Why Has Carbon Capture And Storage Not Taken Off Yet?

Yves here. Notice how this article points out the need for setting a price for carbon. The Financial Times, in CO2 needs a price but taxes are the best way to set it, called for that in 2007. And the problem, as the editorial explained, is that the price of fossil fuels does not reflect the cost of the externality of greenhouse gases. The underpricing of carbon is the reason that renewables can appear to be more costly than they are (although their prices need to reflect the use of any scarce or environment-damaging inputs) and that carbon capture schemes look to be too costly.

By Michael McDonald, an assistant professor of finance and a consultant on capital structure decisions and investments. Originally published at OilPrice

For all of the talk about green energy one fact still remains clear; fossil fuels are going to continue to be used in enormous quantities for decades to come. From China and India to the U.S. and Canada, the world is flooded with growing markets looking for new sources of fossil fuels and developed markets coming up with new ways to extract those fossil fuels. India, for instance, is on track to double its use of coal as a main source of energy over the next 20 years.

It is certainly true that solar power in particular is growing rapidly in importance but that has very little to do with the fact that hundreds of millions of cars and homes still rely on oil and natural gas for power and heat. Retrofitting an asset base that large would require trillions in investments.

Given these realities, carbon capture and storage (CCS) is an intriguing proposition and one that pragmatic environmentalists ought to give more credence to. Yet, CCS has not really gotten off the launch pad at this stage despite the fact that a new report from an industry group highlights the necessity of the technology in helping to mitigate carbon emissions across the world economy. There are a variety of criticisms against the technology, yet it may be the best of a bad set of options.

According to the Zero Emissions Platform industry group, “Without CCS, the cost of decarbonising the power sector could be 2 to 4 trillion euros ($2.3-$4.5 trillion) higher and some energy-intensive industries would not be able to decarbonise at all.” The problem is that while CCS is probably good for the environment, it does not make economic sense on its own in many cases and environmental groups have failed to rally behind it in any meaningful way.

The business case for CCS is built on the idea that taking carbon out of fossil fuel energy production and injecting it back into the ground then helps to enhance recovery rates on oil and gas fields. This idea would be great as a recovery mechanism for fossil fuel fields if it were cost effective. But it’s not. Utilities in general have very little interest in CCS as the technology is expensive to retrofit on existing plants. Standalone CCS facilities can cost up to a billion dollars, and they only remain economically useful as long as an oil or gas field has resources remaining.

There are many big firms backing CCS, especially large oil companies, but none of them are interested in spending investor’s money on the plants without a rational economic reason to do so. With oil prices slumping over the last year and profit margins tighter than ever, any realistic prospect of companies choosing to install CCS tech in facilities for business reasons have vanished. At this stage, across most of the world, carbon has no positive value.

One could have argued that CCS made sense in some regions before the oil price slump, but at this point companies are in cash lockdown and are in no mood to engage in substantial discretionary spending. Apache (APA) and Encana (ECA) have used CCS technology previously and American Electric Power (AEP) has a CCS project in place at a plant in West Virginia, but these projects are insignificant in the larger scheme of things.

That means that for CCS to really take off, world governments would have to decide that they want to put a price on carbon. Political realities make that unlikely for now in most major regions except Europe. Even in the EU though, the block has failed to set an effective carbon price, which has created a lack of major impetus for CCS projects. This has seriously held back the technology. At the end of the day, while CCS is a potentially very useful and important technology from a pragmatic standpoint, until the world gets serious about charging companies that emit carbon or a viable business purpose is developed to use enormous amounts of carbon, CCS initiatives are unlikely to go far.

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  1. scientific gadfly

    This article, like every other one that I have seen, fails to address the crucial question of whether CCS is a practical technology. Every pound of coal that is burned yields about 3 pounds of CO2, and the CO2 is a gas, which must then be compressed >1000 fold in order to reduce its volume back to the original. It is of course simple to do this on a small scale. But how do you scale up to the enormous amounts of carbon that we burn? How can anyone writ an article about carbon capture and sequestration without even considering this point? Ugh.

    1. Mark P.

      The classic joke about economists ‘Assume a can opener’ here gets a real-world illustration with ‘Assume carbon capture.’ This piece is technologically illiterate idiocy.

