Will CCS Ever Find a Long-Term Home?

Carbon, capture and storage (CCS) and its CO2 utilization cousin CCUS are hailed as a "must have" technology in the fight to keep global temperature increases below 2°C. Yet, despite widespread support from energy watchdogs including the International Energy Agency and the Intergovernmental Panel on Climate Change, Big Oil players interested in the technology aren't ready to invest big money in commercial-scale projects. The financial risk is simply too great. Even enhanced oil recovery (EOR) projects are struggling. Low oil prices led to the September mothballing of the US' Petra Nova CCS-EOR project in Texas. Academics suggest other US CCS-EOR projects including Enchant Energy’s San Juan project in New Mexico and Minnkota Power Cooperative’s Tundra Project in North Dakota could be in jeopardy. Making the economics work has always been CCS' Achilles Heel. The industry now talks of industrial clusters, blue hydrogen production and natural gas processing. CCS in the power sector seems out of vogue and out of the money. Total chief executive Patrick Pouyanne thinks so. Speaking at the Energy Intelligence Forum earlier this month, Pouyanne said he didn’t think CCS would hit capacity levels supporters are predicting, largely hindered by high financing and construction costs and a dearth of government funds. Pouyanne said he sees a future for CCS in industrial clusters near storage sites, but thinks in the power sector CCS is more likely to be used on existing supercritical coal-fired power stations rather than gas, especially in Asia, particularly China. Total is a consortium member of the Northern Lights CCS project in Norway, alongside Equinor and Royal Dutch Shell, arguably Europe's flagship CCS project (NE Oct.15'20). Pouyanne said last month thatTotal will rely on CCS and natural carbon sinks to help meet net-zero targets, nonetheless Pouyanne is concerned about relatively high costs, especially in the transportation part of the CCS equation. "Without the Norwegian government we would never have invested in the Northern Lights CCS project," he told the Forum, adding that the "economics don't make sense otherwise." The Norwegian government is footing up to 80% of the project's costs. Industrial clusters seem to offer the best opportunities to scale up CCS, with Europe, China and the Middle East showing interest. In the UK, BP and consortium partners including most of the European IOCs, have applied for government funding for pre-front-end engineering and design work on two transportation and storage projects associated with the Humber and Teesside industrial cluster projects in northern England. Italy's Eni is also interested in UK CCS storage (NE Oct.15'20). The industry is under no illusions that costs have to come down, but many within its ranks argue that CCS should not solely be judged on its levelized cost of electricity (LCOE) metrics. Rather the technology should be assessed using full system analysis, such as adding the cost of balancing renewables intermittency and grid network upgrading. The industry defends itself by arguing it is part of a suite of low-carbon options which when deployed together minimize the total cost of achieving the Paris climate goals. The IEA and IPCC agree. CCS may never be competitive with solar PV and wind, where costs continue to fall, but supporters argue the technology is a viable option for specific areas such as natural gas processing or ethanol and fertilizer production which have a much lower CO2 per ton cost (see graphic). Research from the Global CCS Institute (GCCSI) claims CCS used for natural gas processing can be as low as $20 per ton of CO2, whereas CCS with supercritical coal is in a range of $60-$121/ton CO2 and CCS used with gas-fired CCGTs can be $80-$160/ton CO2. Energy Intelligence's LCOE analysis puts CCGT with CCS at $70 per megawatt hour. So for coal and gas in power generation, it could be cheaper to build renewables even if grid upgrades and system intermittency costs are included. "In Europe, CCS will play a role in reducing emissions in industry and blue hydrogen production, plus carbon removal such as biomass with CCS and direct air capture. In developing countries that have a lot of relatively new coal plants, retrofitting these with CCS will likely make more sense compared to closing them," Eve Tamme, senior adviser for international climate change policy at the GCCSI told Energy Intelligence this week (NE Oct.22'20). While some ardent supporters such as US' Occidental see CCS as a potential trillion-dollar industry in its own right, oil executives on the other side of the pond are far more cautious, seeing an industry which unlike solar photovoltaics and wind is immature, alongside green hydrogen. Energy Intelligence sees CCS as being a decade or two away from maturity and cost competitiveness. Jay Eden, London Hydrogen Production Facilities With CCS Facility Production