Emission trading; incentive or obstacle to funding of carbon capture and storage ...tu-freiberg.de/sites/default/files/media/professur-fuer... · 2018-04-17 · capture and storage

© IEA Clean Coal Centre www.iea-coal.org.uk

Emission trading; incentive or obstacle to funding of carbon

capture and storage demonstration projects

John KesselsIEA Clean Coal Centre

http://www.iea-coal.org.uk


Introduction

Key messagesCoal and the role of Clean Coal Technologies in the futureEconomic instrumentsIs emissions trading working for CCS?Alternative optionsConclusions


Key messages

IEA and IPCC clearly indicate mitigation of CO2 emissions is urgentCurrent economic and policy instruments are inadequate to accelerate CCSEmissions trading is a medium to long term option for CCS International action is needed to accelerate CCS via the UNFCCC A new mechanism or fund is needed


Why is CCS needed?

The science is robust with IPCC, Stern Report all calling for mitigation options including CCSThe status of coalWhat will be the energy demand?What will be the implications for CO2 emissions?The numbers

GLOBAL CONTEXT FOR COAL

40% of the worlds power is generated from coalCoal is often indigenous and offers energy securityGlobally 6Gt of coal is produced and consumed annuallyCoal is not a scarce resource, for example Alaska could have 5,012 Gt of coal resources surpassing the USA mainland coal reserves by 40%


0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

1980 1990 2000 2010 2020 2030

Mtoe

Other renewables

Hydro

Nuclear

Biomass

Gas

Coal

Oil

World energy demand expands by 45% between now and 2030 – an average rate of increase

of 1.6% per year – with coal accounting for more than a third of the overall rise

World primary energy demand in the Reference Scenario

(IEA WEO 2008)

CCS is a key option to use fossil fuels safely

Source: http://www.ipcc.ch/

CARBON IN

FOSSIL FUELS

‘Unconventional oil’ includes oil sands and oil shales. Unconventional gas’ includes coal bed methane, deep geopressured gas etc. but not a possible 12,000 GtC from gas hydrates.

1000ppm

750ppm

650ppm

CARBON THAT CAN BE

EMITTED TO ATMOSPHERE

IN THIS CENTURY

450ppm

350ppm

550ppm


Using CCT and CCS

Table 1. Regional scenario results

MtCO2/ yr reduction SPCC low SPCC high IGCC low IGCC high CCS low CCS highin 2030 30% 100% 20% 60% 10% 50%China 193 645 129 387 247 1233India 58 193 39 116 74 370Indonesia 26 88 18 53 34 168US+Canada 154 513 103 308 237 1187EU-25 143 475 95 285 220 1100OECD Asia 45 149 30 90 69 345Australia 12 41 8 25 19 95total 631 2104 421 1262 899 4497


The numbers• 6.3 billion global population growing to 9 billion

by 2040• 2008 markets collapse with loss of $30 trillion• Insurance $3 trillion per annum• US fiscal package 750 billion• $1 trillion for WB and IFC• 2324 coal fired power stations globally above

50MW• 1.050 billion and part of 300 million EUA

allowances valued currently €8-12• $20 billion for CCS demonstration plants?• 67 the key number in the US


How do we reduce CO2 Emissions?


Key Economic Instruments

• Emissions trading is the tool of choice, but the current price of €12 is to low for CCS

• Estimated CCS costs including transport and storage are around €35- 70/tCO2 costs could drop with technology development to €25/35/tCO2

• With each years delay in China alone approximately 35x 500 MW coal fired power stations will be built

• Carbon taxes not a realistic option

Other Options for Funding CCS

• Expand traditional “technology policy” options (tax credits, subsidies, etc.)

• Set new regulations requiring CCS (e.g., generator CO2 performance standards) (as in California CO2 stds)

• Adopt stringent cap-and-trade program w/ CCS bonus allowances and/or a tech. fund (e.g., from auction of allowances)

• Feed in tariffs has worked with Renewables

• Set up a similar fund to ITER for financing 12 demonstration CCS projects


Europe: 12 CCS projects

12 full-size pilot plant in EU by 2015

EU finance and other support for coal based CCS

€1.050 billion for CCS split at 5*180 million€ for each of 5 member states

Germany – 2 candidates – IGCC & oxyNetherlands – 3 candidates – IGCC & 2*PCPoland – 1 candidate – PCSpain (& Portugal)-1 candidate – oxyUK – 4 candidates – 3*PC & IGCC

Kingsnorth, Tilbury, Longannet, HatfieldItaly €100 million for a coal plant at Porto TolleFrance €50 million for industrial carbon capture

projectAlso, 300 million EUA allowances to be divided with innovative renewable projects and the 12 CCS demos



UNFCCC and coal

• No CCS projects under the Kyoto Protocol• A new UNFCCC sectoral mechanism

recommended by the EU, could cover the power sector and include CCS

• There is little incentive for investment in CCS, the EU ETS EUA price collapse to €8- 12 will send the wrong signal

• To many cooks spoil the broth and with a new mechanism some countries must be excluded

What policy is needed to get CCS operational?

0

10

20

30

40

50

60

70

80

90

100

CCS overall cost journey – reference case €/tonne CO2 abated; rounded to €5; European rollout scenario

Lowest

Highest

Ranges for technology / fuel and onshore / offshore combinations (reference cases)

Cost of CO2abatement

2015 2020 2030

90

60 50

35

45

30

Demonstrationphase (2015)

Early com-mercial phase

(2020+)

Mature com-mercial phase

(2030+)

Subsidy

Regulation?Carbon market

Source: McKinsey


Three Possible Pathways Forward

Initial three CCT paths to include in thenew UNFCCC mechanism in stages:(1)Power plant efficiency improvements through

the deployment of supercritical Pulverised Coal Combustion (SPCC) and IGCC technology.

(2) Include Coal Mine Methane in the new protocol the CDM does include CMM but it would be better to include all coal related activities that reduce emissions under one protocol

(3) Carbon dioxide capture and storage application in existing conventional pulverised coal combustion (PCC) power plants and advanced SPCC and IGCC technologies.


Need to Act now otherwise Carbon Lock-in

New and replacement fossil fuel power generation capacity (GW)

2010 2020 2030 World 520 967 1205 OECD 160 309 363 Developing Countries 343 587 750 Transition Economies 16 72 90 European Union (25) 39 105 132 North America 83 141 171 China 162 210 260 India 24 66 97 Russia 5 27 34


Key messages

IEA and IPCC clearly indicate mitigation of CO2 emissions is urgentCurrent economic and policy instruments are inadequate to accelerate CCSEmissions trading is a medium to long term option for CCS International action is needed to accelerate CCS via the UNFCCC A new mechanism or fund is needed


THE END THANK YOU FOR LISTENING

IEA CCC www.iea-coal.org.uk+44 (0)20 8780 2111 (tel)+44 (0)20 8780 1746 (fax)

John Kessels [email protected]

http://www.iea-coal.org.uk/

mailto:[email protected]

Documents

Emission trading; incentive or obstacle to funding of carbon capture and storage ...tu-freiberg.de/sites/default/files/media/professur-fuer... · 2018-04-17 · capture and storage