barriers to demonstrating CCS. In particular, this Act amends existing legislation and provides the mechanisms for companies that will be seeking access to pore space for storing CO2, and the associated requirements for monitoring and closure plans. In the legislation, the province will assume the long-term liability for the stored CO2, after certain conditions have been met; these conditions are being developed though Regulatory Framework Assessment. In April 2011, the Carbon Sequestration Tenure Regulation was published which sets the conditions for a pore space tenure application.

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

the Great Plains/Weyburn-Midale project continuing to inject around 3Mtpa of CO2;

two projects that are in the Execute stage Agrium CO2 Capture with ACTL and Boundary Dam; and

three projects which may be in a position to decide whether 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.


Figure 13 European map of LSIPs by industry7

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Europe

Since the 2010 report, the most material development in Europe has been Member States of the European Union (EU) making CCS project submissions to the European Commission (EC) for the first round of the NER300 funding program. A total of 65 renewable and 13 CCS project proposals were submitted to the EC in May 2011 for assessment by the European Investment Bank (EIB). The EC intends to provide clarity on the outcomes of the first round of the NER300 funding program in the second half of 2012. Funding from the total NER300 program could probably support four to six large-scale CCS projects, though this is dependent on the quality of applications and the value of the allowances auctioned. The expectation is that these supported projects would be operating within four years of being informed of a funding award. Table 2 below summarises the 13 CCS submissions.

Table 2 CCS project submissions for NER300 to the European Commission

CCS PROJECT CATEGORIES PROJECTS SUBMITTED BY NAMENO. OF

PROJECTS

Power generation (pre-combustion) C.GEN North Killingholme (United Kingdom)

Don Valley (United Kingdom)

Eston Grange CCS (United Kingdom)

3

Power generation (post-combustion) Getica CCS Demonstration (Romania)

Bechatow (Poland)

Porto Tolle (Italy)

Longannet (United Kingdom)

Peel Energy CCS (United Kingdom)

Peterhead Gas CCS (United Kingdom)

6

Power generation (oxyfuel) UK Oxy CCS Demonstration (United Kingdom)

Vattenfall Jnschwalde (Germany)

2

Industrial applications ULCOS Blast Furnace (France) steel production

Green Hydrogen (Netherlands) hydrogen production

2

From the CCS related submissions, a number of observations can be made:

seven countries made project submissions to the EC to compete for funds available under the NER300 funding program;

seven project proposals were submitted by the Government of the United Kingdom across all three power generation categories;

only the Government of the United Kingdom has submitted applications for the power generation pre-combustion category;

the large majority of projects are related to power generation, and in general, the capture elements of these projects exhibit greater maturity than their storage elements;

there is a growing realisation in Europe that finding and licensing offshore storage sites of strategic significance for captured CO2 will be the key to a winning submission at least for the nine projects which propose offshore storage;

growing interest in possible application of EOR based models in the North Sea, in particular as a possible financial underpinning for Don Valley;

the Dutch Government submitted only the Green Hydrogen project by Air Liquide out of four projects put forward by industry for consideration. This non-power project will also receive 90 million of funding from the Dutch Government if successful in the NER300 funding program;

four projects have already received funding through the European Energy Programme for Recovery (EEPR), including Bechatow (Poland), Porto Tolle (Italy), Don Valley Power Project (United Kingdom; formerly known as Hatfield) and Jnschwalde (Germany). The Norwegian Government has also announced an additional 137 million in funding for the Bechatow project; and

the Porto Tolle project in Italy was submitted to the EC for consideration but suffered a setback over permitting approvals for the base power plant earlier in 2011. The Institute understands that ENEL has requested the Ministry for the Environment to re-examine the objections to the project raised in the earlier ruling issued by the Council of State.


The EIB will assess the NER300 submissions against a number of criteria, including importantly the cost of CO2 abatement and the financial viability of the project. Separately, the EC will confer with Member States as to what financial support they will give to the project, as well as assess the ability of the submissions (and available funding) to demonstrate the different technologies specified in the funding call.

Other developments include:

the ROAD project in the Netherlands plans to use the 180 million received through the EEPR (and an additional 150 million from the Dutch Government) to be in a position to decide on whether to progress to a FID early in 2012 and has not provided a submission to the NER300 program;

the United Kingdom continues to move to finalise negotiations in relation to program support for Longannet, with final decisions expected by the end of 2011. In addition, the government has announced support from general revenue for two to four projects with competition arrangements to be announced in early 2012; and

the Compostilla Project in Spain also received 180 million of EEPR funding. However, the Spanish authorities did not submit the project developers proposal for funding under the NER300 program to the 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 of this, the search for suitable saline formation storage is a requirement for all large-scale CCS projects. Saline formation storage is being used in the only Australian project in the Execute stage the Gorgon Carbon Dioxide Injection Project. A detailed case study on this project is provided at the end of this chapter.