      The author handwaves with a link towards a MIT study critical of the problems of storage underground, without bothering to mention ( or find out, presumably) that any viable technology for carbon capture is non-existent in the first place.

  2. Fibrous Artichoke Substitute

    The other problem with carbon capture is that no one has actually shown that it will work on a large scale. For the moment it’s a fantasy, pure and simple.

    1. Martin Finnucane

      Makes one wonder what it takes to qualify as a “pragmatic environmentalist” [see P. 3 in the article]. If such vigorous handwaving jibes with “pragmatism,” then perhaps we’ve drained that term of meaning. We can throw it in the same trash heap as “democracy”, “freedom”, “free and fair” [as in elections], “the West”, etc.

    2. brightdarkness

      They tested a system in North Dakota where they pumped the CO2 back into the ground. Found it didn’t worked when ponds in the area started becoming like seltzer water and trees died.

  3. kimyo

    Time to stop investing in carbon capture and storage

    Abstract: Government investment in carbon capture and storage (CCS) is a large and expensive fossil-fuel subsidy with a low probability of eventual societal benefit. Within the tight resource constrained environments that almost all governments are currently operating in, it is irresponsible to sustain this type of subsidy.

    …The amount of energy required to capture and store CO2 is often not adequately recognized in optimistic perceptions of the potential of CCS. This so-called energy penalty has been estimated to be about 30% with a range from 11 to 40%.[20] This means roughly that for every three coal-fired power plants utilizing CCS an additional power plant would be required simply to supply the energy needed to capture and store the CO2. The magnitude of this energy penalty (including even the lower estimates) is so high that it is difficult to imagine a future scenario in which consuming this much additional energy to enable CCS would actually make sense.

  4. jfleni

    RE: “Retrofitting an asset base that large would require trillions in investments.’

    It would be fairly easy with a handful of those platinum pennies some sharp economists keep talking about.

    Imagine! Excellent public transportation, including high-speed trains running on solar and wind with storage; climate change actually cancelled; the “tin-turd-mafia” (gas-buggies from a dozen countries, and their FUMES) a historical artifact, plus millions of new and better jobs.

    But unlike believers like “T Boone-Pickens”, “Grovelling Barry” is totally oblivious.

  5. Jef

    CCS decreases EROEI so you end up burning more to get less so most Countries have clearly stated they are not willing to reduce their reserves by implementing it.

    Funny how often we hear the twisted logic that amounts to “if we can make things more expensive then things will naturally start to get better”.

    Ten years ago when I was hosting gatherings at my restaurant in an attempt to increase local foods production everyones biggest issue was how to get local and organic foods to cost the same as supermarket foods. I use to say back then that eventually they will cost the same but that it would be because the supermarket food prices would continually increase to catch up to organic. Nobody liked that response.

  6. Jeff

    Somebody made the calculation a few months back that if the world population would be Indian farmers, you could put all 7 billion of them on the Continental US, and still have space left.
    That would allow to plant trees & forests everywhere else, and is much faster, cheaper and more beautiful as a Carbon storage scheme than anything the Oil Barons can come up with.

      1. JTMcPhee

        Yah, gotta protect our Exceptional Circumstances as long as we can, “maintain OUR sacred standard of living,” keep extracting from the weak… Only way “we” will end up as poor as Indian farmers, of course, is by just keeping on doing what “we” are doing, and letting the neoliberal overlords keep getting fatter…

        1. Vatch

          Just yesterday you explained why you need air conditioning, and I support what you said. Indian farmers do not have air conditioning. If we live at their level of poverty, we will not have air conditioning.

          1. JTMcPhee

            I and my wife know our vulnerability, and do what we can to “reduce our footprints.” We are well aware that our “privilege” is unsustainable and that our puny desire to keep on living as long as we can has costs, including, through the spider web of “trade,” to Indian farmers and lots of other fellow humans. I guess the Honorable course would be suicide and composting, but as with the Navy showers we take and all the economies of lifestyle we practice ( out of necessity but also conviction) all we seem to be doing is reducing our water use like many citizens in CA,for example, so the rich sh-ts who get commercial reduced rates for the huge amount of potable water they use to fill their Infinity Pools and Water Features and “planting” and monoculture lawns will have more left in the aquifer for their indulgence, which they tell is their right, because after all their brigandage, “they can afford it.”

