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GWPF Report On CCS Triggers Heated Debate In Canada

Global Warming Policy Forum

The new GWPF report by Professor Gordon Hughes on the economic pitfalls of carbon capture and storage (CCS) has led to a heated controversy in Canada where the government of Saskatchewan has retrofitted its state-owned Boundary Dam coal power plant with CCS facility costing $1.5 billion. In response to Prof Hughes’s critical analysis, the government and CCS proponents are hitting back.

A new report from a U.K.-based think tank is taking aim at the use of carbon capture and sequestration (CCS), including how it is being used in Saskatchewan.

Gordon Hughes, a former advisor to the World Bank and economics professor at the University of Edinburgh, wrote in a Global Warming Policy Foundation (GWPF) report that Saskatchewan’s use of CCS technology is “an object lesson in the uncertainties and difficulties of managing the installation of a new technology.”

SaskPower spent $1.5 billion retrofitting an existing coal power plant — Boundary Dam 3, near Estevan — with CCS technology.

Its aim was to reduce carbon emissions generated by the coal-fired plant, but Hughes says in his report it has “not performed up to expectations.”

He notes breakdowns and maintenance have led to the unit operating only 40 per cent of the time.  Hughes suggests replacing the coal-fired plant with an efficient gas plant would have cut CO2 emissions at five to 10 per cent of the cost.

“This is really the key lesson from the Boundary Dam project. It was simply an application of the wrong technology in the wrong circumstances,” he writes. […]

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Letter: Report critical of carbon capture and storage is unbalanced, incorrect

Letters to Regina Leader-Post, 11 July 2017

Michael J. Monea is president and CEO of the International CCS Knowledge Centre.
Michael J. Monea is president and CEO of the International CCS Knowledge Centre
Michael J. Monea of Regina writes:

Recently, the Leader Post reported on the Global Warming Policy Foundation (GWPF) report on Carbon Capture Sequestration (CCS). The GWPF’s report is unbalanced and incorrect.

The author makes assumptions that natural gas prices will remain low and that natural gas generation will never have greenhouse gas regulations. However, it fails to acknowledge that countries like Japan, China and India import liquid natural gas (LNG), and as such, the long term cost considerations for these markets should be taken into consideration. LNG is costly to these markets and as such, coal continues to be a supply source for power generation. Also consider that China and India have a growing appetite for cost-efficient electricity, and growing pressure to reduce their CO2 emissions. CCS can and has been applied to coal plants successfully, which represents the largest greenhouse gas emissions globally.

Saskatchewan is advancing a capture process that will make a significant contribution in the battle against climate change across the globe. The well-respected International Panel on Climate Change also says that without CCS, the world has few options to meet the commitments of the Paris Climate Change Accord.

Saskatchewan is a leader in this clean energy option, and we should be proud of this accomplishment. I hear daily from people around the world about Saskatchewan’s achievement in capturing over 1.5 million tonnes of carbon dioxide at Boundary Dam Power Station. Unit 3 is now the cleanest fossil fuel unit in all of Canada. It operates cleaner than a comparable natural gas unit.

The facts are that the CCS process is cost-competitive with other new sources of power generation. As well, new projects in the United States such as Petro Nova, near Houston, have been on time, on budget and deemed successful. Lessons learned from the Saskatchewan experience have contributed to this success. The expansion of the technology and our work will continue to result in lower costs of CCS. The CCS technology can also be used on natural gas plants. And with the lessons learned, here in Saskatchewan, it can even be applied to industrial emissions, which have few options for reducing emissions. These are precisely the lessons learned that the world wants to know. Even multilateral development banks seek our advice to de-risk their future investments.

I welcome debate as it serves to explore new perspectives and ultimately to progress innovation that leads to technological and social change. However, what this report does not highlight are regional differences and energy demand. I suggest that it is the discrediting of first generation technologies that is wrong – not the technology itself.

