V 11 - Final

EU Technology Platform ZEFFPP

WG4 Subgroup on Markets, Policy and Regulation

Making Carbon Capture

Happen in Europe:

September 26, 2006

P. Di Zanno/F. Giger

and

Storage

Markets, Policy and Regulation

***

September 26, 2006

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Foreword ..................................................................................................................3
Summary of recommendations ................................................................................5
Chapter 1: Introduction and technical background .................................................7
1a. Experience with Carbon Capture.................................................................................................................. 7
1b. Recent developments.................................................................................................................................... 9

Chapter 2: Risk Assessment and Management in CCS...........................................10

2a. Environmental risks.................................................................................................................................... 10
2a.i. Environmental risks for CO2 capture................................................................................................... 12
2a.ii. Environmental risks for CO2 transportation ....................................................................................... 13
2a.iii. Environmental risks for CO2 storage................................................................................................. 13
2b: Risk assessment.......................................................................................................................................... 16
2b.i CCS chain process risk assessment ...................................................................................................... 16
2b.ii Risk mitigation/minimization.............................................................................................................. 19
2b.iii Site remediation and contingency plans ............................................................................................. 21
2b.iv Side option: reversible CO2 geological storage .................................................................................. 21
2c. Recommendations ...................................................................................................................................... 21

Chapter 3: The Market for CCS ...............................................................................22

3a. Market Assessment..................................................................................................................................... 22
3a.i CO2 Emissions Growth and Storage Potential...................................................................................... 22
3a.ii Storage Potential.................................................................................................................................. 26
3b. Costs of CO2 Capture, Transport and Storage ............................................................................................ 27

Chapter 4: Three Business Models for CCS ............................................................28

4a. Business Model 1: Power Company Case ................................................................................................. 29
4a.i: Drivers ................................................................................................................................................. 29
4a.ii: Technical Issues.................................................................................................................................. 30
4a.iii: Market Issues Perspective of a Power Company............................................................................. 32
4a.iv: CO2 Market Issues Perspective from a user................................................................................... 34
4.a.v: Conclusion ......................................................................................................................................... 34
4b: Business Model 2: Oil Company Case....................................................................................................... 35
4b.i: Drivers................................................................................................................................................. 35
4b.ii: Technical Issues ................................................................................................................................. 36
4b.iii: Market Issues .................................................................................................................................... 37
4b.iv: Conclusion......................................................................................................................................... 37
4c: Business Model 3: Government Case....................................................................................................... 37
4c.i: Drivers. ................................................................................................................................................ 37
4c.ii: Technical Issues.................................................................................................................................. 38
4c.iii: Market Issues..................................................................................................................................... 38
4c.iv: Conclusion......................................................................................................................................... 40
4d: Overall conclusions .................................................................................................................................... 40

Chapter 5: European regulations affecting CCS.....................................................40

5a. Overview of existing legal framework and regulations .............................................................................. 40
5b. The OSPAR and London Conventions....................................................................................................... 41
5b.i: Recent developments........................................................................................................................... 42
5b.ii: Next steps ........................................................................................................................................... 43
5c. EU regulations CO2 capture in power plants .............................................................................................. 43
5d. EU regulations concerning transport of liquefied CO2 ............................................................................... 43
5e. EU regulations concerning CO2 storage ..................................................................................................... 44
5f. CO2 and EU waste law product or waste?................................................................................................ 44
5g. Requirements of EU water protection law ................................................................................................. 45
5h. Suggested changes to the Water Framework Directive and EU Waste Directive ...................................... 46
5i. Ownership of and Responsibilities for Storage Sites .................................................................................. 46
5j: R&D Needs in EU Technologies and Policies ............................................................................................ 47

Chapter 6: Suggested Treatment of CCS in the EU Emissions Trading Scheme ....48

6a: Treatment of CCS....................................................................................................................................... 48
6b. Allocation of quotas for CCS in the ETS ................................................................................................... 50
6c: Legal Treatment of Storage Sites in the ETS ............................................................................................. 51

Annex 1: Clean fossil fuel technologies for power generation ..............................52

