The Global Status of CCS and the Institute's Strategic Direction
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Brad Page, CEO of Global CCS Institute
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The Global Status of CCS and the Institute's Strategic Direction
- 1. Brad Page – CEO Second Annual EMEA Members’ Meeting – Edinburgh, Scotland 22–23 May 2013 THE GLOBAL STATUS OF CCS AND THE INSTITUTE’S STRATEGIC DIRECTION
- 2. Economic growth – IEA 2°C scenario 2Source: International Energy Agency 2012
- 3. Economic growth – IEA 2°C scenario 3Source: International Energy Agency 2012
- 4. Potential emissions by current fossil fuel reserves Source: International Energy Agency 2012 4
- 5. European aspirations – an early mover in CCS Important early mover Delivers 10-15% of EU power sector decarbonisation by 2050 - <10% of world power decarbonisation Plus industrial applications In total, Europe could account for 10-15% of total CO2 stored in 2050 5 CCS capacity in power sector globally
- 6. Churn in European project developments: 2010 vs 2013 European reality – churn and stagnation 6
- 7. European reality – churn and stagnation 7 Churn in European project developments: 2010 vs 2013
- 8. Challenges to deployment: Revenue and costs 8
- 9. CCS policy and funding support 9
- 10. Challenges to deployment: Global carbon constraints International progress on climate policy is slow IEA notes world on path to 6ºC warming European 2030 targets and CCS - Credible long-term signals crucial - Uncertainty matters • Demonstration financing mechanism risk – who should bear it? Equity in technology support 10
- 11. What needs to be done Climate change legislation not progressing sufficiently. Need to include CCS in the portfolio of clean technologies with equitable incentives and treatment - lowering cost of meeting reduction targets in the long run. Funding for CCS demonstration projects should be accelerated and incentives increased from current base. Re-invigorate the case for CCS in Europe and collaborate to boost its profile. 11
- 12. The Institute is committed to the challenge OUR MISSION To accelerate the development, demonstration and deployment of CCS CREATE FAVOURABLE CONDITIONS TO IMPLEMENT CCS AUTHORITATIVE KNOWLEDGE SHARING FACT BASED, INFLUENTIAL ADVICE AND ADVOCACY Generate, collect and share information, experiences and lessons learnt Facilitate workshops, events and networking Provide a world class online digital platform Build Member capability Support the development of policies and programs Build understanding of financial and commercial issues Deploy capability development programs Collective voice for CCS community Promote the critical role of CCS in a low carbon economy Connect and advise senior decision makers, the media and the public on the benefits of CCS 12
- 13. Strong, independent and influential representation: Leadership roles in key international policy agendas – Clean Energy Ministerial and inclusion of CCS in the UNFCCC’s CDM. CCS expertise, knowledge and initiatives: Publish the annual Global Status of CCS report – the international respected reference source on CCS developments. Comprehensive expertise including toolkits, guides and reports, the world’s most visited website dedicated to CCS and capacity development. Unique convening power: Gateway to a global network of governments, companies and NGOs. Access to thought leaders and events. Working collaboratively IEA joint work, IEA GHG R&D and Zero Emissions Platform. 13 Track record: acting globally and regionally
- 14. End June 2013 22 March 2013 Q1 – Q4 2013 By Q4 2013 RELEASED FINAL FIVE-YEAR STRATEGIC PLAN RELEASE 2013-14 BUSINESS PLAN AND MEMBERSHIP INFORMATION ENGAGE WITH MEMBERS TO SUPPORT IMPLEMENTATION OF NEW BUSINESS MODEL DEVELOP AMENDMENTS TO THE CONSTITUTION FOR APPROVAL AT OCTOBER 2013 INTERNATIONAL MEMBERS’ MEETING IMPLEMENT NEW REGIONALLY FOCUSED APPROACH THROUGH 2013/14 RELEASED DRAFT FIVE-YEAR STRATEGIC PLAN AND CONSULTED WITH MEMBERS July 2012 – Jan 2013 14 P P On track with our plans
Notes de l'éditeur
- • Economic growth and access to energy are linked.This is the economic growth path to 2050 the IEA presented in their most recent long term energy projections and technology assessments through to 2050Over the period 1990-2050, world economic growth averages 3.4% - which means income doubles every 21 yearsKey point is that over the period to 2050, total global income is nearly 7 times the level they were in 1990 within this 2 degree IEA scenario
- Strong economic growth depends on access to inputs.Energy is an essential input to all economic activity and energy use increases with economic activity. But at a slower rate – This is energy consumption in the IEA 2°C scenario – where energy consumption is some 34% below that of the path we are currently on: to a world of 6°C warming if no further action is takenIt is abundance and access to any good that creates prosperity. Energy is no different: access to abundant, low cost energy sources increases our well being. Fossil fuels are a relatively abundant and rich source of energy: dealing with their pollutants – including carbon dioxide – enables these fuels to support economic growth in developed and developing countries alike. Access to abundant low-cost fuels enhances energy security – as well as economic prosperity.That is - fossil fuels can be an important part of the solution to climate change – in a manner that enhances economic security and economic prosperity.Other notes:• In developed economies, energy consumption increases at a slower rate than economic activity.• That is - energy intensity (the amount of energy used to produce a unit of GDP) - declines over time.• In almost all economies - energy intensity has generally been declining for the last couple of centuries when considering energy from all sources – including biomass.• If only 'modern' energy types are considered - fossil fuels, nuclear, and hydropower – a common pattern in the development of an economy is that energy intensity initially increases as an economy develops from an agriculturally based production system to a manufacturing based system and then falls with increasing economic development and the shift to a services based economy.
