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* The OECD90 region includes the countries belonging to the OECD in 1990. The REF ('reforming economies') region aggregates the countries of the

Former Soviet Union and Eastern Europe. The ASIA region represents the developing countries on the Asian continent. The ROW region covers the rest of the world, aggregating countries in sub-Saharan Africa, Latin America and the Middle East. For more details see SRES, 2000.

* The OECD90 region includes the countries belonging to the OECD in 1990. The REF ('reforming economies') region aggregates the countries of the

Former Soviet Union and Eastern Europe. The ASIA region represents the developing countries on the Asian continent. The ROW region covers the rest of the world, aggregating countries in sub-Saharan Africa, Latin America and the Middle East. For more details see SRES, 2000.

studies, as well as those based upon more top-down modelling approaches, also indicate that, once the full cost of the complete CCS system has been accounted for, CCS systems are unlikely to deploy on a large scale in the absence of an explicit policy or regulatory regime that substantially limits greenhouse gas emissions to the atmosphere. The literature and current industrial experience indicate that, in the absence of measures to limit CO2 emissions, there are only small, niche opportunities for the deployment of CCS technologies. These early opportunities could provide experience with CCS deployment, including the creation of parts of the infrastructure and the knowledge base needed for the future large-scale deployment of CCS systems.

Most analyses of least-cost CO2 stabilization scenarios indicate that, while there is significant penetration of CCS systems over the decades to come, the majority of CCS deployment will occur in the second half of this century

(Edmonds et al, 2000, 2003; Edmonds and Wise, 1998; Riahi et al., 2003). One of the main reasons for this trend is that the stabilization of CO2 concentrations at relatively low levels (<650 ppmv) generally leads to progressively more constraining mitigation regimes over time, resulting in carbon permit prices that start out quite low and steadily rise over the course of this century. The TAR mitigation scenarios (Morita et al., 2000) based upon the SRES baselines report cumulative CO2 storage due to CCS ranging from zero to 1100 GtCO2 (300 GtC) for the first half of the century, with the majority of the scenarios clustering below 185 GtCO2 (50 GtC). By comparison, the cumulative contributions of CCS range from zero to 4770 GtCO2 (1300 GtC) in the second half of the century, with the majority of the scenarios stating figures below 1470 GtCO2 (400 GtC). The deployment of CCS over time in the TAR mitigation scenarios is illustrated in Figure 8.7. As can be seen, the use

Figure 8.7 Deployment of CCS systems as a function of time from 1990 to 2100 in the IPCC TAR mitigation scenarios where atmospheric CO2 concentrations stabilize at between 450 to 750 ppmv. Coloured thick lines show the minimum and maximum contribution of CCS for each SRES scenario group, and thin lines depict the contributions in individual scenarios. Vertical axes on the right-hand side illustrate the range of CCS deployment across the stabilization levels for each SRES scenario group in the year 2100.

Figure 8.7 Deployment of CCS systems as a function of time from 1990 to 2100 in the IPCC TAR mitigation scenarios where atmospheric CO2 concentrations stabilize at between 450 to 750 ppmv. Coloured thick lines show the minimum and maximum contribution of CCS for each SRES scenario group, and thin lines depict the contributions in individual scenarios. Vertical axes on the right-hand side illustrate the range of CCS deployment across the stabilization levels for each SRES scenario group in the year 2100.

of CCS is highly dependent upon the underlying base case. For example, in the high economic growth and carbon-intensive baseline scenarios (A1FI), the development path of CCS is characterized by steadily increasing contributions, driven by the rapidly growing use of hydrocarbon resources. By contrast, other scenarios (e.g., A1B and B2) depict CCS deployment to peak during the second half of the century. In a number of these scenarios, the contribution of CCS declines to less than 11 GtCO2 per year (3 GtC per year) until the end of the century. These scenarios reflect the fact that CCS could be viewed as a transitional mitigation option (bridging the transition from today's fossil-intensive energy system to a post-fossil system with sizable contributions from renewables).

Given these models' relatively coarse top-down view of the world, there is less agreement about when the first commercial CCS units will become operational. This is - at least in part - attributable to the importance of policy in creating the context in which initial units will deploy. For example, McFarland et al. (2003) foresee CCS deployment beginning around 2035. Other modelling exercises have shown CCS systems beginning to deploy - at a lower level of less than 370 MtCO2 a year (100 MtC a year) - in the period 2005-2020 (see, for example, Dooley et al., 2000). Moreover, in an examination of CCS deployment in Japan, Akimoto et al. (2003) show CCS deployment beginning in 2010-2020. In a large body of literature (Edmonds et al.

