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Carbon capture and storage has potential to be major global emissions market player.

THE THOUGHT of burying millions of tonnes of carbon dioxide underground is not for the risk-averse. If carbon dioxide is injected into pores in the earth's crust that previously held oil and gas for thousands of years, will it stay there as long? What happens if it doesn't? Is it worth it?

Maybe, these are all reasons why governments have been slow to commit significant funds to carbon capture and sequestration projects, despite the potential benefits in cutting CO2 emissions. And it certainly explains why pilot programmes are diligently sinking holes and experimenting with potential solutions.

However, the potential is clear. If a significant proportion of new carbon emissions could be captured and stored securely under the ground or sea, that would not only transform the global warming debate but also generate a great deal of money.

With the European Union's (EU) carbon trading scheme putting a tradeable price on carbon dioxide, being able to remove a substantial amount of the gas from the world market has a substantial paper value. Some estimates put it as high as GB Pounds 150 billion worldwide. No wonder the underground equivalent of the post-war race to space is well under way.

In Norway, scientists have achieved a world first by taking carbon dioxide from crude oil and gas offshore and pumping it into sandstone underground.

In Denmark, the world's largest pilot plant for the capture of carbon dioxide from a coal-fired power station was opened last year.

Also, in the UK, oil giant BP and gas group Centrica are planning to construct power stations with in-built carbon capture and storage facilities.

And drilling started this year on an underground storage facility for carbon dioxide near Ketzin, a German town west of Berlin. As part of a project known as CO2SINK and funded by the European Union, 60,000 tonnes of CO2 will be injected into a saline aquifer and stored underground at a depth of more than 700 metres.

Outside Europe, in Australia, the government-funded CO2 Cooperative Research Centre, says 150 million tonnes of carbon dioxide a year--about one-quarter of the nation's annual output - could be safely put underground.

And the US Department of Energy says there's enough underground storage capacity in the US and Canada to bury greenhouse gases from power plants for 900 years. The two countries are said to have capacity to store more than 3,500 billion tonnes of CO2.

"It's completely feasible," says Stuart Haszeldine (NOTE: CORRECT SPELLING), professor of geology at Edinburgh University.

"All the component parts for CO2 storage underground to happen already exist but have never been joined up in an integrated way.

"You need to have power stations, pipes and storage facilities and all of these need to be increased in size, some by as much as three or four-fold. But all the engineering people I know seem to be entirely comfortable with that.

"You can take technology from oil refineries and you can use the technology for injecting water into oil fields. It's pretty much ready to go."

At the Ketzin project, Rolf Emmermann, of the GeoForschungsZentrum in Potsdam, which is co-ordinating the effort, is more cautious.

"The storage of this greenhouse gas can represent an option to gain more time for the development and introduction of CO2-free technologies," he said.

"However we have to know what processes are set off through underground storage and what happens in the medium and long-term to CO2 that is stored underground. That is what we want to investigate.

"We will use the entire methodical arsenal of the geological sciences to gain a comprehensive picture of the processes taking place because the significant aspect is the long-term safety of such a storage facility and the corresponding development of the necessary surveillance technologies."

Such caution is not preventing some of Europe's biggest companies from making ambitious plans, however. Centrica's proposed GBPounds 1 billion "clean coal" plant on Teesside would be the UK's first with built-in carbon capture and storage (CCS) and is projected to have an overall carbon emission footprint equivalent to 4% of that created by a traditional coal plant.

BP' is trialling an alternative pre-combustion method at the Peterhead (NOTE: SPELLING CORRECT) power station, near Aberdeen, in a deal with power generator Scottish & Southern Energy. It plans to capture CO2 from a mixture of hydrogen and carbon dioxide formed from the incomplete combustion of natural gas and bury it under the North Sea.

Prof Haszeldine says 12 such plants are envisaged across the EU by 2015. "This is a whole new industry and Britain is in a market-leading position to benefit," he stated.

The UK was one of the first countries to invent the concept for doing this and it has still got the lead in sorting out the chain of events in the sequencing of this technology, such as the legality and licensing and regulation.

"Britain also has huge storage capabilities because of all the rock under the North Sea that's been depleted of oil and gas and the saltwater aquifers in sandstone. Britain ticks all the boxes in terms of being in a great position to do this and there are extraordinary opportunities for British companies to sell technology for carbon capture and storage to China and India", said Prof Haszeldine.

The pace of development will be driven by a many factors including safety and geological assessments and technological developments but proponents of CCS believe that governments have to play a key role nonetheless.

The European Commission has proposed that every new power station built in member countries after 2015 must be capable of capturing its carbon dioxide emissions. After 2020, it wants every fossil fuel plant in Europe to be actually capturing some emissions.

This is likely to involve huge investment, not only in building new plants but in retro-fitting old ones with carbon capture and storage equipment.

At present, CCS systems are not allocated carbon permits under the EU's carbon trading scheme but this should change after 2012, meaning they will be able to sell their unused quota of carbon to traditional power generators and manufacturers.

Edinburgh University and the UK Energy Research Centre estimate that the size of the UK market alone could reach 150 million tonnes of CO2 a year, which would be worth about GB Pounds 2 billion based on a carbon price of Euro 17-a-tonne. Globally, the world market could be worth about GB Pounds150 billion, based on similar assumptions.

This is expected to lead to a massive expansion of the carbon market and Prof Haszeldine believes demand and supply will do the rest.

"There will be a new incentive to capture and store carbon dioxide," he told Utility Week, "because it is a fixed cost compared to the variable costs of acquiring carbon emission permits at their highly volatile prices. Companies will have to make choices."

Some already have. "The main reason for going into our project," said a Centrica spokesman, "is its low carbon emissions, which makes economic sense if you start reflecting future carbon prices into power generation building programmes."

Despite this, BP says it will not go ahead with its Peterhead project without financial backing from British government.

Poyry Energy Consulting (NOTE: CORRECT SPELLING), which in January issued a report on the cost of CCS for the UK's Department of Trade and Industry, says governments need to offer greater incentives as the cost of procuring, installing and operating CCS technology is likely to be at least Euro 38-per-tonne of CO2 captured and stored--more than double the current cost of CO2 emissions.

"It's a really expensive thing to do and unless there is some sort of incentive for power companies to do this then what reason have they got to install these facilities?" said Barry Ladbrook, one of the report's authors.

"It does depend on society and government putting a value and a sufficient value to warrant the technology for reducing CO2 emissions," adds a BP spokesman.

"It's not something that would be done without a value put on it because it has no inherent value it its own right. It does require fiscal support."

Carbon capture and sequestration could also cost customers. A Massachusetts Institute of Technology (MIT) report in March this year said that equipment to capture the gas at power plants, transport it and bury it deep underground could add up to 20% to consumers' power bills.

In 2003, a DTI report in the UK estimates that CCS storage would put between GPPounds 0.01pence to 0.02-and-a-third pence on the price of a unit of electricity.

Power prices in Britain are closely regulated but there is some speculation that the UK Government could allow suppliers to charge extra is a certain proportion if their energy was processed by CCS plants.

Haszeldine is optimistic that a way will be found. "I can see a situation where all new carbon emissions from UK power stations are captured," he said.

"From a global warming perspective, if anyone is worried about India and China building traditional fossil fuel power stations that are going to be emitting CO2 for the next 50 years, we really have to be retro-fitting CCS systems so we can capture CO2 from there. It's a response to the global warming agenda but it's also going to create a whole new industry."
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Author:Cave, Andrew
Publication:International News
Article Type:Industry overview
Date:Apr 1, 2007
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