20Climate%20Change%20Capital%20%20%2023%20April

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Transcript 20Climate%20Change%20Capital%20%20%2023%20April

STRICTLY PRIVATE & CONFIDENTIAL
Financing the CCS business
Tony White
British-Norwegian Workshop on CCS
23rd April, 2008
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Getting Started
The Zero Emissions Platform
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CCS costs summary
Average ‘central case’ estimates from industry studies (low – high range shown in brackets)
Total cost2
Capex only3
Annual cost4
Annual cost per
CO2 tonne5
€m
€m
€m p.a.
€/tCO2 p.a.
IGCC with precombustion CCS
861
(566 – 1125)
566
(464 – 668)
124
(91 – 153)
24.90
(18.30 – 30.50)
PC with postcombustion CCS
1114
(881 – 1418)
784
(616 – 952)
153
(124 – 183)
30.70
(24.70 – 36.70)
PC with oxyfuel CCS
1364
(945 – 1851)
891
(538 – 1243)
186
(131 – 237)
37.20
(26.30 – 47.40)
CCGT with postcombustion CCS
1016
(977 – 1150)
685
(616 – 823)
334
(324 – 373)
66.90
(64.70 – 74.70)
For one commercial-scale
800MW plant1
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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
€ 77.9/MWh
€ 103/tonne
IGCC
€ 86.7/MWh
€ 129/tonne
PC post coobustion
€ 95.4/MWh
€ 73.7/MWh
€ 155/tonne
€ 90/tonne
PC oxyfuel
CCGT
When CCGT sets marginal power price, the carbon price must rise to
over €100 before CCS technology on coal-fired plant can compete
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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
Funding support should be
segmented across technologies
EU ETS is the only source large
enough
Therefore payment mechanism
should pay for CO2 tonnes stored
EU ETS is an existing mechanism
based on CO2 tonnes
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
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….and then?
How to decarbonise
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Policy analysis: impact of long-term framework
The cost of supporting the CCS demonstration plants is greater if no future policy signal
Total cost of CCS power plant
Cost of
support
mechanism
Cost to
shareholders and
consumers
Cost of low emissions
power plant (eg
reduced emissions
intensity)
Cost of unabated coal
power plant
Visible policy continuum is needed for real supply chain mobilisation
First tranche
deployment
Delivery of CCS
demonstration plants
2015
2008
Future of CCS
Preparation
of
legislation
and
mechanism
s
Possible
requirement
for CaptureReady
20??
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Future behaviour of
supply chain parties?
Compulsory CCS for
new build ?
Compulsory retrofit ?
20??
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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
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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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