One North Sea Report


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Assessment of the opportunities for carbon capture and storage in the North Sea Basin under different policy scenarios. Report commissioned by the North Sea Basin Task Force and produced by Element Energy.

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One North Sea Report

  1. 1. A study into North Sea cross-border CO2 transport and storageillustration: © Paul Weston 2010 DESIGN: Report for: On behalf of: The Norwegian Ministry of Petroleum and Energy The North Sea Basin Task Force The UK Foreign and Commonwealth Office
  2. 2. One North Sea One North Sea A study into North Sea cross-border CO 2 transport and storage 18th March 2010 Final Main Report For: The Norwegian Ministry of Petroleum and Energy and The UK Foreign and Commonwealth Office On behalf of: The North Sea Basin Task Force Authors: Page 3
  3. 3. About the Authors About the Authors Contributing organisations Element Energy Limited is a low carbon The following organisations provided consultancy providing a full suite of services important input into this study: from strategic advice to engineering consultancy in the low carbon energy The Norwegian Petroleum Directorate sector. Element Energy’s strengths include provided data on Norwegian demand and techno-economic forecasting and delivering CO2 storage potential, and assisted with strategic advice to clients on all opportunities stakeholder engagement. connected to the low carbon economy. The British Geological Survey (BGS) Element Energy has experience in the design provided input on sink assessment, a of strategies for the coordinated deployment GIS database of storage sites around the of low carbon infrastructure. North Sea and assisted with stakeholder For comments or queries, please contact: engagement. CMS Cameron McKenna provided input +44 (0) 1223 227 532 on legal and regulatory issues and assisted with stakeholder engagement. +44 (0) 1223 227 533 Econ Pöyry developed and modelled scenarios for capture within the power sector and databases of potential locations for capture sites around the North Sea. Carbon Counts provided feedback on the overall report and assisted with stakeholder consultation. Det Norsk Veritas provided feedback on the report’s conclusions and recommendations.Page 4
  4. 4. CaveatCaveatWhile the authors consider that the dataand opinions contained in this report aresound, all parties must rely upon their ownskill and judgement when using it. Theauthors do not make any representation orwarranty, expressed or implied, as to theaccuracy or completeness of the report.There is considerable uncertainty aroundthe development of CCS. The available dataon sources and sinks are extremely limitedand the analysis is therefore based aroundhypothetical scenarios. The maps andcosts are provided for high-level illustrativepurposes and no detailed location-specificstudies have been carried out. The authorsassume no liability for any loss or damagearising from decisions made on the basisof this report. The views and judgementsexpressed here are the opinions of theauthors and do not reflect those of theGovernments of Germany, the Netherlands,Norway or the UK, or Industry/Academic/NGO Representatives of the North Sea BasinTask Force, Contributing Organisations, or Picture: iStockphoto © Kris HankeExpert Stakeholder Group. Page 5
  5. 5. Contents ContentsPage 6
  6. 6. ContentsHighlights 8List of Figures & List of Tables 10Executive Summary 121. Introduction 262. Overview of current CCS activity in Europe 323. Predicting deployment of CCS in the North Sea countries 424. Results 545. Additional drivers for CO2 networks 686. Legal and regulatory issues 807. A ‘One North Sea’ Vision 928. Barriers to achieving the vision 989. Delivering the vision 10210. Acknowledgements 108 Page 7
  7. 7. Highlights Highlights Carbon Capture and Storage (CCS) in the • Cross-border transport could become North Sea countries could play an important increasingly important beyond 2020 in role in European CO2 emissions abatement scenarios with high CCS growth and/or by 2030, with capture volumes above 270 where storage is restricted(for example, million tonnes (Mt) CO2/year. By 2050 this in onshore sinks). Cross border transport could rise above 450 Mt CO2/year. volumes could contribute up to 25% of overall CO2 flows in 2030. The combination of abundant CO2 storage capacity, clusters of CO2 sources, world • Uncertain CCS economic incentives, class research institutes and commercial regulations and viability of specific sinks, stakeholders, and a strong demonstration and limited co-operation and organisation programme makes the North Sea countries of stakeholders, work against private natural leaders for the development and sector investment in capture and large deployment of CCS technology in Europe. scale transport and storage infrastructure. Around fifty per cent of European CO2 • Uncertainties over capture demand storage potential is located under the and storage capacity also impede the North Sea. A large amount of predicted public sector from making the clear CCS demand is located within Germany, commitments to CCS that the private the Netherlands, Norway and the UK, the sector requires. countries of the North Sea Basin Task Force. The geographical clustering of sources Our analysis concludes that the rapid and/or sinks gives opportunities to develop deployment of large scale low cost efficient transport and storage networks. infrastructure by 2030 is technically achievable and is necessary for full Many stakeholders around the North Sea deployment (e.g. the ‘Very High’ scenario have already developed visions for deploying described in this report which stores over safe, cost-effective and timely transport and 270 Mt CO2/year in 2030). However this storage infrastructure, although challenges would require a step change in co-operation have also emerged. in planning by numerous stakeholders, The modelling and stakeholder consultation favourable economic conditions and CCS conducted demonstrate that: cost reduction. With only modest further intervention, the market is likely to deliver • In a ‘Very High’ CCS scenario source only a few of the most straightforward CCS ‘clusters’ or ‘hubs’ could be responsible projects by 2030, storing up to 46 Mt CO2/ for 80% of stored CO2 in 2030. year under the North Sea in a ‘Medium’Page 8
