May 30 2024

Carbon Capture Storage – A viable option for Australia’s future?

Carbon capture and storage (CCS) is a way of reducing carbon dioxide emissions and is seen as key to tackling climate change and reducing our emissions. CCS is a three-step process involving:

1. Capturing the CO2 produced by power generation or industrial activity.

2. Compressing the CO2 before transporting it via pipelines, road transport or ships to a site for storage which may be co-located where the emissions are being created (eg, oil and gas drilling).

3. Injecting the CO2 into deep geological formations such as depleted oil and gas reservoirs, saline aquifers or between grains in sedimentary rocks.

Figure 1: How Carbon Capture and Storage can work

Source: CO2CRC

CCS has been in operation since around 1972 in the US where several gas plants in Texas captured and stored more than 200 million tonnes of CO2 underground. As of 2024, there are currently 700 projects in various stages of development across the CCS value chain, with 45 commercial capture facilities in operation globally, with a total annual capture capacity of more than 50m tonnes of CO2.[i] If the announced projects globally are delivered on time and to full capacity, 434m tonnes of CO2 could be captured annually by 2030, with the 700 announced projects having a total storage capacity of 615m tonnes of CO2 per year. To put this number into perspective, global emissions reached a record high 37.4bn tonnes of CO2 with Australia accounting for 467m tonnes. Most credible international climate models, including the International Energy Agency and the International Panel on Climate Change suggest a significant amount of global CCS capability is required to achieve net zero targets, with the IEA saying it will be “virtually impossible” for countries like Australia to reach net zero by 2050 without the use of CCS.[ii]

CCS in Australia

Over the past almost two decades, CCS has become a seemingly more vital piece to the puzzle in Australia’s emission reduction targets. Although our energy grid is becoming less reliant on fossil fuels during the day, thanks to the massive uptake of rooftop solar over the past decade and investment in large scale renewables (ie, wind and solar), we are still a country that is reliant on coal and gas and will be for some time. This reality has meant that governments and industry are looking to CCS to help us keep our net zero targets on track. Sadly though, questions still remain on whether CCS can be a viable option, with the technology not currently ready to be deployed at scale.

Chevron’s Gorgon Gas Plant in Western Australia is the country’s only operational CCS plant, and has been plagued by problems since it was opened in 2019. The project, with an estimated price tag of $3.1 billion, was highlighted as a ‘flagship’ project by the Federal Government, and promised to store four million tonnes of CO2 a year in the first three years of its pilot. By 2022, the project had only stored 6.5m tonnes, falling short by more than 45 per cent.  In 2024, the plant is only operating at 1.6 million tonnes, with Chevron purchasing carbon offsets, including international offsets, to make up the 2.4-million-tonne difference. Chevron reports they have injected more than 9mt to date.

Rising pressure in the layer of sandstone below Barrow Island where the CO2 was to be stored has also caused problems for Chevron. A Chevron Australia spokesperson told The Age that it needed to remove water from the sandstone to be able to increase the rate of CO2 injection in the site, but wells being used to remove the water were being clogged with sand.[iii] This geological setback has highlighted a major issue with building efficient CCS projects – different geological features of sites make it difficult to standardize the process and operate at a scale big enough to make a difference in reducing emissions.

Although problems with the Gorgon gas plant have been widely publicised, Governments are still latching on to CCS and the promise that it will help clean-up coal and gas generation.

  • In 2021, the South Australian Government approved the $220m Santos Moomba CCS Project which aims to store 1.7m tonnes of CO2 per year, with the potential to scale up to 20m tonnes a year when fully operational.[iv]
  • The Victorian Government has been operating the Otway International Test Centre since 2008 which has successfully stored 95,000 tonnes of CO2 in their Nirranda South site. This project has been used by industry and academia to “investigate and overcome engineering challenges, as well as assess technical performance under operational conditions prior to embarking on a commercial CCUS project.”[v]
  • There are currently 18 CCS projects at various stages of progress in Australia, including two test facilities, with current planned projections forecast to sequester 20 million tonnes of CO2 a year by 2035.
  • In 2009, the Victorian Government established CarbonNet, which they claim to be “one of the most technically advance carbon capture hubs under development in Australia”. The project includes a 100km pipeline from Loy Yang in the Latrobe Valley to Golden Beach to transport captured CO2, where it will be pumped underground at their Pelican site. The site has 168m tonnes capacity and can store up to 6m tonnes a year. It is due to be operational by the late 2020s at a cost of $11.1b.[vi]
  • In a rare pushback, the Queensland Government announced they would be banning CCS in the Great Artesian Basin (GAB) because of its potential to cause irrevocable damage to the water supply. This ban came days after the government announced it had blocked Glencore's proposal to use the GAB for CCS.[vii]

In this month’s Federal Budget, the Government committed $22.7b over the next 10 years to its Future Made in Australia agenda which included $556.1m over the next decade for its Resourcing Australia Prosperity program. This is to be run by Geoscience Australia and will map Australia’s resources and geological storage potential. On top of this, the Government has allocated $32.6m over the next four years for regional cooperation on carbon sequestration.

