In one sense it has never gone away, but while carbon capture and storage (CCS) has held onto its place in emissions reduction scenarios over the last ten years, it has shown little sign of becoming a commercially viable proposition.
The EU has pumped billions into the technology, with little to show for it. Of around a dozen pilot projects kicked off a decade ago, none have survived to today. And yet, the rationale for CCS is stronger than ever with carbon removal now accepted as an inescapable part of climate action if the world wants to meet the goals of the Paris Agreement.
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By GlobalDataNowhere is this rationale more powerful than in Europe, which is aiming to be the world’s first climate-neutral continent by 2050. CCS is making a comeback in policy circles for three reasons. One, as a means of decarbonising heavy industry; two, of kick-starting a clean hydrogen economy (blue hydrogen is made from natural gas with CCS); and three, of achieving net-zero emissions.
Energy-intensive sectors such as steel, cement and refining are “indispensable” to the European economy and their decarbonisation a “top priority”, said the European Commission in a new EU industrial strategy in March 2020. Trade unions say CCS is an essential part of the just transition because it can help secure a future for European industry. The European Green Deal highlights it as an example of “smart infrastructure”.
In the past, CCS was considered a technology that should be applied to power rather than industry, and projects tended to be led from a capture rather than a transport and storage point-of-view.
European CO2 infrastructure
The next milestone for CCS in Europe will be the revision of the Trans-European Networks for Energy (TEN-E) regulation, with proposals from the Commission due before the end of the year. TEN-E sets the selection criteria for so-called projects of common interest (PCIs) in energy, which are eligible for faster permitting and can apply for funds from the Connecting Europe Facility (CEF). This EU fund is dedicated to European infrastructure projects in energy, transport and digital services.
TEN-E has historically promoted cross-border electricity and gas interconnections. Yet, five CO2 transport projects have also made it onto the current PCI list, which was adopted by the Commission in October 2019 (it is revised every two years). These projects have, however, laid claim to just a fraction – €10m or 0.25% – of CEF money spent on energy to date.
With the revision of TEN-E, the CCS community sees a golden opportunity for more European support. It believes the technology’s future depends first and foremost on CO2 transport and storage infrastructure with common access and tariff controls.
“The basis for it all is to build European infrastructure for the transport of CO2 that links emitters Europe-wide to storage sites,” says Per-Olof Granström, speaking on behalf of the Zero Emissions Platform (ZEP), the EU’s official technical advisor on CCS.
“Of course this infrastructure needs to include transport options other than pipelines,” he adds. “Ships, rail and trucks.” So far, these are not supported by TEN-E.
CCS advocates also want to see storage included in the new regulation.
“Storage is the biggest challenge we have,” says Jonas Helseth from Bellona, an international NGO headquartered in Norway that is also a member of ZEP. “But there is no dedicated EU funding for storage. TEN-E only covers transport.”
Starting with storage
Financing has replaced public acceptance concerns as the big challenge for storage. The idea that carbon capture is the most expensive part of CCS comes from Europe’s historical focus on the power sector, says Helseth. “Out of all the potential capture places, the power sector is probably the most expensive.”
In the US, in contrast, the focus has been on storing CO2 – bolstered by tax breaks and the prospects of enhanced oil recovery, or using the gas to push extra oil out – so projects have appeared where capture is cheapest.
In general, industries from fertiliser to bioethanol to hydrogen production can capture CO2 for under €10 a tonne (t), Helseth says, because the CO2 stream is pure.
“Europe’s most important task, if it is serious about the decarbonisation of industry, is to ensure fair access to [CO2] storage for industries.”
There is a second pot of money available to support CCS in Europe – unconnected to the TEN-E regulation – which does have storage in its scope, but poses other challenges. The Innovation Fund, which will be fed by the sale of EU carbon market allowances, opened a first €1bn call for innovative, low-carbon technologies in July 2020. But, like its predecessor, the NER300 programme, it requires CCS applicants to guarantee the entire CCS value chain rather than only capture or storage, for example. This makes projects riskier and could limit the fund’s ability to support the development of large-scale CCS hubs.
