CHAPTER 13 The Capture, Transport and Storage of CO2
TA 2747/2011
The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
Introduction: Climate Cure 2020 This is a translation of one of the chapters in the report “Climate Cure 2020”. The Climate and Pollution Agency (Klif) is responsible for this translation. Climate Cure 2020 was commissioned by the Ministry of the Environment. The report was launched in February 2010 and was written by an expert group – Climate Cure 2020 – consisting of the Norwegian Water Resources and Energy Directorate, the Norwegian Petroleum Directorate, the Norwegian Public Roads Administration, Statistics Norway and the Climate and Pollution Agency, which has led the work. The report has also drawn on the expertise of other agencies, research institutions and experts. We have strived to achieve an open process, with several conferences and seminars and input from many others along the way. The analysis is based on the target for a national emissions cut that was laid down in the agreement on the Climate White Paper, known as the Climate Agreement, which received majority backing in the Storting in 2008. The aim is to reduce emissions in Norway by 15 to 17 million tonnes of CO2 equivalents by 2020 in relation to the reference path presented in the National Budget for 2007, the effect of forests included. Forestry measures are estimated to give a net uptake of 3 million tonnes of CO2. Domestic emissions shall thereby be reduced by 12 to 14 million tonnes of CO2 equivalents, so that they do not exceed 45 to 47 million tonnes of CO2 equivalents by 2020. The assignment was to present the various options the national authorities have for achieving the target for national emissions reductions by 2020 and the consequences of these, without giving recommendations as to how this can be done. This has been done by means of sector by sector analysis of measures and instruments, as well as macroeconomic analyses that also show the effects on the Norwegian economy. A summary of the main findings is also translated to English. You can order this summary by e-mail to
[email protected]. Please refer to TA 2678/2010.
Klif, Oslo, December 2010
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010) 1.
Summary ............................................................................................................................................... 5
2.
Technology Status ................................................................................................................................ 6
3.
Examples ............................................................................................................................................... 8
4.
Cost estimates for first generation full scale CCS plants established before 2020 ......................... 9
5.
Uncertainties in the cost estimates .................................................................................................... 12
6.
Lead time (time for planning and building) and project capacity ................................................. 13
7.
CCS at offshore emissions sources .................................................................................................... 14
8.
Simplified estimates for cost trends in the long term ...................................................................... 15
9.
Assumptions regarding coordinated transport and storage solutions ........................................... 16
10.
Profitability......................................................................................................................................... 17
11.
Regulatory framework and instruments .......................................................................................... 18
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
1.
Summary
The capture, transport and storage of CO2 (Carbon Capture and Storage or CCS) could be a relevant measure for petroleum, industry and power production plants, and different options for deployment of CCS are briefly described in the relevant sector chapters of the Climate Cure Report. This chapter is an excerpt of a separate cross-sector report on CCS “Fangst, transport og lagring av CO2 - The capture, transport and storage of CO2 . Norwegian Petroleum Directorate et al 2010).
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
2.
