CC & S – or U – is back on the EU agenda [NGW Magazine]
Carbon capture and storage (CCS) or indeed use (CCU) is getting fresh attention – and the cash to follow – in the European capital. It is seen as a key way to decarbonise energy-intensive industries. In a new European Union (EU)’s industrial strategy unveiled March 10, the European Commission says industries such as steel, cement and refining are “indispensable" to the European economy. Their decarbonisation is a “top priority”.
The European Green Deal, which the industrial strategy refers to as “Europe's new growth strategy”, has at its heart the goal of making Europe the world’s first climate neutral continent by 2050. It highlights CCUS as an example of “smart infrastructure” and calls it a “priority breakthrough technology.”
“It is really going up in quite a big way,” said the European Commission (EC)'s acting director for renewables, research, innovation and energy efficiency Hans van Steen at an event on CCUS organised by the Zero Emissions Platform (ZEP) in the European Parliament at the end of January. ZEP is the EU’s official technical advisor on CCUS. It is made up of a mix of stakeholders, including oil and gas companies, research institutes and NGOs.
Graeme Sweeney, who has chaired ZEP for over ten years, says the EU’s net-zero emissions goal and sustainable finance taxonomy “change everything” for CCUS. “For energy-intensive industries such as cement, lime and steel […] technologies such as CCS and CCU represent the lowest-cost route […] to decarbonise,” he said in response to the EU’s new industrial strategy.
The big difference with the past – over the last ten years, the EU spent billions on the technology, with little to show for it – is a shift in focus from the power sector to industry and projects starting from the perspective of transport and storage rather than capture. There is also a new clean hydrogen narrative.
Cleaning up gas
In the new industrial strategy, the EC says it will unveil its “vision" for clean hydrogen as part of a “smart sector integration” strategy due in summer. “All carriers of energy, including electricity, gas and liquid fuels will need to be used more effectively by linking different sectors,” it says.
It calls clean hydrogen a prime candidate for an “industrial alliance” of the kind created for batteries, plastics and microelectronics to promote European technological leadership. European companies’ share of global R&D spend has declined over the last five years, the industrial strategy notes, while that of the US and China has gone up.
The EC intends to propose a European Clean Hydrogen Alliance, hooking up investors with governmental, institutional and industrial partners by summer. Future alliances could include one on low-carbon industries.
Energy-intensive industries have welcomed the new strategy; and many, such as the oil and gas, and chemicals sectors, say their future is bound up with the development of a hydrogen economy. “What we are risking [with CCS] is a rapid decarbonisation of gas,” joked Per Sandberg from Norwegian state-controlled Equinor at the ZEP event in late January.
For some, hydrogen and CCUS are two faces of the same coin; for others, clean hydrogen means hydrogen produced by renewables-powered electrolysis. In its response to the industrial strategy, WWF for example warned that the rhetoric around hydrogen is “too vague” to exclude “harmful gas investments.”
The question of what counts as “clean” hydrogen is yet to be resolved at EU level. ZEP argues that the natural gas plus CCS route must be part of the European Clean Hydrogen Alliance to create a clean hydrogen economy “now”. "The production of early, large-scale quantities of low-carbon hydrogen from natural gas, will be essential for a decarbonised industrial sector,” said Sweeney.
CO2 networks
Practically, to get things moving on CCUS, the EC will revisit the role of CO2 transport and storage infrastructure when it reviews the Trans-European Energy Networks (TEN-E) regulation later this year.
The TEN-E regulation has historically promoted cross-border electricity and gas interconnections. It also sets the selection criteria for Projects of Common Interest (PCIs), which benefit from faster permitting and can be eligible for EU funds from the Connecting Europe Facility (CEF).
There are five CO2 networks on the current PCI list, which was adopted by the Commission in October 2019. But just a fraction of the CEF money spent on energy projects to date, has gone to CCUS.
Van Steen pointed out that the unequal distribution of CCUS projects in Europe so far - they are mainly limited to the northwest - could translate into a political limitation in how strongly Brussels can push the technology for the EU as a whole.
Sweeney's chief demand of the EC is that it stimulates CCUS as a “proper commercial activity.” TEN-E needs to be “fixed and changed” to introduce common access and tariff control for the CO2 transport and storage infrastructure which is now being built. “[These] will connect industrial clusters, to which emitters could plug in,” he explains.
