Carbon Capture and Storage: overall perspectives

1
Carbon Capture and Storage overall perspectives
CCS Conference, Gothenburg
January 27, 2009
2
Agenda for todays discussion
Why CCS? CO2 capture and storage (CCS) has the
economic logic and potential to be a major CO2
abatement lever by 2030
Where do we stand today? Need to address
regulatory and funding barriers and then prove
technology at scale
What are the implications for the Nordics? A
potentially important option for industryHow
can/ should that opportunity be addressed?
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What is CSS?
ILLUSTRATIVE
Carbon capture and geological storage is a
technique for trapping carbon dioxide as it is
emitted from large point sources, compressing it,
and transporting it to a suitable storage site
where it is injected into the ground. European
Commission / Climate Change http//ec.europa.eu/
environment/climat/ccs/what_en.htm
Source IEA, European Commission
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CCS has potential to be a major abatement lever
by 2030
1.0
2080619 EIB CCS perspectives
Billion CO2e/year in 2030 EUR 40/ton scenario
Vattenfall/McKinsey Cost Curve 2.0 Total 39 bn
CO2e/year
Stern-report Total 27.6 bn CO2e/year
IEA Total 28.7 bn CO2e/year
1.4
4.0
2.0
CCS
4.5
4.4
Renewable
2.7
2.7
Nuclear
Source IEA World Energy Outlook 2007
Stabilization scenario IPCC FAR, WG III, Summary
for Policymakers Stern-report McKinsey analysis
4
5
IEA business-as-usual forecast of Worldwide
electricity generation TWh x 1000
6.5
Fossil fuels
35.4
0.8
3.3
6.5
94
0.9
18.2
8.1
Biomass and waste
0.2
Nuclear
2.8
Renewables
3.1
1.2
Oil
3.6
15.8
Gas
7.3
Coal
2005
2030
Source World energy outlook, IEA 2007
6
European CO2 emissions from fuel combustion and
industrial processes
53
CCS addressable emissions 100 2 GtCO2, 2007
Total emissions 100 4.2 GtCO2, 2007
Non addres- sable by CCS
Power-gas
Addressable by CCS
16
Power-oil
6
Power-other
1
52
Power-coal
47
9
Cement
8
Iron Steel
8
Predominantly large stationary sources
Refineries
IEA estimates of CO2 emissions from fuel
combustion and industrial processes in 2007.
Not including biomass, oil sands, paper
mills, ammonia, ethanol, ethylene, hydrogen, and
other industries Includes metal ores
processing Source EEA GHG Emission Trends and
Projections 2007 IEA World Energy Outlook 2007
McKinsey analysis
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The McKinsey CCS report CCS Assessing the
economics
The McKinsey CCS report

• Key insights
• Provides the reference case on economics and
  European potential of CCS
• Developed with over 50 participants
• Received as an important contribution by European
  CCS stakeholders and wide media coverage
• Analyzes enablers and barriers key topics that
  influence CCS development
• Available at www.McKinsey.com

Source McKinsey
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Likely development of CCS costs versus carbon
pricereference case
/tonne CO2
Demonstration phase Not economic on standalone
basis.
Commercial phase Cost of CCS expected to be in
the range of the future carbon price
Estimated cost of CCS
Economic gap
Carbon price forecast
Demonstrationphase (2015)
Early commercial phase (2020)
Mature commercial phase (2030)
Carbon price for 2015 from 2008-15 estimates
from Deutsche Bank, New Carbon Finance, Soc Gen,
UBS, Point Carbon, assumed constant
afterwards Source Reuters McKinsey analysis
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CO2 Capture will typically account for well over
50 of value chain cost
43
CONCEPTUAL
Total cost of early commercial projects
Reference case /tonne CO2 abated
Assumption

• CO2 capture rate of 9092
• CCS efficiency penalty of 712 points
• Same utilization as non-CCS plant (86)
• CO2 compression at capture site

Capture
2532

• Transport through onshore/offshore pipeline
  network of 200/300 km in supercritical state
• Use of carbon steel (assumed sufficiently dry CO2)

Transport
46

• Injection depth of 1,500 m in supercritical state
• Vertical well for onshore/directional for offshore

Storage
412
3550
Total
Ranges are rounded to 5 on totals Source McKi
nsey analysis
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A successful CCS roll-out will likely develop
around regional clusters
ILLUSTRATIVE EXAMPLE
Low emissions
Emission and capture cluster
Medium emissions
Storage cluster
High emissions
Source Team analysis IEA GHG Emissions
database v2006 pathfinder ECOFYS Gestco
summary report
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A worldwide roll-out could lead to 400 600
plants equipped with CCS, representing a 500
bln opportunity
ESTIMATES
Roll-out rate average number of plants equipped
with CCS per year (new build or retrofit)
Number of plants equipped with CCS

• Worldwide abatement potential of CCS by 2030 of
  2.02.4 GtCO2
• Europe could account for 20 of this
• Total capex to support roll-out likely EUR
  300-500 billion