            1. Vatch

              Of course I agree with you about the excesses of the rich and the ultra-rich. Even members of the upper middle class in the U.S. are very wasteful.

              My point is simply that I refuse to reduce my levels of consumption to that of an impoverished Indian farmer. The only way our world can sustain its current population is if everyone (or nearly everyone) becomes poor, and that is unacceptable to me and to millions of other people. Instead, population reduction is absolutely essential. Usual disclaimer: this must be accomplished by reducing the birth rate, and not by increasing the death rate.

  7. Arizona Slim

    A few years ago, I had a conversation with a world-renowned expert in this field. His take? Without a government mandate, there is no market for CCS.

  8. fajensen

    CCS does not work, technically and economically. The energy required to liquify CO2 and pumping it deep enough that it stays liquid will add about 20% energy loss for the CCS system to the fossil power-plants.

    It sounds, frankly, loopy “… taking carbon out of fossil fuel energy production and injecting it back into the ground then helps to enhance recovery rates on oil and gas fields … ” suuure, because we need to tax Carbon Emissions to be able to afford burning MORE Oil and Gas FASTER!?

    Tax Carbon at the source. Or at the border – If China whines about it. That will work.

  9. curtis

    Resilience.org covers this area in many different forms. Degrowth is a good google entry that shows a way to start over without capitalism and interest. V. Smil has written about this in many different ways in many books. Claus Lackner at Arizona State has the neatest way to go after CO2 in the atmosphere. Then there is the 20 million dollar challenge from XPrize Foundation that is sponsored by Canada’s Oil Sands Innovation Alliance. Carbon sequester techniques will probably involve plants after our society collapses. All of the above sort of ignore the concept of net energy. The Question Everything blog will bring you up to speed on that concept. Then of course there is Limits to Growth, and dieoff.org. It all sort of comes down to the fact that we are using about 10 times the amount of energy in fossil fuel to grow our food than the food itself provides. Sheepherding and the like will seem to be the future for my grandson.

  10. a different chris

    Lordy. I can’t even get to the storage part, I am dumbfounded by the capture part? Eight zillion point sources, another zillion pipes sprawled everywhere, and how do we know their capture systems are working – that is, no leaks? I bet at least one person reading this is ignoring their Check Engine light for as long as they can (in Pennsylvania, it’s once a year it needs to be fixed). You don’t think the frackers won’t drag their heels the same way?

    1. craazyboy

      He’s talking about capture at power plants, not car tailpipes. But plenty of problems with that, transportation and storage too. One major one is where are these huge underground caverns? And no one is really sure the CO2 will stay put in presumably high pressurized underground caverns. The author cited Norway as a success story, but they are pumping it down deep offshore depleted oil wells where the temps are cold enough and pressure high enough to liquefy the CO2.

  11. susan the other

    I remember one of the problems with carbon capture and sequestration was that once the CO2 escapes into the higher atmosphere it will stay there for decades and only slowly work its way out – how I don’t remember. So it might also be a better idea to end air travel along with car travel. Why we are dragging our feet when we could be building trains is puzzling. And why isn’t anyone designing carbon fibers into our construction projects? Isn’t carbon a very strong, light-weight molecule? Does it rust? Does it rot?

  12. craazyman

    One man’s cost is another man’s revenue!

    Form, and quantity. Form. Form. Consider Form along with Quantity.

    If they don’t know what Form is, they can’t see it.

  13. Roger Chittum

    Capture is expensive but can be made less so by gasifying the coal first and extracting the CO2 before combustion. But once you accomplish that you still have a big problem operating at scale: The lifetime output of a single large coal-fired power plant will fill reservoir rocks equivalent in size to a major oil field. http://thinkprogress.org/climate/2014/09/04/3478726/futuregen-gets-epa-approval-for-ccs/ Obviously, there are many more large power plants than there are suitable disposal reservoirs. CCS could still be a niche business because CO2 is useful for enhanced oil recovery–as my chemical engineer friend says, CCS is almost breakeven if you can sell the CO2 to an oil field operator.

