17 responses to “Time to come clean on CCS”

  1. Cody

    Related to your comments on the potential emissions reductions to be realized via switching electrical generation in the province to natural gas, do you think that CCS may be a bit of a dead-end for policy? I ask this because when thinking of the knock-on effects of something like fuel switching in electrical generation, it’s easier to see how that policy could lead to other emission reduction opportunities, like increased electrification of our vehicle fleet.

    The policy choices you make at time A influence the options you will have at time B, and I’m wondering what range of options CCS opens up, compared to other choices we could make now. If all CCS does for us is marginally increase recoverable oil reserves while providing marginal emissions reductions, with few prospects of policy options unique to its developmental path opening up in the future, does it make sense to be spending so much money on it?

    Hope I’ve made myself clear, really enjoying your work.

  2. Duncan Kinney

    Well done. You’ve taken the time to deconstruct and unpack a lot of the mythology and reasoning behind CCS and bring the numbers to the fore. I appreciate that.

    To be frank, CCS has always been terrible policy and as a province we can’t ditch out on its public support soon enough. If it makes sense with a carbon tax so be it, but I don’t see that happening.

    There is so much wrong with it and there are so many rabbit holes you can go down here. Let us count the ways;

    Enhanced oil recovery not actually being a meaningful way to store carbon is one.

    The increased carbon produced from compressing and liquefying the CO2 being another.

    The fact that the science and long term environmental effects of storing liquefied carbon underground are, how do you say, extremely unknown.

    And of course the stuff that you brought up. The ridiculous cost expectations, the fact that this is going to have to scale up massively despite being unproven etc.

    I could go on.

    Thanks Andrew

  3. Joel Wood

    Andrew,
    Great post. CCS seems like another good example why picking winners in the innovation process is so extremely difficult. I totally agree with you that a price on carbon would avoid this problem and allow firms to implement the techs that are most cost effective for them.
    Joel

  4. Stafford "Doc" Williamson

    The good new with respect to CO² is that algae eat the stuff. Quite literally, and in the same way that all green plants require CO² to construct sugars that store the energy of the sun (photosynthesis), algae absorbs carbon dioxide and gives off oxygen.

    It is incredibly easy and less expensive to direct the CO² from industrial processes (refineries, steel smelters, cement plants, common chimneys) to ponds of algae hungry for the stuff. The result is an oil rich vegetable mass that can be separated by a very simple and economical process (see http://originoil.com/ ) . The “green crude” oil thus extracted can be processed in the same “machinery” (of an oil refinery as petroleum crude oil. This makes CCS a PROFIT CENTER not just an added cost.

    Then, too, transesterification of the “green crude” produces biodiesel, which is called “bio” not just because it comes from plants, but because it is biodegradable as well (let’s not go down the “cloud point” argument again, that was solved with a separation of saturated from non-saturated to a cloud point of -40 degrees and below) (Just incidentally, have you seen common motor oil at -40 degrees? It is thicker than Vaseline petroleum jelly.) Biodiesel is lower in particulates, sulfur free and a higher cetane number than petro-diesel.

    Too cold in Alberta for algae? (Although I’m inclined to agree, because Alberta gets REALLY COLD …) The heat of the exhaust gases can be used to keep the CO² at “room temperature” to keep the algae at optimum temperatures too. (This is for “open pond” cultivation, although ponds need to be covered. “Photobioreactors” appear to be impractically capital intensive at the present time.)

    It has been years since I first said it, but now gas and oil companies have finally, in the last year or two, latched onto the idea that they are the logical ones to be at the forefront of developing alternative fuel sources.

    Combining creating alternative fuel and the CCS process makes this a “no brainer” to use the CO² to feed the algae. Are our politicians and the public so “no brainer” themselves that it isn’t obvious to them?

    Ooops, I forgot, … Alberta, home of the CCF, Social Credit and all that.
    (Sorry about that, I actually “grew up” in Edmonton as a child and graduated from Univ of Calgary, many moons ago.)

