LONDON, Aug. 11 (Reuters) – A market push that puts a price on global warming emissions could make carbon dioxide capture and sequestration technology commercially viable after decades of false starts.
A report by the United Nations Intergovernmental Panel on Climate Change (IPCC) made it clear on Monday that the world would face catastrophic consequences if targets to limit climate change were missed. Read more
Some experts say carbon capture and storage (CCS) technology is key to achieving the goal of a net zero carbon economy by 2050, as behavior change alone will be insufficient.
But environmental activists tend to distrust CCS on the grounds that industry can use it to justify the continued use of fossil fuels.
CCS transports the CO2 from where it is emitted and stores it, usually in a geological site, to prevent its release into the atmosphere.
Although the technology has been around for decades, it has yet to be widely deployed because it was not cost effective – until now.
This year, the cost of carbon production, which was far too low to deter many large emitters, has reached record highs.
In the most established carbon market, the European Union’s emissions trading system, pollution permits in July reached their highest level to date at nearly 60 euros ($ 70.33 ) per ton.
Many analysts believe that a European carbon price of around 100 euros is within reach by the end of this decade, tipping the scales in favor of CCS.
Another large economy, Canada, is also facing an increase in carbon prices after the country’s Supreme Court gave the green light in March for an increase to C $ 170 ($ 135.67) per tonne by now. 2030, compared to C $ 30 now. Read more
OPPORTUNITY FOR SOME
Most roadmaps on how to meet the targets set under the Paris climate agreement to limit a rise in global temperatures to less than 1.5 degrees Celsius (2.7 ° Fahrenheit) require a vast intensification of CCS.
For companies and countries that do it right, the opportunity is enormous. The world is expected to increase from the current capture capacity of 40 million tonnes of CO2 per year to 7.6 billion tonnes per year by 2050 to achieve the International Energy Agency’s net zero scenario.
In addition to the increased interest due to rising carbon prices, a larger deployment of CCS would reduce costs and help make it profitable through economies of scale.
“One of the reasons why so many people are now talking about CCS is the evolution of carbon prices and rising tax costs,” said Syria Crouch, vice president of CCS at Shell (RDSa.L), who aims to capture and store $ 25 million. tonnes of CO2 per year by 2035.
Shell is involved in CCS projects in Europe, Canada and Australia. Read more
IEA data shows that the cost of CO2 capture, excluding transportation and storage, ranges from $ 15 per tonne at a natural gas processing plant to over $ 300 per tonne at a natural gas processing plant. Direct Air Capture (DAC), which sucks emissions from the atmosphere and is the only negative emission solution.
The variation in costs depends on factors such as the concentration of CO2 in the captured gas.
Transport and storage costs also vary depending on the existing infrastructure, the distance to which the CO2 needs to be transported and the structure used for storage.
Total CSC costs are already starting to be manageable for some issuers, said Nick Cooper, CEO of project developer Storegga.
Storegga is leading the development of the Acorn CCS project in Scotland, which aims to use existing oil and gas infrastructure to store 5-10 million tonnes of CO2 per year by 2030. Its partners are Shell and the oil and gas company Harbor Energy . (HBR.L)
The majority of existing and developing CCS projects are in power plants or natural gas processing sites, but experts say more projects are needed to install CCS filters on chimneys in industries such as steel. and cement.
Major manufacturers such as HeidelbergCement (HEIG.DE), LafargeHolcim, ArcelorMittal and Nippon Steel (5401.T) are among those considering CCS to achieve their climate goals.
“If you are a high emission industry and you are not actively planning how these emissions will be avoided or stored in the future, you run the risk of freezing your assets, and that risk increases as prices increase. carbon increase, ”said Mark Freshney, energy analyst at Credit Suisse.
The chemical giant Ineos [RIC:RIC:INEOSG.UL] hopes to eventually store around 1 million tonnes of CO2 from its Scottish plant in Grangemouth at the Acorn site and in July signed a memorandum of understanding with Storegga. Read more
“If it hadn’t been for this (carbon pricing) movement, we wouldn’t have had this conversation about CCS. It certainly led to a radical change,” said Colin Pritchard, commercial director of the energy in Grangemouth.
Ineos is also developing the Greensands CCS project off the Danish coast which it hopes could eventually store up to 8 million tonnes of CO2 per year in depleted oil and gas fields.
The sudden rush, especially from oil companies that can use carbon dioxide to increase pressure in old fields to extract more fossil fuels – currently the most common use of CCS – leaves climate activists wary, even. if they understand the urgency of finding all possible solutions to control climate change.
“Putting carbon capture technology on greenhouse gas-emitting facilities allows those facilities to continue to operate, effectively providing those emitters with a permit to pollute indefinitely,” said a group of more than 500 international organizations. , Americans and Canadians in an open letter to their decision-makers. in July.
At the same time, some existing projects faced technical problems.
Australia’s A $ 3.1 billion ($ 2.3 billion) Gorgon CCS project, a joint venture comprising Chevron (CVX.N), Shell and ExxonMobil (XOM.N), was designed to store 4 million tonnes of CO2 per year in a liquefied natural gas project.
Since it started injecting CO2 in August 2019, three years later than expected, it has injected a total of 5 million tonnes of CO2 equivalent.
“Like anything of this magnitude, there are technical challenges to overcome,” said Shell’s Crouch. Lessons from the project would be shared with industry and governments and help drive future projects forward, she said.
In the longer term, proponents of the technology say it will play a critical role in removing CO2 from the atmosphere, rather than simply capturing it at the source, through methods such as direct capture of CO2. air or bioenergy, derived from renewable biomass, with carbon capture and storage. (BECC).
UK power producer Drax is looking to develop BECCs in its biomass units, which it says could make it the world’s first negative-emission power plant by 2027.
Drax CEO Will Gardiner told Reuters the company would need an initial investment of £ 2 billion ($ 2.8 billion) to build the factories capable of removing 8 to 9 million tonnes of CO2 per year, CCS costing around 100 per tonne.
“As carbon prices increase globally, and if we are to reach a 1.5 degree trajectory, they will have to increase, this will be a very cost effective way to remove CO2 from the atmosphere,” he said. -he declares. ($ 1 = AU $ 1.3618)
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Reporting by Susanna Twidale and Shadia Nasralla, additional reporting by Sonali Paul in Melbourne; Editing by Veronica Brown and Barbara Lewis
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