Event Recap

Carbon capture and storage (CCS) technology is not new, but launching a large-scale implementation of CCS will only follow from the right mix of climate change policies and marketplace incentives – neither of which are currently in place, said Howard Herzog, senior research engineer at the MIT Energy Initiative. Herzog spoke about the advantages and limitations of CCS within the context of marketplace and policy challenges at an EPIC seminar on November 18th.

CCS entails capturing carbon dioxide from the exhaust gases of large stationary energy sources, and storing it in geologic formations. According to Herzog, the technology has the potential to be a major climate change mitigation option, paired with energy efficiency, renewables and nuclear power.

In theory, this process would significantly reduce the amount of carbon dioxide in the atmosphere, reducing the rate of climate change. If implemented on all types of power plants, whether coal or natural gas, models estimate that CCS could cover about 14 percent of the total emissions reduction that we would need by 2050 in order to keep warming at the 2 degrees Celsius target to avoid the worst consequences of climate change, Herzog said.

Among some of the inherent strengths, Herzog highlighted three reasons why CCS could be a viable and profitable option for emissions reduction. First, CCS allows dipatchable power, as opposed to intermittent power from wind and solar. Second, it is the only mitigation technology that can rescue potentially hundreds of trillions of dollars of stranded fossil assets. Third, CCS can provide a major pathway to negative emissions when combined with biomass-fired power plants.

While CCS technology has made great strides over the past decade in terms of technical feasibility, challenges remain on the policy and industry fronts.

“All of the components of CCS are commercially available, and there are about a dozen or so large scale demonstrations around the world today,” Herzog said. “The issue of implementing CCS will always revolve around cost, because it’s always going to be cheaper to let the CO2 into the atmosphere than to capture and store it. Therefore until we get policies that will mandate us to have significant emissions reductions, there will be limited opportunities to implement CCS in the commercial marketplace.”

The lack of a strong emissions mandate has also dampened the industry’s interest in CCS. Back in 2009, when the world expected an agreement at the Copenhagen Climate Change Conference there was a peak in the energy industry’s interest in CCS, Herzog mentioned. After 2009, however, industry attention for CCS waned.

“The markets haven’t developed yet due to the lack of a strong climate policy,” Herzog said. “Across many institutions we have even seen a pullback by the industry because of a lack of the marketplace options for CCS.”

In terms of implementing CCS, Herzog estimates that the entire process could cost between $50 to $100 per ton of stored CO2. Providing a 30 percent investment tax credit and $50 subsidy per ton of CO2 stored, as proposed by the US Department of Energy, would likely spark the building of CCS plants, Herzog said.

“The reason we are seeing the renewables go up as compared to CCS is because they have the tax credits,” Herzog said. “Climate policy has not reached the levels to incentivize CCS and I don’t think it’s going to before 2030…therefore if we want to see the technology move forward we have to see technology policy support.”

Herzog referenced several CCS plants in the US and the European Union, which have demonstrated the technical feasibility, but noted the differences in policy incentives. The UK for example has a £billion (billion pound) competition project that incentivizes CCS, while Norway is proposing to directly subsidize CCS at energy plants.

Though implementing CCS could significantly facilitate emissions reduction, Herzog did note that some uncertainty still remains about long-term geological storage.

“We’ve been putting fluids in the ground for a long time…and though the geological community is confident that this is doable on a large scale, there are still questions about the long-term integrity of storage. So far all of the major projects we’ve done do not show any signs of leakage.”

There is also a question of future liability and how we will account for unforeseen effects of CCS, Herzog said. Despite these uncertainties, CCS is a technically viable option, which can only be unlocked with the right marketplace and policy incentives.

“CCS can’t compete today with business as usual, so the real question is can it compete with large-scale renewables and nuclear,” Herzog said. “I think there is room for all of them and there is enough variation out there that different circumstances may favor different technologies.”

Presentation: Carbon Capture and Storage: A Technology at a Crossroads

Registration

Cost: Free, Contact Bethel Haile: bhaile@uchicago.edu
Areas of Focus: Climate Change
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Climate Change
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Climate Law & Policy
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Energy Markets
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Electric Power
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Electric Power
As the electric power system faces new pressures and opportunities, EPIC research is working to identify the mix of policies needed to accelerate the global transition to clean, reliable, affordable...
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Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.