A more practical problem is that the first decisions under the Innovation Fund are only due in December 2021, which is too late for Europe’s two flagship CCS projects, Porthos at the Port of Rotterdam in the Netherlands, and Northern Lights in Norway.
Flagship projects
The Northern Lights project aims to capture CO2 from a waste-to-energy plant in Oslo and a HeidelbergCement factory in Brevik, transport it and store it under the North Sea. It is headed by oil and gas giants Shell, Equinor and Total. Because half the material going into the waste-to-energy plant is biowaste, it could double up as a pioneering example of biomass-based CCS, or carbon removal.
Northern Lights took a significant step towards a final investment decision in May 2020, when the three oil and gas majors officially agreed to invest in the project. The initial investments will add up to almost NOK6.9bn (€650m).
The final decision now rests with the Norwegian government – and more specifically, the subsidies it is willing to provide. The goal is to secure investments for the first two capture sites, ship transport and storage infrastructure and then apply for EU funds to scale it up.
Porthos in the Netherlands is also preparing to transport CO2 to empty gas fields under the North Sea. Four companies at the Port of Rotterdam – Shell, ExxonMobil, Air Liquide and Air Products – signed on as potential suppliers in October 2019.
“All four have declared they want to continue, crisis or no crisis,” says Mark Driessen, a Porthos representative.
The Porthos project hopes to take a final investment decision in 2021. Like Northern Lights, it is a PCI and has submitted a subsidy request to the CEF, with an answer expected by mid-October 2020. EU funds could help Porthos lower its transport and storage tariffs – while building CO2 pipelines bigger than needed today in anticipation of future demand – and raise the competitiveness of industrial clients as they bid for subsidies from the Dutch government, says Driessen.
The Netherlands, which is expanding its renewables support scheme to other CO2- reduction technologies in 2020, will open a call for subsidies under the so-called SDE++ at the end of November. It will divide €5bn into 12–15 year grants based on the cost per tonne of CO2 reduction. CCS for industry “is part of the cheaper categories”, Driessen says. He hopes it will meet one of the lowest two thresholds, €70/t of CO2 or €85/t of CO2.
Not for power
Only CCS for industry is part of the new SDE++ scheme. Neither Porthos nor Northern Lights plan to collect CO2 from power-only plants. European electricity association Eurelectric believes CCS will play a “very limited” role in the power sector, with coal plants phased out by 2045 and “gas used only for limited operational hours, accounting for 15% of installed capacity and some 5% of generation”. Utilities generally seem more interested in investing in renewable hydrogen than in CCS, says the organisation.
“Not all technologies are successful,” said Enel CEO Francesco Starace in a debate on Europe’s post-Covid economic recovery in May 2020. “We have tried commercially successful CCS. Tens of billions have been invested. Enel will not reinvest. For us, CCS is a dead-end.” Green hydrogen is “something new” where EU funding could establish industrial leadership, he added.
Yet CCS remains a stalwart of nearly all emission-reduction scenarios, including those of the Commission and the International Panel on Climate Change.
In a 2050 vision for the future of gas, European industry association Eurogas imagines about one billion tonnes of CO2 sequestered a year. In contrast, Eurelectric’s 2050 scenario foresees just a fifth of that being locked away every 12 months. These figures compare to ambitions to store 1.5 million tonnes and 2.5 million tonnes a year for Northern Lights and Porthos respectively, when they kick off.
A possible future
Like the European Commission, Eurogas foresees most future CCS in the power sector. The primary purpose of CCS is to ensure carbon removal at power plants, burning biomethane to offset emissions in other sectors, notably buildings, which are in part still heated by natural gas, says the lobby group in its 2050 vision, carried out by international energy consultancy DNV GL and presented at the end of June 2020.
“If you drive the carbon price, you can make CCS happen,” argues Eurogas secretary general James Watson. DNV GL assumes CCS would become viable at a carbon price of around €100/t, which has been its price tag over the last ten years. The EU carbon price today is around €25/t.