Demonstration plants
Early commercial plants
Mature commercial plants
Installed capacity GWe
15
30
400
Yearly abatement potential GtCO2/y
0.05
0.3
2.2
Source Team analysis
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Agenda for todays discussion
Why CCS? CO2 capture and storage (CCS) has the
economic logic and potential to be a major CO2
abatement lever by 2030
Where do we stand today? Need to address
regulatory and funding barriers and then prove
technology at scale
What are the implications for the Nordic region?
A potentially important option for industryHow
can/ should that opportunity be addressed?
13
Maturity of CCS component technologies
Capture
Transport
Storage
Stage of development
Concept
Lab testing
Demonstration
Commercial refinements needed
Commercial
Potential future breakthrough technologies
Several projects are operational (e.g., Weyburn
(Canada)). EU has limited EOR potential
First projects are coming online now
Post- combustion
Oxy-fuel
Membranes
Pre-combustion
CO2-EOR
Chemical looping
Depleted oil and gas fields
CO2-EGR
Transport off-shore
Transport On-shore
Saline aquifers
US has existing CO2 pipeline network of more than
5000 kilometers
Sleipner (Norway) field has been operational for
around 10 years
Source Interviews McKinsey analysis
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Examples of key players currently involved in CCS
ILLUSTRATIVE
Asia
Europe
North America
l
Source MIT
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Current status and potential of CCS by region
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Relative attractiveness CCS
Total 2030 emissions from point sources
Regulatory and political situation
Availability of storage
Region
North America
China
India
EU
Middle East
Japan
South Korea
Australia
South Africa
Compared to other abatement measures
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Status in Europe

• ZEP and others for some time have promoted the
  need for a Flagship Programa coordinated
  portfolio of 10-12 commercial scale demonstration
  CCS projects
• Test the full range of technologies and fuels in
  multiple geographies, refine economics and build
  public acceptance
• Will require a mix of private and public funding
  given high costs of demonstration projects,
  expected requirement 610 billion
• EU in December endorsed using 300 million EUAs as
  the public funding contribution to these projects
  

Source ZEP
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Four next steps if widespread CCS deployment is
to occur in Europe

• Design and run tender process to select
  flagship projects and allocate public funds
• Develop national regulatory and legal framework
  for storage in line with EU directive
• Address public awareness and safety concerns to
  allow project permitting
• Develop the blueprint for broader
  deploymentprove up storage capacity, develop
  pipeline options etc for cluster development

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Agenda for todays discussion
Why CCS? CO2 capture and storage (CCS) has the
economic logic and potential to be a major CO2
abatement lever by 2030
Where do we stand today? Need to address
regulatory and funding barriers and then prove
technology at scale
What are the implications for the Nordic region?
A potentially important option for industryHow
can/ should that opportunity be addressed?
19
Sweden has an industry heavy carbon footprint
14
Energy
Percent Emissions from power, heat and industry
CO2 intensive industry
Other industry
World
Sweden

• Energy
• Coal
• Gas
• Oil

100 22.5 Gton CO2e
100 30.8 Mton CO2e
Other
Cement
Other industry
14
Refineries
Iron Steel
Iron Steel
7
Oil
60
Coal
11
Gas
Cement
Refineries
Ammonia, ethanol, ethylene, hydrogen, biomass,
oil and gas processing, oil sands, paper mills,
and other industries Source IEA GHG emissions
database 2006 McKinsey analysis (McKinsey KO
Carbon Capture and Sequestration) NRI
Environment reports
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Swedish CO2 cost curvesimplified
CCS
Reduction cost, SEK per tonne CO2e
5.5 million tonnes of CO2e emission reduction
6 000
4 000
CCS,steel
2 000
Ethanol(transport)
SEK 500 per tonne CO2e
0
5.0
6.0
7.0
8.0
9.0
10.5
9.5
8.5
7.5
6.5
5.5
4.5
3.5
2.5
1.5
0.5
10.0
11.0
12.0
3.0
4.0
11.5
Reduction potential, Millions of tonnes of CO2e
CCS, raff./ petrochem.
-2 000
CCS,cement
-4 000
Energy efficiency measures
Transport sector solutions
Industry, heat and power measures
-6 000
Source McKinsey analysis
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Distribution of CO2 emissions in Sweden
Kton CO2 emitted per year
SSAB, Luleå

• Top 10 emission points account for 40 Swedish
  emissions
• Largest emitters generally close to the
  coastpossible ship based CO2 transport
• Gothenburg cluster with 3.5 million tons CO2 per
  year

SSAB, Borlänge
Outokumpu, Avesta
Cementa, Skövde
Fortum, Värtaverket
Preem, Lysekil
SSAB, Oxelösund
Borealis, Krackeranläggningen
Shell, Göteborg
Preem, Göteborg
Incuding Lulekraft Source Swedish
Environmental Protection Agency Environment
rapports McKinsey analysis
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Considerations for CCS in the Nordics
FOR DISCUSSION

• What are the CO2 capture priorities and at what
  economics?
• West coast Sweden/Norway/Denmark cluster
  (Skagerack project)?
• Swedish Steel?
• Other?
• What are the optimal transport and storage
  options for these sites? (local, NCS, shipping?)
• Is there a near term opportunity to develop an
  industrial CCS project under the EU flagship
  program? What is required in order to do so?
• What is required from government and industry
  more broadly to move forward on developing Nordic
  CCS?
• What broader business opportunities for Nordic
  companies could be available in CCS?

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Top 10 point emitters of CO2 in Sweden
3,600,000
Steel
MT of CO2 per year
Refinery
Cement
Energy
3.6
SSAB, Luleå
SSAB, Oxelösund
2.5
Other point emitters 18.2mt CO2 / yr
Preem, Lysekil
1.7
1.6
Cementa, Skövde
Borealis, Krackeranläggningen
0.7
Top 10 emitters 12.7mt CO2 / yr
41
Fortum, Värtaverket
0.7
Preem, Göteborg
0.5
Shell, Göteborg
0.5
Outokumpu, Avesta
0.4
SSAB, Borlänge
0.4
Including Lulekraft Source Swedish
Environmental Protection Agency Environment
reports McKinsey analysis