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Can Australia Afford Carbon Capture and Storage for Coal?

The world needs it, but strict budgets have forced Australia to scale back or cancel plans to advance the technology



Image of Collie Coal Mine, Western Australia by Calistemon, courtesy Wikimedia Commons

BRISBANE, Australia -- Environmental groups sounded the alarm when the government of the northeastern state of Queensland announced it would stop funding a zero-emissions power plant.

In those circles, rumors had been floating for weeks before the Dec. 19 decision that Queensland's budget deficit-conscious premier and the coal companies were ready to pull the plug on the $4 billion ZeroGen plant.

"Unless you commercialize it, it's not going to contribute," Kellie Caught of the World Wildlife Fund-Australia said about carbon capture technology needed to reduce coal plant emissions.

Cutting power plant emissions that contribute to climate change is an uphill climb unless carbon capture and storage (CCS) technology can be made cheap enough for electric utilities to buy and use. The technology traps carbon dioxide produced from burning coal, before it's released into the atmosphere, and buries it or uses it for industrial purposes.

About one-fifth of the emissions reductions needed to cut the global output of greenhouse gases 50 percent by 2050 would have to come from CCS technology at coal-fired power plants, according to the International Energy Agency (IEA). In Australia, high carbon-emitting coal is the primary source of electricity.

"Without CCS, the IEA projects that the cost of reducing global emissions will be around 70 percent higher," said a November report by Australia's National Low Emissions Coal Council.

Australia's experience with CCS mirrors technical, financial and political hurdles experienced in the United States. Public-private partnerships in both countries have struggled to secure financing for zero-emissions power plant demonstration projects, but energy agencies in both nations are mapping out and testing sites for storing carbon emissions.

In the past two years, Australia has erected several layers of programs meant to jump-start carbon capture technology, and the focus is turning toward identifying storage sites. Still, Queensland's decision to scrap ZeroGen reinforces the sense by some industry and environmental advocates for the technology that Australia's commitment to cleaning up coal-fired power plants remains tenuous.

New politics puts CCS on shaky ground
Australian states are operating on tight budgets, and state political control is switching from the Labor Party to more conservative coalition governments. That could put CCS on fragile footing. And, advocates say, power plant operators and electricity regulators simply don't have the economic incentive to increase the capacity to squelch carbon emissions unless the federal government places a high price on carbon pollution.

Further, commercial-scale CCS cost estimates are getting pricier as they approach the $4 billion mark.

"The aspirational 2015 target for an integrated commercial-scale project now proves unrealistic," Ralph Hillman, president of the Australian Coal Association, told researchers and CCS program directors meeting in Melbourne in late November.

"This will increase the political and funding challenge," Hillman said.

Hillman, a former Australian diplomat, represents coal producers that know their long-term future could turn on whether clean coal technology can be widely deployed. If it is not, coal at power plants could be replaced by natural gas, nuclear power and large-scale renewable energy projects.

Coal producers operating in Australia have pledged to contribute $1 billion by 2016 to a fund for CCS technology development.

Australia's CCS adherents press ahead on the belief that the government will eventually impose a cost on carbon emissions through a tax or emissions trading scheme. If the price on carbon is high enough to penalize coal consumption, the theory is it creates economic incentives to retrofit coal plants or use gas or wind power to generate electricity.

The 'realism' of fossil fuels
In time, successful demonstrations will drive down the cost and energy use now stifling full development.

"In order to get the CCS deployed, ultimately you're going to need a carbon price," said Nick Otter, chief executive of the Global CCS Institute, based in Canberra. "In the end, the big driver will be a good, strong carbon price."

Since Sunday, Queensland Premier Anna Bligh has taken some heat, answering critics by reiterating that the ZeroGen project isn't necessarily dead. She said it could be revived if carbon storage sites are identified and costs can be brought down more quickly.

It's in the "best interest and prosperity of future generations" to deploy clean coal technology by 2015, she said, but she added that "early research has shown us this is not viable at this time on a commercial scale."

The project envisions an integrated coal gasification plant with the capacity to capture 90 percent of its emissions. About $190 million has been invested so far, about $90 million of which comes from coal companies contributing to a CCS fund. Japan's Mitsubishi Corp. has offered to help fund the project if it can get an ownership stake.

ZeroGen and the Callide Oxyfuel Project, which is a $200 million project to convert an existing 30-megawatt unit into a carbon capture plant, are in the heart of Australia's coal country. In every direction, in the coal fields northwest of Brisbane, the world's largest producers are preparing to expand their mines, rails and ports so they can ship billions of tons of coal to East Asia and India.

If coal industry projections are right, Queensland will help supply Asia's churning steel mills and power plants for decades, as hundreds of millions of people migrate from the countryside to the cities of China and India.

"In the end, you have to have some realism in there," CCS Institute's Otter said. "Fossil fuels will continue to be used, we know that. So how do you use it in a low-carbon market?"

CCS advocates say large demos critical to building confidence
With the highest emissions per person in the industrialized world, Australia has elbowed its way on the world stage of CCS development.

The Global CCS Institute, a public-private partnership that started a little over a year ago, has about 250 global organizations participating in information sharing, including China. It's joined the nation's science agency, CSIRO, and the Cooperative Research Center for Greenhouse Gas Technologies in a full-steam-ahead approach to getting at a couple of CCS demonstration projects up and running.

About 15 carbon capture or carbon storage projects are up and going. The $50 million Otway Project northwest of Melbourne is a carbon sequestration demonstration project the government hopes will open the door to others around the country.

Chevron Corp., Royal Dutch Shell PLC and Exxon Mobil Corp. are also in the final planning stages for the Gorgon Liquefied Natural Gas Project, an LNG export project off the coast of Western Australia. The LNG terminal would inject 3.3 million metric tons of carbon emissions into the ground.

The fact that there's only one onshore storage project in Australia is seen as a significant hurdle for deploying carbon capture technology at the nation's power plants.

Directors of clean coal projects at Australia's power plants boil their future down to confidence: "We have to address urgently the need for large demonstrations to get that confidence," said one during Australia's first national CCS conference in Melbourne. "Without them, we will never have the confidence to go forward."

An expensive political football
Critics of throwing billions of dollars at the technology, including Australia's Green Party and some conservative coalition members, argue it will be developed too late to address climate change and is too expensive. Still, advocates said cleaner coal is the only way to other forms of electricity.

"We don't believe CCS should do the job alone," Paal Frisvold, chairman of the European environmental interest group Bellona Europa, said at the conference. "But when the goal is to decarbonize, we'll need a lot of energy to produce aluminum for the solar cells, cast iron for the windmills, and the fertilizers for biomass. Those things require energy. If we go straight to renewables, we'll shoot ourselves in the foot and delay the transition."

Policy promises made during Australia's August elections were stark with regard to CCS. A party either intended to protect the nation's growing stake in deploying the technology or intended to kill it because it's too expensive and success is too uncertain.

In the latest round of federal elections, the governing Labor Party promised to implement power plant emissions standards and carbon capture requirements for new coal-burning generators.

The National Low Emissions Coal Council, which advises Australia's ministries, in its recent progress report said the cost of climate measures "is increasingly being built into companies' investment planning decisions."

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500

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