Annex 2: List of articles and reports on CCS ..........................................................54

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Foreword
The objective of ZEFFPP at reducing CO2 emissions and hence combating anthropogenic induced
climate change will be achieved by the deployment of zero emissions technologies that involve CO2
Capture and Geological Storage (CCS, e.g. CO2 storage, EOR, ECBM and EGR) in Europe.
The aim of the group is to understand the size of a potential new market and to help its development,
by addressing technological and societal issues, thereby creating a demand for CO2 emission reduction
and capture technologies for large-scale deployment through appropriate policy, regulatory and fiscal
regimes.
Due to the need to comply with the Kyoto Protocol and National Allocation Plan limits of CO2
emissions, storage and alternative applications abovementioned will be an important avenue for large
emitters.
A proper policy and regulatory framework will be required to motivate and/or push projects to
proceed. Short term and long term risk factors for emitters, technology sellers, project developers and
assemblers and final users will be investigated. Gaps between the present legal status and future legal
requirements will have to be defined and compiled.
Future verification procedures will have to address local, national and global safety and operational
targets. A review of performance criteria and short term and long term responsibilities will be placed
with a regulatory and legal framework.
The Working Groups deliberations shall serve as a basis for the development of the Strategic
Research Agenda (SRA) and the Strategic Deployment Document (SDD). The SRA and SD will assist
the Commission in establishing the work programmes and the concrete calls for proposals within the
7th Framework Programme on Research and Development (FP7).
The WG has used available databases to set a cap for the market size for storage and EOR.
The WG will also use project development scenarios / business models to determine any risk, liability
and responsibility issues between contracting entities (eg. Emitter, Technology Provider(s),
Assemblers and Pipeline Operators, and User(s)) that need to be addressed to motivate projects to
proceed and ensure that verifiable protocols provide the level(s) of certainty for society to accept
these concepts and projects.

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V 11 - Final

Coleads:
Francois Giger
Pietro Di Zanno

francois.giger@edf.fr
pietro.dizanno@airliquide.com

EDF
Air Liquide

FR
I

33143694423
33149835679

arve.thorvik@statoil.com
iain.wright@uk.bp.com

Statoil
BP

NO
UK

3222345421
441932768262

EnBW
ENDESA
ENEL
Electrabel
Vattenfall
RWE

DE
ESP
I
BE
DE
DE

497216317886
34912131707
390683055713
3225012559
493081824011
492011241416

FR
DE

17135132583
491311885751

CIRCE
AEAT
U. Sevilla

ESP
UK
ESP

34976761863
448701906099
34954461718

Bellona
Climnet

NO
UK

4795721632
3222295221

Bellona
DG Recherche
Bellona
MINEFI
BP
Siemens
DG Environment

USA

Oil and Gas

Arve Thorvik
Iain Wright

Generator Companies
Jochen Benz
Silvia Burgos
Roberto Venafro
Luc Van Nuffel
Juergen Krause
Hans Schiffer

j.benz@enbw.com
sburgos@endesa.es
roberto.venafro@enel.it
luc.vannuffel@electrabel.com
juergen.krause@vattenfall.de
hans-wilhelm.schiffer@rwe.com

Equipment Suppliers
Claude Roulet
Klaus Willnow

roulet@slb.com
klaus.willnow@siemens.com

Schlumberger
Siemens

Research
Sabina Scarpellini sabina@unizar.es
tim.dixon@aeat.co.uk
Tim Dixon
vjcortes@esi.us.es
Vincente Cortes
NGOs
Marius Holm
Kirsten Macey

mariush@bellona.no
kirsten@climnet.org

Persons Invited to one meeting or more

David Coleman
Pierre Dechamps
Paal Frisvold
Philippe Geiger
Mike Nash
Andreas Pistauer
Stefaan Vergote

david@bellona.no
pierre.dechamps@cec.eu.int
paal@bellona.org
philippe.geiger@industrie.gouv.fr
mike.a.nash@uk.bp.com
andreas.pistauer@siemens.com
stefaan.vergote@cec.eu.int

