The use of carbon capture and storage (CCS) technology at coal-burning power plants would add 78 per cent to the price of producing electricity, according to a new report released yesterday.
The report from the Australia-based Global Carbon Capture and Storage Institute said that the high cost meant that the energy sector would have a "limited incentive" to install CCS facilities, putting the onus on governments to take a leading role in financing and developing such projects.
"A viable business case for commercial-scale, integrated projects has not been established at this time for coal-fired power generation and other large CO2-emitting industries," said the report, titled Strategic Analysis of the Global Status of Carbon Capture and Storage.
However, government-subsidised CCS demonstration projects could significantly lower the costs of future CCS facilities, said the institute, which is aimed at accelerating the worldwide commercial deployment of the technology.
The report concluded that oxy-fuel combustion is the cheapest CCS technology, but only becomes viable at a carbon price of about A$60 a tonne, with integrated gasification combined cycle feasibly starting at A$80 a tonne. Meanwhile, natural gas combined cycle carbon capture systems are only practical at A$112 a tonne.
The Australian treasury has estimated that under the federal government's proposed emissions trading scheme, carbon prices will reach A$80 a tonne in real terms by 2038.
The report noted that CCS could be deployed in China and India with 30 per cent lower capital costs due to low labour expenses. "In order to accelerate the deployment of CCS projects, the world must exploit cost advantages that exist in advancing projects in developing countries," it said.
The study's audit of CCS projects worldwide found that there were 62 fully integrated, commercial scale projects aimed at capturing CO2 at every stage (capture, transport and storage) of the CCS process, but only seven are in operation. The leading developers of such projects were Europe, the US, Australia and Canada.
Launched in July with A$100m in funding from the Australian government, the Global Carbon Capture and Storage Institute's membership includes the governments of China, India, Japan, South Korea, the US and UK.
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