CHEAP RENEWABLES PRICING CCS OUT OF THE MARKET

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4 december 2017

‘Game over’ for CCS, driven out by cheap renewables

By Frédéric Simon | EURACTIV.com, Dec 4, 2017

“The game is over” for carbon capture and storage, priced out of the low-carbon energy mix by the rise of cheap renewables, industry experts say. Even the use of CCS to decarbonise heavy industries like steelmaking now looks less attractive.

The endgame has started for CCS. Once seen as unavoidable to mitigate global warming, the technology has suffered setback after setback in Europe.

And the rise of cheap renewables might be the last nail in its coffin.

Carbon capture and storage initially appeared a sensible option to decarbonise coal-fired power plants, said Auke Lont, the CEO of Norwegian power grid operator Statnett. But the emergence of renewables at a cost “below seven euro cent per kilowatt hour” means “there is no room for carbon capture and storage in the power sector,” he said.

“In the power sector, the game is over because other technologies have surpassed CCS,” Lont told participants at a Brussels event last week.

His words echo declarations by Francesco Starace, the CEO of Enel who currently chairs Eurelectric, the EU power industry association.

“I think CCS has not been successful,” he told EURACTIV in an interview earlier this year. “It doesn’t work, let’s call it what it is – it is simply too expensive, too cumbersome, the technology didn’t fly.”
UK cancels pioneering carbon capture and storage competition

The UK government has cancelled its £1 billion (about €1.4 billion) competition for carbon capture and storage (CCS) technology just six months before it was due to be awarded, breaking a key pledge in the Conservative party manifesto. EURACTIV’s partner The Guardian reports.

Hope hasn’t entirely faded, however.

At COP23, the UK and Canada led a historical alliance to phase out unabated coal across the world, highlighting the role of CCS to meet the Paris Agreement, remarks Graeme Sweeney, the chairman of the European Zero Emission Technology and Innovation Platform (ZEP), a coalition of stakeholders united in their support of CCS.

Both the Netherlands and the UK have emphasised the importance of CCS. And the Port of Rotterdam is competing with Norway to become the first European CCS cluster, able to capture carbon dioxide from a number of industrial sites to be transported to a permanent storage facility offshore, Sweeney wrote in an opinion article for EURACTIV.

At EU level, the European Commission gave CCS backers a shot in the arm when it included for the first time a handful of CCS transport projects in its latest list of Projects of Common Interest (PCI) eligible for EU funding – including the Teeside CO2 hub in the UK.

CCS projects in the European Commission’s latest list of Projects of Common Interest. [European Commission] Image images//import_8fe54d7429a0822c2257451601dae5ad_CCS_PCIlist.png



Crucially, CCS was until recently seen as the only option to decarbonise sectors such as steelmaking, chemicals or cement – which are “hard to electrify” and cannot directly benefit from the falling cost of renewable energies.

CCS questioned in heavy industry


But even that notion is now being challenged. According to Auke Lont, the next question is whether there is room at all for CCS in heavy industries like steelmaking.

“Probably electricity, through hydrogen, will be the solution for steel,” he said. “And, again, does that leave room for carbon capture and storage? I don’t know.”

As prices of renewable electricity continue to fall “there is not much room left for CCS other maybe than the very-hard-to-abate sectors” of the economy, Lont added, saying it might still be an option for cement production.

Laurence Tubiana, CEO of the European Climate Foundation (ECF), agreed. CCS, she argued, is a technology that was purely envisaged to abate emissions in sectors where no better solution could be found.

“It’s not innovation, or a business model or whatever. It’s just a cost, a net cost. And across the world, there is no strong carbon price. So it’s a cost with no benefit. That’s why there is no business model.”

Artur Runge-Metzger, director at the European Commission in charge of climate strategy, agreed with Lont and Tubiana that “the economics of CCS has changed” over the past years.

“Still, I would think that CCS will be required. But we won’t need it to the huge extent that scientists were predicting because there was no other option to remove carbon from the atmosphere”. On the industrial side, he stressed that deep decarbonisation will be needed in the 2040s-50s in order to reach the 2°C target in the Paris Agreement.

“It means we need to test those technologies now,” Runge-Metzger said.

Lord Adair Turner, the Chairman of the Energy Transitions Commission (ETC), also believes CCS does not make much sense anymore as a way to decarbonise the power sector in Europe although it will “probably still be needed for cement”.

CCS “may also still be needed to decarbonise existing coal-fired power stations in India and China,” Turner continued, saying the cost of de-commissioning those plants would be higher than retrofitting carbon capture technology.

“And certainly I don’t think coal-fired power stations with CCS will be built de novo because renewables will be cheaper,” he said.

The ETC, he said, is now working on identifying cost-effective carbon abatement solutions in India with the aim of “stopping” emissions at 900 million tonnes of CO2 per year instead of 1,500 mt/y currently. And CCS, he contends, has to be included in the technology mix in order to achieve that.


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