In praise of carbon capture and storage
|Joachim Klement||Jul 20|
I am a big advocate for ESG investing and renewable energy. Renewable energy has to become the dominant source of electricity by 2040 or we will face climate change that is so severe that our lives will change dramatically, and the economic consequences could be devastating for some regions, countries, and businesses. Don’t get me wrong, I don’t expect the world to end if we don’t successfully fight climate change. We will adapt to changing circumstances. But I do expect that our lives and the lives of our children and grandchildren will become massively more complicated and dangerous. The increase in floods, droughts, windstorms, etc. will make life quite miserable for all of us – and will ruin and kill many.
But to think that we can switch to 100% renewable energy all the time is an illusion. The power generated from wind and solar is highly variable throughout the day and the year and we simply can’t build energy storage fast enough and cheaply enough to store enough electricity for a major country. Hence, as I have said before, we need to rely on alternative low-carbon fuel sources like nuclear power as well as renewables. That has made me unpopular with some environmentalists but so be it. I prefer to advocate for realistic solutions, not unrealistic dreams.
The problem with nuclear power is that we cannot ramp energy production from this source up quickly if needed. Nuclear power can provide the baseload of electricity needed. What we need is another source of energy that can be activated quickly if solar and wind energy decline temporarily and electricity storage is insufficient to cover the shortfall. And this energy source is most likely to be gas with carbon capture and storage (CCS) facilities.
Again, environmentalists sometimes fight against CCS because they think it will keep us hooked on fossil fuels for a long time. But let’s be honest: the numbers show that we will inevitably have to rely on gas as a source of electricity for decades to come. So-called peaker gas plants that ramp up electricity production quickly when needed are the best way to deal with the natural variability of renewable energy sources. And while natural gas is a relatively low carbon source of electricity, it can be made almost carbon neutral with CCS technologies. CCS typically reduce the CO2 emissions of gas power plants by 90% (and can similarly be used to capture CO2 emissions from steel and cement plants). The CO2 extracted from the power plant is then compressed until it is liquid and stored underground in depleted oil and gas reservoirs or used to produce industrial gases and fertilizers. By now, the International Renewable Energy Agency, the International Energy Agency and many other organisations like the OECD have endorsed CCS as a necessary technology to keep climate change under control.
The current CCS storage capacity is c. 38MtCO2/year, which is nowhere near enough of what we need. To reach the Paris climate goals we need to build an estimated storage capacity of 1,250MtCo2/year by 2040, which requires investments in the order of $500bn. Thus, there is much more growth to come in this area – and possibly some interesting investments to be made once CCS becomes more mainstream.
Capacity of CCS facilities globally