Funding Storage of Carbon Dioxide (CO2) in Europe

By Prof. Derek Taylor, Former Energy Advisor to the European Commission

The only way we have of combating Climate Change while continuing to use our fossil fuel resources is Carbon Capture and Storage (CCS). Without CCS the world will have to steadily, and possibly drastically, reduce the amounts of coal, gas and oil that we burn in the very near future. Unfortunately, progress on developing and demonstrating the technology is very slow. In fact, in Europe it has almost ground to a halt. Eight years ago, we were talking of having “up to twelve” large-scale demonstration projects operating in Europe by 2015. We do not have a single one, with no certainty of one operating in the next 5-10 years.

The process of CCS - capture, transportation and storage

Several reasons have been cited for this failure to make progress. Most of them are, in some way, related to the cost of CCS and its implications for the cost of producing heat and/or electricity from fossil fuels. Undoubtedly, CCS will significantly reduce the present cost advantage fossil fuels have over renewable energies for the production of electricity. In a Europe in which the EU’s Emission Trading System (ETS) operated as it was initially designed to do, this cost advantage of fossil fuels would already have been reduced. This would have encouraged companies to migrate to low-carbon technologies or even already have started to deploy CCS on a commercial scale.  This is clearly not the case. So governments must urgently find other ways to bring about the necessary changes to our energy system.

I, for one, do not believe that Europe can be weaned off fossil fuel burning for many years. Much of the rest of the world, in particular the developing countries, certainly will not be! We need to realise that, in addition to electricity, fossil fuels provide us with the majority share of our energy. So we desperately need to find ways to move CCS along very quickly. This cannot be just for electricity production but also for other energy intensive sectors.
At this point, some people will want to introduce the subject of carbon “use” as well as storage. This is to be encouraged, but it is very difficult to imagine that we would be able to use a significant percentage of the CO2 that we produce – except in those regions where Enhanced Oil Recovery (EOR) combined with storage could make a reasonable contribution. In North America, for example, EOR reduces the cost burden of operating CCS. In Europe, unfortunately, opportunities for EOR are too limited at this time.

Those working on CCS often make the claim that all aspects of the technology - capture, transport and storage – have been developed and demonstrated already. This is true. They have, though only recently, been demonstrated together at a near-commercial scale (for example at the SaskPower Boundary Dam project in Canada). What can we do to accelerate the demonstration and eventual deployment of CCS in Europe without the economic advantages of EOR and the very limited financial incentives offered by the ETS?

Public funding is clearly necessary and the European Union and a small number of European States have already provided - or promised to provide - support for demonstration projects. So why have we still made too little progress? I think it is possible that we have not yet picked the best targets for much of the financial support. In the past, we placed too much emphasis on the capture side of the process – and too little on the storage aspects. We failed to realise that nobody is going to capture one million tonnes (or more) CO2 each year without have somewhere they know they can put it!
What I believe we need to do now is to identify and fully develop a large storage site or complex under the North Sea – capable of taking at least 5 or 10 million tonnes of CO2 per year for 20-30 years or longer. This would include building all the necessary infrastructure to link the site to a small number of potential “hubs” in countries around the North Sea.

Over the last decade and more, our oil and gas companies, geological surveys and research institutes have built up an extensive knowledge around storage and, in particular about the possibilities for storage under the North Sea. This work is continuing but has already reached the stage when we could start to explore a number of potential sites.

This video from Scottish Carbon Capture and Storage helps to explain the potential for CO2 storage under the North Sea

This would not come cheap! On the other hand at lot of companies - and countries - benefit greatly from producing, transporting and using the fossil fuels that are generating all the CO2.  Anybody and everybody benefitting from fossil fuels should contribute towards the cost of management of the waste they produce. Of course, we all benefit from the production and use of fossil fuels, so the “simplest” way would probably be for the individual States to pay all the money up front. Then, if necessary, they could recover it from the different organisations or companies in relation to the amounts of fossil fuels they have produced, transport or used. The exploration work could be contracted to some of the oil and gas companies presently operating in the North Sea, who could make in-kind contributions to offset their expected share of the funding.

Companies wishing to use the storage facility would be responsible for delivering their captured CO2 to the hub and be charged for storage space. However, they would know from the start that storage was available for their project, what it would cost them and they would not have to face the issue of any longer term risk.
Once CCS starts to be fully deployed, future storage sites could be delineated and privately operated under licence from the State. If this is to happen, it will require clarification on long-term liabilities. However, I firmly believe, these must be eventually transferred to the State or States. But this issue should not - and must not - delay the operation of the first European sites. We have already lost too much time. If we want fossil fuels to continue to play a part in our fuel mix we need to get CCS moving quickly - now.
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