Technology Status
There is at present no large scale plant for capturing CO2 from flue gas. A great deal of research effort is being put in nationally and internationally and activities have been given a major boost with the UN climate panel’s assessment of CCS as a measure with great potential. The present day technology for capturing CO2 from flue gas involves high investment costs. The technology also requires large quantities of energy, which means high operating costs. Less energy intensive carbon capture methods are therefore being researched. Several countries are looking into the possibility of building a full scale (demonstration) carbon capture plant for flue gas, but as far as we are aware no investment decisions have yet been taken. The report focuses on capturing CO2 from flue gas with the aid of so-called post combustion capture technology, in which CO2 in the flue gas is absorbed in an amine based solution and then separated out again by heating. This process has been chosen because it is considered to be the most mature of the available methods. Post combustion systems can be fitted to existing sources of emissions. This type of carbon capture system is commercially available from several suppliers. Two other recognised principles for capturing CO2 from exhaust gas are precombustion and oxy-fuel. Both methods are relevant for the capture of CO2 from new coal power stations, but still require technological development before full scale plants can be planned and built. Establishing full scale plants will be necessary in order to clarify real investment and operating costs and to promote further technological development, including for post combustion technology. Cost estimates for the capture of CO2 have risen over the course of time. General increases in costs of materials and other input factors are a causal factor here, but costs have also been adjusted upwards as more information about the individual processes has become available. There are still major uncertainties regarding the cost of a demonstration plant in Norway, and there is a significant risk that costs may be even higher than the estimates so far presented and on which this analysis has been based. History tells us that projects with a significant new technology factor that need to be integrated with existing facilities are normally substantially more expensive than anticipated in the early phases of the project. According to the current plan, the first full scale plant may be implemented by 2015 and it is difficult to say what significance the plant might have for future technological developments and costs. Several consultants have tried to estimate how costs might be reduced as a result of technological development and new learning. A McKinsey report of 2008 used a 12 per cent drop in costs for every doubling of installed capacity on newly established power stations (McKinsey&Company 2008). There is considerable uncertainty about how much experience can be carried over from other industry that uses the same type of process components as a carbon capture system. Some parts of a carbon capture system could benefit from experience in other plants, but many of the process elements are well known, limiting what may be learned. Costs associated with the integration of carbon capture systems with the existing source of emissions will also have a moderate learning potential because each plant is unique. Even so, in this report we have
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
chosen to illustrate potential by estimating costs of some selected examples based on a considerable reduction in costs as a result of the learning curve effect, among other things. .
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
3.
Examples
The analyses of the costs of measures cover the capture, transport and storage of CO2 from the petroleum installations at Melkøya, Mongstad and Kårstø, the combined heat and power plant at Mongstad, the gas power station at Kårstø and the industrial plants Norske Skog Saugbrugs Halden, Esso Slagentangen, Ineos Rafnes, Norcem Brevik, Yara Porsgrunn, Hydro Aluminium Sunndal, Metanolfabrikken at Tjeldbergodden, Elkem Thamshamn and Norfrakalk Verdal. The capture of CO2 from point sources offshore has also been assessed. The industrial plants were chosen based on their potential for reduction of CO2, geographical proximity to each other and from a desire to assess the costs of CO2 handling in different industrial sectors. It is not necessarily the case that all the chosen plants are the best candidates for CCS. The plants are divided into two groups. The cost estimates for the plants at Melkøya, Mongstad and Kårstø represent costs of first generation full scale carbon capture systems 1 , while the cost estimates for the other plants represent simplified estimates for possible cost levels in the longer term.
1
First generation full scale plants have been taken as a basis for discussion of the plants at Kårstø, Mongstad and Melkøya. These would be the first full scale plants to be built and the costs these represent are at a level that reflects this.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
4.
Cost estimates for first generation full scale CCS plants established before 2020
The estimates for the plants at Melkøya and Mongstad are based on investigations by Statoil in 2008 and 2009. The cost estimates for Melkøya have not been quality assured by Statoil in line with the company’s internal procedure for quality assurance and the company does not therefore wish to be held responsible for these. Even so the estimates have been used in this investigation. For Mongstad, the calculations behind the Master Plan for Mongstad have been used. For the gas process plant at Kårstø, estimates based on investigations carried out in 2008 and 2009 by Statoil and Gassco have been used. The estimates for the gas power station at Kårstø have been based on an update of a feasibility study carried out by the Norwegian Water Resources and Energy Directorate in 2006. The cost estimates for pipe transport are based on information from Gassco (2009). The costs of storage are based on studies by Statoil in connection with their investigation of South Utsira and the Johansen formation as disposal sites for CO2 from Kårstø and Mongstad. Adjustments have been made with regard to different assumptions with the different volumes and storage locations in this analysis.
Figure 1. Costs of measures for the capture, transport and storage of CO2 from Mongstad, Kårstø and Melkøya, 2008 NOK per tonne of avoided CO2. Coordinated transport and storage solution for Kårstø and Mongstad. For the gas power station at Kårstø, 5,000 operating hours has been taken as a basis (for the other plants about 8,000 hours).
