Europe’s Carbon Capture Disaster
WHY YOU SHOULD CARE
The world often takes cues from Europe on making money and saving the planet. But this time might be different.
It doesn’t look like much: a run-of-the-mill industrial space in Spain, all metal pipes and shiny metal against the backdrop of a massive power generator. The building houses a hodgepodge of offices and not particularly exciting businesses. What’s most remarkable, in fact, is what’s absent. Something is dying here. We’d tell you to say hello to Ciuden, a government foundation with a major carbon capture and storage (CCS) program, but there’s no longer much to greet. And the future of one of the few economically attractive incentives for combating global warming is increasingly uncertain.
Europe, which obviously prides itself on its green cred, once boasted ambitious plans around CCS, which currently generates around $10 billion globally a year in spending. But the region got dragged into a futile policy debate pitting industry against climate change. On paper the idea’s a slam dunk for the continent. In fact, it was first championed there as the best way to avert climate Armageddon while basking in the most enviable shades of green — eco-friendly and cash-rich. But actually allowing big polluters to burn cheap fossil fuels before snatching up and burying their global warming gases deep in the earth hasn’t caught on. Now, other energy giants known for their high-polluting industries (we’re looking at you, Canada and the United Arab Emirates) are taking action and surpassing Europe’s lead.
These days, in an all-too-common story throughout Europe, Ciuden is withering into oblivion due to underfunding, and most of its researchers have moved on. (Ciuden, which is now being absorbed by another institution, declined to comment.) It’s a frustrating reality, especially for those who’ve witnessed the turnaround firsthand, like Vicente Cortés, the former director of the capture program at Ciuden. “I keep my distance now,” says Cortés, who’s now a private consultant in this space and a chemical engineering professor at Seville University. The sentiment is echoed throughout Europe. “It has been an emotional and disappointing process, for all of us,” says Jonas Helseth, European director of Bellona, a Norwegian environmental nongovernmental organization and leading CCS advocate.
Only one carbon capture project survives in continental Europe, in the Netherlands, although its future is in jeopardy over funding.
It sounded a bit like science fiction back in 2007, when European leaders agreed that after an initial phase of pilot projects, including Ciuden, 12 demonstration plants would be funded and built by 2015. Then that target was halved and delayed to 2020. Now nobody knows when or how CCS will be deployed, even though Europe shares the outlook that trapping carbon is supposed to deliver a fifth of global CO2 cuts by 2050, most of it from rich countries.
Today, only one carbon capture project survives in continental Europe — in the Netherlands, although its future, too, is in jeopardy over funding. (The company says it’s “still working on alternative funding solutions.”) There’s a little hope in the U.K., which is pushing on with two projects. But will policymakers in other countries be ballsy enough to join the fray before the Paris global summit on climate change in December? That is, after all, when Europe is supposed to lead by example, not lip service.
Not deploying CCS would be much more expensive in the long run, most experts warn, especially since Europe last year doubled down on its climate-change agenda by committing to binding greenhouse-gas emission reductions of 40 percent from 1990 levels by 2030. Sure, nabbing and hiding carbon was always meant to be a temporary solution and not an endgame. And the European bloc led the way in proving that the concept was technically feasible, “to buy us some time to unleash the potentials of renewables,” says Cortés. But it’ll take at least two decades to learn how to massively store enough green power to wane off nuclear and fossil fuels, Cortés warns.
Meanwhile, other parts of the world have transformed the experimental idea into reality. Canucks have activated the first large-scale coal-burning power plant using CCS, a $1.4 billion project, while Americans have two bigger projects on the way, both of which will burn coal and are set to go live next year. Then there’s the Emiratis, who are installing a steel smelter also scheduled to go online in 2016. What do all of these projects have in common that Europe’s lack? Ka-ching. (They make money.) Each will use CO2 and pipe it nearby to be pumped underground into existing oil wells to build pressure and extract more black gold, in a process called enhanced oil recovery.
Europe, for its part, has little financial incentive when it comes to enhanced oil recovery, so the carbon has little use this way. There are, of course, many other ways CO2 could be utilized, but the volumes are tiny and the costs involved — by far — outstrip just buying it on the open market. Europe also lacks the incentive to carry huge upfront costs because, frankly, it’s just cheaper to pollute, at least under the current system, Cortés says. The only way forward, some experts argue, is to find more profitable means of disposing the billions of tons of CO2 that would be collected.
The real deal-breaker, though, is that Europe’s main funding vehicle of allocating carbon credits, which can be sold on the open market, has been grossly oversupplied. That’s because energy-intensive industries receive most of their emission permits for free, and releasing 1 ton of carbon dioxide equivalent costs a little more than $5 — but for carbon capture and storage to be enticing to investors, the price needs to be at least $43. Europe is considering reforms to lift prices, but nothing nearly robust or timely enough to reenergize CCS. “The price is so low that it is of no interest to any board of any company,” says Bellona’s Helseth.
To be sure, woes about CCS in Europe might have finally hit rock bottom. “The current state of play is more conducive than in the past,” says Graeme Sweeney, a former Shell vice president and the chairman of Europe’s Zero Emissions Platform, an umbrella group of CCS supporters. Europe is now looking into mirroring the British strategy of guaranteeing minimum returns for power generators that use CCS, which would protect companies from market fluctuations while reducing future carbon abatement costs. Cortés favors simply capping the emissions of big factories, which is where the U.S. appears to be heading.
Whatever the region ends up doing, it knows the timing is urgent. “We were first out of the gate, we are off the pace now and we need to pick up,” says Sweeney.