    1. JTMcPhee

      How does one “gassify the coal and extract the CO2 before combustion”? The CO2 isvwhat is PRODUCED by the exothermic oxidation that is what happens to the carbon that is what coal is, CO2 being the stuff that comes into being as molecules made up of one atom of carbon and two of oxygen. How other than by alchemy is the CO2 extracted before combustion?

      ” useful for enhanced oil recovery.” And this is supposed to be reducing greenhouse gas manufacturing and release just how, again?

  14. michael gandy

    The author is correct that that carbon storage is critical. However, there are two erroneous assumptions in particular that make this article misleading.

    Two areas of innovation address both these errors. I do go on at some length to expand these ideas in order to counter the general defeatist tone and assumptions that frame this article.

    1) A decentralized hydrogen (moderate pressurized gas, not liquefied) fuel economy with zero operational carbon output (endless recycling of a small amount of water into hydrogen/oxygen, then back to water) can completely replace fossil fuels in the transportation sector. Transitional conversions of the current transportation fleet, until true hyper-lightweighted vehicles replace them, has already been demonstrated.

    Various clever efficient approaches to splitting water powered by through renewable energy are available and in development.

    As Germany has shown, even in non-optimal locations for solar and wind, decentralized renewables can in most cases supply power, and not just photo-voltaic, to static buildings and commercial processes. With greater integration of distributed energy production storage with centralized energy production (e.g. hydroelectric, big wind, tidal energy, etc.) each contributes to a robust grid, and filling in as needed when on-site production and storage are inadequate.

    2) Using location appropriate intensive pasture management techniques of moving grazing ungulates, e.g. we use a cattle/sheep system along with black soldier fly/chicken systems for food waste streams, we simultaneously achieve multiple goals not rewarded in the present economic regime. These include reversing soil erosion and desertification (see the Alan Savory TED talk), long-term carbon sequestration in humus/soil, healthy animal protein production, and built-in nitrogen and nutrient rich manure to replace petrochemical energy intensive “green revolution” petrochemical centered fertilizers. And agricultural machines, e.g., tractors and excavators, can be converted to compressed hydrogen gas, just like most Hyster fork lifts can run on compressed propane gas.

    As the author suggested, non-scientific (or pseudo-scientific) mainstream economics ignores or externalizes many real costs. The current version of Capitalism is a free-loaders dream. So much so that the “free” market badly prices commodities, incentivizes wasteful bad practices and elevates badly behaving businessmen and politicians.

    Regenerative Agriculture (such as Permaculture) has shown, when intelligently and pragmatically adapted to local conditions, it can scale so as to potentially simultaneously leverage many of the levers driving “climate change”. (Or more accurately named, if not succinctly named, the “global ‘hotting’ extreme weather cascading catastrophe”.)

    This “necessary for survival project” can instead be embraced as an opportunity of a large-scale conversion to a “thriving, not just surviving, project”. Economics that make life better, not just disposable and cheaper.

    We have a window of opportunity to jettison the system that works just for the elites to one that works for the rest of us. What will an “eyes wide open” political-social-ecological economic system that supports and incentivizes behavior that continually runs away from civilization’s tipping points to collapse look like? Certainly very different than what we have now.

    Rather than an ubermench Utopian dream or the psychopaths reality that now is mindlessly is driving not just the economy, but civilization, to the brink, we need a total life cycle analysis vision, a system dynamics model that gets the basic input->process->output relationships right.

    There is, despite what vegetarian True Believers want to believe, an evolved mutually beneficial and healthy interdependent relationship between pasture plants, grazing vegetarian animals and carnivorous animals (humans included). If reproduced correctly, Regenerative Agriculture invests in, versus externalize cost onto, natural systems and human communities. With research hooked into social media the basis of all culture, agriculture, can be scaled up to rapidly to semi-permanently store carbon at volumes far beyond what band-aids on petrochemical extraction might achieve.

    Having said that, petrochemicals extraction, where controllable, can still continue to supply feed-stocks to the chemical industry. For example, oil into thermoplastics, which can be designed to be easily recycled and reshaped. Other safe and clean-up-able chemical processes can begin as oil.

    But burning petrochemicals, given the realities of climate hotting and pollution, is simply moronic.

    The oil behemoths can still be big (though not “too big to fail”) and profitable, that is, if they stop being enemies of humanity, democracy, planetary life-support systems, basic survival, and just being general greedy perverted purveyors of pseudo-science and jerks leading us down the genocidal path of climate denial.

