The collapse of a Dutch “clean coal” power project has ended near-term prospects for carbon capture and storage (CCS) in European power generation. That leaves proponents of the technology having to turn instead to smaller, industrial applications, writes energy analyst and consultant Gerard Wynn. But while CCS may make sense on a more limited scale, big problems remain there too, he adds. This article was first published on the blog of the Institute for Energy Economics and Financial Analysis (IEEFA) and on Gerard Wynn’s and Gerard Reid’s Energy and Carbon blog.
European utilities Uniper and Engie in June announced they were walking away from a Dutch CCS project known as ROAD (Rotterdam Opslag en Afvang Demonstratieproject or Rotterdam Capture and Storage Demonstration Project). ROAD is the last proposal standing for a large-scale coal or gas power CCS project in Europe. Its demise followed cancellation of CCS funding in Britain, ending prospects for a European commercial-scale demonstration power plant.
The bigger outlook for CCS in power generation is bleak, especially after the collapse of the clean coal Kemper County plant in the U.S., although to be sure that had as much to do with the use of Integrated Gasification Combined Cycle (IGCC) technology as CCS.
In 2007, EU leaders endorsed a European Commission plan for up to 12 CCS demonstration power plants by 2015. Today there are no such plants, nor plans
It will take time for CCS proponents to digest and acknowledge what is either a colossal failure or a gargantuan disappointment—depending on one’s perspective across electric utilities and the community of experts and policymakers that have supported CCS in power generation for more than a decade.
In 2007, EU leaders endorsed a European Commission plan for up to 12 CCS demonstration power plants by 2015. Today there are no such plants, nor plans. CCS has also had big backing from the International Energy Agency and the Intergovernmental Panel on Climate Change, both of which have promoted the technology as the cheapest way to transition quickly to a low-carbon economy, because in theory it allows us to keep using – rather than writing off – existing fossil fuel infrastructure.
Hugely expensive
The complicated process of carbon capture and storage involves capturing carbon dioxide emissions from the flue gas of fossil fuel power plants or carbon-intensive factories, and then compressing the CO2 and piping it deep underground for long-term storage.
The core problem with CCS is that it is so hugely expensive up front. Even the prospect of hundreds of millions of euros of subsidy couldn’t make it work for coal-fired power in the Netherlands. The European Commission had committed €180 million to the ROAD project, and the Dutch government up to €150 million.
Another barrier to European CCS is the huge cloud of uncertainty hanging over coal-fired power plants in general, headwinds that include tougher air pollution rules and stringent phase-out targets. In the end, Engie and Uniper were unwilling to throw more money at power plants whose outlook was so unsure.
The decision by Engie and Uniper to extricate themselves from the ROAD project makes sense, given the uncertainty
IEEFA last year documented the management failure by these utilities in their decision to build two new coal plants near Rotterdam in the first place, and by RWE to build a third, further up the Dutch coast (see map). All three were commissioned in 2015.
In our “Dutch Coal Mistake” report, we questioned investments made on mistaken expectations of power demand growth and the failure to understand the impact on power prices of a massive build-out of renewables in neighboring Germany. The result for Engie, Uniper and RWE has been huge write-downs.
The decision by Engie and Uniper to extricate themselves from the ROAD project makes sense, given the uncertainty, but it adds nonetheless to the impression of flawed decision-making by the utilities’ executives, given that their power plants were meant to benefit from the ROAD project.
Few alternatives
Granted, ROAD isn’t dead. The Dutch government can still support CCS for industrial facilities in the Port of Rotterdam (e.g. the Shell Pernis oil refinery and an Air Liquide hydrogen plant). Applying CCS might work on such a scale. Some factories and refineries emit more concentrated streams of CO2 than power plants, making carbon capture less costly.
And in the near term, oil refining, chemicals production, steel-making and cement industries have few low-carbon alternatives. Industrial CCS in fact may be needed if Europe is serious about embracing a low-carbon economy.
While building CCS into existing factories, refineries and waste facilities sounds modest and organic, it still requires pipeline and storage infrastructure at scale
Three similar projects aimed at applying CCS to industrial facilities around the North Sea are emerging, in Norway, England and Scotland. Each would take CO2 from multiple sources and pipe or ship it offshore for sub-sea storage.
But the problems of upfront cost and scale remain. While building CCS into existing factories, refineries and waste facilities sounds modest and organic, it still requires pipeline and storage infrastructure at scale: it would be prohibitively costly to build CO2 compression and pipeline infrastructure for only a handful of factories.
