APPENDIX 29
Memorandum from Carbon Trust
The Carbon Trust is an independent company funded
by government. It was set-up by Government with support from the
private sector in 2001. Its aim is to accelerate the transition
to a low carbon economy by helping organisations reduce their
carbon emissions and develop commercial low carbon technologies.
We welcome the opportunity to contribute to the House of Commons
Science and Technology Committee's inquiry into carbon capture
and storage (CCS) technology.
CCS is a wide-ranging subject covering, for example,
the technologies needed for carbon dioxide separation and capture,
geological considerations relating to long term (i.e. on geological
rather than human timescales) storage, and public, attitudinal
and legal aspects associated with long term storage of carbon
dioxide. As part of its Low Carbon Technology Assessment study,
published in 2003, the Carbon Trust considered carbon capture
and storage. We concluded that although the carbon abatement potential
of carbon sequestration was high the Carbon Trust is not material
to its development. We have therefore not engaged deeply in carbon
capture and storage and therefore others are better able to contribute
detailed material on the technological, geological, attitudinal
etc. aspects of capture and long term storage. Our comments therefore
focus on the development and deployment of CCS and the role of
Government funding for R&D and technology transfer.
We note that the scope of the Committee's inquiry
is descried as looking into "the viability of CCS as a
carbon abatement technology for the UK". We think there
are two dimensions to this:
(i) CCS as a technology option for the UK
to run alongside continued used of coal (and gas) combustion for
point source bulk power generation; and
(ii) the extent of and opportunity for the UK
to win commercial returns in the global market for CCS through
the exploitation of a competitive advantage in this area.
Each dimension requires a different approach to equipping
the UK with the necessary capabilities to deliver successful policy
and commercial outcomes; and although some individual activities
will underpin both outcomes it is important to be clear which
one is being supported by which Government support instrument
and why.
CCS TECHNOLOGIES
The science and engineering needed to underpin current
generation CCS is pretty well known. Of course, more research
needs to be done on as yet unproven concepts (such as ocean storage)
but compared with some new and emerging low carbon technologies,
CCS does not present any particular technological challenges—though
there are significant uncertainties about the long term storage
of carbon dioxide.
Carbon dioxide capture processes from point source
power production fall into three general categories: (i) post-combustion
separation of flue gas—currently operated at around a dozen
facilities worldwide; (ii) pre-combustion separation—capturing
carbon dioxide before fossil fuel combustion thereby offering
scope to use more efficient separation methods; and (iii) oxy-fuel
combustion in power plants—burning the fossil fuel in pure
or enriched oxygen and thereby creating easier to capture carbon
dioxide rich streams.
Each of these technologies carries both an energy
and economic penalty—anything from 15-25% and 1-2p/Wh are
widely quoted by experts. Some commentators argue that without
technology cost reductions going forward, carbon prices would
have to be of the order
100/tC for CCS technologies to be adopted by the
power industry on a significant scale.
Following the capture process, carbon dioxide needs
to be stored, so that it will not be emitted into the atmosphere.
Geological sinks for carbon dioxide include depleted oil and gas
reservoirs, enhanced oil recovery, unminable coal seams, and deep
saline formations. Together, these can hold thousands of gigatonnes
of carbon (GtC)—the scale needed if CCS is to make a global
contribution to reducing carbon dioxide emissions from fossil
fuelled power generation. The technology to inject carbon dioxide
into the ground is well established. Deep saline formations, both
subterranean and sub-sea bed, may have the greatest carbon dioxide
storage potential. These reservoirs are the most widespread and
have the largest volumes. Research is currently underway to understand
what percentage of these deep saline formations could be suitable
for carbon dioxide storage.
Annex 1 gives some further details of CCS technologies
drawing from Carbon Trust technology fact bases.
THE UK GOVERNMENT'S
ROLE IN
FUNDING CCS R&D
Having decided what the desired policy and commercial
outcomes are (and that is not a matter for the Carbon Trust),
the Government's role and mechanisms to facilitate their achievement
can be considered further. Without a conscious determination to
do otherwise, there can be a knee-jerk reaction to see "Government
support" for technology solely in terms of support for R&D.
We acknowledge that there may well be a role for publicly supported
R&D but mainly in partnership with commercial players—not
just because of the sheer scale of CCS projects but also, and
more importantly some would argue, it encourages shared ownership
with the private sector of the challenges, the desired outcomes
and rewards.
Currently, the main players in CCS are the multi-national
oil and gas companies. Their efforts dwarf public RD&D funding
in this area. Therefore, the targeting of Government funding—is
crucial. It requires decision-makers to consider and be clear
about:
(i) the objective(s) and desired outcomes of
UK involvement;
(ii) the nature and magnitude of the risks/barriers
which Government intervention is seeking to overcome;
(iii) the stage and scale of technological development;
and
(iv) who else is active in this field, what they
are doing and why.
