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Even small CCS projects face challenges in the United States
A carbon price is a necessary, but not sufficient condition to promote carbon capture and sequestration, says Carl Bozzuto in this opinion piece where he reflects on his lengthy experience in the R&D sector.
Evidence for carbon pricing as a key to CCS abounds. For example, nuclear plants do not require a carbon price or carbon capture and can be built today. Yet, with the exception of China and perhaps France, very few nuclear plants are being built. CO2 is used in enhanced oil recovery (EOR) for dry ice production and for carbonated soft drinks. Still, very little captured CO2 is used in these processes. There has to be more to this problem.
I would assert that the key to this issue is the failure to understand how to monetize this process from beginning to end. That entails understanding how each of the players involved in the capture, transport, injection, monitoring, characterizing, and closing can make money. Further, we must understand how the infrastructure to support this entire process must evolve and the various legal, regulatory, insurance and liability aspects will be handled.
As an example, I look at my Alma Mater, the MIT. They have a co-gen facility and are very active in R&D related to climate change and CCS. Let us presume that they want to 'go green' and capture and store the CO2 from their 25 Mw combined cycle power plant. The capture part is relatively easy, although somewhat costly. However, having captured the CO2, they have no place to put it.
As Massachusetts is a part of the Regional Greenhouse Gas Initiative (RGGI), there is a price for carbon. Whether that price is adequate or not is open to question. Even with a carbon price, there is no infrastructure to support moving the CO2 to a storage facility. Whether it is a pipeline or a barge, there needs to be a way for the operator of those services to make some money. Once the CO2 is on its way to a storage site, there needs to be a way for the storage site operator to make some money. Of course, before any of this happens, there will be consultants and engineering and construction projects, all of whom need to make some money. Finally, there needs to be some allocation of risk and some allocation of potential liability in a reasonable manner. Otherwise, none of this will be done. There is no way that a university like MIT will take on some future liability 50 or 100 years out.
At the present time, there are no schemes being proposed for how these various entities can make money on this whole capture and storage issue. The economies of the Western world are not in a position to tolerate a doubling of electricity prices and their subsequent impacts on global competitiveness at the present time. Thus, until we can figure out how this whole system can work in the real, commercial world, we will have difficulty getting this whole technology 'off the ground'. To be sure, there will be demonstration units, supported or subsidized in some way. But that does not make a commercially viable approach.
A cap and trade system can be part of a solution, but only a part. Ownership of the CO2 has to be established. For example, if the CO2 is sold for EOR, the generator is no longer the owner of the CO2. Most practical cap and trade systems provide for allowances to be turned in, once per year, for the amount of emissions put out during the year. If allowances are granted, what is the incentive to turn those allowances over to the EOR contractor? If the allowances are auctioned, why should the generator bid for allowances?
In one of our projects, the capture plant is a separate economic entity from the generation plant. If such is the case, then the emitter would be the capture plant and not the power plant. What rules must be followed for the capture plant? These types of questions must be addressed before wide-scale implementation of CCS will take place. Liability issues and long-term storage issues are perhaps the most serious concerns.
A storage site, will likely be taking CO2 from a number of sources. Let's suppose there is a small leakage from the system. How can we tell whose CO2 has leaked? How will the injection site owner obtain allowances to cover such leaks? Will there be a need for a 'reserve system' similar in nature to what banks are required to hold? What is needed to make such a site insurable? How will we pay for that insurance? Thus, the entire system needs to be thought through and understood so that potential providers can understand how to make money in this process.
Without that understanding and associated infrastructure all we will have is some number of demonstration units.
This post expresses the views of this author and not necessarily of their organisation or the Global CCS Institute.