All these new projects are applying for EU pipeline funding, as “projects of common interest,” under a “Connecting Europe” facility. Ultimately, it would require ambitious, cross-border projects involving hub-and-spoke pipelines crisscrossing the North Sea, connecting multiple industrial installations and countries.
Sound familiar? Driving down unit costs may depend on the same scale that would be required by CCS with large fossil-fired power plants, an idea that has become passé and now seems out of step with the times. Supporters of industrial CCS will have to articulate clearly how their projects are different.
Editor’s Note
This article was first published on the blog of the Institute for Energy Economics and Financial Analysis (IEEFA) and on Gerard Wynn’s and Gerard Reid’s Energy and Carbon blog. It is republished here with permission.
See also this article and the comments to it.
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Dr Graeme Sweeney, Chairman, European Zero Emissions Technology and Innovation Platform (ZEP) says
The cancellation of the ROAD project – whilst disappointing – does not end prospects for CCS in Europe. For example, there are a number of project proposals in the UK and Norway is also pushing ahead with a CCS portfolio across a number of sectors.
Beyond Europe, projects continue to come on stream. In fact, there are currently 21 large-scale CCS projects in operation or construction around the world, and a number of these are connected to power plants (for example, the Petra Nova project in Texas).
CCS is essential to meeting global climate change targets at least cost, due to its importance for decarbonising not just the power sector, but also industrial sectors, and even heating and transportation (via CCS on natural gas to produce hydrogen). Furthermore, many climate change models including the IPCC’S 5th Assessment Report predict that we will need bio-energy and CCS (Bio-CCS) to enable negative emissions – which will be absolutely vital if we are to achieve the well-below 2°C goal that was agreed at COP21.
The full benefits of CCS are only realised by taking a regional approach to its development. We must move away from considering individual projects and focus instead on CCS as a means to enabling a sustainable future for key regions such as the Port of Rotterdam, Teesside and Scotland. The creation of CO2 transport and storage infrastructure in these regions will deliver least-cost decarbonisation in the power, heating and transport sectors whilst opening up opportunities to link to hydrogen networks, carbon capture and utilisation and the provision of negative emissions.
Alexander Fassbender says
CCUS is dying because the would be users – the electric utilities – do not want it and will do almost anything to avoid it – all the while appearing to embrace it. Their worst outcome is a successful and cost effective CCS or CCUS project because then they would have to embrace it. Their shareholders do not want stranded assets and do not want to take on the long term liability for the CO2. Look at FutureGen or Kemper. Both of the utilities leading these efforts knew well in advance that the technology they had chosen, IGCC/CC, was incredibly complex, difficult and expensive. I know they knew that because I visited them and explained it to their very smart technical people in detailed chemical engineering and thermodynamic terms. I also published on this at the Clearwater Clean Coal Conference. When I explained the complexity of IGCC/CC to the PhD mechanical engineer who would go on to become the Kemper Project Manager he said “We are never gonna do that”. Yet, they went ahead and attempted to.
If you were leading the research lab in charge of coming up with a clean coal technology and had been well funded every year for over 45 years to achieve that end, coming up with a workable solution would be the worst possible outcome. A big chunk of the lab’s funding would stop once the goal had been reached and the lab would need to find a new mission. In the National Lab system, those missions are hard to come by and tough to get into appropriations bills that pass. The coal companies? They are not structured to be the primary beneficiary of a CCUS technology so they relied on their customers, the utilities, to advance CCUS. For reasons mentioned above, that did not work so well as the utilities are less committed to coal than the coal industry. In addition, the coal industry’s attention was elsewhere. In 2007 one of the leaders of the coal industry told the National Coal Council that “The Arabs got the oil, we’re running out of (natural) gas, all there is is coal, coal, coal”. It was what the coal industry wanted to hear and what they wanted to believe and their subsequent debt fueled acquisitions left them unprepared for the Shale Gale and they all went bankrupt or nearly so. Mr. Robert Murray’s company did not get underwater in debt and remained financially solvent.
If any of the readers of this note represent interests that actually do want to achieve CCUS and more particularly clean coal with CCUS, please contact me. I invented and have obtained the rights the pressurized oxyfuel approach and to date, nothing else has come close. (Patent No. 6,196,000 ‘Power System with Enhanced Thermodynamic Efficiency and Pollution Control’.)