In the Government's strategy document on carbon abatement
technologies published in June this year the objective was described
as:
"To ensure the UK takes a leading role
in the development and commercialisation of Carbon Abatement Technologies
that can make a significant and affordable reduction in carbon
dioxide emissions from fossil fuel use."
Whilst perfectly adequate as a general objective,
there would be merit, we think, in introducing greater clarity
of purpose along the lines of the above. We believe that there
are two strategic questions that need to be answered to help to
develop the Government's approach to CCS. The first of these questions
is around the strength of the UK's competitive or potential competitive
position in relation to this technology. If the UK position is
relatively weak then an appropriate strategy may be to focus on
dimension (i) above and use CCS as a technology to reduce carbon
dioxide emissions from coal (and gas) fired power generation.
Under that scenario, it would make more sense to develop our [odq]informed
buyer[cdq] understanding of CCS technology, research geological
storage options and import the technology once costs have reduced.
If, however, the UK has a potentially strong competitive position
in the supply/value chain then an appropriate response may be
for material Government investment in RD&D to leverage this
strength for its commercial and environmental benefits. Given
that Government resources for energy supply RD&D are limited
the Carbon Trust believes that the UK should prioritise its support
for the development of low carbon technology options where the
UK has or can develop a competitive advantage. Understanding the
UK's actual or prospective competitive position should, we think,
be one of the focal points for this inquiry. (Our report entitled
"Building Options for UK Renewable Power" discusses
and expands on this view of the rationale for low carbon technology
investment. We have attached a copy of the report to this note.)
The second strategic question is around the quantum
of resource that the UK Government would need to put on the table
in order for the UK to become a credible and material global player
in this area.
At present, CCS is technically feasible but not commercially
viable. There is currently no operational experience of CCS at
scale in the UK and comparatively little experience worldwide.
Demonstration projects are expensive and sparse. Consequently,
there are few opportunities for "learning by doing"
and little opportunity of gaining a better understanding of costs
and the scope for cost reduction. CCS is at the stage where full
scale demonstrations and trials would improve understanding and
enable a better assessment to be made of the prospects for commercial
and technical viability both for new and retrofit applications.
A [odq]learning by doing[cdq] demonstration project with the private
sector (perhaps as part of the EU Framework programme given the
high costs involved) would provide valuable information and operational
data which would not only help inform project participants but
also Government in terms of understand the competitive position
of the UK and the quantum of Government support that might be
required to develop a UK leadership position in this area. At
the same time, a successful UK CCS demonstration project would
provide an export promotional platform for UK skills and know-how.
However, to enable the UK to take a strong international position
it would require significantly more funding than the £40M
over four years currently be announced in the Government's carbon
abatement strategy document.
The export aspect should not be under-estimated.
Globally, fossil fuel power generation (and in particular coal)
is growing—significantly in the rapidly industrialising
developing countries such as China and India. Hanging on to the
coat-tails of the rising trend in global carbon dioxide emissions
resulting from more coal burn will require big-scale technologies
deployed sooner rather than later. CCS, potentially, has an important
role to play to mitigate carbon dioxide emissions from fossil
fuel power generation and, if the market for CCS takes off, the
UK undoubtedly has skills and services it can sell. Now whether
there is a need for R&D support, or whether R&D is the
right Government instrument to achieve the desired outcomes, needs
consideration. An analysis of the CCS value chain would show whereabouts
the UK had particular strengths and where, therefore, support
should be provided to convert those strengths into competitive
advantage. The Carbon Trust recommends that, if this analysis
has not been carried out, it should be as a precursor to determining
the nature and extent of Government intervention/support. Annex
1 (Figure 2) contains an illustrative schematic of the CCS supply
chain.
November 2005
Annex 1
CARBON CAPTURE
AND STORAGE
TECHNOLOGIES
Carbon capture
The separation and capture of carbon dioxide
is neither difficult nor new. Chemical sorbents such mono- and
di-ethanolamine (MEA and DEA) will selectively remove carbon dioxide
from gas streams. The carbon dioxide is released on regeneration
of the sorbent simply by heating. At least four leading systems
are commercially available.
Carbon dioxide can be extracted before or after the
fuel is combusted. The options are sometimes represented as: post-combustion
by retrofitting existing plant; pre-combustion by gasification;
and the use of oxy-fuel combustion with capture. It is possible
to capture carbon dioxide from the flue gases of existing power
plants. However, it is very inefficient and costly because of
the vast volume of gas that has to be scrubbed. The flue gases
are at atmospheric pressure and at a low carbon dioxide concentration—between
3-10%. The efficiency penalty would be about 10 percentage points
from the 35-38% current efficiency level of a coal power generation
plant due to the power consumed in the scrubbing process. While
such systems will achieve the goal of emissions reduction, other
ways of approaching the problem need to be examined if the cost
of CCS is to be reduced.
