June 30, 2008

Britain Seeks Lead In Carbon Capture And Storage

The British government announced the four companies on its short list to build a first of its kind commercial-scale power plant that would not contribute to global warming. According to a Reuters report, the firms shortlisted were Scottish Power Generation, BP Alternative Energy International, E.ON UK and Peel Power.

The winning firm will receive hundreds of millions in government funding.

The new plant would utilize an approach called carbon capture and storage (CCS), in which carbon dioxide (CO2) is captured from emissions and then stored, preventing it from entering the atmosphere.  

"It is the great panacea. It would mean not having to do the hard things like changing the way we live," Michael Grubb, chief economist at Britain's Carbon Trust, told Reuters.

"The trouble is that while everybody says it can be done, no one has yet done it. There are very big companies out there with very deep pockets but even they are not doing it."

Indeed, implementing such a system would be extremely costly.

"Estimates tend to group around an extra 30 to 50 percent in capital costs and around 15 percent more in running costs of a power station," Tom Burke of the environment lobby group E3G told Reuters.

Power output would be simultaneously reduced between 10 and 30 percent, depending on the underlying technology. 

The added costs of building and running a CCS power station has kept companies from investing in the technology without substantial subsidies.   Such investment could perhaps reveal ways to streamline and enhance the CCS.

The sheer size of the potential market for CCS is an incentive for power firms to make the technology commercially viable.  The European Union alone has said it would like 12 full-sized trial projects operational by 2015, with commercially viable by the year 2020.

According to the International Energy Agency, the amount of coal being burned throughout the world will double to the equivalent of 5 billion tons by 2030.  

"Potentially the market for this technology is going to be worth trillions -- of whatever currency you name," Jeff Chapman of Britain's Carbon Capture and Storage Association, told Reuters.

With CCS, the carbon is captured either before or after burning a fossil fuel at a power station.  It is then stored in a deep underground geological formation, such as a saline aquifer or old oil or gas field, where it cannot contaminate the atmosphere.

Chapman says both incentives and regulation are required.

"In Australia, Canada, the United States, Germany, the Netherlands and Norway as well as Britain companies are ready and waiting," he said.

Utilities such as Germany's E.ON and RWE, along with leading oil firms such as Royal Dutch Shell, Total and BP have expressed interest, but only in Britain has any real progress been made toward CCS competition. 

It's a problem that grows more urgent with each passing day.

Levels of carbon in the atmosphere are currently at 385 parts per million (ppm), and increasing at a rate of 2ppm annually.   Some scientists equate 450 ppm to a rise in average global temperatures of two degrees Celsius above pre-industrial levels, the limit of what the Earth can withstand without a widespread extinction of species.

During a climate change seminar last week, Lars Josefsson, chief executive of Swedish power firm Vattenfall, said CCS could account for a global reduction of 3 billion tons of CO2 by 2030. 

It would mean CCS would have a significant impact in the world's current annual output of over 6 billion tons of CO2 a year, despite the coming CO2 output surge as China and India continue to fuel much of their growing economies with coal.

However, no one has yet implemented CCS on a commercial scale, so the true costs and environmental impact remain unknown.  For a decade, Norway has been storing oil under the Sleipner oil field without incident, but only in a small trial environment.

Middle Eastern oil states are also interested in CCS since CO2 has been used to drive more oil out of depleting wells.  These exhausted wells are essentially vast unused parking lots for unwanted CO2.   The United Arab Emirates has established a clean technology fund, called Masdar, and aims to build a national CCS network.   Saudi Arabia is also investing heavily in the technology.  China is interested too, and claims capacity to store over a trillion tons of CO2 underground.  The nation is currently building one coal-fired power station each week.

However, the challenge of making CCS commercially viable remains enormous.  Josefsson said new estimates have shown that average carbon output needs to be reduced to just one ton per person by the end of the century to avoid dramatic climate change.  In Europe that number is currently 12 tons per person, while in the U.S. it is around 20.