By Didier Houssin , Director of Sustainable Energy Policy and Technology, IEA
On 2 October 2014, the SaskPower Boundary Dam CCS project was officially inaugurated in Saskatchewan, Canada. The launch was a
momentous point, not only for the project itself, but for CCS as a whole. The Boundary Dam unit 3 is the world's first large-scale power unit equipped with CO2 capture. It operates on continuous mode, producing 115MW of power to the grid, and capturing 95% of the CO2 emissions (and
100% of the SO2) of the lignitefired power unit.
The launch of Boundary Dam underscores the importance to act. The world's appetite for fossil fuels is expanding: the use of fossil fuels has increased significantly more than renewable energy in the past 10-15 years. As fossil fuel consumption is expected to continue for decades, deployment of carbon capture and storage (CCS) is essential. CCS is the only known technology that will enable us to continue to use fossil fuels and also decarbonise the energy sector.
While CCS progress in Europe has had its ups and downs, it is encouraging to note that CCS is moving forward on global scale. There are now more projects than there were five or ten years ago. We know the technology better. And we are starting to see important moves by key players such as the US and China. Going forward the wish list for CCS is short: better technology with lower costs and more ambitious policy.
Capturing and storing carbon dioxide is no longer sciencefiction. Actually 2014 and 2015 are developing into good years for CCS. Large-scale CCS projects are entering construction and operation. For example, Southern Company's Kemper gasifier and capture unit will come online during the first half of 2015 in Mississippi, US. The NRG Petra Nova project has also recently entered construction in Texas. The large LNG-related Gorgon project in Australia is under construction, driven by Chevron, Shell, ExxonMobil and their partners; the world's largest CCS project, it should begin injecting CO2 in a deep saline formation next year. And of course we hope that a number of further projects will take final investment decisions during 2015.
But the progress of CCS is not only measured with large projects. We also know technology better than we did before. There has been significant progress in R&D and pilot installations across the world, in various sectors: power, steel, cement, bio-CCS and so forth. Just as an example of progress: the energy requirements to separate and compress a tonne of CO2 have been cut in less than half in the past 25 years. We have also observed an increasing number of patent applications and granted patents. And it's not only about capture technology. Characterising, engineering and operating underground CO2 storage sites have also greatly improved in recent years.
But more is obviously needed, as technology development cannot stand still. We need better and more cost-effective technology to ensure significant deployment of CCS in the future. Adding CO2 capture on a power plant would today still be prohibitively costly without some form of public incentive. For example, no one can state that Boundary Dam 3 came cheap. At 1.2 billion USD it is certainly an expensive piece of kit, even if a large share of this cost was to modernise the plant itself, not only to build a capture unit. But the good news is that the project owners now believe that they could build a second plant 25-30% cheaper. Going forward, cutting cost and improving technology needs to accelerate. This can be done by research, by duplication and by exploiting economies of scale.
We must also put to the forefront the versatility of CCS. Most often we tend to think of coal-fired power when we talk about CCS. But this is only one part of the story: CCS can be adapted to both gas and biomass-fired power. Another key advantage of CCS is that it can provide solutions for several industrial sectors, such as cement, steel, chemicals and refining. Indeed, the significance of CCS for these sectors is even higher than for power. In these industries, there is simply no other known technology that can achieve significant emission reductions. So CCS is not only a coal story. It is very much more than that.
In addition to technology innovation, CCS would definitely also benefit from policy innovation. Right here in Europe, in fact, the UK offers a textbook example of comprehensive CCS policy making. In addition to pursuing a research and development policy, the UK offers a strong policy push for demonstration and early deployment. The UK CCS commercialisation programme with the associated capital grants and the reforms of the energy market with contract-for- difference feed-in-tariffs for CCS surely look promising. I should stress that speed of implementation is of essence.
Some international or global processes also deserve a mention due to their interesting potential for CCS. Recently the US and China issued a joint announcement on climate change, at the presidential level. The announcement includes various energy technology actions, including very direct references to developing joint CCS projects. This is significant, as the two countries are the world's two largest energy users and CO2 emitters. Joining their efforts to boost CCS on the level of concrete projects must be congratulated.
Even more globally, of course the UN-led process to set goals and coordinate actions to combat climate change provides an opportunity for CCS. After all, we are discussing a group of technologies to be deployed exclusively for the sake of climate. So our chance is now to make sure that this global process also includes CCS. This can be done from two directions: both from the inclusion of CCS in Parties' national pledges, and by ensuring that CCS can fully benefit from the various UNFCCC mechanisms alongside other technologies.
So there are plenty of reasons to be hopeful today.
But let's not forget that policy and politics matter to CCS, more than for any other energy technology at the moment. Unfortunately, in
many countries with considerable potential for CCS, and even with much relevant expertise, the backing and championing of CCS by policy-makers has slowed down or disappeared. CCS has become a political orphan. This has unfortunately been the case especially in Europe. But it's not too late to turn this around. It is also imperative that the next wave of investment decisions includes projects in Europe. ROAD, White Rose and Peterhead spring to mind as obvious candidates.
The IEA hopes that Europe continues to work to keep deep decarbonisation possible, by making CCS available. The 2030 timeframe could be crucial, and so it is positive that CCS is explicitly mentioned in the recent political deal on the 2030 framework for climate and energy policies. The next step is to deliver action. Leadership from Member States and industry, jointly investing in their futures, will be key, but success will also depend on certain enabling actions from the Commission. A strategy for CCS could include: encouraging Member States to take advantage of CCS to meet 2030 climate targets; improving the performance of
component technologies through research; adapting the New Entrants Reserve to the needs of innovative projects with European added-value; and supporting Europe's industrial sector to maintain competitiveness while sharply cutting emissions. As has already been seen in a number of sectors and regions, CCS is much closer to competitiveness that people realise, but closing the gap requires political commitment.