  8. 8. HighlightsFigure 18: Carbon Capture and StorageCCS Decarbonised power for residential & Residential industrial uses CO2 from industrial sources Coal power station CO2 CO2 CO2 from refinery Coastal gas process terminal Gas power CO2 CO2 from hub station cement Ships with production Injection imported CO2 CO2 point Decarbonised Residential Subsea pipeline power for residential & industrial uses 1-3 km storage depth Sink, CO2 underground reservoir graphic: © 2010scenario. The shortfall between ‘Very High’ access to safe storage, for exampleand ‘Medium’ scenarios would need to be through developing frameworks formet by other approaches to CO2 abatement. managing cross-border CO2 flows.The focus for government and industry co- 3. Recognise shared interests, speak with oneoperation around the North Sea should voice and act consistently, where possible, tobe to: promote the development of CCS. 1. Co-ordinate and lead the pre- commercial deployment of CCS in the period to 2020 and beyond. 2. Increase confidence in the location, volumes and reliability of sink capacity in and around the North Sea, and facilitate Page 9
  9. 9. List of figures List of figures Figure 1 CCS activity in the ‘Medium’ scenario in 2030 16 Figure 2 CCS activity in the ‘Very High’ scenario in 2030 17 Figure 3 Timeline reflecting the focus of CCS stakeholders in the North Sea region (assumes ‘Very High’ scenario) 24 Figure 3.1 A One North Sea vision 24 Figure 4 Approach taken to identify cross-border CCS demand around the North Sea and requirements for NSBTF to facilitate optimum transport and storage networks 44 Figure 5 Methodology for source-sink matching 51 Figure 6 Development of ‘Very High’ and ‘Medium’ CCS deployment scenarios 52 Figure 7 Map of 2020 CCS demonstration projects 57 Figure 8 Map of source-sink connections in 2030 – ‘Medium’ Scenario 59 Figure 9 Map of CCS transport and storage in 2030 – ‘Very high’ scenario 61 Figure 10 CO2 transport in 2050 – Very High Scenario. (No restrictions on transport or storage) 65 Figure 11 Existing gas and oil pipelines in the North Sea 72 Figure 12 Schematic of options for transport network topologies. A) Point-to-point; B) ‘Oversized’ Pipeline; C) Rights-of-way for pipelines; D) Shipping and shipping hub concept. 75 Figure 13 Overview of the DNV co-ordinated Joint Industry Projects (JIP) to develop CCS guidelines. (Image courtesy DNV) 84 Figure 14 Cross-border issues 91 Figure 15 A One North Sea vision 96 Figure 16 Virtuous circle of CCS policy development and investment in capture, transport and storage infrastructure 105 Figure 17 Timeline reflecting the focus of CCS stakeholders in the North Sea region (assumes ‘Very High’ scenario) 107 Figure 18 CCS scenario graphic 111Page 10
  10. 10. List of tablesList of tablesTable 1 Summary of effects of transport and storage restrictions on CCS uptake in the NSBTF countries and Denmark 18Table 2 Summary of capture, transport and storage issues in the NSBTF countries 21Table 3 CCS demand in Europe in 2030 in three recent studies 29Table 4 Summary of the market and policy combinations in 2030 used as inputs for the Classic Carbon model 45Table 5 Projected CO2 capture investment from the Classic Carbon and PRIMES models 46Table 6 Modelled Mt CO2 storage capacity in depleted hydrocarbon fields in the GIS database with 30Mt filter 49Table 7 Modelled Mt CO2 storage capacity in saline aquifers in the GIS database 49Table 8 Summary of transport and storage inputs for the CCS deployment scenarios 53Table 9 Development of ‘Medium’ scenario 58Table 10 Development of ‘Very High’ Scenario 60Table 11 Summary of sensitivity analysis conducted on the ‘Very High’ scenario 63Table 12 Comparison of transport network topology options 76 Page 11
  11. 11. Executive Summary Executive SummaryPage 12
  12. 12. Executive SummaryExecutive Summary 14Background 14Our Approach 14Analysis 15A ‘One North Sea’ vision 19Barriers to CCS in the North Sea region 21Suggested actions for theNorth Sea Basin Task Force 22Actions for Governments of the NSBTFto facilitate cross-border CO2 flows 23 Page 13
  13. 13. Executive Summary Executive Summary demand for cross-border transport and storage, and (ii) government actions and principles to support the management of CO2 flows across national borders Background (‘transboundary’) and optimise the rapid development of CO2 transport infrastructure. The European Union, its member states and Norway, have pledged to dramatically Our Approach reduce emissions of carbon dioxide The approach taken in this study combined over the next decades, in order to avoid a review of policies and initiatives to support dangerous climate change. Meeting CO2 CCS at EU level, and within Norway, reduction targets will require action in the UK, the Netherlands and Germany, every sector. Alongside renewable energy economic modelling of CCS demand and technologies, nuclear power, and energy CO2 transport and storage scenarios and efficiency measures, carbon dioxide capture networks, an analysis of legal and regulatory and storage (CCS) has the potential to barriers to achieving CCS deployment, and substantially reduce future CO2 emissions a three-month consultation exercise involving from electricity generation and industry. more than forty government, industry and Recent studies suggest that CCS could (in a academic stakeholders. cost effective manner) provide up to 20% of European CO2 abatement by 2030, reducing Scenarios for investment in capture, emissions by 0.4 Gt CO2/year (IEA, 2009, transport and storage in 2030 and 2050 McKinsey 2008). By 2050 this could rise were developed by the project team above 1 Gt CO2/year. and stakeholders to understand how the quantities and geographic distribution of Within Europe, the North Sea region has CO2 capture, transport and storage might a natural role in the development of CCS, develop. due to high concentrations of industrial and power sector emissions and access Projected investments in capture technology to an abundant and diverse resource of at power plants were determined using potential storage sites under the North a model of the European power sector, Sea. Against this backdrop, the UK developed by Econ Pöyry. A database for Foreign and Commonwealth Office and storage capacities of potential sites in the Norwegian Ministry of Petroleum and Energy North Sea countries was provided by the commissioned the ‘One North Sea’ study British Geological Survey and Norwegian in September 2009, on behalf of the North Petroleum Directorate, drawing on the recent Sea Basin Task Force (NSBTF), to establish EU GeoCapacity study1. a vision of the potential role of the North Sea in the future deployment of CCS across These data were used as inputs to Element Europe, and propose a strategy for its Energy’s CO2 network optimisation model, delivery. which identified plausible matches of sources and sinks. The network model was used To understand the role for co-ordinated to analyse the distribution of CCS across activity amongst the governments of the the North Sea countries, with particular NSBTF, a team led by Element Energy emphasis on cross-border transport of carried out an examination of (i) likely CO2 for the different scenarios. All resultsPage 14 1