Against this background, in June 2011 the Australian Government announced AU$60.9million in funding for a National CO2 Infrastructure Plan to study potentially suitable sites to store captured CO2 and speed up the development of transport infrastructure near major CO2 emission sources. The plan includes the development of a national CO2 drilling rig deployment strategy and an assessment of infrastructure needs.

The Australian Government also announced that it had selected the Collie Hub project for funding under the AU$1.68bn CCS Flagships Program. The base case for the Collie Hub project aims to capture around 2.5Mtpa of CO2 from an industrial source south of Perth in Western Australia. The Australian Government is to provide up to AU$52 million to support the studies required to move the project to the next phase of decision making. A key aspect of the next phase of project development is the completion of a detailed storage viability study. Initial studies have identified the Lesueur formation in the Southern Perth Basin as the best potential CO2 storage site.

The Australian Government also announced that it will continue to progress other large-scale Australian CCS projects, including the CarbonNet project in Victoria and the Wandoan project in Queensland. As with the Collie Hub project, these two projects will initially focus on the development of CO2 storage reservoirs and associated community engagement.

China

China continues to be one of the most important and challenging markets for CCS deployment. The high cost and energy penalty and the immaturity of CCS technologies at large scale are commonly cited as the major concerns to Chinese stakeholders. The current measures for reducing Chinas GHG emissions are focused on improving energy efficiency, energy conservation and increasing the share of non-fossil fuel energy sources. However, there is growing recognition by the Chinese central government that while these technological options remain important, they will only go so far and CCS will also need to play a key role in Chinas climate change abatement strategies, particularly in the medium to long term. This recognition, coupled with the 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 the planning stages. These projects are generally being undertaken by Chinas large state-owned power utilities and oil and gas companies. Some of the most prominent projects are the Greengen IGCC project and the Shenhua Coal-to-Liquids (CTL) Plant (Ordos City). These projects have the support of government agencies such as the National Development and Reform Commission (NDRC), as well as involvement from international partners such as development banks, non-government organisations (NGOs) and industry.

CO2 utilisation is considered to be critical to making CCS a commercially viable option. A number of companies in China are already capturing and using CO2, including in the production of food and beverages, fertiliser, algae and for EOR. Chinas focus in the near term in this regard is likely to be unchanged. For example, Sinopec is currently operating an integrated pilot plant that captures 0.04Mtpa of CO2 for EOR. Based on this experience, Sinopec has started a program to expand the capacity of this facility up to 1Mtpa CO2 capture (Phase II). A series of research programs will be conducted on petroleum geology investigation, environment impact and other areas concerning CO2 EOR. Phase II of this EOR facility is expected to be completed in 2014.

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Japan

The Japanese Government is committed to reducing its CO2 emissions. Since the March 2011 earthquake and tsunami, the Government has revised its Basic Energy Plan, which will likely include an increased reliance on fossil fuels, at least in the short term. The revision of the plan is being considered in line with the emissions reduction target, and could include the adoption of CCS.

The Ministry of Economy, Trade and Industry (METI) is currently funding the development of a demonstration project in Hokkaido. The project aims to capture more than 100000 tonnes per year of CO2 for storage in an offshore deep saline formation more than 1000 metres under the seabed in the North of Japan. In support of this project, Japan CCS Co. Ltd is undertaking a 3D seismic survey and drilling a test borehole to identify and explore suitable formations for CO2 storage. The budget to develop the project is approximately 5.9bn in Japanese Fiscal Year (JFY) 2010 and 4.9bn in JFY 2011.

Korea

Korea aims to achieve commercial deployment of CCS plants and global technology competitiveness by 2020. Two LSIPs are currently under development:

Korea-CCS 1 proposes to use post-combustion technology to capture up to 1.2Mtpa of CO2 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 of CO2 and store in a deep saline formation by 2019.

The Korean Government has commenced a storage capacity assessment and geological survey of the offshore Ulleung basin and is exploring shipping transport.

Middle East

The Middle East is a region of strong promise for CCS. This region possesses a range of drivers and natural advantages for CCS, including:

significant EOR and deep saline storage potential, accompanied by a wealth of geological data;

strong and growing demand for power that is unlikely to be satisfied by natural gas and will require use of other fuels, especially coal;

a rapidly expanding industrial base, especially in a number of high CO2 emission sectors, such as gas processing, refining, steel making, chemical processing, and fertilisers;

significant overlap between the location of existing CO2 sources and potential CO2 sinks; and

growing awareness and action to address climate change.

While there is large potential, the demonstration of CCS in the region is seen as an important precursor to deployment. The key initiative designed to contribute towards the regional demonstration of CCS is Abu Dhabis Masdar program. As a whole this program is a clean-energy initiative designed to explore a range of renewable and alternative fuel options for the United Arab Emirates. Through Masdar, three CCS projects are being supported, all focusing on using CO2 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 the region has actively advocated for the inclusion of CCS in the UNFCCCs Clean Development Mechanism (CDM). Suc

global status ccs 2011

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