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Summary:

Here’s another hurdle for the carbon capture and sequestration (CCS) market (where carbon emitted during power generation is collected and stored): Research firm ABI says that the price of carbon on emissions trading markets needs to hit $40 per ton of CO2 for CCS to “attain […]

Here’s another hurdle for the carbon capture and sequestration (CCS) market (where carbon emitted during power generation is collected and stored): Research firm ABI says that the price of carbon on emissions trading markets needs to hit $40 per ton of CO2 for CCS to “attain true commercial status.” Ruh-roh. Carbon prices recently took a major dive after the Copenhagen climate summit failed to send strong signals to investors that international governments would set aggressive emissions reductions.

This morning carbon futures are trading around €13 ($18.75), not even reaching half of what ABI says is needed for a commercial CCS. So, if the carbon markets hover around this price, CCS won’t be moving into commercialization anytime soon, as many have predicted.

The ABI report is interesting in that it predicts that CCS and the carbon emissions trading markets will be closely linked going forward as carbon credits will be created as carbon from CCS is stored. Pike Research has predicted the same thing. And that really means that CCS won’t be economical for power producers without that externality — also not a good sign for CCS.

Pike Research has pointed out that CCS will hike up the cost of producing electricity at power plants by 50-70 percent (based on today’s costs and capabilities). Energy Secretary Steven Chu has said that CCS technology today would increase the cost of generating power from coal by about 80 percent and that it would need to get to a 20-25 percent premium to be “tolerable.”

That’s why many are pretty bearish on CCS. Google CEO Eric Schmidt has likened the current state of CCS technology to a half-baked web tool in need of debugging.

Still with the U.S. government making a significant investment in the tech through the stimulus package, the technology will have to move forward, at least a little bit. The Obama administration’s Recovery Act included $3.4 billion for CCS-related projects, and the EU plans to spend $535 million on CCS and clean coal technology through 2013. Australia, Canada and Norway have said each will invest hundreds of millions of dollars into the industry in the coming years. The ABI report says that between 2009 and 2014, $14.6 billion will be invested in 73 new CCS projects that will sequester 146 million tons of CO2.

A report by Emerging Energy Research published in February found that CCS technology could be ready for commercialization as early as 2016 if demonstration projects go well and governments provide sufficient funding.

Image courtesy Wikimedia Commons user Arnold Paul

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By Katie Fehrenbacher

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  1. Tyler Hamilton Monday, January 4, 2010

    $40 is cheap — several other reports last year have pegged the price higher than $100, a figure many of the oil and coal companies (at least in Canada) are basing their plans on.

  2. Katie Fehrenbacher Tuesday, January 5, 2010

    Thanks Tyler, Can you link those so we can check em out?

  3. Tyler Hamilton Tuesday, January 5, 2010

    Sure, Katie

    http://www.fossil.energy.gov/programs/sequestration/capture/index.html — U.S. DOE — $150 per tonne.

    http://belfercenter.ksg.harvard.edu/files/2009_AlJuaied_Whitmore_Realistic_Costs_of_Carbon_Capture_web.pdf — Harvard study, and deals strictly with capture.

    http://www.ico2n.com/docs/media/ICO2N%20Report_09_final.pdf

    ABI says $40 a tonne to reach true commercial status, but the assumption is that dozens of demonstration projects have been completed that have been heavily subsidized to bridge the gap from current carbon prices and current CCS costs. To say a $40 price today would be enough to stimulate the private-sector investment needed to stimulate wide-scale deployment of CCS is a huge stretch.

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