  14. 14. Executive Summaryand interpretations were shared with the further two under development at Kårstoexpert stakeholder group. The stakeholder and Mongstad. The UK has a commitmentengagement provided local knowledge and to fund four CCS demonstration projectsrevealed where expectations differ. and is part-way through the development of significant long-term regulatoryCMS Cameron McKenna analysed legal frameworks to support large scaleand regulatory issues. The report was deployment of CCS. The Government ofreviewed in full by Carbon Counts, and the Netherlands is amending legislation andrecommendations were additionally reviewed developing a Masterplan for CO2 transportby DNV. This final version of the report and storage infrastructure. Germanincorporates feedback from stakeholders on Government support is directed throughthe interim and draft final versions. two research programs, focused on power plant efficiency, capture and storage.Analysis As a result of the policy support and public financing for CCS demonstration,At European level, the most important CCS CCS demand in 2020 is modelled aspolicies have been: approximately 30 MtCO2/yr in the NSBTF countries. • Passing of the CCS Directive in 2009, which has established a legal framework Once satisfactory capture and storage for geological CO2 storage exploration, locations have been identified, transport operation and closure. choices would primarily be based on considerations of capacity, distance and • Partial funding for six large-scale CCS terrain which influence capital and lifetime demonstration projects from the European costs, and planning and consenting risks Energy Programme for Recovery. and timescales. Additional drivers include financing, predicted utilization, economic • A commitment to fund up to twelve use of CO2 (such as for enhanced oil large-scale CCS demonstration projects recovery or in greenhouses), infrastructure using 300 million emissions trading re-use, shipping and clustering. scheme allowances from the New Entrants Reserve. Cross-border transport of CO2 between NSBTF members before 2020 is not strictly • Inclusion of CCS within the next phase necessary. This is primarily because each of the Emissions Trading Scheme. country has sufficient domestic capacity • Funding research, development and to match demand. Some stakeholders communication activities, for example nevertheless express interest in cross- through the Framework programmes. border CO2 transport beginning after 2016, possibly by ship, from Germany, Belgium,The four Governments represented on Northern France, Sweden or Finland tothe North Sea Basin Task Force have British, Norwegian or Dutch sinks, anddevoted considerable efforts to removing from the Netherlands to Denmark for CO2-legal obstacles and supporting research, enhanced oil recovery. It is not clear howdevelopment and demonstration of CCS. well developed these proposals are.Norway already has two CCS projects inoperation at Sleipner and Snøhvit, and a Page 15
  15. 15. Executive Summary Legend - graphic: © ElementEnergy 2010 2030 Sinks 30 year annual capacity (Mt/yr) <2.5 2.5-5 5 Mt/yr 5-10 10-15 5 Mt/yr 15-20 10 Mt/yr 20-50 50+ Sources 5 Mt/yr 2020 Demonstrations 10 Mt/yr 2030 Source-sink matches Large uncertainty 5 Mt/yr 5 Mt/yr over pipeline routes and CO2 injection locations 0 500 1000 Kilometres Figure 1: CCS activity in the ‘Medium’ scenario 2030 Source clusters with shared infrastructure policies and progress in CCS beyond are unlikely to occur before 2020, although currently announced CCS demonstrations. careful design and implementation of the The scenario reflects a future where there demonstration projects could expedite the are limited opportunities for storage, and development of larger networks between relatively simple ‘point-to-point’ transport 2020 and 2030. The strengths and infrastructure. weaknesses in facilitating transport growth of point-to-point pipelines, shared rights of However, with optimistic assumptions way, integrated pipelines and shipping are on CCS demand and a step-change in compared in the report. co-ordinated efforts to deliver large scale transport and storage, CCS could play a For 2030, due to uncertainty, a range important role in European CO2 abatement of different CCS deployment levels are efforts by 2030. For example, Figure 2 analysed. The economic modelling and shows the overall quantity and distribution stakeholder feedback identify an overall of CO2 capture and storage projects in the demand for CCS in the NSBTF countries NSBTF countries and Denmark in a ‘Very and Denmark of ca. 46 MtCO2/year in 2030. High’ CCS scenario, where 270 Mt CO2/yr This is the ‘Medium’ scenario, illustrated in is captured and stored in 2030. Figure 1, and is consistent with modestPage 16
  16. 16. Executive Summary Legend graphic: 2030 Sinks © ElementEnergy 2010 30 year annual capacity (Mt/yr) <2.5 2.5-5 5 Mt/yr 5-10 10-15 10 Mt/yr 15-20 20-50 50+ Sources 20 Mt/yr 40 Mt/yr 60 Mt/yr Source clusters 2030 Power sector source Industrial Sources 10 Mt/yr 43 Mt/yr 20 Mt/yr 40 Mt/yr 0 500 1000 KilometresFigure 2: CCS activity in the Very High scenario in 2030In a ‘Very High’ scenario, CCS projects of some of these restrictions on the overallwould share transport and particularly uptake of CCS in the North Sea countriesstorage infrastructure due to geographical by 2030. Storage restrictions also have aaggregation of sources and sinks. Seven significant effect on CCS deployment, both onsuch clusters in the North Sea countries the number and cost on projects that may beare responsible for 80% of CO2 transported forced to transport CO2 to more distant this scenario in 2030. In this scenario,60% of CO2 storage is under the North Sea.Cross-border transport comprises 10 – 15%of overall CO2 storage by 2030.Energy and climate policies are vital driversfor CCS in Europe in 2030. However, verylarge scale of CCS deployment by 2030is additionally sensitive to restrictions ontransport and storage, as well as the overallinvestment in capture technology by individualplants. Table 1 (next page) shows the effect Page 17