Page 4

NO
FR
UK
AT

3222956623
3226483122
33144972545
442079486524
499131182130
3222969696

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V 11 - Final

Summary of recommendations
THE OBJECTIVE IS:
- Increasing our knowledge:

THE PROPOSAL APPLIES TO:

CCS
in
general

Capture

Transport:

Storage:

There is a need for further development of monitoring technologies and

methodologies for CO2 in geological formations.
There is a need for improved understanding of well integrity, including failure
processes, and well integrity needs to be included within the modelling and
simulation of CO2 behaviour and storage site integrity.
In ZEFFPP all basic technologies options (including technology potentials of
efficiency increase on energy conversion as well as pre- and post combustion
capture processes and oxygen firing) must be focussed on including the
energy efficiency of those processes.
there are strong and strictly forced developments necessary to make CO2capture technologies available. Equipment development, up- scaling and
consumption tasks must be solved. Examinations and application tests are
urgently necessary to join the equipment to functional processes and systems.
Strong R&D efforts must be made to develop new efficient conversion
technology systems and to integrate the CO2- capture technologies. This
needs basic examinations as well as test and demonstration programs on
different scales.
The regulation and policy framework must ensure that R&D activities initiate
that at last the most fossil fuel efficient equipment and process systems will be
developed, tested and integrated to complete balanced CO2- infrastructure
transport and storage systems.

- Ensuring it is safe:
Set MMV (Mapping, Monitoring, Verification) standards in collaboration with
certification companies, regulators and NGOs.
Use the MMV standards as Risk Acceptance Criteria (RAC) for input to new
regulations (for site selection, process control and validation).
Propose validation of CCS for eligibility for ETS-CDM credits when compliance
with MMV- RCA standards and linked to UNFCC work.
Contribute directly to regulation setting using MMV-RAC standards.

Making it economical:
The costs of CCS are larger than most if not what all companies are willing to
accept. Both appropriate fiscal incentives and/or constraints (sticks) would
have to be implemented to bring these technologically complex projects
ahead.
Regarding the ETS: In the short to medium terms, it is difficult to see the EU
ETS providing sufficient incentives for early deployment of CCS projects.
Accordingly other incentives will be required. Where these are at Member
State Level it is important that the EU framework encourages rather than
discourages such Member State incentives (e.g. State Aid Guidance). We also
recommend that careful consideration be given to the interaction between the
EU ETS and MS incentives.
The future regulation and policy frameworks should incentivise the near-term
industrial-scale deployment of appropriate CCS technologies.

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CCS
in
general

- Making it legal:

Capture

Transport:

Storage:

Large power plants with CO2 capture could be included in the framework of the
IPPC (Integrated pollution prevention and control) principles. These plants
could fall within the point 4.2 of the Annex 1 of the IPPC directive (96/61/EC).
The requirements of the Directives concerning the approval and operation of
combustion plants are unlikely to pose particular obstacles to the use of
carbon capture. Significant amendment of the EU legislation appears
unnecessary.
Carbon dioxide used as a gas or a liquid or as a feedstock for the production
of chemicals or food products, is not classified in the European Inventory of
Existing Commercial Chemical Substances. This matter should be addressed
in a future review of the relevant legislation.
CO2 separated from other fluids as a result of an industrial process should not
be classified as a waste, especially when the CO2 is used as input to a further
industrial process.
Particular obstacles to the approval of the relevant pipeline systems used for
the transport of liquefied CO2 are not to be expected from these provisions. A
special need for adjustment is not discernible.
Offshore storage: The London Convention should continue and the OSPAR
convention should start work on CCS.
Onshore storage:The definitions of liquid waste in the Landfill Directive
need to be tightened up and could be dealt with by appropriate sitecertification standards.
Onshore storage: The Water Framework Directive (Article 11(3)(j)) should
be clarified to ensure that CO2 is not a pollutant for the purposes of this
directive, or an exclusion is made from the requirements of Article 11(3)(j)
equivalent to the exclusion of natural gas or LPG.
The Water Directive: An adjustment or extension of this EU legislation is called
for. The definition of a pollutant needs to be tightened up.
Liquid CO2 should be defined separately and dealt with by appropriate sitecertification requirements. We recommend that the waste directive
requirements are eased by an exception in favour of CO2 storage
underground.