- CCS has a strong role to play in supporting economic growth and energy security through access to least cost fuelsThe ‘carbon budget’ available in a 2°C world increases by 14% as shown This illustrates its vital role
- In the EU:share of gas in primary energy consumption has grown over the last ten years to a level of 25% (in 2010)In response to lower coal prices since 2010, coal consumption has increased some 13% for black coal and 11% for brown coal (for comparing the same 5 month period in 2010, 2011 and 2012)Coal contributes significantly to Europe's security of energy supply – more than 73% of coal used in the EU is produced domesticallyAlthough the consumption of coal across Member States is mixed:Some are relatively low (eg Sweden, France, Spain and Italy is less than 20%Some have relatively high reliance on coal: Poland (88%), Greece (56%), Czech Republic (56%), Denmark (49%), Bulgaria (49%), Germany (42%), UK (28%).With the exception of Denmark – those countries also have a domestic mining industryCCS has a role to play in decarbonising the energy sector and supporting energy security
- The total number of projects in 2010 and in 2013 was 28With the overwhelming majority in various planning phasesAnd nearly 60% in advanced planning – or the define phase
- But when you consider the projects at an individual level - there is a fair amount of churn whenall the projects in comparing those two years both 2010 and 2013Only 1 project (Don Valley) has progressed from Evaluation to DefineOnly 8 other projects that were in planning in 2010 are still being evaluated by their ownersBut none from that period have progressed either from evaluate to define – or made an FID to progress from DefineOf the 6 projects in advanced planning in 2013(Define phase), 5 of those were at the same phase 3 years ago.Clear evidence that the business case has been very challenging to make
- • CCS is competitive with alternative future large-scale technologies to reduce or avoid CO2 emissions.• But there are no or limited price signals:absence of long-term policy clarity of level of international emissions reductions to be achievedat best, modest climate change commitment globallyto the extent that carbon pricing exists, or is anticipated to exist – it has driven some CCS operations (Sleipner, Snohvit,Gorgon)limited use marketsEOR is very important in this context, but without policy support will not be sufficient.• Current political climate in theUnited States and Europe, operating under austerity policies, is constraining government funding support for R&D and demonstration.Although this ‘Great Recession’ is having a larger effect than any recessions since the Great Depression, we must recognize that climate change is long-term.Recent IEA projections for energy-related CO2 emissions suggest that even by 2040, although trending up slowly, emissions will be below 2005 level due to:extended slow recovery from the recessiongrowing use of renewable technologies and fuelsautomobile efficiency improvementsslower growth in electricity demand the switch to natural gas.But, emissions will still be relatively high overall – and will need to be reduced to levels well below 2005 by 2040 in order to avoid dangerous climate change.Action to address the challenges on the revenue side are more important than the challenges on the cost side at the moment.
