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Turnitin reference paper ID: 13279479

The electricity sector is the single largest contributor to greenhouse gas emissions. The cheapest and most abundantly available fuel for generation is coal, which is also the most polluting source of electricity. The new technology of carbon capture and storage (CCS) promises a way of making coal a clean source of energy. Discuss the potential of CCS as a way to mitigate climate change, and its potential implications for the UK power sector.
Reducing anthropogenic emissions is essential to preserving long-term climate stability, without which it is undeniable that the future of large swathes of human population is placed in jeopardy. Estimates predict that by 2100 a +4oC change is probable, with deleterious environmental effects, as Greenhouse gas (GHG) emissions rise steadily (predicted to rise by 52% by 2050 (Figure 1)). Opening international dialogue has served to commit focus on reducing hydrocarbon reliance across energy sectors (which account for 40% of GHG emissions); but lack of 'mature' substitutes has stifled progress. Subsequently transitional technologies have received attention as they offer the immediate opportunity to reduce emissions and time to move to sustainable low-carbon energy systems. As such CCS is profoundly attractive as application of demonstrated CO2 capture rates of 80-90% would drastically constrain global emissions and could save at least tens billions USD [Edmonds et al., 2000] even at low levels of GHG stringency. Furthermore CCS can be applied to a wide range of industrial processes which could potentially reduce global emissions by 9% [IEA, 2008].

4099728 Economic analysis presumes technological obstacles are resolved but for complete discussion it is beneficial to outline such limiting factors. Notably, CO2 capturing is yet to be refined to a single process and creates an energy penalty, as additional energy is needed for separation,(figure 2): reducing efficiency by 8-10%. Thus, a 20% increase in inputs is required to maintain output which dramatically influences costs and could exacerbate environmental degradation from extraction [Florin and Fennel, 2010].

Transport and storage of collected CO2 are relatively established technologies in most aspects and are carried out at low cost (20% of overall cost). Transportation of CO2 via pipelines is extensively used across America and should be subject to economies of scale; ship transportation may need developing due to uneven distribution of storage opportunities (Figure 3).

Storage estimation and techniques, with regards to saline aquifers, are underdeveloped in comparison with hydrocarbon reservoirs due to lack of previous industrial use [Bachu et al, 2007]. Given existing literature estimates 70-450 years of storage is possible [Metz et al.,2005], the immediacy of this knowledge-gap is tentative as aquifer are only expected to dominate by 2030 [IEA, 2008] allowing time for refinement,

4099728 Lack of full-scale CCS energy plants undermines cost-based empirical analysis as derived values are subject to uncertainty. Estimates show production costs increase by 0.01-0.05kwH [Metz et al., 2005], such costs of CCS application may be negated by utilising captured emissions for Enhanced Oil Recovery (EOR); which could generate $0.01/kwH, although Figure 4 [IEA, 2008] shows that EOR opportunities are more relevant to the Middle East and North America. Retrofitting CCS to existing plants is more expensive as further efficiency loss is created and plant rearrangement is required to accommodate capital.

International consensus opines that for climate change to be decelerated emissions must be limited to 450ppm equivalent CO2. Studies have demonstrated that for similar targets to be achieved CCS will need to be deployed on an increasing basis, for overview see Metz et al., 2005 8.3.3.2. Yet the potential of CCS is dependent upon commercial adoption which relies on the benefit derived from abating CO2 being greater than the cost of capturing CO2. Prevailing international conditions deem CCS deployment unlikely to be utilised as the defined monetary benefit monetary benefit is insufficient compared with the cost estimates of capturing CO2 (60-901). Raising costs of emitting should encourage deployment as an incentive for tax-avoidance or revenue generation through selling unused permits, but analysis concerning the exact price required is mixed.

1 McKinsey, 2008 p.19

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Most scholarly work determines 'retrofitting' to be economically infeasible, apart from at high levels of CO2 cost (e.g. IEA[2008] $200/tCO2). Aune et al. [2009] determine that by 2030 a $90/ tCO2 tax should reduce EU GHG emissions by 90%; with greenfield coal CCS heavily utilised whilst gas CCS and retrofitting are uneconomically viable. IEA [2008] report that tax of $50/tCO2 by 2050 should enforce CCS usage, causing a 14% drop in CO2 emissions globally. Odenberger and Johnsson [2009] predict that a tax of 20-45 /tCO2 is required to achieve stabilisation targets of reducing EU emissions by 85% of 1990 levels. However, McFarland et al. [2003] predicts that no deployment shall occur by 2040 even with exorbitant emissions price ($200/tCO2) due to the high cost of electricity generation.