Adapting the EU Emissions Trading Scheme:

The avoidance of emissions to the atmosphere through long-term geological
storage should be treated as equivalent to emissions reduction at the source,
subject to clear provisions in a monitoring and reporting system.
Incentives for CCS should be implemented in the EU ETS for Phase I and II
(where allocations of EUAs will be made by MS NAPs and where CO2 storage
sites will not be classified as installations).
Power plants with CO2 capture should be granted allocation EUAs, with due
recognition of CO2 emission reductions afforded by CCS, and with regard to
other incentive schemes for CCS that may exist.
CCS measures should also be recognized as JI/CDM projects and relevant
arrangements be stipulated, so that the CO2 emission reductions feasible with
CO2 sequestration can be applied on a global scale.
Considering the CCS chain as a set of installations subject to the ETS or any
subsequent scheme.

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Chapter 1: Introduction and technical background

The scope of the Technology Platform was defined, namely: To drastically reduce the environmental
impact of fossil fuel use, particularly coal, aiming at highly efficient power generation plants with near
zero emissions. This includes CO2 capture and storage, as well as clean conversion technologies
leading to substantial improvement in plant efficiency, reliability and costs.
A Zero Emission Fossil Fuel Power Plant is a new concept, but supported by previous developments
carried out in recent years in order to achieve a Cleaner Fossil Fuel Power Plants. The European
Commission under several research programmes has funded most of these developments.
During its more than 50 years of existence, the European Coal and Steel Community (ECSC)
supported the efforts of the Coal and Steel Industry to tackle jointly large projects, creating
throughout the Member States a network of researchers, through which there was an effective
exchange of information related to the projects and their results.
The THERMIE programme focused on the need to take short-term actions to assure reliable clean
coal technologies for the future electricity generation and funded a series of demonstration projects
under the IV Framework Programme, such as the Puertollano IGCC plant in Spain, the second
generation PFBC co-generation plant in Cottbus (Germany), the demonstration of British Gas/Lurgi
(BGL) gasification under optimised conditions for the European and Asian markets in SVZ Schwarze
Pumpe GmbH (Germany), the CFB Alholmen plant, located at Pietarsaari on the west coast of Finland,
etc. The Cleaner Coal Technologies (CARNOT) programme funded some projects such as the
Provence Power Station Unit 4 (Gardanne 250 MWe Circulating Fluidised Bed) in France.
The yearly CO2 emission to the atmosphere amounts to 23.6 GT in 2002 and is forecast to increase
proportionally to the energy demand, ie 50 % at least by 2030, 33 GT leading to a sizeable potential
world temperature increase, hence the critical need to curtail the emissions. CCS, together with
energy savings is a major solution to tackle this challenge. The power and oil industries will be the
two largest emitters of CO2. They will have to undertake CO2 sequestration projects, once regulatory
and legal issues are addressed.
The main CCS objective, whether static storage in geological formations (oil and gas depleted
reservoirs or deep saline aquifers) or dynamical storage through EOR/EGR/ECBM, is to limit CO2
emissions to the atmosphere to 550 ppm compared to what it is currently in 2006 around 370 ppm to
contain worldwide average temperature increase to a maximum of 2 deg C.
This is to be considered as a temporary solution for the next few decades only and compulsory
together with significant energy intensity reduction while new technologies are being aggressively
developed and deployed for centralized large non carbon power plants (nuclear plants Gen3 +4) and
decentralized / distributed energy production using renewable sources (solar, wind and biomass).
However, the amount to be stored per year is such (several GT per year) that the potential risk on the
environment and living species (flora, fauna, humans) has to be managed which is mandatory to
ensure political and public acceptance

1a. Experience with Carbon Capture

CCS in geological formations involves capturing CO2 and then injecting it into rock layers.
The purpose of CO2 capture is to produce a concentrated stream that can be readily transported to a
CO2 storage site. There are three main approaches to CO2 capture, for industrial and power plant
applications. Post-combustion systems separate CO2 from the flue gases produced by combustion of a
primary fuel (coal, natural gas, oil or biomass) in air. Oxy-fuel combustion uses oxygen instead of air
for combustion, producing a flue gas that is mainly H2O and CO2 and which is readily captured. This is
an option still under development. Pre-combustion systems process the primary fuel in a reactor to
produce separate streams of CO2 for storage and H2, which is used as a fuel.

