The power of choice – a CCS roadmap for Hungary

The Bellona Environmental CCS Team (BEST) has just released its latest roadmap for CCS for an EU Member State. This latest roadmap, the preparation of which was supported by the Global CCS Institute, covers Hungary.

At first glance it may seem strange to prioritise preparing a roadmap for a country that has, after Latvia, one of the lowest per capita greenhouse gas emissions in Europe and only relies on solid fuels for less than 20 per cent of its electricity supplies. This is a very different situation and energy mix to that of Poland, with its very high dependence on coal burning (see the CCS Roadmap for Poland released in 2011). However, Hungary is a very interesting case study, not least because it is one of the few countries outside of the USA that has already used carbon dioxide (CO₂) for enhanced oil recovery (EOR). In addition, it relies quite heavily on imported gas for 30 per cent of its electricity generation, a share that could well increase if Hungary's plans concerning other new generating capacity do not occur. Hungary also has a well developed heavy industry with substantial CO₂ emissions that could be negatively impacted by a significant increase in the price of carbon in the Emission Trading System (ETS).

To investigate the impact of applying CCS to the Hungarian energy system, Bellona used two different scenarios for electricity generation to 2050 based on the Hungarian Ministry of Economy and Transport's projections from 2006. This predicted the steady increase in the share of renewable energies (up to 30 per cent by 2050) and new nuclear capacity commissioned in 2024. The resulting supply 'gap' was filled in one scenario predominantly by solid fuels (hard coal and lignite), referred to as the 'standard scenario'. In the other scenario, the gap was mainly filled by natural gas (not surprisingly referred to as the 'gas scenario'). Because there is considerable potential for co-firing of the solid-fuel power plants with biomass, it is assumed that after 2025 all such plants could and would co-fire with 20 per cent biomass, giving the possibility of a 'carbon negative' future.

Based on these two different scenarios, CCS is applied on a plant-by-plant basis starting by the retrofitting of the large lignite-burning Matrai II plant in 2025, followed by the retrofitting of several gas-fired plants from 2030 onwards and by all new fossil-fuelled plants after that date. The Bellona report contains details of all the different power plants, the key model parameters and factors (including the various costs), and the carbon prices used in the calculations.

For the 'standard scenario', the greatest investment cost would come between 2025 and 2030 with carbon emissions rapidly decreasing from 2025 mainly as a result of the capture of the carbon from the retro-fitted Matrai plant. This would reduce to near zero soon after 2030 and then, thanks to the 20 per cent co-firing with biomass, become 'carbon negative', saving the emission of over 16 million tonnes of CO₂ each year. The cost benefit of CCS (savings in terms of costs per kWh of electricity generated) would be immediate, although it would remain relatively small until 2030 after which it would become increasingly significant as the carbon price increased.

The picture for the 'gas scenario' would be rather similar. The CCS facility costs would be less overall than for the 'standard scenario' and delayed relative to that scenario. This is because there would be less CO₂ to capture (as natural gas has lower emissions than coal per unit of electricity generated). Because fewer emissions are captured, the electricity cost impact (savings) would also be less than for the 'standard scenario'. The carbon negative potential of the 'gas scenario' would also be less than for the coal-based trajectory. It is clear, however, that equipping all natural gas-fired power plants with CCS from 2030 onwards cannot be avoided.

The key message from this for the Hungarian power sector is that regardless of which fossil fuel is used, there would be immediate environmental benefits and savings on electricity costs by fitting CCS to the system as early as possible. Even if the costs of capture, transport and storage are all at the highest end of their ranges and all other factors do not favour CCS deployment, a CCS-equipped system would still give economic benefits by no later than 2045 and, most likely, much earlier.

The Bellona report also looks at the possibilities for capturing and storing carbon from the industrial sector that, together with oil refining, is responsible for well over 20 per cent of Hungary's emissions. Refining, iron and steel, cement, petrochemicals and fertiliser production are the main emitters. The lowest cost of capture would be at the fertiliser plant which produces a pure stream of CO₂ as a by-product of ammonia production. Though the total volume of gas is relatively small, it could be economic if the power plants and other industries in the area (especially cement) were to form a cluster. In a very simple model, if CCS deployment in the industry sector could start very soon, reaching 25 per cent equipped by 2020, 50 per cent by 2025 and 100 per cent by 2035, there would be immediate environmental and economic benefits (with a CCS-equipped industry less costly than one not equipped with CCS) by as early as 2031. Therefore, early CCS deployment would reduce the risk of carbon leakage in the very important Hungarian industrial sector and the loss of employment that would result from it.

Hungary has the geological potential to store all of its own carbon emissions, along with the technological know-how and experience. There is also the potential to further increase the benefits it could gain from CCS by using a portion of the captured emissions for EOR. Early deployment of CCS would mean very significant savings in the cost of electricity production, regardless of which fossil fuel it favoured to cover the gap between supply and demand left by nuclear and renewables. With a growing interest in bio-energy, including biofuel production, Hungary could have a strong carbon negative value chain in a very short time. Furthermore, the industrial sector could also be a winner from early deployment of the technology. So the picture for Hungary regarding CCS is very similar to the one for Poland despite the two countries' very different energy mix.

The report can be downloaded from both the Bellona CCS website and directly from the Institute.