Carbon dioxide can be captured much more efficiently
in two ways,
Air contains about 80% nitrogen so the bulk
of the flow through a boiler is inert thus substantially diluting
the carbon dioxide content. Hence, if carbon dioxide is to be
captured in bulk, the separation of the nitrogen from the air
is an important option to be assessed.
However, the status of the technologies is such that
a watershed is approaching. If power alone is to be generated
at minimum cost, steam systems may have a cost advantage. If carbon
dioxide capture is required as a major step towards establishing
an equilibrium level in the atmosphere, then gasification appears
to offer the least cost route to capture in conjunction with power
generation.
Carbon dioxide can be transported to a suitable storage
site via pipeline or ship. The former is a mature market, with
approximately 3000km of land-based carbon dioxide pipelines in
existence, the majority in North America. The use of existing
oil and gas pipeline infrastructure to transport carbon dioxide
is also a possibility; however wet carbon dioxide (plus other
substances such as sulphur dioxide) is corrosive, which may render
these pipelines unusable. Gas dehydration is therefore employed
to ensure minimal corrosion of the pipeline. Carbon dioxide pipelines
are currently designed to transport carbon dioxide at approximately
100bar, with upstream compressors providing the necessary compression
(although some pipelines require intermediate compressor stations).
These compressors and their associated pumps must be purpose designed
to avoid damage due to the poor lubricating characteristics of
dry carbon dioxide. Shipping of carbon dioxide to storage sites
is at an early stage of development. The carbon dioxide is transported
in liquid form (this time at -50C). However the sheer magnitude
of shipping required might prove a considerable challenge.
CARBON DIOXIDE
UTILISATION
Utilisation of carbon dioxide is one means by which
it can be prevented from reaching the atmosphere. At present,
the most common application for carbon dioxide is in Enhanced
Oil Recovery (EOR), this process having been implemented in West
Texas since the 1970s. EOR is the application that has the greatest
potential, with leading oilfield services companies such as Halliburton
and Schlumberger expressing interest. It is also a means of carbon
storage—hence the current interest of oil majors such as
BP.
CARBON STORAGE
In relation to carbon storage clearly the period
of storage needs to be on a very long timescale compared with
human timescales; the cost of storage, including transportation,
needs to be minimised; environmental impact needs to be minimal;
and the storage method should not contravene any national or international
laws and regulations. The three basic mechanisms are geological
storage, ocean storage and ecological sinks. The first two of
these can be linked directly with power plants, however the third
is a storage mechanism which is not tied to any particular carbon
dioxide source.
Figure 1 below indicates the approximate global capacity
of the various storage options. It shows that the ocean has the
highest storage capacity. Deep saline formations, depleted oil
and gas reservoirs and coal seams all offer reasonable storage
potential, but ecological sinks and utilisation have minimal capacity.
The figure also demonstrates the vast global storage potential
for carbon dioxide (1000s of GtC).
Sources: Carbon Capture and Storage from
Fossil Fuel Use, Howard Herzog and Dan Golomb, Massachusetts Institute
of Technology Laboratory for the Energy and the Environment, July
2005. Solutions for the 21st Century Zero Emissions Technologies
for Fossil Fuels, May 2002, International Energy Agency Working
Party on Fossil Fuels, McKee B., Technology Status Report
UK storage capacity is generally in proportion to
global storage capacity, although depleted oil fields offer a
comparatively greater opportunity for the UK.
THE SLEIPNER
CARBON DIOXIDE
STORAGE PROJECT
The first, and to date only, commercial-scale project
dedicated to geological carbon dioxide storage is in operation
at the Sleipner West gas field, operated by Statoil, located in
the North Sea about 250 km off the coast of Norway. The natural
gas produced at the field has a carbon dioxide content of about
9%. In order to meet commercial specifications, the carbon dioxide
content must be reduced to 2.5% percent. At Sleipner, the CO2
is compressed and injected via a single well into the Utsira Formation,
a 250 m thick aquifer located at a depth of 800 m below the seabed.
About one million metric tons of carbon dioxide have been stored
annually at Sleipner since October 1996, equivalent to about 3%
of Norway's total annual CO2 emissions. A total of 20 Mt of CO2
is expected to be stored over the lifetime of the project. One
motivation for doing this was the Norwegian offshore carbon tax,
which was then about $50 (USD) per tonne of CO2 (the tax was lowered
to $38 per tonne on January 1, 2000). The incremental investment
cost for storage was about $80 million. Solely on the basis of
carbon tax savings, the investment was paid back in about 1.5
years.
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