Sustaining CCS development

Energy policy is driven by three broad objectives – that energy supply should be secure, sustainable and affordable. Unfortunately, these objectives, although not mutually exclusive, are nonetheless not fully convergent; a secure supply market will not necessarily be sustainable and a sustainable market is not necessarily affordable. Policymakers have thus sought to prioritise these objectives, and with climate change gaining political momentum the most important policy objective has become sustainability. The challenge for policymakers is thus twofold; develop a sustainable policy that does not undermine security and does not make energy unaffordable.

Sustainable energy is defined as the provision of energy that meets the needs of the present without compromising the ability of future generations to meet their needs, and includes only those energy sources not expected to be depleted in a time frame relevant to the human race. But this somewhat narrow definition, which has been used by the environmental lobby to argue for a fully renewable energy supply market, can be broadened out to allow the inclusion of fossil fuels as transitional energy sources while non-fossil fuel technology is being commercially

developed.

Addressing the Sedigas annual meeting in Madrid last month, International Energy Agency executive director Nobuo Tanaka said that under the IEA’s baseline scenario fossil fuels will continue to dominate the energy market for the next 40 years, while under its alternative ‘Blue’ scenario by 2050 half of total generation will come from renewables with the remainder roughly split between nuclear and fossil fuels. Tanaka added that the ‘Blue’ scenario provides for more security than either the baseline or high renewable (75% of global production by 2050) scenarios.

Clearly the IEA is adopting the broader definition of sustainable energy, and this is only possible if fossil fuel generation is ‘cleaned’ through the application of carbon capture and storage (CCS) technology. According to estimates by the Intergovernmental Panel on Climate Change, CCS applied to a modern conventional power plant could reduce atmospheric CO2 by approximately 80-90% compared to a plant without CCS, with the economic potential of CCS estimated at between 10% and 55% of the total carbon mitigation effort until the end of this century.

Two years ago at the Hokkaido G8 summit the major economies committed to the broad deployment of CCS by the end of this decade, yet while significant progress has been made towards commercialising CCS technologies the Hokkaido recommendation to launch 20 large-scale CCS demonstration projects by 2010 remains a challenge, according to a

new report from the IEA, the Carbon Sequestration Leadership Forum and the Global CCS Institute, a report that was presented to G8 leaders at last month’s summit in Muskoka, Canada.

There is no disputing the importance of CCS to supply security, sustainability and affordability with the IEA arguing that the technology ‘contributes significantly to the least-cost route of reducing and stabilising the concentration of CO2 in the atmosphere.’

Yet while utility groups readily invest in a

new renewable energy infrastructure there remains significant resistance to investment in CCS technology development. This is (unfortunately) understandable. While there is full government support for renewable energy infrastructure, with various subsidies and incentives provided to encourage investment, there is no similar support for clean fossil fuel plant. There may be a Renewables Obligation in the UK, but there is no comparable Low Carbon Obligation that would encourage investment in clean coal plant. This being so, utilities will only invest in CCS development if government underwrites part of the cost.

According to the IEA, governments have made substantial financial commitments, in excess of $26 billion, since the Hokkaido G8 summit, to fund large-scale, integrated CCS demonstration projects and the launch of

up to 43 of these projects by 2020. Such

is the progress that some CCS proponents believe the market is now steadily moving from research and development to commercialisation of effective and deployable CCS technologies.

A recent study commissioned by the Global CCS Institute identified 80 large-scale integrated CCS projects at various stages of development around the world, although only five of these are currently operational. As Nick Otter, chief executive officer of the Global CCS Institute, observed: ‘The growing number of projects under development around the world demonstrates that increased action is being taken. Rapid progress towards operation of those projects is now required if CCS is to be on-track for broad deployment by 2020.’

But for all the good progress made in the past two years there remains no certainty that CCS technology can be commercially developed, and sceptics still view the technology as a smokescreen adopted by coal-fired operators to keep their plant online. The environmental lobby remains unconvinced about CCS, arguing that the investment pouring into cleaning fossil fuel plants would be better spent on renewable energy projects. In short, the problem with CCS is that it is synonymous with coal and, to the environment lobby, coal will always be associated with emissions.

While the IEA is right when it says it is ‘essential that governments and industry intensify future collaboration to realise CCS projects under development, and to press for and enable more rapid progress toward the full implementation of the G8 goals,’ there remains a secondary objective; education.

Governments have been poor in selling in the concept of CCS in much the same way that they previously failed to put the case for nuclear energy. It was only when nuclear energy was associated with secure and sustainable energy supply that the general public started to accept the need for new nuclear capacity. This change has seen operational extensions in Germany while Sweden has decided to overrule a thirty year old referendum and maintain its nuclear capacity at the present level.

A similar security/sustainability argument needs to be adopted to push the case for CCS and gain public support. But before this argument can be made there has to be some policy honesty on the energy mix. The IEA ‘Blue’ scenario of 50% renewable, 25% nuclear and 25% clean fossil fuel may be an idealised energy mix, but it is probably the only scenario that supports the development of a sustainable energy policy that does not undermine security and does not make energy unaffordable.

If governments can put the case for such

an energy mix then the case for CCS

becomes undeniable and the quest for commercialisation of the technology becomes less onerous.