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CO2 capture has costs and we to be aware of these. The energy required to operate CO2 capture
systems reduces the overall efficiency of power generation or other processes, leading to increased
fuel requirements, solid wastes and environmental impacts relative to the same type of base plant
without capture. It is not yet clear which technologies can easily be applied to address CO2 capture
and storage; be it post treatment of flue gases from an air based power plant, CO2 capture from a
pre-combustion technology or CO2 capture from oxy-combustion based technology. All must be
considered at this stage of technological development. However, as more efficient plants with CO2
capture become available and replace many of the older less efficient plants now in service, the net
impacts will be compatible with clean air emission goals for fossil fuel use.
The monitoring, risk and legal aspects associated with CO2 capture systems appear to present no new
challenges, as they are all elements of long-standing health, safety and environmental control practice
in industry. However, minimization of energy requirements for capture, together with improvements in
the efficiency of energy conversion processes will continue to be high priorities for future technology
development in order to minimize overall environmental impacts and cost.
New or improved methods of CO2 capture, combined with advanced power systems and industrial
process designs, can significantly reduce CO2 capture costs and associated energy requirements.
While there is considerable uncertainty about the magnitude and timing of future cost reductions, this
assessment suggests that improvements to commercial technologies can reduce CO2 capture costs by
at least 20-30% over approximately the next decade, while new technologies under development
promise more substantial cost reductions. Realization of future cost reductions, however, will require
deployment and adoption of commercial technologies in the marketplace as well as sustained R&D.
The CASTOR project, the world's largest carbon dioxide capture scheme and created with funding
from the EU's Sixth Framework Programme (FP6), was inaugurated on 15 March of 2006 at the Elsam
coal-fired power station near Esbjerg, Denmark. The project is a large-scale trial to investigate how
power station exhausts could be modified to remove the greenhouse gas carbon dioxide.
Storing industrially generated CO2 in deep underground formations is being seriously considered as a
method for reducing greenhouse gas emissions to the atmosphere. Growing interest has lead to
significant investment by governments and the private sector to develop this technology and evaluate
if this approach to greenhouse gas control could be implemented safely, environmentally and
effectively. There are several options for storing captured CO2. The most viable and environmentally
acceptable is geological storage.
There are three main storage options:
!" Depleted or near-depleted oil and gas fields;
!" Deep saline formations;
!" Unmineable coal seams.
Deep saline formations are believed to have by far the largest capacity for CO2 storage and are much
more widespread than other options (IPCC Special Report on CCS - Chapter 5).
In each case, geological storage of CO2 is accomplished by injecting it in dense form into a rock
formation below the earths surface. Porous rock formations that hold or (as in the case of depleted oil
and gas reservoirs) have previously held fluids such as natural gas, oil or brines, are potential
candidates for CO2 storage. Suitable storage formations can occur in both onshore and offshore
sedimentary basins (natural large-scale depressions in the earths crust that are filled with sediments).
Coal beds also may be used for storage of CO2 where it is unlikely that the coal will later be mined
and provided that permeability is sufficient.
Large-scale injection of CO2 started in 1972 in the Permian Basin in Texas, USA. The objective was to
enhance oil recovery (EOR) from exhausted oil fields by displacing more oil towards the production
wells. CO2 proved to be a very effective injection fluid for this purpose. When the oil prices increased
in the mid 1970s many new projects were started. Today there are more than 70 ongoing CO2 EOR
projects and almost 40 million tonnes of CO2 are being injected each year. These operations have
provided a lot of experience in handling large quantities of CO2 with respect to separating CO2 from

