In a recent report, the International Energy Agency called for 100 full-scale carbon capture and storage (CCS) projects to be deployed worldwide in the next decade to help meet emissions reduction goals. Does the political will exist to make this happen? What are the costs and challenges? During today's OnPoint, Thomas Kerr, a senior energy analyst at the International Energy Agency, discusses IEA's CCS Roadmap and explains why the next decade is a "make or break" period for CCS.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Thomas Kerr, a senior energy analyst at the International Energy Agency. Thomas, thanks for coming on the show.
Thomas Kerr: Thank you.
Monica Trauzzi: In your latest report on carbon capture and sequestration technology IEA says that the next decade is a make or break period for CCS and you're calling for at least 100 full-scale carbon capture and storage projects to be deployed worldwide in the next decade in order to reach our emissions reduction goals. It's a tall order considering the fact that the technology is not implementable at this point. It's not fully developed. So, how do we make this happen?
Thomas Kerr: Yeah, that's a good question. I think, in fact, the technology is in place right now. We have five full-scale projects around the world operating as planned. They're injecting CO2 into different saline formations in oil and gas fields. The big challenge in the next decade is to ramp that up to full-scale demonstration and, right now we're working in oil and gas facilities, we would like to see coal-fired power plants in particular work in an integrated fashion to collect and to store their CO2. So the big challenge we see is, number one, government funding. We need to see governments stepping up and expanding their funding. We have seen a recent spike in additions, particularly with the financial rescue packages that came through last year that are going towards green technologies, including CCS. We need regulatory frameworks. We need to make sure the governments are standing behind procedures for permitting and ensuring that this is safe for communities and we need community outreach. People need to know what's happening under their community and governments need to do that. And it is a tall order. They need to start to work on this. In the next two to five years we really need to see 10 to 20 projects go in place and then, again, after that we're hoping between 2015 and 2020 we can get up to a hundred and sort of ramp up towards this long-term CO2 reduction goal.
Monica Trauzzi: Is it overly ambitious though considering the state of things, the state of cap-and-trade legislation here in the U.S.? When you look bigger picture, is this too tall up an order?
Thomas Kerr: Well, I will say too that our report, the CCS road map, is guided by CO2 emissions reductions, so it's based on a model we had done and we've optimized all different greenhouse gas technologies and CCS plays a very strong role. And we came out with a result that CCS has to deliver 20 percent of the emissions reductions in 2050 to achieve our global climate targets. And so then we back calculated and said based on that CO2 pathway, how many projects is that? You're right that this is not guaranteeing that the political will is there and the funding is there, but it's saying if you want to be on the CO2 pathway, on the lowest cost CO2 pathway, you need to be investing in this many projects in the next decade.
Monica Trauzzi: So, you're saying we can't reach our emissions reductions goals without CCS?
Thomas Kerr: We think it's possible, but it's highly unlikely. Based on our models of fossil fuel use in the developing world and in the developed world as well, there's just no chance to completely transform that away from fossil fuel use and the heavy industry is also a big part of CCS. It's not just about clean coal, we have industrial sectors like pulp and paper and cement that need to be looking at CCS. In fact, we're releasing a cement sector roadmap tomorrow that will be endorsing the use of CCS. But all of these projects have to do this technology and they have to do it very quickly.
Monica Trauzzi: How much money are we talking about? I mean how much needs to be invested?
Thomas Kerr: We estimate, and this is a very rough estimate, one of the challenges is we do have four to five projects and so we are getting some data, but we don't have a lot of data on full-scale transport and storage in particular. But given that, our rough estimate is like a large-scale, coal-fired power plant is going to cost about a billion dollars extra to put on CCS technologies. So, again, if you're looking, some people have talked about having 20 demonstration projects, that's a $20 billion price tag. I will say though that the recent stimulus packages had roughly 20 billion set aside for demonstration projects. So we're seeing some real money being put on the table to demonstrate this technology in some countries, not all.
Monica Trauzzi: There are concerns about liability issues relating to CCS. Is that something that you considered when putting this report together? Is that something you see as a hurdle that needs be overcome in the future? And sort of how do you regulate that in developing nations?
Thomas Kerr: Yeah, that's a good question. We did consider this; it's a key issue particularly for the public acceptance because they want to know somebody at the end is going to stand behind this technology. Is it going to leak and, if so, are they going to remediate it and who's responsible? We have seen some regulatory frameworks come forward, Australia and the EU, there is an overall European directive on CCS where the member state takes control of liability after it's been proven that the CO2 has performed as expected. However, that doesn't take away the sort of public perception. I think it's more of a public perception than it is an actual legal issue. I think governments are starting to address it. We do have cases here in the U.S. where like the state of Texas has taken over and they said the state will take on long-term responsibility for the CO2. In developing countries, you're right, that is a concern because they are less farther along in these legal and regulatory frameworks. They're just starting to think about the technology. We have seen a change in China. They seem to be moving from looking at this as a very long-term R&D technology to something more for the near term, but they have not developed the legal and regulatory frameworks and they've asked, I've been to some meetings where they've been asking about what are other countries doing in long-term liability for example.
Monica Trauzzi: Does the political will and interest exist internationally to put this roadmap into action?
Thomas Kerr: We hope so. I think we're seeing, again, governments are starting to announce more and they're starting to come to us and see us as a convening group. We're also working closely with a couple other groups. One is called the Global CCS Institute; it was recently created by the Australian government. It is a global institute and it has private sector players as well as government. And then the Carbon Sequestration Leadership Forum has existed for quite a few years. We're all sort of working together and seeing, I think, we have to learn together. This is one of those technologies that everybody is sort of at the same position right now across the world, not just the developed and developing. It's really not a technology transfer issue; it's a technology cooperation issue. There are, in fact, some pretty advanced plans in China to put in one of these plants and maybe we can learn from them. And so we hope that this happens. I think the key question is going to be can we get consortia together and resolve things like intellectual property issues and others that have come up in these dialogues. We need someone to sort of say there's some urgency here. We need to have these early projects and we need to work together on this.
Monica Trauzzi: Who's leading the technology race? Is it China?
Thomas Kerr: I wouldn't say China. I think there's a mix of players here. You know, the oil and gas industry sees this as an interesting opportunity for them because they have the transport and the storage expertise. The utilities have the capture expertise and so in some ways it's combining these different industries that haven't worked together. They have to combine efforts and so at our meetings we see people from all over the world, Europe, North America, Australia, Canada, and a bit from China and Japan. So it's really I don't see one country leading in terms of the private sector. I think it really comes down to there are some governments that are showing some leadership.
Monica Trauzzi: OK, we'll end it right there. Thank you for coming on the show.
Thomas Kerr: OK, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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