Michael J. Monea, P. Geol., P.Eng., ICD.D is president and CEO of the International CCS Knowledge Centre

Letter: SaskPower CEO slams report on carbon capture and storage

SaskPower president Mike Marsh says clean coal technology is a "great solution'' for Saskatchewan and the world.
SaskPower president Mike Marsh takes issue with a recent report critical of carbon capture and storage. DON HEALY / REGINA LEADER-POST
M.J. (Mike) Marsh, president and CEO of SaskPower, writes:

A report by the Global Warming Policy Foundation (GWPF) on carbon capture and storage technology (“Carbon capture wrong technology,” says a new report, July 7) asserts that SaskPower’s Boundary Dam 3 project (BD 3) was ill conceived, and that CCS technology generally is not a cost-effective way to reduce greenhouse gas emissions.

We shouldn’t be surprised GWPF holds this view. The organization has been described as “the main group advocating climate change skepticism.” 

There are many well-respected organizations who accept the science of climate change that have a more favourable view of CCS.

Indeed, both the International Panel on Climate Change (IPCC) and the International Energy Agency (IEA) have said it will be impossible to meet international emissions reduction targets without the widespread deployment of CCS.

In fact, the same day the Leader-Post published its story, IEA chief economist Laszlo Varro said in a commentary that BD 3 and a similar project in Texas “have demonstrated that there is a solution to one of the most complex energy and climate dilemmas we face: a large global coal-fired power fleet that today provides around 40 per cent of the world’s electricity. This fleet is the youngest it has been for decades, with more than 500 GW (gigawatts) added since 2010, mostly in emerging economies.”

Mr. Varro highlights an unavoidable fact: the world depends on coal to generate electricity and will for the foreseeable future.

Given this reality, we will need a combination of policies, including the aggressive adoption of CCS, to deal with climate change.

Saskatchewan and SaskPower are world leaders in CCS thanks to our accomplishments at Boundary Dam. We regularly host researchers from around the world that want to learn from us.  They have come to Saskatchewan because this province is in the process of advancing an indispensable technology. It is time we recognize the important work done on CCS here in Saskatchewan and the huge potential it has to help deliver on the international commitments made to reduce greenhouse gases. 

Government of Saskatchewan copies letter by Mike Marsh, CEO of SaskPower — or vice versa

Letter: Environment Minister Scott Moe challenges report on carbon capture


Letter: Professor Hughes defends conclusions on carbon capture and storage

Letters to Regina Leader-Post, 14 July 2017

SaskPower's Boundary Dam carbon capture plant near Estevan is a key part of the province's climate change policy.

SaskPower’s Boundary Dam carbon capture plant near Estevan is a key part of the province’s climate change policy. DON HEALY /REGINA LEADER-POST

Prof. Gordon Hughes of Edinburgh, Scotland, writes: 

I regret that Mr. Monea (“Report critical of carbon capture and storage is unbalanced, incorrect,” July 11) hasn’t made the effort to read the full details of my research, as his claims grossly misrepresent my assumptions and conclusions.

First, it is not gas prices, per se, that matter but the ratio of the gas price to the coal price per unit of energy. I tested my conclusions up to a ratio that exceeds the maximum value that has been observed in any year of the last 50 years, even (especially) in markets supplied by LNG. That ratio would have to persist for 30 years to justify fitting CCS to coal plants. I don’t bet on odds of 1 in 1,000. Does Mr. Monea believe that taxpayers should do this?

Second, I discuss various examples including Boundary Dam and Petro Nova. No one disputes that carbon capture for coal plants can be viable if the CO2 is used for enhanced oil recovery or similar high-value uses. However, that is a very limited market and completely irrelevant on any scale in Japan, China and India.

Third, I discuss carbon capture for gas plants at length. It is the only general application of carbon capture that might be economic, but I show that the evolution of electricity markets with significant renewable generation have undermined the incentives for investing in gas plants with CCS because the expected load factors are too low.

Finally, I don’t doubt the capacity of governments to waste taxpayers’ or electricity consumers’ money. Expenditures on CCS up to now are a prime example. Even so, the cost per tonne of CO2 by deploying CCS, even under very favourable assumptions, is absurdly expensive relative to both (i) other ways of reducing emissions, and (ii) the estimated social benefits of such reductions.

It may be regrettable but CCS is an economic dead-end under current technology and costs.

Prof. Gordon A. Hughes is a professor of economics at the University of Edinburgh, and was a senior adviser on energy and environmental policy at the World Bank until 2001.