2003; Dooley and Wise, 2003; Riahi et al. 2003; IEA, 2004), there is agreement that, in a CO2-constrained world, CCS systems might begin to deploy in the next few decades and that this deployment will expand significantly after the middle of the century. The variation in the estimates of the timing of CCS-system deployment is attributable to the different ways energy and economic models parameterize CCS systems and to the extent to which the potential for early opportunities - such as EOR or ECBM - is taken into account. Other factors that influence the timing of CCS diffusion are the rate of increase and absolute level of the carbon price. Geographic distribution

McFarland et al. (2003) foresee the eventual deployment of CCS technologies throughout the world but note that the timing of the entry of CCS technologies into a particular region is influenced by local conditions such as the relative price of coal and natural gas in a region. Dooley et al. (2002) show that the policy regime, and in particular the extent of emissions trading, can influence where CCS technologies are deployed. In the specific case examined by this paper, it was demonstrated that, where emissions trading was severely constrained (and where the cost of abatement was therefore higher), CCS technologies tended to deploy more quickly and more extensively in the US and the EU. On the other hand, in the absence of an efficient emissions-trading system spanning all of the Annex B nations, CCS was used less intensively and CCS utilization was spread more evenly across these nations as the EU and US found it cheaper to buy CCS-derived emission allowances from regions like the former Soviet Union.

Table 8.5 gives the corresponding deployment of CCS in the IPCC TAR mitigation scenarios for four world regions. All values are given as averages across scenario results from different modelling teams. The data in this table (in particular the far left-hand column which summarizes average CO2 storage across all scenarios) help to demonstrate a common and consistent finding of the literature: over the course of this century, CCS will deploy throughout the world, most extensively in the developing nations of today (tomorrow's largest emitters of CO2). These nations will therefore be likely candidates for adopting CCS to control their growing emissions.16

Fujii et al. (2002) note that the actual deployment of CCS technologies in any given region will depend upon a host of geological and geographical conditions that are, at present, poorly represented in top-down energy and economic models. In an attempt to address the shortcomings noted by Fujii et al. (2002) and others, especially in the way in which the cost of CO2 transport and storage are parameterized in top-down models, Dooley et al. (2004b) employed graded CO2 storage supply curves for all regions of the world based upon a preliminary assessment of the literature's estimate of regional CO2 storage

16 This trend can be seen particularly clearly in the far left-hand column of Table 8.5, which gives the average CCS deployment across all scenarios from the various models. Note, nevertheless, a few scenarios belonging to the B1 and B2 scenario family, which suggest larger levels of deployment for CCS in the developed world.

capacity. In this framework, where the cost of CO2 storage varies across the globe depending upon the quantity, quality (including proximity) and type of CO2 storage reservoirs present in the region, as well as upon the demand for CO2 storage (driven by factors such as the size of the regional economy, the stringency of the modelled emissions reduction regime), the authors show that the use of CCS across the globe can be grouped into three broad categories: (1) countries in which the use of CCS does not appear to face either an economic or physical constraint on CCS deployment given the large potential CO2 storage resource compared to projected demand (e.g., Australia, Canada, and the United States) and where CCS should therefore deploy to the extent that it makes economic sense to do so; (2) countries in which the supply of potential geological storage reservoirs (the authors did not consider ocean storage) is small in comparison to potential demand (e.g., Japan and South Korea) and where other abatement options must therefore be pressed into service to meet the modelled emissions reduction levels; and (3) the rest of the world in which the degree to which CCS deployment is constrained is contingent upon the stringency of the emission constraint and the useable CO2 storage resource. The authors note that discovering the true CO2 storage potential in regions of the world is a pressing issue; knowing whether a country or a region has 'sufficient' CO2 storage capacity is a critical variable in these modelling analyses because it can fundamentally alter the way in which a country's energy infrastructure evolves in response to various modelled emissions constraints. Long-term economic impact

An increasing body of literature has been analyzing short- and long-term financial requirements for CCS. The World Energy Investment Outlook 2003 (IEA, 2003) estimates an upper limit for investment in CCS technologies for the OECD of about US$ 350 to 440 billion over the next 30 years, assuming that all new power plant installations will be equipped with CCS. Similarly, Riahi et al. (2004) estimate that up-front investments for initial niche market applications and demonstration plants could amount to about US$ 70 billion or 0.2% of the total global energy systems costs over the next 20 years. This would correspond to a market share of CCS of about 3.5% of total installed fossil-power generation capacities in the OECD countries by 2020, where most of the initial CCS capacities are expected to be installed.

