McKinsey Report Concludes CCS Could Be Economic at New Power Plants by 2030
29 September 2008
|While many CCS component technologies are relatively mature, to date there are no fully integrated, commercial-scale CCS projects in operation. Click to enlarge. Source: McKinsey|
Carbon capture and storage (CCS) at new power plants could become economic by 2030, according to a new report by management consultancy McKinsey & Co. The report, which focuses on the European power generation market, projects CCS costs in the reference case scenario down to around €30-45 (US$43-65) per tonne of CO2 abated by then—costs which are in line with expected carbon prices in that period.
Early CCS demonstration projects will have a significantly higher cost of €60-90 per tonne, according to the report. Early full commercial-scale CCS projects—potentially to be built soon after 2020—are estimated to cost €35-50/tonne CO2 abated.
|Global cost curve of GHG abatement opportunities beyond business as usual. Click to enlarge. Source: Vattenfall|
A 2007 analysis published by Vattenfall (earlier post) estimated the global potential for CCS abatement at 3.6 Gt/year, with 0.4 Gt/year in Europe—about 20% of the European abatement potential in 2030.
A 0.4 Gt CO2 abatement by 2030 would require the installation of between 80 and 120 commercial-scale CCS projects, the McKinsey report says. These are likely to develop as a set of capture clusters, comprising new power plants and adjacent retrofit and industrial capture projects, all connected into a common transport and storage network.
Storage remains a key area where uncertainty needs to be resolved, the report says, to understand the possibility and cost of developing CCS clusters in specific regions within Europe.
The timing of the roll-out of CCS would have a major impact on the level of abatement achieved by 2030. If the first commercial projects do not start until well after the demonstration phase, of if projects are delayed due to difficulties with permits or other uncertainties, CCS could struggle to reach large scale in 2030. To achieve that, the first commercial projects would have to be started shortly after the demonstration phase or a fast roll-out programme would be needed.
...The implication is that early attention must be given to the prerequisites for commercial roll-out beyond the first 10-15 projects—including cluster development, infrastructure networks, permits, industry preparations, and possible business models and commercial approaches to the next stage of development.—McKinsey 2008
|Capture clusters are a possible scenario. Click to enlarge. Source: McKinsey|
Cost differences between the three main capture technologies—oxyfuel-combustion; post-combustion; and pre-combustion—are relatively small at this point. McKinsey suggests that multiple technologies should be tested at this early stage of development. Retrofitting is likely to be more expensive than new installations, and economically feasible only for relatively new, highly efficient plants.
The reference case costs are especially sensitive to deviations form the assumed risk of capital and the capital investments required for CCS. In addition, actual costs are likely to vary significantly between individual projects, depending on their scale, their location, and the technologies being tested. For a demonstration project, for instance, a transportation distance 200 km longer than the reference case would add $10/tonne CO2.—McKinsey 2008
The report identifies four key barriers to the development of CCS: public safety and support questions; lack of a specific legal framework; funding for demonstration projects; and development of commercial and risk allocation models.
Carbon Capture & Storage: Assessing the Economics (McKinsey 2008)
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