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other gases, compression, transport, injection, corrosion control etc. A comprehensive infrastructure
exists in form of a large CO2 pipeline system supplying oil reservoirs with CO2 from sources up 800 km
from the oil fields. Most of the CO2 comes from deep natural underground accumulation of CO2, while
about 5% comes from industrial sources. In one of the more recent large-scale EOR projects,
approximately 2 million tonnes of CO2 per year are transported through a 320 km long pipeline from a
coal-gasification plant in Dakota, USA, across the border to Saskatchewan, Canada, where the CO2 is
injected into the Weyburn oilfield to revive the oil production from the oilfield, which has been
producing oil since 1955.
In more recent years, the interest in CO2 injection has also resulted in projects where the CO2 is
injected into geological formation that is not bearing any oil (deep saline formations). In these
projects, the incentive for injection is not to enhance oil recovery but simply to avoid emitting CO2.
The first project of this kind was started in 1996 at the Sleipner gas field in the North Sea, Norway.
Approximately 1 million tonnes of CO2 per year have since then been injected into a deep saline
formation consisting of a 200 m thick sandstone layer at a depth of 1040 m. The extracted natural gas
contains 9% CO2 which is too much for delivery to the markets on the continent of Europe. The CO2 is
therefore removed from the extracted gas and injected. A similar injection project started 2004 at In
Salah, Algeria, where the targeted injection rate is 1.1 million tonnes per year. The BP, Sonatrach and
Statoil CO2 storage project at the In Salah gas field in Algeria has now been in operation for more
than one year and has stored 0.8 million tonnes of CO2 in the water section of the reservoir that
underlies the gas. This project is designed to avoid the emission of 1 million tonnes of CO2 a year.
A number of other commercial or pilot storage projects have been implemented, or are under way, in
Europe, including K12B (Netherlands), Ketzin (Germany), Snhvit in the Barents Sea (Norway) and the
Miller field in the North Sea (UK). In addition, there are several projects in other parts of the world.
Some of these have the ultimate purpose of storing CO2, while others are motivated by EOR. Using
CO2 for EOR has a double benefit and can make storage of CO2 less costly (IPCC, 2005; Torvager at
al., 2005). The costs of capture typically are higher per tonne of CO2 abated than the costs of
transport and storage. The future viability of CCS will depend upon the prospects of reduced capture
costs, availability of storage facilities and the CO2 emission-permit costs or support schemes.

1b. Recent developments

Over recent months there have been important developments in promoting zero emissions, as a
number of large-scale projects for CCS and/or EOR have been announced. The most significant are:
! Vattenfall started constructing a CO2 free plant on the basis of oxy-fuel technology in
Schwarze Pumpe, Germany. The pilot plant (30 MWe) will be in operation by 2008 and has
the goal to make oxy-fuel technology commercially available. Costs will be more than 40
million Euros.
! BP (with partners ConocoPhillips, Shell and Scottish & Southern Energy) announced plans to
build the worlds first industrial-scale project to generate low-carbon electricity from
hydrogen. The Peterhead Hydrogen Power project in Scotland would "decarbonise"
natural gas to produce hydrogen that would be used to generate 475 MW power
for the national grid. 90% of the CO2 from this process would be captured and reinjected into the depleted Miller field in the North Sea, where the CO2 will extend
the productive life of the existing infrastructure and allow the enhanced recovery
of oil that would otherwise have remained underground. Subject to appropriate
policy and regulatory frameworks, this project could be operational by the end of
2009.
! BP (with partner Edison Mission Group) announced plans for a project in the
United States that would generate 500 MW low-carbon electricity using hydrogen
manufactured by gasifying petroleum coke. Subject to an appropriate policy
framework, the Carson Hydrogen Power project in California could be operational by 2011,
avoiding 4 million tonnes/year CO2 emissions. The CO2 would be permanently stored in
depleted oil fields in the Los Angeles basin, where it would recover oil that would otherwise
remain trapped in the geological formations.

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!
!

