NORTHWICH, UNITED KINGDOM - DECEMBER 30:  Low temperatures intensfy the steam emissions from the Ineos Enterprises brine purification plant on December 30, 2014 in Northwich, United Kingdom. The site supplies brine to the local ash plant owned by Tata and other Ineos chemical plants in Runcorn.The area around Northwich has been exploited for its salt since Roman times.  (Photo by Christopher Furlong/Getty Images)

 (Photo by Christopher Furlong/Getty Images)

As a theoretical construct, carbon capture and sequestration (CCS) seemingly has a lot to offer. Foremost, it would allow mankind to continue the uninhibited burning of fossil fuels while at the same time ‘saving’ the climate by ‘removing’ CO2 emissions from the atmosphere – the latter being the main reason why CCS is frequently mentioned in connection with climate change. Sounds promising, right? Not so fast. In reality, almost every aspect of modern life is one way or the other influenced by economics (“homo economicus”).

And this is where the crux of the matter lies with regard to capturing carbon dioxide and storing it, for example, in deep underground formations. While CCS is certainly technically feasible given the right geology, it is still prohibitively expensive to be economically viable. Case in point, the US showcase project in Liberty (Mississippi) known as Kemper County Project and home to the largest CCS plant in the US.

According to the US Department of Energy, the Kemper County Project using “state-of-the-art emission controls to produce electricity from coal in an efficient and environmentally friendly way” appears to have suffered a major financial blow (read Breaking Energy coverage here). As reported by POWER magazine, compared to an initial cost estimate of US$2.2 billion total costs have now almost tripled to over US$6 billion. Energy analyst Chris Nelder sheds light on why CCS is expensive noting that “it takes a lot of equipment to capture, purify (if the CO2 is to be sold), liquefy, transport and bury CO2.” The conclusion from this is pretty straightforward that without government support and, above all, adequate public funding CCS will not become economically viable at commercial scale in a time frame needed to adequately address climate change.

The following chart from the IEA’s “Clean Energy Progress 2015” report shows total global cumulative spending on CCS projects. The IEA report notes that total global cumulative investment in large-scale CCS has now reached US$12 billion since 2005. However, much of the US$ 22 billion from OECD governments made available to support large-scale projects – the IEA stresses – “has not yet been spent.” Therefore, by looking at the chart below attention has to be solely directed towards the disproportionately small purple colored segment, which indicates public spending on projects actually under construction and in operation, and not towards the green colored segment that refers to public ‘spending’ on R&D and planned projects. Remember, the latter refers to money pledged and not necessarily money put to good use on behalf of our climate.

roman CCS1Source: IEA

Evidently, governments globally need to do much more and show real support for the CCS technology by at least matching the share of private spending on such projects in the name of climate preservation because studies at least out to 2050 show clearly that fossil fuels will not just magically disappear from our global energy mix. Therefore, mankind’s ingenuity will once more have to deal with the adverse effects of our continued dependence on fossil fuels for now. By the way, this is the same ingenuity that will lead to the further sensible and rapid expansion of renewable energy sources around the globe. While an increase in public funding would surely be helpful, allocating additional public funds to large-scale CCS projects will not be sufficient without new regulations in the form of policy incentives such as a price on carbon.

Another lesson to be learned indirectly from the ‘Kemper CCS’ case (see above) is that there has to be a commercial driver for carbon capture projects – meaning, ‘carbon’ has to be regarded as a valuable commodity – ideally with a market price – in order for it to be first captured and then stored and not just regarded as a part of ‘waste emissions’. A perfect example in this context is the use of CO2 for ‘Enhanced Oil Recovery’ (EOR) by the oil industry. Logically, the geologically stored and/or piped CO2 would have to be in close proximity to oilfields that actually could benefit from this tertiary recovery method by increasing their oil production. This also presupposes well-developed and existing oil and gas transportation infrastructure on the ground to get the CO2 to the site in question. This clearly points to the major shale oil production areas along the US Gulf Coast.

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Location of US Liquids Pipelines

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Source: Pipeline 101

Unsurprisingly, the IEA report clarifies this in context: “The United States is leading the deployment of CO2 capture, largely because of demand for CO2 for EOR. Seven of the 13 projects in operation, and seven of the 22 in construction and development, are in the United States.” Note, it is in large part due to these prevailing commercial interests in the US that the chart above depicts significantly larger global private spending vis-à-vis public spending on CCS deployment. In the US example, CCS may be poised to become a fixture in oil and gas infrastructure by supplying a valuable ‘feedstock’ for oil production.

Now, the problem with this example is that oilfields that could use the injection of CO2 are rarely located in close proximity to coal-fired power plants and thus the US model is barely replicable on a global scale. From a strict climate perspective, however, it is indispensable to remove carbon dioxide emissions from the atmosphere as much as possible wherever fossil fuels are burned for affordable power generation, especially in the developing world.

Therefore, in order to get CCS to global commercial scale the initial and primary emphasis has to be on improving its economic viability while going hand in hand with a focus on “carbon utilization” instead of the economically inefficient “simple” storing of carbon dioxide in deep underground formations.

Duncan Kenyon of the Canadian Pembina Institute wrote a very interesting article on the technologies behind carbon capture and utilization (CCU). His reasoning is straightforward: “The economics of capturing CO2 could be improved if the captured carbon could be utilized. Carbon utilization processes either convert CO2 into a new product or use CO2 in a modified process to generate revenue and in some cases reduce overall carbon emissions. Some utilization technologies, such as enhanced oil recovery, are already commercially viable. Others, including the conversion of CO2 into fuel, cement and chemicals, are at various stages of development.”

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Source: The Pembina Institute with Integrated CO2 Network (ICO2N)

No question, most carbon utilization processes still under study will require significant amounts of additional R&D investments to be ready for primetime by smoothing out diverse technological challenges. Meanwhile, governments should not hesitate to support already feasible CCU applications – such as for EOR – financially to show the public that the government is confident in the technology and that it could – once scaled up globally – make a difference for the global climate. ‘Nothing succeeds like success’, meaning that overall successful deployment of CCU in certain feasible applications will attract more investment in the CCS space and expand the realm of potential future CCU applications, which in turn will lead to more CCS/CCU deployment. As Duncan Kenyon explains further, this is critical: “[I]f carbon capture and utilization technologies are to be financially feasible and environmentally significant, they must be able to use significant amounts of CO2 in a timely fashion.”

Check out the highly informative fact sheet developed by the Pembina Institute together with the Integrated CO2 Network (ICO2N) providing an overview of CCU/S technologies with respective opportunities and challenges:

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Source: The Pembina Institute with Integrated CO2 Network (ICO2N); enlarge here.