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Background to the Study
This study, undertaken on behalf of IEAGHG by Element Energy (now a part of ERM), explores the role of CCS in decarbonising small-scale industry and power generation applications. While relatively under investigated compared to their larger scale counterparts, reaching net zero will be dependent on successfully addressing the emissions from small-scale facilities. The findings from the study will be of interest to the broader energy community but, in particular, should benefit project developers, the finance community and policymakers.
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Key Messages
- A significant share of CO2 emissions from industry and power generation is emitted from small-scale applications, defined for this study as:
- Industry sites emitting up to 100,000 t CO2 annually from point sources.
- Power generation plants with an unabated installed capacity of up to 100 MWe.
- As small-scale applications will also be required by governments to honour the net-zero CO2 emissions pledge, technology developers are increasingly turning their attention to the capture of carbon from them.
- Until now, most analysis on the deployment of CCS on power and industrial applications has focused on large-scale plant, defined as plant with annual CO2 emissions of several hundreds of thousands, if not millions, of tonnes. This reflects the dominant focus of technology developers on the larger applications that offer stronger economies of scale.
- While the cost advantages stemming from economies of scale remain valid, energy and climate imperatives coupled with technology progress and incentives to reduce CO2 emissions may result in capture plant sizes that were once considered uneconomic to now offer more attractive prospects.
- The literature on carbon capture mostly focuses on large-scale applications. While there are many pilots and small-scale demonstration projects ongoing, a granular breakdown of performance and costs is often not published. Moreover, there is a lack of publicly available data on the performance of many patented processes. This results in a scarcity of data on carbon capture from small-scale applications that makes a bottom-up analysis of the costs of such applications more challenging
- To address this problem, four case studies of small-scale capture applications were explored in the analysis undertaken for this study:
- Natural gas-fired combined-cycle gas turbine (CCGT);
- Natural gas-fired co-generation (or combined heat and power (CHP));
- Energy from waste (EfW); and
- Lime kiln.
In the case of the CCGT, its large-scale analogue was also explored for comparison.
- Based on available data, techno-economic assessments were performed and the following high-level metrics estimated:
- The cost of carbon capture;
- The cost of carbon avoidance; and
- The impact on the cost of key products (e.g., lime) or outputs (e.g., electricity and heat).
- Findings showed that the relative share of capital expenditure in the total cost of a CO2 capture facility increases as the capture plant is downscaled. Consequently, capture technologies that are best suited for large-scale capture are not necessarily those best suited for small-scale capture.
- While amine-based post-combustion capture is the current benchmark capture technology due to its higher maturity, its capital-intensive nature makes it more costly to deploy at small scale.
- Emerging capture technologies that may be better suited for small-scale capture include:
- Advanced chemical absorption. Alternatives to amines could lower both capital and operational costs.
- Membrane separation. Membranes are modular by nature.
- Molten carbonate fuel cells. MCFCs are potentially attractive due to their modularity and because their capture cost is decoupled from the heat supply strategy.
- Cryogenic separation. Lower energy penalty and cost than competing technologies, plus liquid CO2 can be produced ready for transportation.
- Further development and deployment will be necessary to reach a verdict on which capture technologies are most suitable each of the different applications.
- By taking advantage of mass manufacturing, modularisation and standardisation could potentially offset the loss of economies of scale for small-scale applications. Standardisation of capture units, however, would involve a trade-off between high performance and low manufacturing and engineering costs.
- Differences in operational modes of large- and small-scale plants influence the suitability of capture technologies. For instance, as processes typically found in smaller-scale industries normally operate at lower temperatures than their large-scale counterparts, less waste heat might be available for use in many small-scale capture plants. This confers an advantage to capture technologies powered by electricity or technologies where regeneration is possible using low-temperature heat.
- The analysis undertaken clearly demonstrates that higher levels of financial support are required to offset the higher relative costs of small-scale capture and stimulate investment. A combination of low energy costs, high carbon prices and additional policy support would encourage deployment of small-scale capture plant. Moreover, the following issues should be considered:
- The lack of specific research, development and demonstration targeting small-scale plants results in evident gaps in the publicly available literature and a shortage of data.
- The relative cost of CO2 infrastructure is likely to be higher for small-scale applications as economies of scale for CO2 transport would be lost and small-scale plants tend to be dispersed and away from anchor emitters.
- Alternative decarbonisation strategies like electrification could have a stronger comparative advantage at smaller scales, especially if they are less capital-intensive.
- To address many of the challenges facing small-scale capture applications and to minimise the transition costs involved, tailored policies and incentives that target the higher relative cost of small-scale capture may be required, e.g., the scope and duration of existing incentives could be extended. Any such approach would need to achieve a balance between two different objectives:
- The need for policy measures to encourage least cost abatement including uptake of low emissions technologies and practices (existing or new); and
- The need for direct incentives for development and early deployment of new technologies to encourage market diffusion or uptake.
- It is instructive to note that several countries are introducing or have introduced incentives to encourage decarbonisation of their energy sectors, which may change (or have changed) the economic equation whereby some smaller-scale capture applications might now become (or have become) commercially viable. Geographic regions explored in the analysis undertaken for this study are the Netherlands, California and Texas in the United States, and China.
- In the absence of effective policies and incentives, the alternative would be to introduce mechanisms that better enable emitters to pass the additional costs on to consumers. Such a course of action might be particularly challenging to realise.
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