    I’m proud of having been an Albertan for most of my life. Love the 0% sales tax, too. “Alberta, where money flows like water because of the oil.” But please, let’s not confuse that with “Alberta, where the water flows like oil, because of the oil.” CCS using algae is logical, practical and “green” in more ways that one.

    Sincerely,

    Stafford “Doc” Williamson
    President
    DaoChi Energy of Arizona
    http://daochienergy.com

  5. Darren Merritt

    There’s no doubt the long lead-in time for successful CCS and the billions of pre-commercial capital expenditure needed to kick-start the carbon capture, transport and storage industry is enough to make any taxpayer or elected official very nervous. To say that the $2 billion already spent is not enough is no doubt quite true. There’s years of geological research covering millions of square kilometers to do, standards and regulations to develop and billions of infrastructure to be built before such an industry could even begin a comercially viable stage. Without this being done, regardless of what carbon capture technology becomes the most cost-effective in future, will not matter. Without this massive up-front investment, any option to capture carbon from existing fossil fules is lost to us withjout there being the infrastructure, regulations and geological surveys being available. Until government spends the years and billions developing the supporting system, reducing carbon emissions from fossil fiuels will not happen; as simple as that. There can certainly be no commercial incentive to send shops out for years surveying geology or to soend billions pipelines. This is a job for government. Some people find the up-front pre-comercial expenditure needed by government in the early years as being a reason against it. People should realise there is nothing new about government investing in new infrastructure like roads, bridges or sewerage systems. Last I heard, we didn’t get a lot of return on the sewerage but did it anyway. If we had not, relying on the local merchant to take away our waste would have avoided years of expensive capital works and taxes but no one could argue we would be better off.

    The aternative to the government not spending the years of pre-comercial work developing the infrastructure and regulations needed to bring a whole new carbon industry into life is for us not to do it. The cost of not doing it means there is no possible way to use any carbon capture technology, of which there are many exciting ones and some less so. It means we need to provide for our increased electricity needs and abandon our existing fossil fuels and still somehow manage to meet a 20-30% cut in emissions by 2020 (8 years) using only solar, wind and geothermal.

    Beyond that, most scientists agree that the sage level of CO2 in our atmosphere was 350ppm which we went way beyond years ago. It’s hard to see how we can get our emissions down to zero, which they ultimately will need to be so that we can make sure atmospheric CO2 doesn’t exceed a maximum of 450ppm and then, the public might as well accept this, that we will have to start removing CO2 from the atmosphere so that we go from 450ppm back down to levels in 1990′s of 350ppm when there were less ice bergs melting. Even if we went to 100% renewables tomorrow morning, we may still find we wanted carbon capture technology up our sleeve.

    To suggest it might not be able to compete with the alternatives, is to abandon an elaborate suite of exciting options and, I believe, to ignore the suggestion that we are not in a position to pick and chose. We need maximum investment in all of these options, and need them this year so the concrete infrastructure can be put into place next year. We don’t have another 12 months left to debate these issues. The shovels have to come out on all these options. I agree with the observation that since CCS will take billions and several years to get ready on a commercial scale, in the emantime, we also need to focus on commercial-scale biomass such as algae, and the renewables we hear so much about. Each of these technologies has a specific place in our timeline and we could well be dooming ourselves to an expensive and dangerous future if we don’t make sure CCS is available to us, like a sewerage plant, down the track.

    I keep trying to shorten this but to no avail. Sorry it is so long.

    Thanks for reading my humble opinions.

  6. Darren Merritt

    Thanks Andrew,

    YOu are quite correct about the situation being somewhat different here.

    First, there’s virtually no real use for EOR here in Australia. Our oil is easily extracted so that doesn’t enter the picture. We would have to do it without any potential return from EOR. Obviously, there’s benefits to CCS beyond EOR.

    The isue I understand is that, alhtough we do seem to have convenient access to some appropriate storage areas near our Victorian coal reserves, it would not be enough and either way, vast resources need to go into studying safe places to store CO2. There has been much work done here already which has demonstrated ceratin geological layers of sedementary rock are ideal and safe, but this will take many years and also needs to address what we do about the existing preliminary data which is currently in the hands of oil companies. It seems silly for us to re-survey millions of square km which has already been done, in part, by oil companies. There is also lack of survey ships. I am also confused, as a rssult of some scientists being confused, why so many new CCS projects which were to happen on-shore, are now being moved off-shore. The reason may be that the survey licences are easier to deal with but maybe no other scientific reasons. Red tape such as this could end up meaning we all pay too much for our electricity.

