Sydney Morning HeraldMonday 7/9/2009 Page: 17
Carbon capture and storage is expensive, risky and may not work, writes Paddy Manning.
THERE may be a few forced smiles when
Martin Ferguson dishes out $2.4 billion in funding for a handful of "flagship"
carbon capture and storage projects (
CCS), intended to clean up
carbon dioxide emissions from coalfired power stations. As the Energy and Resources Minister knows, these
CCS projects have taken one helluva time to get tip and running- and it will be a long while yet before they make any significant contribution to Australia's
CO2, emission reductions.
For at least a decade, the coal industry has promoted a range of
clean coal technologies, including
CCS, as an alternative to renewable energy. But as necessary emission reduction trajectories get deeper and steeper, the industry has been tardy - stubborn, even - about paying for it. Instead the public will foot most of the bill for
CCS, and will wear the liability if it goes wrong.
CCS projects have a conspicuous history of failure - here and overseas. Put simply, nobody has yet integrated power generation with
carbon capture and storage at scale to create clean electricity, anywhere in the world. And many experts, including from within the energy industry, believe
CCS will remain prohibitively expensive and risky compared with known baseload power sources such as nuclear, or renewable sources such as
geothermal or concentrating
solar thermal which do not leave vast underground stores of
carbon dioxide for future generations to worry about.
In April the
CSIRO's energy chief, David Brockway, told a federal parliamentary inquiry on climate change that while he did not have a crystal ball, over the next 15 years wholesale electricity costs would roughly triple from the present $40/MWh, as
CCS is incorporated into coalfired power generation. That would bring it, he said, roughly into line with
solar thermal - about $160-$200/MWh but falling fast - and wind energy, likely to remain stable at $100-$110/Mwh (other estimates are lower) because it is a mature technology.
It's not a reasonable comparison, though, because
solar thermal and
wind energy actually exist, lain MacGill, the joint director of the Centre for Energy and Environmental Markets at the
University of New South Wales, says, "all prices for
CCS are projections right now, because they haven't actually done it yet. Until they can make
CCS work, they're on a different planet."
The executive director of the
Australia Institute, Richard Denniss, says he would love to see
CCS work. But if it doesn't, he asks, "What's plan B?" Federal and state governments are keen to support the coal industry, which provides cheap power, claims to employ 30,000 Australians directly and was our biggest export earner in 2008-09, with about $50 billion in combined overseas sales of metallurgical and thermal coal.
Especially vulnerable are the coal-reliant communities of the Hunter Valley and Victoria's
Latrobe Valley. In both regions, local councils, environment groups and sections of the union movement are working to develop "just transition" plans to create green collar jobs - and avoid job losses - as part of an orderly switch to gasfired or renewable power. Not even the Greens are proposing, in
Kevin Rudd's parlance, to "shut down the coal industry by Thursday" and abandon these communities.
The
Institute for Sustainable Futures estimated annual national financial assistance for coal was more than $1.2 billion in 2005-06, in terms of direct subsidies, cheap fuel and accelerated depreciation. The industry pays cheap royalties to the states under a regime which is the envy of the gas lobby. There is also infrastructure funding designed to ease years of capacity constraints - for example, last year's $1 billion plus in federal rail funding to help double export capacity from the Hunter Valley coal chain by 2014, and the NSW budget's $205 million to expand Eraring power station on the Central Coast.
The Federal Government is proposing to issue $3.9 billion worth of free permits to coalfired power generators under its
carbon pollution reduction scheme, and is being urged to compensate power station owners for the anticipated loss in the value of their assets if or when such a scheme is introduced. On top of that, in May the Federal Government announced $2.8 billion would be set aside to fund
clean coal initiatives, including $2.4 billion to fund between two and four "flagship" coal-or gas-fired power stations with
CCS over the next nine years.
The
CCS flagships funding was part of a broader clean energy initiative, including $1.5 billion to part-fund a number of flagship
solar energy stations under a separate process, and a $500 million fund to support emerging renewable technologies such as wave and
geothermal. Australia, as the world's biggest coal exporter, wants to lead on
clean coal with its Global
CCS Institute, which won plaudits from the US President,
Barack Obama, earlier this year.
The International Energy Association predicts
CCS could deliver almost 20% of emissions reductions needed to cut annual emissions in half by 2050, globally, but last year said, "current spending and activity levels are nowhere near enough to achieve these deployment goals".
Under modelling linked to the proposed
carbon pollution reduction scheme, and depending which emissions reduction trajectory is chosen, Australia will broadly get a third of its reduction in emissions from energy efficiency, a third from introduction of renewables spurred by the recently legislated "20% by 2020" target, and a third from
CCS.
The modelling, by the energy consultants
McLennan Magasanik Associates, predicts
CCS will become commercially viable in about 2030. Walter Gerardi, its director, says: "I think the reason why
CCS might have some legs here is we have a very low coal price compared with other countries, and very good potential storage opportunities. So the cost of
CCS could be lower here than in other countries."