- What is being done?Around the world CCS support comes from both direct CCS policy programs together with domestic climate mitigation commitmentsEurope was at the forefront in developing funding support and in implementing stringent climate targetsIn early 2010 it was thoughtEuropean programs could in total raise more than US$8 billion across stimulus programs, the NER300, the UK competition plus various Member State announcementsThe UK even considered a levy on all electricity users that might have raised an additional US10 billion if implementedThat the carbon price in Europe would trend upwards – to levels 5 to 6 times it’s current price sending strong long-term signals.In contrast – the outcome today is very differentSetting aside the Norwegian Government’s activity to support Mongstad TCM facility thenTotal support within Europe is less than US$4 billion Of that, around 35% has been allocatedThe value of the NER300 program available to projects is substantially reducedWe currently estimate that less than €700m will be available from the 2nd round (including the €275m carryover from the first round)And that the maximum available to any single project would be around €270m – so only 2 projects could be provided funding at bestThis has put more pressure on individual European governments for co-funding to cover project costs – and which has not been forthcomingUK only country with comprehensive CCS policy Seeking to sieze unique opportunity to refurbish entire generation fleet – not only CCS but renewables and nuclear are part of the overall energy reform packageCarbon price support with minimum carbon price on a trajectory to US$45/tonne by 2020 and then to >US$100/tonne by 2030Specific CCS price support through fixing forward electricity prices for a number of CCCS projects to have projects operating in early 2020sEmission Performance Standard of ~990lbs/MWhCCS Roadmap identifying infrastructure requirements, workforce development and regulatory framework needsProcess underway to consider supporting up to 2 CCS projects in the UKThere is slow action of climate mitigation targets, and where they exist, carbon prices are often relatively lowWith the exception of North America and Norway – the allocation of funds from substantial funding has often been lowIn this regard - US and Canada are leaders – together contributing around half of the funding available to CCS projects, with the majority of available funds allocated, projects progressing through to FIDNorth American has an advantage in access to other revenue options such as EOR revenues.Europe more challenged in this respect.CCS is recognised as a key abatement technology in all independent scenario analysis. In the science journal nature earlier this year, CCS was again identified as a technology the world could not do without.Despite the support given by Governments, policy parity is not apparent across technologies.Necessity for industry to support government activity as wellIf government is to increase support to CCS, then it is reasonable to expect that industry and others that realise the importance of CCS – academics, NGOs – that is those here today - that
- The problems for CCS in Europe are not necessarily unique to EuropeGlobally action on climate change has not met expectationsCurrently on a 6°C path for global warmingI note that, at least cyclically, the world past 400ppm concentration levels for CO2 last weekCredible long-term signals on climate target are at least as important as any short term funding supportThe European Commission recently released a number of papers for comment – both on CCS and on the 2030 framework for climate and energy policiesFor CCS – they recognise the need for action now, but there are a number of factors are holding CCS backLack of long term signalsLarge effect of uncertainty on investment for CCS proponentsLack of a business caseFailure of the financing mechanism to actually provide the required financingChallenges of integrating any technology specific or sectoral mandate policy with longer term reliance on ETS as key driver for decarbonisationThe problems are well known in Government and industry.Identifying the solution is more challenging, especially given current targets, ETS design and economic conditions in Europe.In contrast – government support for renewables has been both large and in place for over a decade in many countriesFor example in Germany, it has been estimated that between 2006-2010, the support cost for a mature technology such as wind averaged €43/tCO2 – higher than the EU ETS over the period, but of the same order of magnitudeFor a developing technology like solar PV, the FIT in Germany over the same period has averaged around €537/tCO2 – well above any realistic carbon price.
- Timely and stable policy support is required to deal with the barriers to implementation of CCS. This will drive industry confidence, encourage more innovation and, ultimately, reduce capital and operating costs.To achieve emission reductions efficiently and effectively, governments should ensure that CCS is not disadvantaged. They must review policies to ensure that CCS can play a full part in the portfolio of low-carbon technologies.Funding for CCS demonstration projects by governments and industry should be accelerated and incentives increased to develop the technology and bring down costs through innovation.Sharing expertise and learning from CCS projects around the world must be encouraged to ensure that progress is made as quickly as possible.. Importantly, this knowledge must be shared with developing countries, where 70 per cent of CCS deployment must occur by 2050.What needs to be doneHave to demonstrate a positive business case more than anything else; including especially utilisation.Requires strong, stable and enduring government policy support that is technology neutralConcerted and persistent approach to improving public knowledge of CCSGlobally connected and leveraged R,D and D effortFocussed program of knowledge sharing on project experiences to improve costConsistent, unified, authoritative promotion of CCS
- This slide identifies what we focus on as the Global CCS Institute. At the heart of the Institute is its mission to accelerate ....We achieve our mission through 3 critical activities: The first is:The first is fact-based influential advice and advocacy (mention one or two points about this from the slide)The second is authoritative knowledge sharingThe third is creating favourable conditions to implement CCS
- Our commitment is to build on our track record and support our MembersStrong independent and influential representation is needed:We have influenced the inclusion of CCS in the UNFCCC CDM – of great importance to developing countriesWe are building on our expertise and knowledge Creating the respected Global Status of CCS reportWorking in 8 countries through our capacity development programProviding expert resources on the CCS chain through our website – the most visited on CCSBeing a Member gives your organisation access to the latest developments in CCS around the world
- Our plans for 2013Note “Membership information” includes information on our:Fee principlesFee levelsMember consultative processesImportantly, we have started to implement a new organisational delivery model in response to Member feedback (lead in to next slide)