    I think we all agree that in the end, we want the cheapest electricity we can get while we meet our targets. I hope Australia’s new carbon tax, due to bein July 2012, provides the incentives we need to promore the large investments in renewables and somehow into CCS. I had heard that a simple carbon tax alone would not be enough to kick start CCS though. This could be a problem if we need more than that. Clearly we all have a lot more to work out.

    Thanks for the discussion.

    Darren

  7. Eric Beynon

    I would like to address several points raised in the above blog post.

    It is mentioned that CCS will require perpetual government funding of $50/t and that there is no exit strategy for government. This is not the case.

    The main driver for CCS is addressing climate change and CCS has been identified, both in Alberta and globally, as an essential tool to reduce CO2 emissions. We simply cannot meet CO2 reduction targets without CCS and the volume of reductions available through CCS are a necessary piece of Alberta’s, Canada’s and the world’s effort to address climate change.

    As we recognize the need for CCS, we also know that it will cost money to deploy. In the future climate change policy will drive CCS deployment, but in the early years, when the technology application is new and climate change policy is only emerging, CCS is not commercial. It is in this early transition phase that government has a role to assist deployment.

    Regarding cost decreases, over time, as CCS facilities are built around the world, costs are indeed expected to decline. And they are expected to decline significantly. Technology learning curves are well established and as this occurs for CCS we will see the technology be applied to more and more facilities. Also note that the graph referenced by Ian Murray is not a supply cost curve over time, but a snapshot of supply costs today.

    It is also important to recognize that no jurisdiction can do this all on their own. Cost declines will only happen when CCS is deployed around the world. Similarly, Canada and Alberta cannot move too far ahead of our trading partners, primarily the United States, on climate change policy for risk of loosing investment. Let us be clear that large scale CCS will not occur in Alberta unless the world also gets serious about reducing CO2 emissions and it is important to look at future deployment with this perspective.

    Regarding costs, the other dynamic that is not mentioned in the blog post above is that the deployment of CCS in Alberta is an investment in advancing an enhanced oil recovery (EOR) industry in the province. The Alberta CCS Development Council estimated that this industry would result in $11 – $25 billion in additional royalties, far outweighing the initial $2B investment. And these estimates were made at a $75 per barrel oil price.

    Regarding the fourth hard truth, we are in agreement that climate change policy should not be prescriptive and that fuel switching to natural gas should be an option for many companies. However, fuel switching is not the answer for all companies. Further, it will not reduce CO2 to the levels required, so capital stock replacement from for example, coal to gas may be short sighted at best.

    CCS is needed and policy must support CCS development to set the stage for Alberta’s future. Thanks for the opportunity to provide our perspective on a meaty issue. Healthy debate is the way these initiatives move forward in the best possible way.

  8. Eric Beynon

    Andrew,

    Thank you for your comments and the discussion. Some further thoughts in response to your questions/points.

    I agree there will be an upward sloping merit curve for CCS applications. As you say, we will “have to move along (and thus up) the supply curve to get the increases in quantities, while that supply curve is shifting down over time with learning”. However, it is important to emphasize that there are significant CO2 volumes available both in the near and medium term towards the bottom end of the CCS supply curve. And as technology improves and costs decline these volumes will be even more appropriate for capture. The snapshot you have of the volume curve in 2020 shows that upwards of 30 million tonnes of CO2 are available for a price of less that $125-$150 per tonne. With only a small portion of this being captured by the initial 4 projects in Alberta (5 Mt) there is still significant volume available at the lower end of the cost curve.

    Note: This cost/volume curve is also available on the ICO2N website with a description of the various cost thresholds: http://www.ico2n.com/what-is-carbon-capture/carbon-capture-storage-economics/total-costs.