  17. 17. Executive Summary % Mt/yr Cross- Aquifer Onshore Cross- Scenarios stored border capacity storage border in 2030 transport permitted flow permitted ‘Very High’ deployment 273 Yes High Yes 10% Decreasing CO2 volume No cross-border transport and storage 253 No High Yes 0% agreements No hydrocarbon 8% 205 Yes High Yes fields Reduce Low aquifer capacity 191 Yes by 90% Yes 20% Restricted onshore 178 Yes High No 25% storage Low capture 65 Yes High Yes 21% investment Medium scenario Reduce 46 No No 0% by 90% Table 1: Summary of effects of transport and storage restrictions on CCS uptake in the NSBTF countries and Denmark The potential value of the CCS industry in deployment in 2030, a number of legal and Europe is very high. The IEA’s CCS Roadmap regulatory issues will need to be resolved envisages cumulative investment in CCS of before 2020. These include: US$6.8 billion in OECD Europe by 2020, with a total of $590 billion by 2050. For transport • Satisfactory regulations for exploration and storage alone, the comparable figures are and storage licenses, particularly liabilities, US$2.6 billion by 2020 and US$140 billion within national laws. by 2050. In some scenarios, the capacity of the transport and storage infrastructure would • Clarifying jurisdictional responsibilities exceed the capacity of existing North Sea and approaches for elements of CCS oil and gas infrastructure. The industries in – including handover of stewardship the North Sea could leverage home-grown of hydrocarbon sites for CO2 storage, experience to capture a large proportion of risk management, site qualification, the global market – the IEA estimates the monitoring, verification, accounting, cumulative value to be US$5 trillion by 2050. reporting, decommissioning, and monitoring. There are long lead times for delivery of international legal agreements and major • Legal rights to transport captured CO2 infrastructure. International agreements often across borders, which require ratification take several years to broker, and it can take of the recent amendments to the Ospar more than ten years from early design to the Protocol and London Convention. eventual operation of a large pipeline that crosses international borders. Therefore in the event of a ‘Very High’ scenario for CCSPage 18
  18. 18. Executive Summary • Clarifying emissions accounting rules the development of CCS incentives at for integrated CCS networks spanning European and global levels. multiple countries, with diverse sources, sinks and transport solutions. • A more detailed picture of the useful storage capacity within the North Sea • Agreements on the management will have been developed, increasing of cross-border issues, such as confidence for policymakers and transboundary transport and storage commercial stakeholders alike. infrastructure, sinks that span national borders, and the management of potential • The demonstration projects will be impacts from a project developed in one optimised to ensure the necessary learning country on a second country. and growth is achieved efficiently, with best practices developed and communicated on capture, transport, and storage.A ‘One North • Appropriate legislation will be in place toSea’ Vision facilitate the large scale commercial storage of CO2 under the North Sea, and its potential transfer between member states.The member states and commercial partnersof the NSBTF are in a natural leadership Mid-termposition on CCS, due to: Assuming successful demonstration, a ramping • Abundant sink capacity and source up of commercial CCS deployment in the clustering, potentially leading to lower period 2020 – 2030 so that by 2030 the costs for deployment. technology is making a significant contribution to CO2 abatement within Europe. • The opportunity to capitalise on commercial activity within NSBTF member • Incentives for CCS (such as CO2 prices) will states, to act as a supplier of CCS be sufficient and long-term so as to encourage technologies and expertise, which, once a growing number of large scale commercial proven, can be exported worldwide. projects.We suggest the following vision for CCS • The legislation developed in the near term, willwithin the North Sea region: support an increasing volume of cross border flows. This mutual support will help dilute andNear term reduce risk and costs amongst North Sea member states.A coordinated set of demonstration and pre-commercial projects in the period to 2020 • By the end of this period, the CO2 flows in theproving key elements of the technology as North Sea region and the industry required toeconomically viable, and thereby establishing develop it, approach the capacity of the oil andthe NSBTF countries alongside world leaders gas industry in the North Sea.of technology development and deployment. • Industry in the NSBTF countries will exploit the • There will be significant efforts by the knowledge acquired through demonstration and governments and stakeholders of the scale up, exporting technologies and services to NSBTF to coordinate efforts on a worldwide market. Page 19
  19. 19. Executive Summary Long term to attract and retain carbon- and energy- intensive industries, allowing them to Assuming successful CCS deployment, in operate cost-effectively within a low the period up to 2050 where necessary we carbon economy. will see: • The CO2 storage capacity of the • Many additional sources, including NSBTF countries will be harnessed to industrial sources, will connect to CCS facilitate the development of a low carbon networks, further increasing overall economy beyond the NSBTF countries, abatement. for example, import of captured CO2 or • A well-established transport and net export of low carbon electricity to storage infrastructure will allow the region other European nations.Page 20
  20. 20. Executive SummaryBarriers to CCS in the incentives, the usefulness of specific storage sites, and the transfers of liabilities, there is aNorth Sea region risk that the industry will not develop beyond a small number of demonstration scale plants between now and 2030. Currently,The modelling and stakeholder review the barriers to CCS, and the progress beingidentified that although the potential for made to reduce them, vary substantiallyCCS in NSBTF countries is very large, there between the countries of the uncertainty at every part of the valuechain. Unless steps are taken to provide Table 2 summarises the issues facinggreater certainty, for example over capture each country.Table 2: Summary of capture, transport and storage issues in the NSBTF countries Country Norway UK Germany Holland Maximum annual Mt CO2 captured in Up to 7 Up to 60 Up to 160 Up to 40 2030 Projects Progress with operational and Projects in design phase. Small pilots operational demonstration under construction Capture policy Strong policy Strong policy for Strong CO2 CCS policies support CCS with new reduction agreed by coal plant commitments Parliament but limited existing CCS polocies Sufficiency of Excess capacity, Excess capacity, Sufficient theoretical capacity, but storage capacity with potential to but limited sink use sensitive to conditions. for high demand store CO2 from maturation so far Cross-border transport reduces risks other countries if domestic storage is not available Transport issues Pipeline re-use Intervention may be needed to facilitate optimal growth potential of networks. Some pipeline reuse potential Prevailing cross-border Import, export Import Import Export opportunity in 2030 or hub Page 21