    In summation, these two disruptive emerging areas of hydrogen fuel and carbon sequestering ranching can potentially bring CO2 levels down to non-warming levels according to one estimate in an astounding 10-20 years. This requires a massive good job-creating rural regeneration effort, without the need for wacky dangerous centralized techno Geo-engineering.

    Recovery and use of the 3/5 of the landmass best suited for regenerative pastoral farming and switching to a hydrogen economy can produce more and better food, sequester huge amounts of atmospheric carbon and bury it in richer more productive soil, slash new greenhouse gas emissions to speed up restoration of the atmosphere and eventually de-acidify (carbonic acid) the oceans.

    We can still thrive, not barely survive. We can choose to collaborate before we collapse. We can get off the fence, and move the electric fences for grazing animals to work the carbon under the soil again. Yes, WE can, Mr. Obama, even if YOU and the other neoliberals won’t.

  15. Nicholas Cole

    I have to echo all of the skeptics. Like satisfying all of our enormous electricity and transportation demands with so-called renewable power, CCS remains utterly unproven at any meaningful scale. Anyone who says otherwise in a professional capacity is hoping to slosh around in a government subsidy dumpster.

    1. JTMcPhee

      That would put them in direct competition with the Brigand Capitalists who are already sloshing around in that extraordinary bouillabaisse of subsidies and preferences and thefts and frauds in the way of the extant contents of the government subsidies dumpster then, eh?

  16. pmr9

    “That means that for CCS to really take off, world governments would have to decide that they want to put a price on carbon.”

    Most estimates are that CCS is economic only at a carbon price of something like $100 per tonne CO2. For comparison, nuclear power is economic at a carbon price of about $30 per tonne. If the carbon price were increased progressively over 10-20 years to a level where CO2 emissions were eliminated, nuclear power would have replaced coal long before CCS would be an option.

  17. Raymond Robitaille

    The best and by far the cheapest carbon capture strategy you can have is to end industrial agriculture and transition to organic farming, permaculture and agroecology. Soil is the best natural sink for carbon. Modern industrial agriculture practices deplete the organic matter (and the carbon) stored in the soil. Alternative practices rebuild this store of organic matter (and carbon). See for example La Via Campesina and Grain’s cooling the planet campaign (https://www.grain.org/article/entries/5310-together-we-can-cool-the-planet). The same goes with forestry. No REDD+.

  18. Synoia

    Given these realities, carbon capture and storage (CCS) is an intriguing proposition and one that pragmatic environmentalists ought to give more credence to

    What a stupid question. An electric generating plant converts, at most, 31% of the heat used into electricity. CCS will reduce this number by 2% to 5%, to 26% to 29% – the amount of energy necessary to capture the flue gases,liquefy them and stuff them underground (if they even stay there).


  19. tgo

    The planet already has a CCS system. It’s called trees. Eliminate their food supply and we will most assuredly be screwed. I’m sure everyone knows this, but for some reason shrugs it off, but the planet thrived with plant and animal life 65 MYA when C02 was easily much much more than what is present today. This is power, control and redistribution of U.S. money. Plain and simple. Please stop Gore-ifying reality.

    1. charles 2

      The problem is not the level, but the rate of change. Of course the world can live with more (or less) CO2, but it has never encountered such a quick rate of change and this is where the unknown unknowns lie.

  20. James McFadden

    Carbon capture propaganda is promoted by Big Oil to create confusion about whether skyrocketing CO2 levels need to be addressed now. This fictitious technology is promoted as a delay tactic so oil and gas profiteering can continue. The confusion they sow delays implementation of real solutions like those outlined by Stanford’s Mark Jacobson (http://www.youtube.com/watch?v=l5itfavvu8Q – skip in 20 minutes into the video). If we don’t stop the burning of fossil fuels soon, the acidification of the oceans and mass extinction of most sea life will be a problem comparable to climate chaos. The continued pursuit of obscene oil profits will eventually result in the mass death of most vertebrate life – including a majority of humans. The insane energy policy that continues to invest in fossil fuel is enabled by neoliberal economic models which are based on absurd assumptions (read Steve Keen’s Debunking Economics).

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