    The volumes available at the high end of the cost profile (upwards of $200/tonne and above) will be targeted as part of future CCS deployment and it is the expected cost declines that will make these volumes applicable for CCS. There are many economic reports in Canada and globally that identify the need for carbon costs nearing, if not more than, $100/tonne as we move out towards 2050. And note that this is the price that will be needed for all technologies, not just CCS, in order to meet society’s CO2 reduction targets. It is the combination of future climate change policy (carbon price) and technology cost declines will make capture at the more expensive sites viable.

    For further information on technology learning curves the ICO2N website has model curves and an example with actual data from the implementation of flue gas desulphurization technology in the 1980s: http://www.ico2n.com/what-is-carbon-capture/carbon-capture-storage-economics/technology-learning-curve

    On your point about Alberta being exposed, I believe this should be looked at from a different perspective. If CCS is not progressed globally then the world (not just Alberta) will be short of its GHG targets. This would be an indication that the world’s priority for addressing climate change has diminished and Alberta would not be alone. Alberta and Canada’s climate change plan is, to a large degree, tied to international developments as much as CCS deployment is.

    Regarding EOR, the situation in the U.S. is different from that in Canada. In the U.S. the majority of CO2 is from natural sources rather than CO2 captured from industrial facilities. The nascent EOR industry in Canada can not pay enough for CO2 to cover the costs associated with CO2 capture. As with many other industries, government involvement can play a critical role in helping with early development. This indeed is happening for wind, solar and other renewable technologies around the world and, closer to home, government assistance was crucial to help develop Alberta’s oil sands industry.

    Lastly, to comment on the idea of an exit strategy for government I re-iterate my point above that neither Alberta, nor Canada, can move alone on climate change policy. The province/country cannot be too far out of line with our trading partners for fear of losing investment. The long-term policy development that is needed to drive CCS is therefore tied to global developments and this international perspective cannot be overlooked. It is these international developments that will drive both the necessary policy in Canada and the global CCS deployment needed to reduce costs. And assuming that the world does move on climate change, there is a natural progression to commercial CCS through both tightening climate change policy and CCS cost declines. This is graphically displayed on the ICO2N website: http://www.ico2n.com/what-is-carbon-capture/carbon-capture-storage-economics/transition.

    I’d like to come back to the fact that CCS is a critical technology for Canada and Alberta. While it is not the only answer to reducing CO¬2 and all technologies must be pursued, CCS has been identified as the largest single tool to reduce CO2 emissions. It must be progressed if the country/province is to position itself for future deployment.

    Thanks again for the good discussion and I’m glad to hear you are using the ICO2N website for CCS info.

    Eric

  9. Twice the offsets, half the credibility for the offset system

    [...] Saskatchewan.  The fact that the funding model has been agreed upon is great news, since although I have been critical of Alberta’s carbon capture and storage strategy in the past, I think that these pilots provide a crucial opportunity for technological advancement.  In this [...]

  10. Don Macdonald

    To pick up on this discussion, post cancellation of the TransAlta’s Pioneer CCS project, a number of questions will undoubtedly be raised as to what went wrong and if this is a foreshadowing of turbulent times for CCS in Alberta (and Alberta Climate policy). I notice that TAU’s two official reasons are: 1) insufficient market for CO2, and 2) lack of a high enough policy-driven carbon price. I wonder if the first reason relates to what the economist Nassim Nicholas Taleb calls a Black Swan event – something with a low probability that comes out of nowhere and causes a major impact to systems – in this case the energy system. I wonder if horizontal drilling and mulitistage fracing is revolutionizing not only the NG industry but perhaps also the conventional EOR industry such that the demand for CO2 may be dropping as companies switch to HMF for EOR? The price of oil is still very high, so that’s not it. I think that clastic reservoirs may be more amenable to HMF techniques, while carbonates (like at the Redwater CCS project) may still be more amenable to CO2 flood, but not sure. If HMF is becoming a major economic force in the Alberta energy sector, it would certainly have an impact on the economics of the other Alberta CCS projects. Perhaps, even globally as HMF gains traction around the world?

    Don Macdonald
    MacEwan University

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