12 February 2009, Cambridge, MA -- 2009 is shaping up to be a pivotal year for a global industry seeking commercial solutions for capturing and storing harmful greenhouse gases emitted by coal power plants. Nearly 120 carbon sequestration projects are underway globally with the majority of development in western Europe, the US, western Canada, and Australia. If demonstration projects are successful and designated government funding comes through, the industry will be well-positioned to scale by 2016, according to a new study released by Emerging Energy Research (EER), a Cambridge MA advisory firm in the renewable energy sector.
The carbon sequestration development pipeline continues to expand as the drive to keep coal competitive intensifies. 2009 is shaping up to be a crucial year in determining the pace of commercial-scale development. "Major carbon policy decisions that could mold the carbon regulatory landscape and economic framework for carbon capture and sequestration (CCS) for the next decade are hanging in the balance," says EER Research Director Alex Klein. The current financial crisis will have an impact on sequestration, exacerbating short-term development challenges, but long-term prospects for CCS remain strong, according to EER.
EER estimates that more than US$20 billion has already been earmarked for spending on large demonstration CCS projects, with economic stimulus plans in Europe, the US, and Canada expected to increase this figure in 2009. This funding could potentially support more than 30 large-scale carbon capture and sequestration projects, according to EER. Project investment in carbon sequestration--the process of storing CO2 permanently in geologic formations to prevent its release into the atmosphere--could alone reach between US$30 billion and US$70 billion per year by 2030 based on EER's base-case and high-growth forecast, respectively.
According to EER, CCS could emerge as a solution to allow power generators to continue to tap abundant coal reserves - currently the largest emitter of CO2 globally. "If coal is to maintain its share in the global power generation mix over the next two decades, its carbon emissions must be mitigated through the capture of CO2," says Klein. "While sequestration solutions have been demonstrated on a trial basis, carbon sequestration's commercial viability on a broad scale is still uncertain," according to Klein.
Exhibit 2-11: Overview of Global CCS Funding, Key Regions with Sequestration Regulations
Source: Emerging Energy Research, Global Carbon Sequestration Markets and Strategies, 2009-2030
In key coal-fired power generation markets with CCS potential (North America, Europe, China, India, Japan, and Australia), EER expects that more than 800 GW of coal could be needed between 2010 and 2030. "Coal-based countries represent the uppermost commercial potential for growth of CCS in the power sector. Considering the current pace of coal plant pushback and growing drive to curb emissions in these regions, meeting a substantial portion of power sector demand with coal will depend on the realization of CCS," according to EER.
Even as the economic crisis weakens balance sheets, there are signs of growing public commitments by numerous governments to incorporate CCS as a key technology in national energy policies. While the US is expected to lead the way, escalating funding in western Canada, Europe, and Australia is contributing to a robust global pipeline of sequestration activity. Driven by a desire to preserve coal as part of growing power generation requirements and impending carbon regulations, these countries are seeking to get out on the CCS learning curve over the next five years, according to EER.
According to EER's just released study, entitled Global Carbon Sequestration Markets and Strategies, 2009-2030, barriers to the sequestration industry scaling include the high costs of capture, uncertainty over long-term climate policy, and an unclear framework for site characterization, CO2 measuring, monitoring, and verification, and long-term liability. "Carbon sequestration is finding its way into power generation strategies as energy companies across the value chain wrestle with the likelihood of impending carbon regulations, continuing natural gas price volatility, potential capacity shortfalls, and the need to retire existing coal plants," says Klein.
Several of the largest oil and gas players have been the main participants in key projects demonstrating CO2 storage on a commercially significant scale. Led by the six global 'Supermajors'-BP, Chevron, ConocoPhillips, ExxonMobil, Shell, and Total-the oil and gas industry is uniquely positioned to lead the sequestration industry forward- bringing with them a large number of potential storage assets, reservoir-engineering strengths, and carbon capture capabilities developed through their global natural gas processing and refinery operations.
ABOUT THE STUDYThe above release is based on findings from Global Carbon Sequestration Markets and Strategies, 2009-2030 , a new study from EER which evaluates the sequestration industry's short-term potential and long-term outlook. Featuring over 183 pages of comprehensive analysis, EER's new study of global carbon sequestration markets analyzes the role of carbon policies in driving sequestration development and evaluates the strategies of oil and gas players, power companies and entrepreneurial upstarts. Follow this link for the study's Table of Contents and Order Information.
ABOUT EMERGING ENERGY RESEARCHEmerging Energy Research is a leading advisory and consulting firm analyzing clean and renewable energy markets on a global basis. EER is based in Cambridge, Massachusetts and Barcelona, Spain. Our clients - which include many of the world's largest energy companies, utilities, technology vendors, and financial institutions - seek our informed, objective view and advice on these fast developing markets. For more information visit www.emerging-energy.com