  21. 21. Executive Summary The barriers facing the CCS industry in The first four of these require the organisation, Europe and the North Sea countries can be expertise and interests of the governments summarised as follows: of the North Sea countries, representatives of the CCS industry, and key independent 1. Insufficient incentives for CO2 capture stakeholders. Therefore, given its unique remain the biggest barrier to widespread membership and terms of reference, these Su CCS deployment in Europe. could logically be actions for the full NSBTF. fo 2. Whilst overall theoretical capacity estimates are high, storage opportunities The fifth recommendation relates to facilitating N for CO2 are highly site-specific. Information cross-border CCS projects, and this would on the locations, capacities, suitability and need to remain the exclusive responsibility Ta availability of individual sinks is currently of the Governments, although this could still too limited to support Europe-wide policies occur within the auspices of the NSBTF. and investments that would result in significant CCS activity. Actions for the NSBTF (or other 3. A vicious circle comprising high consortia combining the interests uncertainties over the demand for CCS, of public and private stakeholders investment in integrated infrastructure, in the region) sink suitability and availability, technology development and public policy across Recommendation 1 Europe creates a real risk that investments in CCS infrastructure, for example in Recognising the limitations of existing data shared pipelines, will not proceed quickly on sink capacity, availability, and suitability, enough to enable a large-scale roll-out of and long lead times for storage assessment CCS in the period 2020 to 2030. and validation, the NSBTF (or others) should, by 2012, consider a shared CO2 storage 4. There is limited clarity on CO2 storage assessment to improve the consistency, regulations, creating challenging business quality and credibility of North Sea storage models for storage. capacity estimation, mapping, suitability assessment, and/or validation. 5. An absence of strong public support for CCS as a whole and for constituent Recommendation 2 elements. Recognising the potential for information Recommended actions to reduce uncertainties and optimise the development of CO2 transport and storage infrastructure, the NSBTF (or others) should On the basis of the analysis undertaken and continue to assess and publish biennial long- associated stakeholder consultation, this range reviews of opportunities and challenges report identifies steps that need to occur at for CCS-related activity in and around the global and European levels to deliver CCS. North Sea region. We make five specific recommendations for The next review should include: activities at North Sea level that should ensure CCS could be a viable large scale CO2- i. Updated assessments of the economic abatement strategy for the NSBTF countries. potentials, timing, organisation andPage 22
  22. 22. Executive Summary implementation of capture, transport, Actions for Governments to storage, enhanced oil recovery, and infrastructure re-use. facilitate cross-border CO2 flows The analysis in this report identifies that cross- ii. Updates on relevant national and border CO2 transport and storage could play uggested actions European policies and guidelines, and a useful role by 2030. The Governments of comparison of technical, legal, regulatoryor the or commercial barriers for CCS in the NSBTF member states are best placed to address these cross-border issues, and we North Sea region with other regions of theNorth Sea Basin world. recommend the following actions: ask Force iii. A review of low cost near term Recommendation 5 measures that could substantially reduce Before 2014 the NSBTF Government the long-term costs of CCS, for instance Members should review progress on cross- data sharing, future-proofing specific sites border issues and expected demand, and if or infrastructure, or increased organisation. necessary the Governments should publish iv. Case studies providing as much detail a formal statement of intent to agree terms as possible on site-specific opportunities where required in respect of the management and challenges for capture, transport and of cross-border flows or potential impacts, storage. infrastructure and storage complexes. Whilst the exact timing and focus will depend Recommendation 3 on the outcome of this review and expected Recognising that depleted hydrocarbon lead times, Governments should consider reservoirs in the North Sea are promising early developing frameworks in the period 2015 – storage sites, in the period 2010 – 2015 the 2020 for: NSBTF (or others) should share experience • The management of potential impacts and thereby develop guidelines on how of CO2 storage projects developed in one stewardship should be transferred between country on a second country. hydrocarbon extraction, Government, and CO2 storage. • The management of liabilities for CO2 transported from one country and stored in Recommendation 4 a second country. Recognising that influencing policy • The management of CO2 storage development and sharing information at global complexes that span national borders, for and particularly European levels will be critical example exploration, leasing and licensing in developing CCS around the North Sea, the of pore spaces, short and long-term governments and members of the NSBTF (or monitoring and liabilities. others) must continue to show leadership and co-operation in the development of legislation, • The permitting, construction, operation, and in sharing information where appropriate, decommissioning and liability issues to support CCS, in their own countries, at for physical CCS infrastructure such as European level and in global forums. pipelines and injection facilities that span borders. Page 23
  23. 23. Executive Summary Vision Coordinated demonstration Ramp up of infrastructure Contribute significantly to EU CO2 abatement Ensure readiness to deploy Policy clarity Capacity exceeds North Sea oil Prove the technical & Ensure many types of Connect many sources Technology economic potential of CCS sources can be captured & sinks Reduce costs developers Improve storage assessments Mature sinks Transport & Facilitate long-term capacity growth storage Deliver demonstration Develop large scale infrastructure infrastructure Validate stores Projects share infrastructure Demonstration Cross-border legislation in place Policy Enabling EU & domestic Long-term incentives Capture from existing power focus legislation Long-term regulatory frameworks sources & industry CCS readiness 2010 2015 2020 2030 Figure 3: Timeline reflecting the focus of CCS stakeholders in the North Sea region (assumes ‘Very High’ scenario).Page 24
