Insights and Commentaries

Roadmap scenario modelling confirms the important role of CCS

15th December 2015

Topic(s): Carbon capture, Economics, use and storage (CCUS)

The Asian Development Bank (ADB) has recently published a Roadmap for Carbon Capture and Storage Demonstration and Deployment in the People's Republic of China. The Roadmap contains scenario modelling that illustrates the importance of carbon capture and storage (CCS) to the power sector and industrial processes. In this Insight the Institute's Lawrence Irlam, Senior Advisor Policy and Economics, Asia Pacific, discusses some of the findings.

China is the world’s largest emitter of greenhouse gases and is already taking significant steps to address this, including targeted measures to improve energy efficiency, high levels of direct investment in renewable power generation and plans to launch a national emissions trading scheme.

China is heavily dependent on fossil fuels, especially coal in power generation and also in coal-to-chemical production processes, including methanol, ammonia and synthetic natural gas. In recognising that carbon capture and storage (CCS) can directly reduce emissions from these sources, China currently has nine large-scale CCS projects in various stages of planning. Four of these are expected to become operational in the next two to three years, capturing carbon emissions from chemical production, natural gas processing and power generation, with a combined capture capacity of 2.4 million tonnes (Mt) per year of carbon dioxide (CO₂₎.

China Roadmap results

The recently published Asia Development Bank’s Roadmap for Carbon Capture and Storage Demonstration and Deployment in the People’s Republic of China provides further information on how China could achieve its climate goals through policy measures that encourage the deployment of CCS out to 2050. The Roadmap draws from economic modelling by experts at The Institute of Energy, Environment and Economy at Tsinghua University, and The International Institute for Applied Systems Analysis.

While the project involved a variety of modelled scenarios, those illustrated in the Roadmap are a “continued efforts” policy scenario, where emissions rise and eventually stabilise around 13.4 billion tonnes (Gt) per year by 2050, as well as two “alternative” policy scenarios where China achieves peak CO₂ emissions of around 10.6 Gt per year in 2030, with annual average rates of emissions reductions of between 0.9% and 1.4% thereafter. These alternative scenarios are consistent with China’s current pledge to the UNFCCC process to peak emissions by 2030, and reflect other assumed policy measures to achieve further reductions beyond 2030.

Some highlights from the Roadmap’s scenario modelling within the Roadmap and the Technical Assistance Consultant’s Report - Work Package 5b include:

• CCS is regarded as a relatively high cost mitigation option and is not deployed at all by 2030, but is deployed in significant volumes after 2040. Over these timeframes, the policy scenarios involve continuing emissions cuts and associated increases in the marginal cost of abatement, thus CCS becomes a cost competitive option. For example, CCS is only deployed above a carbon price of US$38 per ton.
• Once deployed, the contribution of CCS in achieving emission reductions out to 2050 is significant. Under the Roadmap’s alternative policy scenarios, CCS could contribute a total saving of 15 Gt CO₂ over the modelling horizon relative to continued policy efforts.
• Emissions of CO₂ in 2050 are in the order of 2 Gt per year lower with the introduction of CCS.
• The policy scenarios identified in the Roadmap suggest CCS in coal-to-chemical industries could contribute between 40 to 45% of all CO₂ emission reductions enabled by CCS, with CCS in the power sector reflecting the remaining 55 to 60%.
• If CCS is blocked as a technology, the carbon price required to induce other technologies to achieve emission reduction goals by 2050 would be between 7% to 20% higher, while electricity prices would be 3% to 14% higher than in a situation where CCS were deployed.

Results from other modelling studies

These particular results vary from other modelling studies however the findings are the same.

Modelling from the International Energy Agency (IEA) has long shown that CCS has an important role to play under a 2°C scenario. For example, its most recent Energy Technology Perspectives shows CCS deployment in China could capture more than 7 Gt of cumulative CO₂ emissions to 2050, or 563 Mt per year in 2050. Its 2015 World Energy Outlook notes that, globally, three-quarters of coal-fired power generation would come from CCS-equipped plants, and in industrial processes, 10% of the cumulative CO₂ emissions over the period to 2040 would be captured and stored under its 450 scenario.

Modelling work conducted recently by Zero Emissions Platform (ZEP) examined industrial and power sector​ emissions from EU countries. Its modelling showed that excluding CCS from the portfolio of available technologies results in a much higher (up to 50%) overall cost in achieving emission reduction targets in the power sector. ZEP’s modelling also showed that, in any scenario, emission targets for industry would simply be unachievable.

These findings are consistent with the IPCC, which surveyed a wide range of modelling studies in its 2014 Fifth Assessment Report, finding that blocking the deployment of CCS (and in particular CCS combined with biomass combustion) would significantly increase the cost and lower the likelihood of achieving climate goals.

The China Roadmap and these other modelling results serve to highlight two key points about CCS, namely that all technologies will need to be deployed under a 2°C scenario, and there are a variety of situations where CCS can and will need to be applied.

The scale of the problem is enormous – all technologies will be required

Much of the climate change debate focuses on the power sector. In this situation, CCS involves the addition of costs onto cheap coal and gas-fired generation. Technologies like onshore wind, solar PV and battery storage are often viewed as being in competition with CCS, and their costs are rapidly coming down. However managing a power system isn’t just about cost. And even on a cost basis, it is not economic to run a power system served entirely by wind, solar PV and battery storage as backup.

As shown above, modelling of least cost outcomes under a 2°C scenario show that it will still be cheaper overall to deploy some amount of CCS-equipped generation as part of a diverse power generation mix that has much higher amounts of wind and solar PV than observed today. For similar reasons, technologies like nuclear, geothermal and solar thermal will also need to be relied upon, even though they each have limitations in terms of risk, availability or cost.

None of these technologies are in competition – they are complimentary. Policies need to be designed such that each are given an equal opportunity to be deployed where technical and commercial drivers allow. Excluding the deployment of any one technology on the basis of expected cost, risk or other political concerns will actually result in it being more difficult and expensive to achieve emission reductions goals.

CCS is not just about coal-fired generators

In the power sector, CCS can be applied to gas-fired as well as coal-fired generators. Gas-fired generation equipped with CCS will be critical in a world considering a switch to gas as a step towards completely decarbonising the power sector.

CCS will also need to be applied to a variety of industrial applications as CCS is the only option to achieve deep cuts in emissions from these sources. Natural gas, cement and ammonia cannot be processed or manufactured without generating CO₂ as a by-product. In other processes like steel manufacture, energy efficiency and recycling will need to play a large role in reducing emissions but CCS will be needed to make even further cuts in emissions from the combustion of metallurgical coal.

Given society is working within a carbon budget, current rates of emissions from all activities will need to be reduced to zero, or have these emissions offset by CO₂ sequestration from other activities. This is where CCS combined with combustion of biomass will play an important role.

Back to Insights