The CCS challenge for the gas industry: the practical potential for gas carbon capture and storage in Europe in 2030
This analysis provides the first assessment of the practical potential for gas power with carbon capture and storage (CCS) in Europe in the medium term. Much of the debate around CCS so far has focused on coal. However, the December 2011 European Commission Energy Roadmap 2050 identified the need for a significant ramp up of gas power with CCS and indicated it will be of greater importance than coal CCS within two decades.
There are multiple hurdles to CCS deployment, creating risks of ‘carbon lock-in’ or ‘stranded assets’ for unabated gas power plant. Chief among these is the absence of a clear business case for investment in gas CCS, given uncertainties around technology, carbon prices and potential load factors. Another hurdle is the absence of robust economic incentives to support the additional high capital and operating costs associated with CCS.
However, additional practical challenges could limit the deployment of gas CCS. In particular, it must be practical to capture CO2 at individual gas plants, and transport it to storage sites with sufficient capacity.
Europe is likely to experience a ‘dash for gas’ in its power sector in the next two decades, with currently planned gas plant expected to double EU gas power capacity. This is both an opportunity and a challenge for Europe’s decarbonisation mission.
Our analysis suggests that by 2030 over 60 per cent of gas power plants will either not have been assessed for capture readiness or will face difficulties in accessing CO2 storage. This highlights the risk of fresh investments locking in generating plant to locations unsuitable for CCS and increasing the future costs of decarbonisation.
More positively, our analysis indicates that the practical potential for gas CCS could reach 50 to 100 GW by 2030 under different policy scenarios. However, this will only be delivered with strong facilitation from governments and the European Commission to require meaningful capture readiness actions from plants constructed during the coming dash for gas.
Our study has additionally identified that:
• there is a large gap between the conditions that define minimal and meaningful capture readiness of gas plant;
• the storage readiness for new gas plants is currently not being assessed meaningfully by any country outside Norway;
• integrated CO2 transport pipelines, which also meet the needs of coal and industrial CCS, can help overcome storage constraints.
Governments can begin to address the challenges of the capture, transport and storage of CO2 for gas power plants through their implementation of the CCS directive. The European Commission can actively increase industry expectations and create positive momentum in support of gas CCS deployment. This will require fresh proposals for financial and regulatory incentives that support the business case for gas CCS, as well as attention to the practical barriers to deployment.
Encouragingly, the five biggest economies of the EU have the greatest potential for CCS by 2030. It is, therefore, the actions of a few key countries in western Europe which will largely determine the uptake of gas CCS in the next 20 years and, by implication, the future of gas-fired power generation in the EU. We identify seven recommendations which would secure significant gas CCS by 2030. The ‘Big 5’ economies of France, Germany, Italy, Spain and the UK, together with likely early adopters of CCS in The Netherlands and Norway, should lead the way by:
• requiring meaningful capture readiness assessments on all new gas plant permitted from 2012 onwards;
• financing or underwriting the characterisation of geological storage capacity in the period to 2020 to enable deployment to proceed in the following decade;
• developing additional incentive structures that progressively prioritise the operation of gas plant with CCS over unabated plant.
The European Commission should support these member states and continue to set the agenda for CCS at European level to foster the creation of a robust market and stimulate further investment by CCS technology providers. It should do this by:
• restating the essential role of gas CCS in its forthcoming communication;
• announcing the prioritisation of gas CCS demonstration in the second round of the NER300 financing process;
• enabling financial support from the next EU budget period for CO2 transport infrastructure projects that would unlock future cluster potential;
• developing further financial and regulatory measures to support gas CCS deployment in advance of the scheduled review of the CCS directive in 2015.
These practical steps would inject fresh momentum into the pursuit of gas CCS deployment, and help ease Europe’s path to a decarbonised power sector. Conversely, without these actions, Europe risks locking in unabated gas infrastructure that will make decarbonisation more disruptive and costly in the future.
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