CCUS proponents argue that the technology is an essential part of the "just" transition – and trade unions agree because it can help secure a future for energy intensive industries in Europe. Eurogas’ comment on the industrial strategy highlights the job creation and industrial leadership potential of gas decarbonisation.
Flagship projects
Experts say that there are two CCS projects in Europe today that will decide its future here. One is Northern Lights, in Norway, and the other Porthos in the Netherlands.
In Norway, the initial plan is to capture CO2 from a waste-to-energy plant in Oslo and a Heidelberg cement factory, and transport and store it under the North Sea. The Northern Lights consortium is made up of European majors Shell, Equinor and Total. In this case, because half the material going into the waste-to-energy plant is biowaste, it could double up as a first example of biomass-based CCS, or “negative" emissions.
Northern Lights expects to take a final investment decision for its first phase in 2020, Sandberg said at the end of January. In early March it completed a crucial drilling test south of the Troll field that confirmed the potential for CO2 storage. Now, the project partners must agree to move forward. The final investment decision will follow in October, when the Norwegian government will announce its budget, including subsidies for Northern Lights.
“Our vision is that the Norwegian government and industry will be able to take investment decisions this year for one or two capture sites and a transport and storage infrastructure,” Sandberg said. “Then we will look for EU backing to scale up.” The challenge is convincing the Norwegian government this is a real industrial investment in a project with growth potential, he added.
Sandberg wants ships as well as pipelines to be eligible for CEF support. Ships are a pricier way of transporting CO2, but with them, Northern Lights could reach 25-50 capture projects, Sandberg expained.
In parallel, over at the Port of Rotterdam in the Netherlands, the Porthos project is also preparing to transport CO2 to empty gas fields under the North Sea. In December 2019, four companies at the port – refineries and hydrogen producers Shell, ExxonMobil, Air Liquide and Air Products – signed on as potential CO2 suppliers.
Porthos intends to take a final investment decision in 2021, said representative Mark Driessen at the end of January. It is waiting for more clarity this April on what subsidies it can get from the Dutch government. The Dutch "climate accord” recognises a need to support CCS but also warns this must not come at the expense of “truly sustainable” technologies. It foresees a ceiling for CCS subsidies and an end to them after 2035.
In any case, EU funds via the CEF will be crucial for the project to move ahead, Driessen said. As (parts of) PCIs, Porthos and Northern Lights can apply for the CEF. “But we have to compete with electricity and gas projects and […] for example we do not contribute to security of supply,” Driessen worries.
Both Driessen and Sandberg say the first funding decisions under the €10bn EU carbon market-fed Innovation Fund - expected end-2021 - will come too late for their final investment decisions.
Power plants
Most CCUS projects in Europe today are directed at high-temperature heat and industrial processes, but there is still an opportunity for the technology to help decarbonise the power sector, both by applying it to gas plants and by eventually converting those to hydrogen.
Sweeney said it was “likely” the technology would be applied to a number of power plants too. European gas-based power generation increased by 12% last year as CO2 came down (gas replaced coal). The UK government has announced it wants to build the country’s first CCS power plant.
And Irish utility Ervia, which started looking at the potential for CCS on large, gas-fired power stations several years ago, has won PCI status for its plans. These have been extended to heavy industry and include a memorandum of understanding with Northern Lights. In 2019, over half of Ireland’s power came from gas.
CCS for biomass-fired power plants, or BECCS, and CCU will also get increasing attention as policymakers come to grips with the realisation that every scenario limiting global warming to 2 °C requires some form of carbon removal. ZEP welcomed the EC’s intention in its industrial strategy to evaluate the role of CO2 removal technologies and the reuse of captured carbon for products.
The problem with CCU is that how the CO2 is used has important implications for climate change: it may stay in building materials for decades, but be stored just a few weeks in fuels like methanol. CCU could in any case mop up just a small part of energy-intensive industries’ total emissions. Meanwhile BECCS is land- and water-intensive.
EU policymakers say they still need to think through where Europe really needs CCUS. “The hydrogen economy and CCUS are part of the same problem," summed up EC official Haitze Siemers, at the ZEP event. "Expensive and not yet at the point where we can see markets and how much they will cost.” Yet both will be needed if the EU wants to live up to its Green Deal.