That would mean storing about 1.6 to 1.7 billion tonnes of
CO2, from the electricity generation sector by 2050. Is that realistic? The biggest existing carbon sequestration project in the world, Norway's Sleipner Field, has taken about 1 million tonnes a year since 1996.
The $50 billion
Chevron operated Gorgon
LNG processing facility at Barrow Island, off WA's Pilbara coast, will pass Sleipner to become the world's biggest carbon sequestration project, with about 3 million tonnes a year of
CO2, to be injected underground there. But the Gorgon
CCS project will not reduce emissions in Australia, although the export of
LNG could he expected to reduce emissions overseas as it replaces the burning of dirtier fuels such as coal.
The biggest existing carbon storage facility in Australia is at Victoria's
Otway Basin, where more than 50,000 tonnes and rising are stored, so far safely. But it's tiny. The depleted oil and gas fields of the Gippsland Basin, off Victoria's east coast, are believed to have the capacity to store all of Australia's
CO2, emissions-but the cost of
CCS is typically considered prohibitive if the distance to injection of captured
CO2, exceeds a hundred kilometers.
Most pilot projects capture less than 10,000 tonnes of
CO2, a year. The biggest
CCS facility attached to an existing coal-fired station, a $10 million demonstration plant at Victoria's
Hazelwood in the
Latrobe Valley, captures just 25 tonnes of
CO2 a day - 0.05% of its total emissions - at a reported cost of at least $1100 per tonne captured. That does not include storage. At Lake Munmorah, in the Hunter Valley, a $5 million pilot facility can capture 3000 tonnes of
CO2, a year. As one
Delta Energy executive quipped the day I visited: "We're not going to save the planet with this one.
The next step there is a larger scale $150 million plant, capturing up to 100,000 tonnes a year of
CO2. That would equate to a cost of $130 per tonne of
CO2, captured, says the NSW Greens' energy spokesman,
John Kaye - or between $119-$124/MWh before they work out where to put the
CO2, or how to get it there. But it's not as though the coal industry has suddenly seen a need to get cracking. The
Australian Coal Association has been weighing the merits of
CCS since the 1980s.
A November 1989 position paper on the greenhouse effect noted
CO2, removal and storage was "not regarded as a feasible option for
fossil fuel power stations". "Technologically, the processes have been shown to be feasible; however, they would add substantially to plant, capital and operating costs, would consume a considerable portion of the plant's output and would increase fuel usage. Also, there are uncertainties about the practicability of [storing] collected CO1."
Ian Dunlop, a retired
Shell executive who was the chairman of the
Australian Coal Association in the late 1980s and headed the Howard government's Emissions Trading Taskforce in 1998, says the coal industry was aware there was a serious prospect that more research would need to be done on
CCS - in fact, that it had some disadvantages. "Now, we're hanging our futures on it."
Other supporters of
CCS have lambasted the coal industry's failure to back the technology. Last year the Government's climate change adviser, Professor
Ross Garnaut, criticised investment by the industry group Coal2l as inadequate and said industry should be spending more like $250 million a year.
In 2007 the
Construction, Forestry, Mining and Energy Union's Tony Matter, now national president, told a meeting of Newcastle Council that - unlike renewables, where there was a clear need for government funding for pilot projects - the coal mining industry was "a very wealthy global private sector industry and it does not need one dollar of public support".
He said scepticism about
CCS would "only be overcome once it's developed.., but there's no reason to oppose the use of the private sector's money to deploy those technologies. If it doesn't work, you've only wasted
Rio Tinto and
BHP Billiton's money, and I don't see that there's any need to cry about that." Nowadays he supports public funding for
CCS and welcomed the Federal Government's flagships announcement.
In July
WWF, the one conservation group consistently promoting
CCS, ran out of patience. Its chief executive, Greg Bourne, a member of the key government and industry advisory bodies pushing for investment in
CCS, noted the Government's almost $3 billion in finance for
CCS shamed the meagre $1 billion commitment from the Coal2l fund in the wake of a tripling in coal prices.
"Should the public be prepared to spend $3 for every one dollar spent by big polluters?" he asked. "If these highly profitable organisations were serious about securing their future and reducing their emissions, they would be ploughing money into deploying
CCS. What we're seeing instead is the Australian taxpayer doing all the heavy lifting, without any of the financial benefit."
It seems every few months another 'world's biggest' renewable energy project gets unveiled--but this one's seriously huge. The US company FirstSolar has just signed a deal with the Chinese government to develop what will be the largest photovoltaic power plant in the world. This behemoth will generate 2,000 MWs of power when it's built in the Mongolian desert, and it will power 3 million Chinese homes. And this isn't some pie-in-the-sky project that will never come to fruition--this one's coming soon, despite its jaw-dropping price tag.
