For over 45 years the oil and gas industry has been injecting carbon dioxide into oil fields to enhance production. The techniques developed are part of a suite of technologies known as carbon capture and storage. Pushed by proponents as essential to radical, short-term decarbonisation, CCS struggles to demonstrate that its potential value to the transition from fossil fuels to renewables is worth its cost
Carbon capture and storage (CCS) describes a variety of technologies aimed at capturing carbon dioxide gas (CO2) emitted from industrial processes and permanently storing it deep in the ground. For two decades, various energy experts have heralded the technique as a way of reducing the anthropogenic CO2 emissions that are largely responsible for climate change. Technological, cost and societal issues have stopped it from taking off, but as scientists warn that time is running out for humanity to have a chance of keeping global warming below dangerous levels, the clamour for CCS to be part of the solution is growing. The capture of CO2 can either take place pre-combustion, such as when it is stripped from natural gas prior to the gas being burned, or post-combustion, in which it is taken from the flue of a power station or an industrial cement or steel factory. Captured CO2 can be transported by pipeline, ship or road haulier. It is then injected several kilometres beneath the earth’s surface into suitable locations such as former gas and oil fields and porous rocks filled with salty water known as deep saline formations. Closely related to CCS is carbon capture, utilisation and storage (CCUS), in which CO2 is used prior to storage and the primary motivation is economic gain rather than climate mitigation. In this case, the CO2 is mainly used in enhanced oil recovery (EOR), a technique pioneered in the 1970s by the US oil and gas industry, whereby CO2 is injected into an already exploited oil field to allow more oil to be extracted. “In the US, 70-80% of the CO2 in EOR is from natural CO2 wells,” says Samantha McCulloch of the International Energy Agency (IEA). “But there is a market and an opportunity to really grow the use of CO2 from anthropogenic sources.”
Stop start development
CCS’s journey has been faltering and the technology remains controversial, with over 100 civil society and popular movements from around the world recently calling for a halt to all large-scale CCS projects because “they perpetuate fossil fuel extraction and combustion”. A graph in the 2016 IEA report, “20 years of Carbon Capture and Storage” shows an undulating line reflecting the fluctuating political support for the technology. The peak in support was in 2009 when G8 leaders pledged to build 20 new large-scale demonstration CCS projects and the EU adopted legislation on the safe geological storage of carbon dioxide. This covered the selection of storage sites, prevention of leakage, ongoing monitoring and ensuring that the CO2 stream consists overwhelmingly of carbon dioxide, rather than any other materials which could pose a risk to the environment or human health. The EU also launched two energy finance packages, the European Energy Programme for Recovery (EEPR) and NER300, which included cash for demonstrating CCS technology and helping it reach commercial scale by 2020. In October 2018 the European Court of Auditors issued a scathing report on the failure of these funds. Of the €1 billion granted under the EEPR to six projects in Germany, Italy, Netherlands, Poland, the UK and Spain, by 2017 €424 million was paid out by the European Commission, the EU executive body, yet four of the projects had ended after the grant agreement was terminated, one ended without being completed and the only finalised project did not represent a commercial sized CCS demonstration facility. No grant aid from the NER300 was spent and it failed to deliver any CCS projects. “Europe was not alone,” says McCulloch. “Around the time the NER300 programme was announced, globally there was around $30 billion in funding announced for large-scale CCS projects and ultimately only around 15% of those funds was spent.” In 2016, CCUS, accounted for 0.1% of global investment in low-carbon technology, according to the IEA.
The vast proportion of emissions reduction needs to be driven by other technologies, however we can’t rule out that CCS could play a role in some limited segments
On the up
From this low there is now growing support for kick-starting the technology, said Lazlo Varo, IEA chief economist, at the world’s biggest CCS conference in Melbourne, Australia, organised in autumn 2018 by the agency’s greenhouse gas research and development programme (IEAGHG). “In the past two or three years we have seen a broad coalition of private sector, academia and government stakeholders who want to revitalise CCS,” he said. There are now 18 large-scale CCS projects operating in the US, Canada, Norway, Brazil, Saudi Arabia, the United Arab Emirates and China, capturing over 31 million tonnes of CO2 a year, says the Global CCS Institute, a non-for-profit based in Melbourne. Five more are under construction in Canada, Australia and China. Another four are under advanced development and 16 under early development. Of the operational plants, nine capture CO2 from natural gas processing, one from iron and steel production, and two from power production. Fourteen of the listed projects are using CO2 for EOR. Only four are sending CO2 to dedicated geological storage. Two of these are in Norway, Europe’s leading developer and backer of CCS. In October 2018, Norway’s minister of petroleum and energy, Kjell-Børge Freiberg, announced a 2019 national budget commitment to increase CCS funding by more than NOK 160 million (€16.7 million) to NOK 670 million (€69.9 million). At the conference in Melbourne “the main research groups, technologies, developers and sponsors were all there,” says Mónica García Ortega, a CCS technology analyst with the IEAGHG. “It is largely a technical conference, but there is increasing participation from private sector players, industry and governments,” says McCulloch, who chaired a panel on unlocking CCUS investment. “There’s more happening and a sense we might be making progress, particularly in the US.” Thelma Krug, vice chair of the Intergovernmental Panel on Climate Change, told the conference that CCS “can play an essential role” in removing CO2 from the atmosphere, but is only “one method” of doing so. She described CCS as “an ongoing technology” which needs to be amplified and its “social acceptability” proven. CCS is included to varying degrees in three of the four model scenarios for emissions’ reductions pathways included in the IPCC’s recent report on keeping warming below 1.5˚C. “CCS has to be part of the technological mix if we are going to meet the Paris [climate agreement] targets,” says McCulloch. CCS does “not mean business as usual” for the fossil fuels industry, but that the technology can “support” the transition, she asserts. “In our 2˚C scenario more than six gigatonnes [of CO2] are being captured each year by 2060.” It is particularly important in Asian economies that are extremely fossil fuel dependent such as China, which has a huge and very young fleet of efficient coal-fired power stations, she says. “In theory many of them could be running in the 2050s.” Not everybody agrees. As Stuart Gilfillan, a geochemist from Edinburgh University responded, a report published in September 2018 by watchdog Carbon Tracker finds that within a decade building new solar photovoltaic in countries including Indonesia and Vietnam will be cheaper than operating existing coal-fired power stations. 
