Carbon capture and storage (CCS) will become a trillion dollar business in the future, reaching the same scale as today’s oil business. However, normal market mechanisms will not work. Governments must provide incentive schemes in order for CCS to take off.
These were some of the clear conclusions stated by Lord Oxburgh, the former chairman of Shell who now works in numerous energy and environment organisations, when he addressed the Global Leadership and Technology Exchange forum in Oslo in April.
Coal stands for 40% of CO2 emissions from fossil fuels and, for geopolitical reasons, coal will remain a vital energy source for a long time because it is available in the US, China and India. Lord Oxburgh underlined that, although not a solution on its own, there is no way to achieve the desired emission cuts to stop global warming without capturing and storing CO2 from coal-fired plants – at least as a transitional solution for about 50 years or so.
Says Lord Oxburgh: “There is no doubt that CCS is too expensive today to become a viable solution. It will lead to a 30% increase in electricity costs and requires a 20-25% increase in the physical footprint of power plant facilities. But the technology is immature and can only improve by the installation of demonstration plants so that we can learn how to make it more efficient.”
A new bonanza
For CCS to really take off, one solution suggested by Lord Oxburgh is to make it cheaper for emitters to apply CCS than to pay the carbon price. The point at which CCS will become economically viable is when a stable carbon price of around 60 Euros per tonne is reached. That will not happen overnight, so other mechanisms and some brave action on the part of politicians are required. And these are already much overdue, says Lord Oxburgh, who leaves us in no doubt that the CO2 accumulation in the atmosphere is most certainly causing rapid and dangerous climate change.
Once CCS does take off, it will be a billion dollar market, and international oil companies are well positioned to take part in a new bonanza.
Date: 13 June 2008