An Economic Assessment of Carbon Capture & Storage: The Case of the Netherlands

Farid Karimi

    Research output: ThesisMaster's thesisTheses

    Abstract

    Following the industrial revolution started circa 1750, global energy consumption and, consequently, CO2 emissions have been rapidly increasing. The amount of CO2 rose from 280 ppm in 1750 to 388 ppm in 2010. This increasing amount of GHGs gases, specifically CO2, is the underlying cause of global warming. According to the IPCC report, with the current rate of emissions, the average global temperature would increase by between 1.9 to 5.4 oC by the end of the 21st century. There is a consensus that the current growth rate of energy consumption and CO2 emissions cannot endure in the future if the disastrous global warming is to be prevented. It has been predicted that global energy consumption will be doubled by the year 2050 if the present trend continues. Thus, the Kyoto Protocol was adopted in line with the United Nations Framework Convention on Climate Change in order to take measures for reduction and stabilization of GHG gasses. The most important measure for mitigation of CO2 is implementation of sustainable energy generation, which requires major large-scale changes in our energy infrastructure. In other words, it is until recently that climate change and sustainable development started to become points of concern in the energy-oriented fields. These issues bring many controversies and discussions among politicians, scientist and the public. There is a myriad of different approaches on how to preempt the climate change and leap towards a more sustainable world. Carbon capture and storage technology is one of the alternatives which can be used as a measure to this end. However, CCS is considered as a medium-run “bridging” option for the reduction of CO2, given the still high cost of renewable energy in combination with deceptively sufficient amounts of fossil fuel. Moreover, CCS is one of the most controversial topics in the field of sustainable development with a rich vein of oppositions.
    The main objective of this research is to investigate the cost effectiveness and benefit of carbon capture and storage technology. Cost – benefit analysis is a tool which the author deploys to assess CCS. The case study of this research is the Netherlands. The calculations are based on the costs for CCS with a special focus on its technological improvements mainly derived from Dutch context. The main research question for this study is:
    What is the importance of CCS for the mitigation of the greenhouse gas, and consequently climate change from technical and economic point of view?
    In order to answer that question, the above is decomposed to the following sub-questions:
    • What is the current local (i.e. the Netherlands) and global state of Carbon Capture and Storage technology?
    • What is the current and future state of CCS in the Netherlands?
    • What are the costs of CCS per each stage and in total?
    • What is the benefit of carbon capture and storage?
    • Is implementation of CCS profitable?
    The Netherlands has substantial fossil fuels resources, mainly natural gas. Hence, the Netherlands and Norway, which is another important fossil fuel producer, have an inclination to play important roles in deployment and development of CCS in the Europe. There are many stakeholders in diverse fields which are involved in this technology in the Netherlands. Indeed, there are notable national and international projects such as CATO2 that are aimed to develop CCS technologically and economically. Moreover, the Netherlands has a good potential for implementation of CCS with regards to the transportation and storage. Due to the existence of gas network and several depleted hydrocarbon fields, mainly in northern areas, for CO2 storage in the Netherlands, there are good infrastructures for captured CO2.
    In this study, I lay emphasis on two major types of power plants: Existing PC power plants and New IGCC power plants; since they are more applicable for the Netherlands. In addition, using results of other studies, different ranges of costs (low, medium and maximum) for both cases are estimated.
    The challenging part of this study is choosing the benefit for the implementation of carbon capture and storage. Since this technology has not run on a large scale yet, it is not easy to talk about its economic benefits. After substantial investigations and discussions with experts, I concluded to consider social cost of carbon as a benefit of CCS. Afterwards, to enhance the precision of the analysis it was very important to choose proper figures for SCC so that a wider range of studies are covered. I selected four studies among several ones. With regards to four diverse SCC from different studies, with varying assumed discount rates, I perform the cost-benefit analysis for low, medium and high costs of CCS. This analysis leads to 12 sets of scenarios for existing and new power plants.
    In case of existing power plants, the results shows that with consideration of very low social cost of carbon, CCS implementation will not be beneficial at all even with the minimum cost of CCS. Conversely, according to high social cost of carbon, CCS implementation is notably beneficial even base on the maximum cost of CCS. The story is the same for new IGCC power plants but the benefits base on high social cost of carbon is significant. Moreover, except the analysis based on the lowest social cost of carbon, in most of the scenarios based on other three studies, implementation of carbon capture and storage system would be beneficial economically with regards to climate change. However, it is important to add that there are many studies on SCC base on different discount rates but I tried to choose maximum and minimum figures among the recent studies which are carried out from mid 90s forward. In addition, in this cost-benefit analysis I just considered social cost of carbon as a benefit of carbon capture and storage. Whereas, definitely, there are other benefits in implementation of CCS in terms of economic.
    This rings true that in the future by decreasing the cost of CCS due to technological development in line with recognition of other benefits of CCS, this technology would be more beneficial and feasible to implement as a measure for hindrance of diverse effect of climate change.
    Finally, in the future studies it will be needed to cover more elements than SCC in order to perform a more precise analysis. This needs substantial time, budget and a team of researchers. In addition, due to more or less unknown benefit of CCS, recent studies are vastly qualitative rather than quantitative. The lack of further quantitative studies is more palpable since their inherent objectiveness appeals more to policy makers and authorities.
    Original languageEnglish
    Publication statusPublished - 2011
    MoE publication typeG2 Master's thesis, polytechnic Master's thesis

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