Decreasing emissions by deploying CCS: learning from Canada

Earlier this month, I and 250 other guests from 20 countries, attended an event on a cold windy day in the middle of the Canadian prairies that was profoundly important to Australia and the world. The event was the launch by Brad Wall, the Premier of Saskatchewan, of the world's first coal-fired power station with fully integrated CCS (capture and geological storage of carbon dioxide), at the SaskPower Boundary Dam site.

Despite the ever-growing use of renewable energy, switching to lower carbon fuels and greater energy efficiency, global emissions continue to rise. The use of coal for electricity generation continues to increase to meet the needs of an energy-hungry world and whilst many people may wish it were not so, the evidence is that coal (and other fossil fuels) will be around for many more years to come. Consequently, for as long as the world chooses to use fossil fuels, if deep cuts are to be made to the CO2 emissions arising from that use, CCS must be deployed. The International Energy Agency, the United Nations Intergovernmental Panel on Climate Change and many other bodies, including some environmental non-government organisations, consider that inclusion of CCS in the portfolio of mitigation measures is not only essential, but is also cost-effective as part of the mitigation mix.

Boundary Dam is important because the oft-repeated claim that large-scale CCS is “unproven” is now demonstrably incorrect, given that the commercial-scale integrated CCS facility at the Boundary Dam coal-fired power station is operational. When at full capacity, which will be very soon, around a million tonnes a year of almost pure CO2 will be captured from the flue gases, compressed, transported several kilometres by pipeline and then injected and stored in rocks 1.5km deep, where the CO2 will used for enhanced oil recovery (EOR). The cost of doing this is not insignificant, at $1.5 billion, and there will be ongoing additional operational costs. SaskPower is confident that it is worth the money.

The greatest need (and opportunity) worldwide for the deployment of CCS is for black coal electricity generation. However, Boundary Dam burns lignite (brown coal very similar to that used in Victoria), and the CO2 is captured post-combustion by a retro-fit unit. In other words, in some (not all) cases, CCS can be retrofitted to existing coal-fired (including brown coal-fired) power stations. Whether it is economic to do so will depend on the specifics of individual power stations. The next commercial-scale (new build) CCS facility, to become operational in 2015, will be that of the Southern Company in Alabama, also based on brown coal, but using a pre-combustion gasification process.

So, Boundary Dam clearly demonstrates that CCS can be applied to cut Australia's emissions from coal-fired power stations and of course coal-fired power stations in other countries too, including those which use Australian coal. If Australia and other countries that continue to use coal-fired electricity generation are to make deep cuts in their emissions, they will need to follow the CCS path pioneered by Canada. Perhaps an agenda item for the next meeting of prime ministers Abbott and Harper?

Interestingly, almost 10 years ago a Canadian said to me “you really have your CCS act together in Australia compared to Canada” and we did at that time, as industry, government and the scientific community worked together to bring about the early deployment of CCS in Australia. Over the past decade, we have seen important developments such as the imminent large-scale geological storage of CO2 by the Gorgon LNG Project in Western Australia, the demonstration-scale separation of CO2 from flue gases at various Australian power stations, most recently at Callide in Queensland, and the storage of more than 60,000 tonnes of CO2 at the CO2CRC Otway Project site in Victoria. What Australia has not done, unlike Canada, is to commercially produce clean electricity through the deployment of CCS or develop integrated CCS and power generation. The impetus of CCS has slipped in Australia and that is a cause for concern. Why has this happened? It is instructive to compare the Australian and the Canadian experience in order to answer this question.

First: there has been significant targeted federal funding, specifically to SaskPower (around $250 million) for Boundary Dam. A similar amount also came from the Provincial Government. In Australia, there has been significant federal funding for CCS but it has been less effectively targeted and the effort has become diffuse. In addition, no Australian electricity company has shown the willingness to significantly invest long term in CCS, in the manner demonstrated by SaskPower. Australian industry and government have not yet been able to come together to use CCS to tackle greenhouse concerns in the way that Canadian industry and government has at Boundary Dam. To date, the single largest spend by the Australian Government on CCS ($400 million) has been for the Rudd initiative of the Global CCS Institute; had that money instead been spent on a CCS project in Australia, it would have provided better value to the Australian taxpayer.

Second: Canada has withdrawn from Kyoto but will shortly implement emission standards on coal-fired power stations, which will mean that old power stations close, switch to gas or, as in the case of Boundary Dam, retrofit CCS. A case of “direct action” perhaps? The Obama Administration has plans (currently in abeyance) for emission standards for coal-fired power stations, as does the UK Government. At present in Australia, there is no specific encouragement to deploy CCS (such as a clean energy target that could include CCS) and CCS is specifically excluded from obtaining funding from the Clean Energy Finance Corporation. Nor is there any plan for an emission standard for Australian power stations that would serve to drive the uptake of CCS.

Third: “clean” electricity costs more on an ongoing basis than “dirty” electricity because of the higher operational costs. Consequently there needs to be some form of ongoing support. At Boundary Dam, ongoing support comes from the sale of CO2 for EOR. I have no knowledge of what price Boundary Dam gets for its CO2, but in North America CO2 for EOR typically sells for $20-30 a tonne. The UK Government has plans for a “contracts for difference” that will compensate for a CCS- related price differential. But no such support mechanism is currently available in Australia and EOR opportunities are limited. The carbon tax of the previous government was the same order ($24 a tonne of CO2) and could have been used to cover the extra operational costs of CCS, but was not. It did establish and fund a CCS Flagship program and funding has been maintained by the present government both for Flagships and for the CO2CRC Otway storage project, in a commendable effort by federal Industry Minister Ian Macfarlane, despite a difficult budget. But to date, little of the money has been spent and the program is struggling to gain adequate momentum, not least due to the difficulty in obtaining the necessary buy-in from industry.

Despite the fact that most of our electricity (and our emissions) are from coal-fired power stations, it would seem there are a number of disincentives, or lack of incentives, that work against the deployment of CCS in Australia. These need to be addressed. There is outstanding CCS capability in Australia, but it is not being applied to power generation. Further, there is a need for CCS leadership and vision in Australia, of the quality that Canada has demonstrated through Boundary Dam, in order to get power-related CCS projects underway. Only when we have these in place will Australia be in a position to follow Canada's CCS lead, and also to once again become a leader in CCS itself – because that is where we need to be if we are to significantly decrease Australian and world CO2 emissions from power stations and other major emission sources – through deployment of CCS.

Peter Cook CBE, FTSE is a professorial fellow at the Centre for CCS Research at The University of Melbourne. He is also a member of the SaskPower CCS Project Advisory Committee.