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
The underlying studies that have been used in this cost analysis vary in their degree of detail and maturity. Mongstad refinery and combined heat and power plant have been most thoroughly investigated. For Mongstad, an integrated solution for the combined heat and power plant and refinery has been taken as a basis. No corresponding integration studies have been carried out for the gas power station and gas process plant at Kårstø. Varied degrees of maturity and varying assumptions, as for example the degree of integration, makes it difficult to compare the costs . For the first generation full scale plants (at Melkøya, Mongstad and Kårstø), the estimated costs of the measures per tonne of avoided CO2 are NOK 1,300 to 2,250. With the exception of Melkøya, these estimates have been based on a coordinated transport and storage solution with storage in the Johansen formation. Capture represents the dominant part of the costs of these measures. The Mongstad example assumed coordination between the refinery and the combined heat and power plant and the two sources of emissions at Kårstø. If the combined heat and power plant at Mongstad were to carry all the costs on its own, including the pipeline from Mongstad to the storage site and the storage itself, the costs for the combined heat and power plant would increase from NOK 1,500 to 1,600 per tonne of avoided CO2. With one exception, the costs are calculated for an operational period of about 8,000 hours per year. If the operating period is reduced, the cost per tonne of avoided CO2 increases. This can be illustrated with the example in figure 2 for the gas power station at Kårstø, where there is uncertainty regarding future operating patterns. In calculating the costs in this analysis, 5,000 operating hours have been used for the gas power station at Kårstø. The high costs for the gas process plants at Melkøya and Kårstø are due to the number of emissions points that must be captured.
Figure 2. Costs for capture, transport and storage of CO2 from the gas power station at Kårstø with different assumptions regarding operating period. 2008 NOK per tonne of avoided CO2. Coordinated transport and storage solution.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
For the refinery at Mongstad, we have only looked at capture from one source, the cracker plant. This is significant for the length of the large flue gas channels and modifications in respect of integration with existing plant. The flue gas from the cracker plant at Mongstad has a higher CO2 content than is the case for the flue gas from Kårstø and Melkøya. This gives a more cost effective capture process at the Mongstad refinery, because more CO2 is captured per volume of flue gas. In this investigation, no estimates of costs for industrial plants have been made or obtained, given that this will be the first full scale plant of its kind. The calculations performed by the consultancy company Tel-Tek for Climate Cure 2020 (TelTek 2009) assess the long term cost level. As a basis for estimating costs for the first full scale plant for industry, we have used assumptions based on Tel-Tek’s capture cost estimates from “plant number 10” 2 . We have also taken Tel-Tek’s outline assumption of a 40 per cent reduction in investment costs from experience and learning. This means for example that if a system for capture, transport and storage is established at Norcem alone, the cost estimate would be NOK 1,250 per tonne of avoided CO2. There is a need for detailed studies to clarify how realistic these assumptions are.
2
“Plant number 10” is used to mean the industrial plants in this investigation that are not petroleum related. The cost level for these plants is not representative since these will be the first plants of their kind to be built.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
5.
Uncertainties in the cost estimates
The cost estimates for Mongstad, Kårstø and Melkøya are very uncertain. This applies especially to Melkøya and Kårstø, which have not been investigated to the same level as Mongstad. However the investigative work for all these plants is at an early stage, with the focus on feasibility. Extensive studies will be needed before any choice of concept. Detailed studies must then be carried out before an investment decision can be taken.