  24. 24. Executive SummaryFigure 15:A ‘One North Sea’ visionFigure 3.1:A ‘One North Sea’ vision Depleted hydrocarbon field or Decarbonised CO2 pipeline aquifer Enhanced CO2 pipeline electricity for oil recovery homes & businesses NATIONAL BOUNDARY CO2 ships CO2 Electric Central & vehicles northern North Sea aquifers Cross-border pipelines CO2 Reused natural gas pipeline Export decarbonised Onshore CO2 power storage CO2 1-3 201 0 km n. infoCO2 ships e sto a ulw w w.p : ©w Depleted phic gra gas field CO2 NATIONAL BOUNDARY Large aquifer Page 25
  25. 25. Chapter 00 - Chapter title 1 - Introduction IntroductionPage 26 1 1. Reference notes 2. Reference notes
  26. 26. Chapter 00 - Chapter title Chapter 1 - Introduction1 Introduction 281.1 The role of CCS in meeting European CO2 reductions targets 281.2 The One North Sea project 291.3 Structure of the report 301. Reference notes Page 272. Reference notes
  27. 27. Chapter 1 - Introduction 1 Introduction 2011-2020,2 approximately one third are located in the four NSBTF countries. The NSBTF countries therefore have the 1.1 The role of CCS in opportunities to become world leaders in CCS implementation in the next decade meeting European and to capture a share of a potentially large global market (valued at potentially several CO2 reduction targets trillion dollars2) for CCS technologies and services in the future. Therefore, in addition to facilitating CO2 emission reduction from National, European and global models for carbon-intensive industries, the CCS industry keeping within levels of atmospheric CO2 could become an important export industry3. concentrations that could restrict climate change to within 2ºC of mean temperature Most European countries are expected to change conclude that Carbon dioxide remain reliant on fossil fuels beyond 2030. Capture and Storage (CCS) is likely to CCS allows the use of fossil fuels (especially be part of a cost-effective CO2 reduction coal) in power generation and industry in a strategy. The International Energy Agency carbon-constrained economy. For Europe (IEA, 2008) conclude that CCS could provide as a whole, the ability to use coal decreases 19% of world CO2 emissions abatement in reliance on natural gas for which security of 2050, and that without CCS, the costs of supply is an important concern. In the longer constraining emissions increase by 70%. term, CCS can also be applied to biomass McKinsey (2008) demonstrates that CCS power or biofuel production, potentially could provide 20% of European emissions resulting in “negative CO2 emissions”. abatement by 2030. Of more than 70 CCS demonstration projects proposed worldwide for the period Picture: iStockphoto © AlohaspiritPage 28 2 IEA CCS Roadmap (2009), available at 3 Scottish Enterprise (2005), Carbon capture and storage market opportunities;ns_type=pdf An Industrial Strategy for CCS in the UK is available at
  28. 28. Chapter 1 - IntroductionTable 3: CCS demand in Europe in 2030 in four recent studies Region Capture Mt CO2/year modelled 2020 2030 2050 Reference IEA CCS OECD Europe 37 300 1000 roadmap 2009 Europe 40 400 Not determined McKinsey 2008 University of EU27 Not published 65-517 Not published Athens Primes model1.2 The One North Sea ProjectIn September 2009, the UK and Norwegian CO2 transport infrastructure.governments commissioned the ‘One NorthSea’ project on behalf of the North Sea Basin The study was led by Element Energy Ltd,Task Force. with significant input from Econ Pöyry, the Norwegian Petroleum Directorate,The One North Sea project extends previous Cameron McKenna, The British Geologicalanalysis by the Task Force4 and aims to Survey, and Carbon Counts. This reportestablish a vision of the potential role of the presents the outcomes from the study,North Sea in the future deployment of CCS which was based on an extensiveacross Europe, and propose a strategy for its scenario development, modelling anddelivery. consultation with key stakeholders listed in the Acknowledgements. This documentThe key objectives of the study are to: represents the final report and major • Establish the likely demand for North deliverable from the study. The final report Sea CO2 storage, including when this will accommodates feedback received from arise. stakeholders on interim and draft final versions of the report. • Identify key government and industry actions and principles to support the management of transboundary CO2 flows and optimise the rapid development of4 Available at Page 29
  29. 29. Chapter 1 - Introduction 1.3 Structure of the report The report is ordered as follows: • Section 2 provides an overview of current CCS activity within the European Union, and, the four countries of the North Sea Basin Task Force - Germany, Netherlands, Norway, and the UK. • Section 3 describes the approach taken to understanding the demand for storage, which involved scenario development, technical modelling and stakeholder engagement. The section includes a critical review on data quality, particularly with respect to estimating storage capacities. • Section 4 presents the results of CCS deployment scenarios. It includes analysis of the overall quantities and patterns of CO2 activity in the North Sea countries, and investigates the effect of restrictions on CO2 transport and storage within and between countries. • Section 5 analyses additional drivers for CCS development, including infrastructure re- use, EOR, shipping, and source clustering. • Section 6 presents legal and regulatory issues surrounding CCS deployment in Europe, with a focus on issues affecting cross-border transport and storage of CO2. • Section 7 brings together the preceding analysis, and suggests a vision for the development of CCS as a safe and cost-effective CO2 abatement technology for the North Sea region. • Section 8 lists the main barriers to delivering this vision. • Section 9 proposes a strategy for delivering this vision. • Section 10 lists the expert stakeholder group who provided input to this study. The report is supplemented with appendices that provide: • A technical description of the methodology used to estimate CO2 storage potentials with a critical review on the consistency of methodologies used to calculate CO2 storage capacity. • A technical description of the CCS demand scenarios and results identified in this study. • A map and description of proposed CCS demonstration projects in Europe. • A description of the North Sea Basin Task Force. • A list of important European CCS Research and Development programmes of relevance to the North Sea Basin Task Force. • A commercial perspective on legal and regulatory issues for integrated transport networks.Page 30