Long-term investment requirements for the full integration of CCS in the electricity sector as a whole are subject to major uncertainties. Analyses with integrated assessment models indicate that the costs of decarbonizing the electricity sector via CCS might be about three to four per cent of total energy-related systems costs over the course of the century (Riahi et al., 2004). Most importantly, these models also point out that the opportunity costs of CCS not being part of the CO2 mitigation portfolio would be significant. Edmonds et al. (2000) indicate that savings over the course of this century associated with the wide-scale deployment of CCS technologies when compared to a scenario in which these technologies do not exist could be in the range of tens of billions of 1990 US dollars for high

CO2 concentrations limits such as 750 ppmv, to trillions of dollars for more stringent CO2 concentrations such as 450 ppm 17. Dooley et al. (2002) estimate cost savings in excess of 36% and McFarland et al. (2004) a reduction in the carbon permit price by 110 US$/tCO2 in scenarios where CCS technologies are allowed to deploy when compared to scenarios in which they are not. Interaction with other technologies As noted above, the future deployment of CCS will depend on a number of factors, many of which interact with each other. The deployment of CCS will be impacted by factors such as the development and deployment of renewable energy and nuclear power (Mori, 2000). Edmonds et al. (2003) report that CCS technologies can synergistically interact with other technologies and in doing so help to lower the cost and therefore increase the overall economic potential of less carbon-intensive technologies. The same authors note that these synergies are perhaps particularly important for the combination of CCS, H2 production technologies and H2 end-use systems (e.g., fuel cells). On the other hand, the widespread availability of CCS technologies implies an ability to meet a given emissions reduction at a lower marginal cost, reducing demand for substitute technologies at the margin. In other words, CCS is competing with some technologies, such as energy-intensity improvements, nuclear, fusion, solar power options, and wind. The nature of that interaction depends strongly on the climate policy environment and the costs and potential of alternative mitigation options, which are subject to large variations depending on site-specific, local conditions (IPCC, 2001). At the global level, which is spatially more aggregated, this variation translates into the parallel deployment of alternative options, taking into account the importance of a diversified technology portfolio for addressing emissions mitigation in a cost-effective way.

An increasing body of literature (Willams, 1998; Obersteiner et al, 2001; Rhodes and Keith, 2003; Makihira et al., 2003; Edmonds et al., 2003, Mollersten et al., 2003) has begun to examine the use of CCS systems with biomass-fed energy systems to create useful energy (electricity or transportation fuels) as well as excess emissions credits generated by the system's resulting 'negative emissions'. These systems can be fuelled solely by biomass, or biomass can be co-fired in conventional coal-burning plants, in which case the quantity is normally limited to about 10-15% of the energy input. Obersteiner et al. (2001) performed an analysis based on the SRES scenarios, estimating that 880 to 1650 GtCO2 (240 to 450 GtC) of the scenario's cumulative emissions that are vented during biomass-based energy-conversion processes could potentially be available for capture and storage over the course of the century. Rhodes and Keith (2003) note that, while this coupled bio-energy CCS system would generate expensive electricity in a world of low carbon prices, this system could produce competitively priced electricity in a world with carbon prices in excess of 54.5 US$/tCO2 (200 US$/tC). Similarly, Makihira et al. (2003) estimate that CO2 capture during hydrogen production from biomass could become competitive at carbon prices above 54.5 to 109 US$/tCO2 (200 to 400 US$/tC).

8.4 Economic impacts of different storage times

As discussed in the relevant chapters, geological and ocean storage might not provide permanent storage for all of the CO2 injected. The question arises of how the possibility of leakage from reservoirs can be taken into account in the evaluation of different storage options and in the comparison of CO2 storage with mitigation options in which CO2 emissions are avoided.

Chapters 5 and 6 discuss the expected fractions of CO2 retained in storage for geological and ocean reservoirs respectively. For example, Box 6.7 suggests four types of measures for ocean storage: storage efficiency, airborne fraction, net present value, and global warming potential. Chapter 9 discusses accounting issues relating to the possible impermanence of stored CO2. Chapter 9 also contains a review of the broader literature on the value of delayed emissions, primarily focusing on sequestration in the terrestrial biosphere. In this section, we focus specifically on the economic impacts of differing storage times in geological and ocean reservoirs.