There is a need for technological development in all the projects. Building activity in existing plants adds further uncertainty for all the cost elements. The investment decisions will be several years into the future, which means that fluctuations in cost levels and uncertainty regarding energy prices will be of great significance. The possible need for closing down plants while carbon capture systems are installed adds a great degree of further uncertainty. Experience indicates that neither planned nor unplanned stoppages are likely to be avoided when rebuilding and extending existing plants. This increases the real costs of these measures due to delays in future income. The estimates have been based on cost levels in 2008. It has been decided to maintain these even though 2008 was at the top of a cyclical peak. Reduced input factor prices, such as for steel, and reduced profit margins at various stages in the supplier chain may argue for a reduction. However personnel costs represent a substantial part of investment costs. These are not expected to be reduced to any great extent. Energy costs represent about 50 per cent of operating costs. We have taken as a basis the same energy prices as in Climate Cure 2020. Technological development may help to reduce the costs of carbon capture over time. The estimates for carbon capture at Melkøya, Mongstad and Kårstø are based on present day knowledge. It is difficult to imagine any significant reduction in the estimates for these plants. This is because a substantial part of the costs relates to the establishment of auxiliary systems, modifications and installing flue gas channels inside large, complex plants. With the exception of the power station at Kårstø, the cost estimates are based on the carbon capture systems having an operating pattern with full exploitation of capacity. As shown in figure 2, reduced operating time will increase costs considerably. The uncertainty regarding future operating patterns at all the plants therefore also means uncertainty in respect of costs. In addition to the uncertainty in respect of carbon capture costs, there is also uncertainty regarding the cost estimates for transport and storage. To summarise, there is great uncertainty regarding these estimates.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
6.
Lead time (time for planning and building) and project capacity
The establishment of CCS involves large single projects of a complexity that makes it difficult to predict how much time will be needed for investigation before making an investment decision, for the decision making process itself and for building to completion after the investment decision has been taken. Based on current plans, a rough estimate would be a lead time of seven to ten years, from first assessment to completion of the carbon capture, transport and storage solution. This lead time can probably be decreased as experience of building such plants is gained. In addition to the complexity of each plant, the project capacities of the companies that will implement the projects is also of significance. Statoil’s project capacity will be key to the development of CCS at Mongstad, Melkøya and the gas process plant at Kårstø. CCS projects will compete with each other for project capacity. They will also compete for capacity with other projects that need to be implemented. To some extent, lack of capacity can be compensated for by increasing manning levels and hiring in temporary resources. Given large scale building of many CCS systems in other industry, capacity limitations among suppliers will also lead to bottlenecks. Such considerations make it impossible to know how many plants can be completed nationally by the target year of 2020.
Figure 3. Simplified estimates for long term costs from a selection of industrial plants. 2008 NOK per tonne of avoided CO2. Includes capture and coordinated transport and storage of CO2.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
7.
CCS at offshore emissions sources
It has not been possible to make full costs estimates for the capture of CO2 from flue gas from offshore emissions sources within the time frame of this project. Assessments based on a study by Det Norske Veritas (DNV 2009) indicate however that the costs will be considerably more than those of plants onshore. Because of the lack of space on existing installations offshore, in most cases carbon capture systems will have to be placed on their own installations in the vicinity of the sources to be cleaned. Experience from other projects also indicates that costs on the continental shelf are considerably higher. However technological development may also affect costs of offshore CCS.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
8.
Simplified estimates for cost trends in the long term
For a number of industrial plants, the consultancy company Tel-Tek (2009) has estimated carbon capture costs on the assumption that the plants are “plant number 10”. The estimates assume considerable cost reduction as a result of learning. All the components in a carbon capture system are assessed to be standard process equipment and installation has the same extent as standard process systems. The examples in Central and East Norway are based on coordinated transport and storage from industrial plants in close proximity. Transport of CO2 from these clusters has been calculated for both pipeline transport and combined ship and pipeline transport. Cost estimates for pipeline transport are based on information from Gassco and those for ship transport on a separate study carried out by Tel-Tek in 2009. The costs of storage are based on studies from Statoil (2009) relating to the investigation of South Utsira and the Johansen formation as disposal sites for CO2 from Kårstø and Mongstad. Cost estimates range from NOK 890 to NOK 1,700 per tonne of avoided CO2. Differences in the total volume of flue gas and in the CO2 concentration in the flue gas are key reasons for the variation in the cost estimates. Norcem Brevik has a high concentration of CO2 in the flue gas, while Hydro Aluminium Sunndal has a low CO2 content combined with a relatively high volume of flue gas. The estimates are sensitive to changes in the volume of CO2 to be cleaned. Figure 3 illustrates the effect of different transport solutions. It is cheaper to transport small volumes of CO2 over long distances by ship than by pipeline. Tel-Tek carried out a simplified and general analysis compared with the studies used for Mongstad and the gas process plant at Kårstø. There is great uncertainty regarding the assumptions that Tel-Tek has used as a basis for the cost estimates for “plant number 10”. All the examples in this analysis are existing sources of emissions and the carbon capture systems must be adapted for integration. This means that to a certain extent each carbon capture plant will be unique. No full analysis has been carried out of the need for auxiliary systems and their associated costs, nor of the costs associated with connecting the carbon capture system to an existing plant. Neither have the costs of possible stoppages and closures been included. These estimates are therefore considered to be optimistic. The discussion regarding uncertainties also applies for the plants at Kårstø, Mongstad and Melkøya.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
9.
