The high cost of not deploying CCS globally

Janet Gellici, National Coal Council, US.

Coal remains the world’s largest resource for power production and is the fuel of choice for developing countries, generating 40% of global electricity. Coal also plays an important role in construction as an essential energy source for the manufacture of cement and steel. Today, 70% of the world’s steel is produced using coal. Global coal consumption grew 60% from 2000 through 2012, and the International Energy Agency (IEA) projects that coal will surpass oil as the top energy source worldwide by 2017. An increasing global population and expanded energy access will result in a 56% increase in total world energy consumption through 2040, with fossil fuels providing nearly 80% of that demand. The effect of these trends on future CO2 emissions could be substantial, as could the cost associated with not deploying carbon capture and storage (CCS) technologies^.*

An international problem in need of an international solution

Growth in energy use, especially in non-OECD countries, is fundamental to improve living conditions. Limiting access to energy is not a realistic or humanitarian approach to climate mitigation. In pursuit of enhanced well-being for its citizens, developing nations are rapidly urbanising and expanding their use of coal for increased power generation and steel, chemical and industrial applications. The IEA projects that 90% of energy demand growth through 2035 will be from developing countries led by China and India.

The developed world alone cannot reduce emissions enough to meet international CO2 emission reduction goals. The US accounts for only 16% of annual global CO2 emissions and is projected to account for virtually zero incremental CO2 emissions through 2040. According to the IEA, if every country around the world fully enacted all of the greenhouse gas (GHG) reduction measures currently being considered (which do not include significant CCS deployment), global CO2 emissions would still rise 20% by 2035.

The IEA’s technology roadmap indicates that a diverse set of technologies will be required to meet international GHG goals by 2050, including efficiency measures (42%), renewables (21%), CCS (14%), fuel switching (12%) and nuclear energy (8%). Importantly, the roadmap assumes significant efficiency improvements and growth in renewables. If either of these does not occur at the rates indicated, it is likely that fossil fuels will be the fallback option, thus further increasing the need for widespread global deployment of CCS.

The cost reduction benefits of CCS

Although today’s CCS technologies may increase energy production costs, it is substantially less expensive to include CCS as part of the mitigation portfolio than to exclude it. In fact, the IEA has estimated that the exclusion of CCS as a technology option for the power sector alone would increase mitigation costs by around US$2 trillion by 2050 – a 70% increase in cost due to the higher estimated cost of alternatives, including renewables. The International Panel of Climate Change (IPCC) also considered the impact of the absence of CCS as a carbon mitigation tool, projecting an increase in cost of about 138%.

While cost estimates vary, there is no question that meeting climate goals will be significantly more expensive without CCS. The US Department of Energy (DOE) estimates the cost of CO2 capture for coal power plants using current technology (oxy-combustion or amine scrubbing) would be US$58/short t of CO2 captured or US$72/short t of CO2 avoided. While this cost is high relative to current market prices of CO2 in various trading systems in the U. and EU (ranging from US$3 – 30/short t), the projected CCS costs are lower than those estimated for other policy approaches in the US, such as Corporate Average Fuel Economy (CAFÉ) standards and Renewable Portfolio Standards (RPS).

The cost of using a hybrid vehicle to meet CAFÉ standards has been estimated at US$100 – 140/short t CO2. Other studies have reported that these standards impose a cost of 6 – 14 times the cost of a gasoline tax for the same level of emissions reductions. Preliminary results from more recent studies at MIT on CAFÉ and RPS standards indicate that the cost per short t of CO2 avoided would be much higher.

Should technology development ultimately reach the goal of cost parity with conventional technology, CCS could become the technology of choice with near zero emissions and relatively low cost

*CCS is used in this article to refer to both carbon capture and storage (CCS) and carbon capture utilization and storage (CCUS).

Written by Janet Gellici. Edited by Jonathan Rowland.

Read the article online at: https://www.worldcoal.com/special-reports/10032015/the-high-cost-of-not-deploying-ccs-globally-national-coal-council-janet-gellici-coal2043/