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STRICTLY PRIVATE & CONFIDENTIAL. Financing the CCS business . Tony White British-Norwegian Workshop on CCS 23 rd April, 2008 . Getting Started. The Zero Emissions Platform. CCS costs summary. Average ‘central case’ estimates from industry studies (low – high range shown in brackets).

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financing the ccs business

STRICTLY PRIVATE & CONFIDENTIAL

Financing the CCS business

Tony White

British-Norwegian Workshop on CCS

23rd April, 2008

getting started

Getting Started

The Zero Emissions Platform

ccs costs summary
CCS costs summary

Average ‘central case’ estimates from industry studies (low – high range shown in brackets)

when ccgt sets the marginal power price carbon price for ccs to compete is very high
When CCGT sets the marginal power price, carbon price for CCS to compete is very high

Power price necessary to earn a 10% return at the given CO2 price

CO2 price necessary for CCS with each technology to compete with CCGT unabated

When CCGT sets marginal power price, the carbon price must rise to over €100 before CCS technology on coal-fired plant can compete

principles and design of ccs support mechanism
Principles and design of CCS support mechanism

CCS will not occur without funding support

At commercial scale, the support needed is big (~€1bn per plant)

Current cost data uncertainty means too early to pick winner

This scale of funding will not be forthcoming from MS budgets

The most efficient way to offer the support is to pay on performance

All technologies are in similar cost ranges within the error margins

No evidence of any budget support this large (eg UK retreat)

Moral hazard risk is created if funds paid before CO2 is stored

Therefore all technology types should be supported in first phase

Therefore EU-level funding mechanism is needed

Therefore payment mechanism should pay for CO2 tonnes stored

Funding support should be segmented across technologies

EU ETS is the only source large enough

EU ETS is an existing mechanism based on CO2tonnes

EU ETS should be used to provide the funding support

Payment for CO2 tonnes stored can be made with EUAs, through a reserve set aside within the Phase 3 cap, of ≤ 180m EUAs p.a. to pay for ≤ 60Mt CO2 stored p.a. segmented equally across 3 CCS technologies and China/India

and then

….and then?

How to decarbonise

policy analysis impact of long term framework

Preparation of legislation and mechanisms

Possible requirement for Capture-Ready

Future behaviour of supply chain parties?

Delivery of CCS demonstration plants

2015

2008

Compulsory CCS for new build ?

Compulsory retrofit ?

20??

20??

Policy analysis: impact of long-term framework

The cost of supporting the CCS demonstration plants is greater if no future policy signal

Cost of support mechanism

Cost to shareholders and consumers

Cost of low emissions power plant (eg reduced emissions intensity)

Total cost of CCS power plant

Cost of unabated coal power plant

Visible policy continuum is needed for real supply chain mobilisation

First tranche deployment

Future of CCS

conclusions
Conclusions
  • Difficult to choose between technologies
  • Each demonstration requires ~€1bn
  • No single member state will deliver
  • EUETS is the only revenue source in town
  • Multiple allowances?
  • Long term intentions may reduce costs
contact climate change capital
Contact Climate Change Capital

CCC Head Office

Climate Change Capital

3 More London Riverside

London

SE1 2AQ

United Kingdom

Tel: +44 (0)20 7939 5000

Fax: +44 (0)20 7939 5030

www.climatechangecapital.com

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