Herzog et al. (2003) suggest that CO2 storage and leakage can be looked upon as two separate, discrete events. They represent the value of temporary storage as a familiar economic problem, with explicitly stated assumptions about the discount rate and carbon prices. If someone stores a tonne of CO2 today, they will be credited with today's carbon price. Any future leakage will have to be compensated by paying the carbon price in effect at that time. Whether non-permanent storage options will be economically attractive depends on assumptions about the leakage rate, discount rate and relative carbon permit prices. In practice, this may turn out to be a difficult issue since the commercial entity that undertakes the storage may no longer exist when leakage rates have been clarified (as Baer (2003) points out), and hence governments or society at large might need to cover the leakage risk of many storage sites rather than the entity that undertakes the storage.

Ha-Duong and Keith (2003) explore the trade-offs between discounting, leakage, the cost of CO2 storage and the energy penalty. They use both an analytical approach and an integrated assessment numerical model in their assessment. In the latter case, with CCS modelled as a backstop technology, they find that, for an optimal mix of CO2 abatement and CCS technologies, 'an (annual) leakage rate of 0.1% is nearly the same as perfect storage while a leakage rate of 0.5% renders storage unattractive'.

Some fundamental points about the limitations of the economic valuation approaches presented in the literature have been raised by Baer (2003). He argues that financial efficiency, which is at the heart of the economic approaches to the valuation of, and decisions about, non-permanent storage is only one of a number of important criteria to be considered. Baer points out that at least three risk categories should to be taken into account as well:

• ecological risk: the possibility that 'optimal' leakage may preclude future climate stabilization;

• financial risk: the possibility that future conditions will cause carbon prices to greatly exceed current expectations, with consequences for the maintenance of liability and distribution of costs; and

• political risk: the possibility that institutions with an interest in CO2 storage may manipulate the regulatory environment in their favour.

As these points have not been extensively discussed in the literature so far, the further development of the scientific debate on these issues must be followed closely.

In summary, within this purely economic framework, the few studies that have looked at this topic indicate that some CO2 leakage can be accommodated while still making progress towards the goal of stabilizing atmospheric concentrations of CO2. However, due to the uncertainties of the assumptions, the impact of different leakage rates and therefore the impact of different storage times are hard to quantify.

8.5 Gaps in knowledge

Cost developments for CCS technologies are now estimated based on literature, expert views and a few recent CCS deployments. Costs of large-scale integrated CCS applications are still uncertain and their variability depends among other things on many site-specific conditions. Especially in the case of large-scale CCS biomass based applications, there is a lack of experience and therefore little information in the literature about the costs of these systems.

There is little empirical evidence about possible cost decreases related to 'learning by doing' for integrated CCS systems since the demonstration and commercial deployment of these systems has only recently begun. Furthermore, the impact of targeted research, development and deployment (RD&D) of CCS investments on the level and rate of CCS deployment is poorly understood at this time. This lack of knowledge about how technologies will deploy in the future and the impact of RD&D on the technology's deployment is a generic issue and is not specific to CCS deployment.

In addition to current and future CCS technological costs, there are other possible issues that are not well known at this point and that would affect the future deployment of CCS systems: for example, costs related to the monitoring and regulatory framework, possible environmental damage costs, costs associated with liability and possible public-acceptance issues.

There are at present no known, full assessments of life-cycle costs for deployed CCS systems, and in particular the economic impact of the capture, transport and storage of non-pure CO2 streams.

The development of bottom-up CCS deployment cost curves that take into account the interplay between large CO2 point sources and available storage capacity in various regions of the world should continue; these cost curves would help to show how CCS technologies will deploy in practice and would also help improve the economic modelling of CCS deployment in response to various modelled scenarios.

Recent changes in energy prices and changes in policy regimes related to climate change are not fully reflected in the literature available as this chapter was being written. This suggests a need for a continuous effort to update analyses and perhaps draft a range of scenarios with a wider range of assumptions (e.g., fuel prices, climate policies) in order to understand better the robustness and sensitivity of the current outcomes.

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Getting Started With Solar

Getting Started With Solar

Do we really want the one thing that gives us its resources unconditionally to suffer even more than it is suffering now? Nature, is a part of our being from the earliest human days. We respect Nature and it gives us its bounty, but in the recent past greedy money hungry corporations have made us all so destructive, so wasteful.

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