Assumptions regarding coordinated transport and storage solutions
With the exception of the assessment of the Melkøya plant, coordinated transport and storage solutions have been assumed. If one does not assume this and looks at the transport and storage solutions separately for each source, the costs will increase. Each cluster consists of a number of capture sources and will require a great deal of coordinated investment if it is to be realised as assumed. Coordination between sources requires parallel development. This conflicts with the desire to build up learning from one development to the next. Also, for many of these plants there may be alternatives to carbon capture that may be considered to be better solutions.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
10.
Profitability
For most of the plants, the socioeconomic costs estimated in this report are considerably above the estimates of quota prices made for Climate Cure 2020. The financial risks mean that the quota price must be considerably above the socioeconomic costs before private players will take investment decisions. Therefore more cost effective carbon capture methods, the reduction of various risk elements and a continuing high and predictable CO2 price will be decisive for commercial solutions for CCS in the future. The use of CO2 to increase recovery in existing fields could give an income contribution for CCS in Norway. High oil prices could in some cases contribute to the profitability of CO2 injection to increase recovery. However the use of CO2 to increase oil recovery on the Norwegian continental shelf requires a stable supply of large volumes of CO2, larger than that which will come from Kårstø and Mongstad. Fields that can make use of CO2 will have different requirements, depending on reservoir size, lifetime and reservoir properties. This investigation has not made any new assessments of the possibility of using CO2 to increase recovery.
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The Capture, Transport and Storage of CO2 (Climate Cure 2020, Chapter 13) (TA-2747/2010)
11.
Regulatory framework and instruments
The lack of incentives within the existing quota regime makes further instruments necessary to realise CCS before 2020. The most cost effective way of phasing in new climate measures is through the use of economic instruments such as quota regimes and/or taxes. Estimates of the cost of measures and the risk situation in respect of CCS indicate a very high price for CO2 through taxes or the quota regime before full scale systems will be triggered. This applies particularly before 2020. Alternatives might be subsidies or full state financing. There is a need for technological development. This could provide a basis for the use of instruments specifically aimed at stimulating R & D, such as different forms of state support or requirements to use new technology. In connection with both the Norwegian projects at Kårstø and Mongstad and the EU’s planned demonstration programme for CCS, contributions to technological development have been used as an argument for strong state commitment. If the technological development perspective and cost effective solutions are to be prioritised in the longer term, this would argue for the gradual establishment of full scale plants, so as to be able to use the technological development and learning from one project for the next.
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Climate and Pollution Agency
The Climate and Pollution Agency reports to the Ministry of the Environment and has 325 employees, based mainly in Oslo. We implement government policy on pollution. We act as advisers guardians and stewards for the environment. Our most important fields of work include climate change, chemicals, marine and freshwater environment, waste management, air quality and noise. Our vision is a future without pollution. We are working to x reduce greenhouse gas emissions x reduce the spread of hazardous substances harmful to health and the environment x achieve integrated and ecosystem-based management of the marine and freshwater environment x increase waste recovery and reduce emissions from waste x reduce the harmful effects of air pollution and noise TA-2747/2010