The above studies, in general, concur that the use of CCS as a mitigation tool is dependent on rebalancing CO2 emission prices, but make little inference on the mechanism used. McFarland et al. [2004] demonstrate that employing carbon-trading schemes is more effective than a carbon-tax at stabilising emissions (figure 5) as it strictly limits overall emissions. But without global adoption of mechanisms 'carbon leakage' occurs as regions outside the scheme can increase emissions at low cost. Hence energy-intensive production will shift to these regions with no aggregate reduction in GHG emissions. Universal adoption will require regulation as Dooley et al. (2001) suggests Annex I economies may purchase credits off Annex II countries rather than decreasing own emissions.

4099728 Energy production data (figure 6) shows that CCS could be applicable to 75% of UK energy production; which account for 32% of domestic CO2 emissions [Duke, 2011]. Crude calculations based on The CCC [2010] estimations of retrofitting possibilities suggest 67%2 of existing plants may be suitable for retrofitting, which could reduce UK CO2 emissions by 17%3. Yet aforementioned studies suggest that retrofitting CCS technology to existing energy-plants is unprofitable.

Over time cost reductions should encourage CCS integration into new plants; Rubin et al. [2006] suggest a 13-40% reduction possible by employing learning-curves, thereby altering the UK energy mix especially as by 2025 a quarter of energy plants will need replacing [Bushby et al., 2008]). Using cost estimates by Rubin et al. [2007] (Table 1) IGCC plants based on coal have the lowest cost of abatement of CO2 and thus should be more prevalent in the UK energy mix. This should, in theory, establish energy security, as future coal imports are expected to be relatively cheaper than gas (figure 7). But IGCC is overwhelmingly undeveloped and cannot be relied upon to deliver future energy production. Thus a mixture of gas (NGCC) and coal (PC) deployment is likely; underscored by the UK government promise to fund at least one (out of four) gas-based CCS plant [Florin and Fennel, 2010].

2 Output of gas fleet incapable of retrofitting/total gas fleet output = (2.74/8.32)% = 67% p.59 . 3 Percentage capable of retrofitting*energy sector share of co2 emissions*CO2 capturing capability = 67%*32%*80% = 17%

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The UK's advantageous proximity to North Sea oil reservoirs (figure 8) could be utilised to achieve earlier deployment at reduced cost. Engaging EOR technology across the UK shelf could generate 150bn4 thus speeding up UK adoption as costs diminish. However, this will require government financing to reduce investment risk of capital; which is being offered, but the recent dissolution of the proposed Longannet plant may deter interested parties as the incumbent government lack consideration for spiralling costs which characterise early technological progress.

Regulation could be enacted to accelerate CCS deployment across the energy sector. Yet enforcing such adoption could ultimately act as a regressive policy: increasing the cost of energy, reducing international competitiveness and harming households in trying circumstances. Furthermore, it
4http://www.dur.ac.uk/news/newsitem/?itemno=10879

4099728 could lock energy plants into sub-optimal technology from which it is difficult to switch to more

efficient options; e.g. the unanimous diffusion inefficient QWERTY keyboard. Such an argument is outlined in Collingridge [1992] when analysing policy decisions which ultimately are unsatisfactory due to technological 'lock-in'.

Current UK policy enforces plants constructed since 2006 to conform to capture-ready regulations; which should remove technological barriers preventing 'retrofitting' by providing space for capital and establishing transport and storage links. But this may simply justify burgeoning UK emissions on the promise of future abatement thereby counteracting current progress [Markusson & Hazeldine, 2010]; this example highlights the difficulty of creating regulation.

CCS is a potential tool to mitigate climate change but without strenuous testing such potential may pass unrealised. Rebalancing CO2 costs could help to accelerate deployment and overcome concerns about efficiency of capture as learning take place. This would remove exorbitant costs and thus make CCS more applicable and thus exert more influence on the structure of the UK's energy plants. Such a mechanism is preferable compared with regulation enforcing adoption as development opportunities are likely be constrained by reducing flexibility. Ultimately CCS' potential hinges upon technological development of all options through global financing initiatives working contemporaneously with incremental carbon-pricing systems. This requires international collaboration to increase knowledge-sharing and create standards; thereby providing sufficient conditions for feedback to be positively incorporated into design processes. Yet, current antipathy towards climate change across North America; with Canada rumoured to be following the US' desertion of the Kyoto Protocol, makes it difficult to determine whether a unified effort will be fruitful. This should not be the consideration for the British government who must fulfil their funding promise as the proceeding quote illustrates the critical role CCS is expected to play.

4099728 "The vast majority of new power stations in China and India will be coal fired.So developing carbon capture and storage technology is not optional, it is literally the essence." [Tony Blair, 2008]

Yet it should not be misunderstood that our ability to mitigate climate change is dependent upon utilising a vast array of technology, CCS cannot be the singular technique used!

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