Cost issues
“The vast proportion of emissions reduction needs to be driven by other technologies, however we can’t rule out that CCS could play a role in some limited segments,” says Kristian Ruby, CEO of Eurelectric, an association representing the EU electricity industry. “More and more NGOs and authorities will be talking about it because there may essentially be no other option for some sectors.” This is not the case for the power sector though, for which he describes CCS as a “fringe technology that has not up to now proved itself commercially viable”. Ruby adds: “We’ve just shut down a task-force that looked at CCS for ten years and that reflects the priority we give to it.” He says that Eurelectric included the possibility of CCS when modelling the most effective way to decarbonise European electricity by the mid-2040s, but it was excluded from the final scenario “because it is too expensive”. Investing in renewables, cleaner transport infrastructure and shifting social patterns rather than relying on a large contribution from CCS is the way forward, says Julien Pestiaux of the consultancy Climact, which recently published a report with the European Climate Foundation on how to reach net zero emissions by 2050. But he adds: “While we must ensure CCS is not used as an argument to postpone action or create lock-ins, we also have to keep in mind the importance of deploying all mitigation actions possible to tackle the climate challenge.” CCS, to varying degrees, is included in the three main scenarios included in the Net Zero 2050 report. If CCS is to be used to reduce emissions, the experts contacted for Climact’s Net Zero 2050 project agreed the challenge is not one of technological innovation but of commercialisation, says Pestiaux. “We need a higher carbon price or additional funding based on a carbon tax.” McCulloch agrees: “At the moment there is no incentive in most regions to undertake CCS. It is an additional cost to an industrial facility or a power plant and there is no driver to make that investment.” In April, the Institution of Chemical Engineers issued a report on delivering CCS at commercial scale, recommending that governments seek regional and international agreements to introduce financial mechanisms to make it cheaper to avoid CO2 emissions rather than release them. “It’s horses for courses in terms of what will drive CCS investment,” says the IEA’s McCulloch, citing Norway’s offshore CO2 tax and the US’s tax credits as examples of different policy mechanisms aimed at encouraging CCS. In February 2018, US legislative changes made it possible for companies to earn a tax credit of up to $15 per tonne of CO2 for capture and geological storage and up to $35 a tonne for CO2 capture and use via EOR or other methods, with no cap on the number of tax credits available. EOR has provided an important revenue stream for some early CCS projects in the absence of any incentive or financial driver to invest in the technology. “I think there is growing interest in EOR in regions such China and the Middle East and it will continue to be a driver of CCS investment,” says McCulloch.
Depth and distance
IEA analysis shows that for facilities which produce a relatively pure strain of CO2, with lower associated capture costs, mainly in China, the US and the Middle East, around 450 million tonnes of CO2 could be captured and used, mostly for EOR, with an investment of less than $40 per tonne. “With natural gas processing the cost could be as little as $20 a tonne for capture and storage, but if you are getting into cement and iron and steel it could be as much as $100 a tonne or more, depending on where your storage is and how far you need to transport the CO2,” says McCulloch. She also cites the “really quite impressive cost reduction projections” for the CCS retrofit of the 30-year old Shand coal-fired power plant in Saskatchewan, Canada. It has drawn on technical, operational and design lessons from the neighbouring Boundary Dam power CCS retrofit which became commercially operational in 2014, she explains. A feasibility study by the Canada-based International CCS Knowledge Centre predicts that capture costs for Shand will be 67% less than those for its neighbour at $45 per tonne of CO2 due to a doubling of the capture capacity — to date Boundary Damn has captured 2 million tonnes of CO2 — and the need for minimal modifications to the power plant. Other ways that are being discussed to stimulate the development of CCS globally are further grant support, public private finance and the development of CCS hubs which develop around already existing industrial clusters, such as the port of Rotterdam, saving costs through economies of scale and strategic use of storage space. These solutions can help to bring the technology out of the shadows, but unless CCS coverts are able to convince not only environmentalists, but also regulators, business and the public, that the technology is a good use of massive amounts of capital in the race to decarbonise, the technology is likely to remain a niche solution with fluctuating support for the next 20 years.
Writer: Iva Pocock