  30. 30. Chapter 1 - Introduction Picture: iStockphoto © Vera Tomonkova Page 31
  31. 31. Chapter 00 - Chapter title 2 - Overview Overview of current CCS activity in EuropePage 32 2 1. Reference notes 2. Reference notes
  32. 32. Chapter 00 - 2 - Overview Chapter Chapter title2 Overview of current CCS activity in Europe 342.1 European Union CCS initiatives 342.1.1 The CCS directive 342.1.2 EEPR funding for CCS demonstration 352.1.3 NER300 funding for CCS demonstration and innovative renewables 352.1.4 Funding CCS deployment via the EU-ETS 352.1.5 Funding research and development in CCS 362.1.6 EU CCS Network 362.2 CCS Activity in Norway 362.3 CCS Activity in the UK 372.3.1 Current and planned programmes and projects 392.4 CCS Activity in the Netherlands 392.5 CCS Activity in Germany 412.5.1 Current programmes and activities 411. Reference notes Page 332. Reference notes
  33. 33. Chapter 2 - Overview 2 Overview of current 2.1.1 The CCS directive CCS activity in The CCS Directive, adopted in 2009, establishes a legal framework for the Europe environmentally safe geological storage of CO2 in the territory, exclusive economic zones To understand the potential for CO2 storage and continental shelves of EU member states. under the North Sea and the role of cross- Key elements of the framework are: border CO2 transport and storage in facilitating 1. CO2 exploration must only be carried this, this Chapter identifies relevant existing out with a permit. and planned EU, Norwegian, British, Dutch and German CCS policies and initiatives. 2. CO2 storage must only be carried out These will be the principal determinants of with a permit from a competent authority in CCS demand around the North Sea in the a Member State. Member States must put period up to and beyond 2020. in place (i) a system for granting permits objectively and transparently; and (ii) arrangements for financial security. 2.1 European Union 3. CO2 streams must consist CCS initiatives “overwhelmingly” of carbon dioxide. 4. During injection, operators must monitor The EU’s strategic energy technology storage sites – and competent authorities roadmap foresees an important role for must carry out routine inspections. CCS. The EU is directing resources5 towards developing the political, economic, social, 5. Operators remain responsible for on- technological, legal and environmental going monitoring, reporting and corrective foundations for safe and successful CCS measures, as well as obligations regarding demonstration and deployment. the surrender of allowances in the case of leakage and all preventative and remedial Of note, the European Technology Platform action. for Zero Emission Fossil Fuel Power Plants (known as ‘ZEP’), initiated by the European 6. Closure requires that (i) all available Commission in 2005, is an influential coalition evidence indicates that the stored CO2 will of European utilities, power companies, be completely and permanently contained; equipment suppliers, academics, and (ii) 20 years has elapsed since injection; environmental NGOs. Working with ZEP, the (iii) the site has been sealed and injection European Commission has developed CCS facilities have been removed; (iv) the legislation (the CCS directive), passed by operator has made a financial contribution the European Parliament, and the EU has to the anticipated cost of monitoring for agreed to co-fund a programme for CCS 30 years after closure. If the site is closed, demonstration. These are described below. the liabilities for monitoring and corrective On the basis of ZEP’s 2009 CCS knowledge measures, the surrender of allowances sharing proposal, the EU is launching its CCS in the case of leakage, and preventative project network.Page 34 5 For a recent comparison of investment in CCS by the EU, member states and industry, see
  34. 34. Chapter 2 - Overview and remedial action are transferred to the 2.1.3 NER300 funding for competent authority. CCS demonstration and 7. Operators of CO2 networks provide innovative renewables non-discriminatory access to third parties, and may be required to provide additional The EU has agreed that 300 million network capacity in order to accept third emissions allowances will be set aside party connections. from the new entrants reserve to stimulate the construction and operation by the endTo date, no country has fully implemented the of 2015 of up to 12 commercial CCSCCS Storage Directive in national law. Some demonstration projects as well as Renewablestorage developers criticise the Directive for Energy demonstration projects across thecreating, in their view, onerous requirements EU. Proposals will need to be submitted inin respect of financing unclear and potentially 2010, with awards made by the end of 2011large post-closure costs and liabilities. and 2013. How quickly developers will beChallenges in managing liabilities for multiple able to access these funds and under whatusers injecting into different locations - or at contractual conditions remains unclear.different times - within the same storage unit,remain unresolved. 2.1.4 Funding CCS deployment via the EU-ETS2.1.2 EEPR funding for CCS demonstration From 2013, CCS will be included within the EU Emissions Trading Scheme. AllowancesThe EU has approved the allocation of will not need to be surrendered for emissionsEur 1.05 billion from the European Energy that are avoided through the permanentProgramme for Recovery to the following storage of CO2 in licensed sites. TheCCS projects, which includes three projects situation for vertically integrated projects isin the NSBTF countries. therefore relatively straightforward. However, before 2030 the rules on CCS within the ETS • Pre-combustion capture at Powerfuel may need to be modified if transport and Ltd, Hatfield, UK storage infrastructure become increasingly • Oxyfuel and post-combustion networked, spans multiple countries, at Vattenfall Europe Generation, includes commercial applications for CO2 or Jaenschwalde, Germany involves sources capturing CO2 derived from biomass. • Post-combustion CCS at Maasvlakte, Rotterdam, the Netherlands Uncertainty about the long-run price of emissions allowances under the EU ETS is • Post-combustion CCS at PGE the largest financial risk facing commercial Elektrownia Belchatow, Belchatow, Poland development of CCS projects and infrastructure. Unlike renewables, energy • Oxyfuel CCS at Endesa Generacion, efficiency, and even nuclear energy, for Compostilla, Spain which technology and commercial risks are • Post-combustion CCS at Enel smaller, CCS project revenues are critically Ingegneria e prod, Porte Tolle, Italy dependent on prices for avoided CO2, and additional incentives prior to commercial roll out. Capital intensive investments, highly Page 35