Gas with CCS

Under current and projected capital costs, the CSIRO Gen Cost report found Gas with CCS to cost $4802/kW, almost five times the cost of large gas open cycle facilities ($1021/kW), three times the cost of small gas open cycle facilities ($1619/kW) and just under two-and-a-half times the costs of combined cycle gas ($2023/kW). By 2050, the projected capital costs for gas with CCS does improve, dropping to $3590/kW, while large open cycle gas is projected to drop to $826/kW, small open cycle to $1369/kW and combined cycle gas to $1655/kW. 

Figure 2: Projected capital costs for gas with CCS by scenario compared to 2022‐23 projections

Source: CSIRO Gen Cost 2023-24 Report

While capital costs for gas with CCS are significantly higher than non-CCS options, it is still preferred to coal with CCS as the capital costs for gas are much lower as well as having lower emissions intensity.

Coal with CCS

The GenCost report projected the capital costs of black coal with CCS to be double the cost of black coal without CCS - $10965/kW compared to $5485/kW. The projections do see a drop of almost 18 per cent in capital costs by 2050 to $9011 per kW, while coal without CCS sees only a six per cent decrease by 2050. This significantly higher capital cost may be one of the reasons for why there are only four coal-fired plants with CCS operational worldwide – two in China, one in the United States and one in Canada. No coal-fired power plants in Australia have CCS technology.

Additionally, these four plants have failed to materially capture a significant amount of CO2, with less than 0.02 per cent of the coal industry’s total emissions being captured through CCS, and Canada’s Boundary Dam CCS facility failing to meet its original target of capturing 90 per cent of the plants emission, instead capturing on average about 50 per cent on average.

Figure 3: Projected capital costs for coal with CCS by scenario compared to 2022‐23 projections

Source: CSIRO Gen Cost 2023-24 Report

Conclusion

The concept of carbon capture and storage is one that on paper, seems like a viable  solution to achieve net zero emissions, but the cost of this technology and the scale in which it must be developed in the coming decades poses the question on whether it is more practical to invest in proven technologies that are able to be utilised quickly and effectively in the near future. CCS seems best suited towards use with natural gas and hydrogen production and previous efforts to develop CCS to allow retrofitting of coal-fired power stations have not been commercially successful.

Australia’s only commercial CCS plant, Gorgon Gas Plant, managed to capture 1.6m tonnes of CO2 last year, equating to just 0.34 per cent of Australia’s total CO2 emissions. Net Zero Australia forecasts Australia will need to permanently store between 80-1000m tonnes of CO2 a year by 2060 to reach net zero, which would require Australia’s CCS capability to increase by between 4900 per cent and 62,400 per cent in the next three and a half decades – a monumental task.

This daunting outlook poses the question of whether it is worthwhile investing capital in projects that are proven to be reliable and can be rolled out now. Data published by IOPScience found 80 per cent of CCS projects end in failure and found nearly all CCS megaprojects – those that cost billions of dollars, fail[viii]. Net Zero Australia estimate the cost of the transition to net zero will be up to $9 trillion[ix], which makes it even more crucial for every dollar to be spent on proven technology and infrastructure which can be guaranteed to lower our emission levels.

The Federal Government currently supports CCS and sees it as a “key mechanism” in Australia’s fight against climate change. But if investment in CCS projects continues to prove fruitless, will they be forced to shift their allegiance to another technology with proven results?

 

[i] https://www.iea.org/energy-system/carbon-capture-utilisation-and-storage

[ii] https://www.iea.org/reports/ccus-in-clean-energy-transitions

[iii] https://www.smh.com.au/business/companies/gas-giant-s-3-2b-effort-to-bury-carbon-pollution-is-failing-20221113-p5bxtw.html

[iv] https://www.santos.com/news/santos-partners-with-csiro-on-development-of-new-technology-to-negate-carbon-emissions/

[v] https://co2crc.com.au/research/otway-international-test-centre/

[vi] https://djsir.vic.gov.au/__data/assets/pdf_file/0009/2235897/CarbonNet-Regional-Economic-Analysis-Report-Gippsland_2021.pdf

[vii] https://www.abc.net.au/news/2024-05-24/great-artesian-basin-carbon-storage-plan-rejected/103889302

[viii] Explaining successful and failed investments in U.S. carbon capture and storage using empirical and expert assessments - IOPscience

[ix] https://www.netzeroaustralia.net.au/wp-content/uploads/2023/07/Net-Zero-Australia-Mobilisation-How-to-make-net-zero-happen-12-July-23.pdf

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