Carbon Capture Journal, January 19, 2008

CARBON CAPTURE -- CURRENT STATE OF PLAY

By Karl Jeffery, editor, Carbon Capture Journal

Where is the world now with carbon capture?

Progress, confusion, doubts.

A great deal of progress is certainly being made on the technical side. We still hear about 'experts' saying that the technology is not ready, but this is hardly fair, probably you could realistically say, at this stage, that it is ready. How many more trials are necessary?

Oil and gas companies, led by Statoil, Shell and BP, feel confident that they have got the technology sorted out for the storage part of it.

On the capture side, there are tried and trusted technologies for separating out the carbon dioxide, and promises of new technologies which can bring down the price.

The confusion is on the regulatory policy. Carbon capture can only work if there is a robust regulation in place, which can make carbon capture financially worthwhile.

Companies need to be financially rewarded for their carbon capture programs -- either by avoiding paying a carbon tax, being able to trade emission credits, or selling the carbon dioxide / using it to push out more oil from underground ('Enhanced Oil Recovery').

Oil companies say it is unlikely that Enhanced Oil Recovery by itself will cover all the costs -- it only works within a narrow range of reservoir conditions.

So, apart from government subsidies, we need more revenue from a carbon tax or avoidance of emissions credits.

The EU does have a carbon emission trading system -- but experts estimate that the price will have to rise by three times to make carbon capture viable. The rest of the world does not have an emission trading system.

So we have two parallel processes going on here, one making carbon capture technology cheaper, and one increasing the cost of emitting carbon to the atmosphere.

The doubt (and the million dollar question) is, will both of these processes move far enough that carbon capture becomes financially viable?

BP, Shell and Statoil clearly think it will, otherwise they would not be investing in these projects.

But they are also large enough to absorb the costs if carbon capture and storage fails to ultimately take off commercially, and gain public relations and government relations benefits from their efforts whether or not they succeed.

Smaller companies will be forgiven for being not so sure if they want to put their money on the table.

Public opinion around the world has not been so anti-carbon capture as many people initially feared it would be (some worried that the public would see it as dumping of waste).

The strongest public opinion about carbon capture, if anything, is people complaining that it is being used as a tool by coal companies to manipulate government policy -- saying, let us build more power stations, we'll capture the carbon dioxide from them one day, but we can't do it right now, the technology isn't ready. So they get to build the power stations they want today without doing anything to capture the carbon.

The world's anti-global warming lobby, which includes just about everybody now, will say that we do need to avoid emitting carbon dioxide for the sake of the earth, and so governments will need, one way or another, to make the finances work out.

But right now, the question still lingers, that from a financial point of view, is an investment in carbon capture technology a bet on current public opinion, and the competence of the world's leaders, to make sure that a system is put in place to save the world?

Agree or disagree? Send your opinion to Karl Jeffery, editor on jeffery@thedigitalship.com