  35. 35. Chapter 2 - Overview uncertain revenues, and novel technology/ In January 2008, Gassnova SF, a state- supply chain combinations together owned enterprise designed to manage discourage investment in CCS. the government’s investments in CCS, was established. Its responsibilities include 2.1.5 Funding research and research and development funding advice development in CCS (CLIMIT programme, see below), large-scale CO2 projects development and execution, The EU also supports CCS research and acting as an adviser to the Norwegian and development projects through its government. framework programme (FP5, FP66, FP7). A list of collaborative European CCS research Gassnova’s projects include: programmes is provided in the Appendix. • The European CO2 Test Centre 2.1.6 EU CCS Network Mongstad (TCM): construction of TCM started in June 2009 and the centre The European Commission is establishing should be operational by the end of 2011. a CCS Network ( The plant will have the capacity to capture The main objective of the network will be up to 0.1 Mt CO2 /year. to facilitate knowledge sharing among participants and stakeholders in the • The full scale CO2 capture plant from gas turbine power at Mongstad, which demonstration programme. should become operational in 2014 and 2.2 CCS Activity will have capacity to capture 1.3 million tons of CO2 . in Norway • Large-scale CO2 capture from a gas turbine power plant at Kårstø; and Norway has undertaken to reduce its • The large-scale CO2 transportation greenhouse gas emissions by 30% of its and storage from Kårstø and Mongstad 1990 emissions by 2020. It has also pledged projects to subsea storage locations, most to achieve carbon neutrality, reducing global likely the Utsira or Johanson formations. greenhouse gas emissions by the equivalent of 100% of its own emissions by 2050. CCS Gassnova SF together with the Research is viewed as an important tool to achieve this Council of Norway administers a Research goal. and Development Programme on Power Generation with Carbon Capture and Storage Norway has 13 years’ experience of CCS (CLIMIT). The programme provided funding up operations, which started in 1996 with CO2 to NOK 68.5 m (£7.5 m) in 2009 for activities storage at the Sleipner field in the North aimed at research, development, and Sea (10 Mt CO2 has been stored so far). A demonstration up to early commercialisation second project at the Snøhvit field for liquefied of CCS solutions for emissions from natural gas in the Barents Sea began in 2008. fossil fuel-based energy production. The 0.7 Mt CO2/year are separated from natural programme has a total budget of NOK 180 m gas onshore every year and re-injected in the in 2010, and the mandate will be extended to formation below the seabed. These projects include CO2 emissions from industry sources. were permitted by the Norwegian Pollution Control Authority (SFT) under the Pollution In Norway, the government plays a very active Control Act. role in executing CCS projects which involvesPage 36 6 EU FP6 funding for CCS has been of the order of 70 million Euros or 17 million Euros per year of the programme
  36. 36. Chapter 2 - Overviewcontracting with companies to build theprojects (through Gassnova SF) and providing 2.3 CCS Activity infull funding. the UKHowever, the Gassnova projects have stillencountered challenges that may be relevant The UK has a legally binding target of at leastfor projects elsewhere: an 80% cut in greenhouse gas emissions by 2050, as well as a reduction in emissions • Costs for storage evaluation may prove of at least 34% by 2020, against a 1990 higher than initially expected. baseline. Analysis by the UK’s Committee • The timescale for developing projects on Climate Change suggests that complete has been longer than originally estimated. decarbonisation of the electricity sector by Political agreement has taken longer, 2030 is essential to meet the 2050 target. as have the collection, processing and The UK government acknowledges that CCS interpretation of seismic data and securing could play a major role in decarbonising the agreements with oil- and gas industry electricity sector, and has taken significant stakeholders. steps to encourage its demonstration and • Restrictions have emerged on storage deployment. The gross value added to the potential, which is therefore lower in UK from new advanced coal-fired power capacity than originally envisaged, and generation including with CCS industry has on where and when CO2 injection will be been estimated8 as £20-40 billion in total allowed which has added to storage costs. between 2010 and 2030 withCCS as part of petroleum activities (whether • £1 – 2 bn/year in 2020 with 2,100for EOR or permanent storage) can today CCS-related jobsbe regulated under the legal regime for • £2 – 4 bn/year in 2030 with up topetroleum activities, i.e. the Petroleum 30,000 CCS-related jobsAct and Regulations (including HSE), thePollution Control Act and Regulations, and the The Energy Act 2008 creates a legal andCO2-levies Act. Since Norway has passed regulatory framework for CCS, whichlegislation for a national emission trading implements part of the EU CCS Directive.scheme to allow it to link the EU ETS, it will Implementation of the recent Marine andlikely harmonise rules for CO2 storage with Coastal Act and Planning Act should alsothose in the EU ETS. streamline the planning process.The Norwegian Petroleum Directorate (NPD) Highlights of current UK policy are:has worked for some years on the mappingof offshore CO2 storage sites related to • DECC has recently published its “Aspecific CCS projects. In 2009 The Ministry Business Strategy for Carbon Captureof Petroleum and Energy asked NPD to start and Storage” and selected projects fora mapping programme and present possible which it will fund the detailed designsecure geological sites for storing CO27. (FEED) stage prior to selecting the winner of its competition to demonstrate the full chain of CO2 post-combustion capture, transport and storage on a 300 MWnet coal-fired power plant.7 Page 37 html?id=5794598 AEA (2009) Future value of coal carbon abatement technologies to UK industry, available at Media/viewfile.ashx?FilePath=What%20we%20doUK%20energy%20supplyEnergy%20mixCarbon%20capture%20and%2 storage1_20090617131417_e_@@_coalcatfuture.pdf&filetype=4
  37. 37. Chapter 2 - Overview Picture: iStockphoto © OversnapPage 38