The analysis demonstrates that CCS is a cost competitive power sector emissions reduction tool when considered among the range of available low and zero emissions technologies.
“While CCS adds additional costs to traditional fossil fuel generation, the underlying coal and gas generation technology and fuel sources are relatively cheap, and CCS has higher rates of utilisation than some renewables technologies,” the report said.
The report analysed US power sector costs, drawing on cost and performance data from a variety of published sources and compared them in a common methodological framework based on the levelised cost of electricity.
It also combines outputs of the LCOE framework with estimates of CO2 emissions from various plants to compare technologies in terms of the cost of CO2 avoided.
The report’s author, Global CCS Institute Asia Pacific region policy and economics senior advisor Lawrence Irlam, said comparisons of this type were important when considering policies that “lead to a least-cost emissions reduction pathway”
Irlam, formerly with the Australian Energy Regulator, said CCS projects in the power sector involved large price tags in the order of hundreds of millions of dollars.
While this certainly warranted attention, particularly as projects tended to involve significant amounts of government support, Irlam said the business case for CCS – and indeed all low emission technologies – was about value for money, which was more than just the cost side of the equation.
“Overall, our analysis demonstrates that CCS is a mid-range technology in terms of cost and value for money in emissions reduction potential,” Irlam said.
“The key cost advantage of CCS-equipped power generators, relative to some renewables like wind and solar, derives from the fact that they are typically used to provide baseload or controllable output, and thus have higher rates of capacity utilisation.
“For this reason, while CCS currently has a higher investment cost than other low emission technologies, this is spread over a larger amount of clean electricity output.
“Technologies like hydro, nuclear and geothermal generation also have high rates of capacity utilisation and therefore may also provide better value for money in terms of costs per megawatt-hours generated and per tonne of CO2 avoided.”
However, Irlam said these were general conclusions, and reflected a range of plant types and costs specific to the US, including natural gas prices.
They also reflect the state of each technology at present and do not include assumptions of expected cost and performance improvements likely to arise for many of the technologies considered.
Irlam said the results should also not be interpreted to mean that technologies with the lowest cost should be favoured, while those with relatively higher costs should be excluded.
“Decarbonising the world’s energy supply is a significant task, with around two-thirds of all power generation currently coming from fossil fuel sources,” he said.
“All low emission technologies will have a role to play in addressing power sector emissions.
“The particular least-cost power generation mix consistent with achieving climate goals will depend on a variety of locational specific considerations, including local fuel costs and access to suitable wind, solar, hydro and CO2 storage resources.
“Policies designed to encourage a transformation of the power sector should allow for investment that reflects local commercial and technical conditions, rather than block or favour particular technologies.”
