CCS SUPPORTERS SHOULD HIGHLIGHT JOB CREATION, EXPERT SAYS

Karen Frantz
GHG Monitor
11/08/2013

Proponents of carbon capture and storage need to restructure the societal case for advancing the technology in terms of job preservation in a future carbon-constrained world, Graeme Sweeney, chairman of Zero Emissions Platform, said at a stakeholders meeting that took place at the Fifth Carbon Sequestration Leadership Forum Ministerial, held in Washington this week. He said the CCS community was appealing to people to invest in the technology as part of a grand aspiration to look after future generations, but the recession made people more focused on the short term. “And I think they’re right and we were pitching this story in the wrong place,” he said, adding that instead the story should be that “it’s not just about creating jobs … but the real gross value added of CCS is the preservation of jobs here if there is the carbon constraint. So if you believe there is going to be a carbon constraint … then the preservation of jobs argument becomes a powerful tool and it means that you now begin to appeal to the labor force at large as you see that the iron, the steel and other industries are protected over the long run by the use of CCS, and perhaps they may not have other options.”

Incentives and Govt. Support Needed

Sweeney and other panelists said that currently there are not adequate constraints on carbon to drive major advancements in carbon capture and storage—with Sweeney saying that “there are no longer expectations that the carbon price will be high over the next 20 years, and certainly not high enough to deploy low carbon technologies.” He emphasized the importance of incentives to spur investment in CCS and of government support for demonstration projects and research and development.

Pam Tomski, senior advisor of policy and regulatory for the Americas at the Global CCS Institute, said the number of large-scale CCS projects fell to 65 in 2013 from 75 in 2012, but noted that four have come online and that two in the power sector, Kemper and SaskPower, are expected to come online in 2014. “All of these projects in the large-scale portfolio have incentives or government support or some combination of them,” she said. And Martin Considine, vice president of Btu Conversion at Peabody Energy, noted that the GreenGen and FutureGen 2.0 projects “both emphasize the need for money and support by the government,” pointing out that FutureGen is moving forward with a billion dollars of support from the U.S. Department of Energy.

Tim Bertels, CCS general manager at Royal Dutch Shell, argued that CCS will have to be driven by incentives. He said that although in the longer term there needs to be a carbon market with a “robust” CO2 price, “in the short term, we see that that is failing, that is falling short for some projects, and so we think that additional incentives and policies are required,” pointing to grants, public support and CCS certificates as examples. “The most important thing is there needs to be a level playing field … because otherwise you get a disadvantage of CCS compared to others, particularly renewables. There is some distortion in some markets, particularly in Europe, between those two,” he said.

Odin Knudsen, CEO of Real Options International, contended that a future carbon-constrained world would be enforced by carbon import tariffs imposed by economies that have an interest in having a carbon market, with the U.S. potentially being a leader in that regard. But he said that currently the only viable carbon markets in the world are in California and China, with the market in Europe not being viable and Australia politically backtracking as a result of its last election. “If you can count on the regulatory policy framework staying in place and you do not have a reversal like you have in Australia, you do not have the uncertainty of whether Europe will continue on beyond 2030. … All those are tremendous levels of uncertainty for anybody to make a long-term investment,” he said.

The Role of EOR

Some panelists said that enhanced oil recovery can provide a source of money for CCS projects. Shannon Angielski, associate director of the Coal Utilization Research Council, said the organization has focused development efforts on an accelerated CO2 EOR program. “That program would provide financial incentives for the capture of carbon dioxide to recover crude oil, while directing the tax receipts and the royalties from that recovery crude oil to pay for those CO2 capture systems,” she said. “Recognizing the constraints on the U.S. federal budget and globally on public sector funding, this accelerated CO2 for EOR program is an out-of-budget mechanism, and that would encourage the capture of carbon dioxide, at least from our perspective, from coal-fueled facilities, but this could be applicable to any facility [that] produces CO2. … We have a huge resource available to us that has an economic value that could be applied to carbon capture systems.”

Tomski also said that of the CCS projects in operation, construction or looking at final investment decisions in the next year, 70 percent are intending to use EOR. “So that really tells you something about project economics and where the trends are.”

But Angielski also cautioned that EOR is limited in what it can do to advance CCS. “That value for the CO2 is not enough to encourage or incentivize the construction of CO2 capture facilities, at least on power generation facilities here in the U.S.,” she said. And Bertels appeared to agree on the limitations of CO2 utilization. “Where we can utilize the CO2 streams we should because it does cover some of the capture costs, but not all,” he said. “I think we all know capture costs will be higher than what you get back from utilization.”