Carbon sequestration: capture technology faces a more hostile environment

http://www.ft.com/cms/s/0/0aa4ba2e-1f71-11e0-87ca-00144feab49a,dwp_uuid=1bae6530-1f72-11e0-87ca-00144feab49a.html#axzz1Jf0g9F64

Capturing the carbon dioxide emissions created by burning coal, liquefying them, pumping them under the ground and then ensuring they stay there for thousands of years, will be done only if politicians are sufficiently alarmed by the risk of climate change to put in place the policy framework to make it happen.

That makes carbon capture particularly vulnerable to a shift in political opinion, which in many countries over the past year has moved away from curbing greenhouse gas emissions towards a focus on economic growth and jobs.

As Dominic Cook, carbon capture and storage (CCS) group manager at Parsons Brinckerhoff, the strategic and engineering consultancy, points out: “It is rare for any company to commit to CCS purely on a commercial basis.”

He adds: “The main driver will be when you get a carbon price high enough to incentivise companies to capture and store, rather than pay to emit.”

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Yet in spite of the more hostile conditions facing CCS, there are still about two dozen development projects around the world that are making real progress.

Ken Humphreys, the chief executive of FutureGen, a $1.3bn US carbon capture project under development in Illinois, says it is still important to develop CCS capability, to safeguard the long-term future of coal-fired power generation.

“While the political environment certainly is changing, we see a need to develop and prove out the technology, so that whatever happens in the US and internationally, we have the option of rolling out CCS if that is the way we want to go.”

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Officially, ambitions for the technology are unchanged. At the end of 2008 Steven Chu, the US energy secretary, said CCS technology could be ready for commercial deployment by the end of this decade. A paper published by his department in January 2011 reiterated that target, saying “first generation CO2 capture technologies” should be ready for commercial deployment by 2020.

And while some of the planned demonstration projects in the US have faced obstacles, the Department of Energy lists seven, backed by the government’s Clean Coal Power Initiative, that are expected to begin operation starting in 2014.

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FutureGen, backed by a consortium of 10 energy and coal companies including Peabody, Rio Tinto, Xstrata and Eon, has redrawn its project to cut its budget from a previously estimated $2bn-plus, and its power output from 244 megawatts to about 140MW.

Nevertheless, the group is still pushing ahead with its plan. “We made significant adjustments to the project structure, to make sure we can be on line in late 2015 or early 2016, and on a reasonable budget,” Mr Humphreys says. The US government is supporting the project with a $1bn grant, roughly three-quarters of its cost.

Keith White, general manager of global gasification products at GE Energy, says that before the global recession governments were prepared to spend much more on supporting technology.

In the UK, the government’s ambitions to become a leading developer of carbon capture and storage technology suffered a setback just before Christmas when Powerfuel, which is developing the country’s first commercial scale clean coal power plant, went into administration.

KPMG, the administrator, said at the time the company needed a new owner with deeper pockets in order to fund the large amount of capital needed up front for the project.

The company also fell foul of regulatory change when the Department of Energy and Climate Change decided that it would fund only post-combustion plants that strip carbon dioxide out of a power station’s exhaust after the coal is burnt. Powerfuel’s proposed plant relies on pre-combustion technology. 

Mr White of GE, which is supplying the gas power turbines for Powerfuel’s project, says “it would be a shame to see it dissolve at this point”. He argues government incentives for CCS technology are important and that “without strong government action” more such projects will falter.

The UK government’s competition to award £1bn ($1.6bn) to one company to build Britain’s first CCS plant has so far not identified a winner despite having been launched in 2007.

Today, only one of the four original contestants, a consortium led by Scottish Power, remains but has yet to be named the winner. Eon, the German utility, pulled out in the autumn saying the market was “not conducive”.

Jeff Chapman, chief executive of the Carbon Capture and Storage Association, an industry body, says while he remains “optimistic” for the prospects of CCS in the UK compared with the rest of the world, there is “still a long way to go to put in place the right support mechanisms”. 

Nevertheless, Mr Cook highlights one positive development recently. “There is a push to get the rules for CCS in the [UN] Clean Development Mechanism finalised by December 2011. One of the concerns is that while it can be argued that the developed world has a moral duty to lead on CCS development, the bulk of the technology is likely going to be implemented in the developing economies and the CDM will provide a route to funds,” he says.

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