A Statoil/Shell project in Mid-Norway aims to capture 2.5 million tons of CO2 from an 860 MW
gas power plant, and use the CO2 for EOR in a first offshore EOR project.
RWE is seeking to bring into operation a CO2-free coal-fired plant by 2014. At a capacity of
between 400 to 450 MW, it is the biggest project of this kind announced to date. Costs will
total about EUR1 billion. This will include transport and storage of CO2.
Total will invest 50 million to build a pilot CO2 capture and sequestration unit at Lacq and to
develop other technologies to reduce greenhouse gas emissions related to the use of fossil
fuels.
The Norwegian Government has ambitious goals towards capture, use and storage of CO2, to
mitigate climate change. To meet this goal the Government has initiated a project divided into
three separate parts. The first part is a study of the value chain for CO2, to ensure that a
proper process is initiated between the commercial actors in the various parts of the chain
capture, transport and storage of CO2. The second part of the project is to perform
engineering studies to support further planning of capture and storage of CO2 from the Krst
gas fired power plant in Norway. The last part of the project is to look into the legal and
organizational aspects of governmental engagement in a value chain for CO2.

All have underlined the need for predictable, long-term regulatory framework, as well as government
participation in the projects.

Chapter 2: Risk Assessment and Management in CCS

A risk management strategy and related implementation tactics need to be developed, Risk
Acceptance Criteria (RAC) need to be defined to set the regulation framework and ensure the
compliance to regulations by CO2 producers.
The CCS process presents 4 categories of risk, namely economical, social, legal and technical.
Economical and legal risks being addressed in another part of the general report, this section will
specifically address the CCS technical risks, the RAC criteria and the recommendations needed to
ensure public and political acceptance, provide the necessary input to regulations (measurement,
monitoring verification, MMV, process standards) and facilitate the eligibility of CCS for ETS CDM
credits.
Risk management has three components:
Assessment
Mitigation /minimization
Remediation/contingency plans.

2a. Environmental risks

A well-established method of analysing environmental impacts in a systematic manner is the
technique of Life Cycle Analysis (LCA). This is codified in the International Standard ISO 14040. The
first step required is the establishment of a system boundary, followed by a comparison of the system
with zero emission and a base case (reference system) without zero emission. The difference will
define the environmental impact of CCS.
As defined in the IPCC Report (2005) a generic system boundary is shown in the following figure,
along with the flows of materials into and out of the system. The key flow is the product stream,
which may be an energy product (such as electricity or heat), or another product with economic value
such as hydrogen, cement, chemicals, fuels or other goods. In analysing the environmental and
resource implications of CCS, the convention used is to normalize all of the system inputs and outputs
to a unit quantity of product (e.g., electricity). This concept is essential for establishing the
effectiveness of this option: in this particular case, the total amount of CO2 produced is increased due
to the additional equipment and operation of the CCS.

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Figure 1 Life Cycle Analysis

Inputs to the process include the fossil fuels used to meet process energy requirements, as well as
other materials used by the process (such as water, air, chemicals, or biomass used as a feedstock or
energy source). These may involve renewable or non-renewable resources. Outputs to the
environment include the CO2 stored and emitted, plus any other gaseous, liquid or solid emissions
released to the atmosphere, water or land. Changes in other emissions not just CO2 may also be
important. Other aspects, which may be relatively unique to CCS, include the ability to keep the CO2
separate from the atmosphere and the possibility of unpredictable effects (the consequences of
climate change, for example) but these are not quantifiable in an LCA. Use of this procedure would
enable a robust comparison of different CCS options. In order to compare a power plant with CCS with
other ways of reducing CO2 emissions from electricity production (the use of renewable energy, for
example), a broader system boundary may have to be considered.
One of the main environmental aspect concerns the construction of any large plant: this issue requires
impact analyses before the approval of such projects. At a power plant, the impact will depend
largely on the type of power generation technology and capture system employed and the
extra energy required, with the latter increasing the flows of fuel and chemical reagents and some of
the emissions associated with generating a MWh of electricity. The construction and operation of
CO2 pipelines will have a similar impact on the environment to that of the more familiar natural gas
pipelines. The large-scale transportation and storage of CO2 could also be a potential hazard, if
significant amounts were to escape.
The different storage options may involve different obligations in terms of monitoring and liability. The
monitoring of CO2 flows will take place in all parts of the system for reasons of process control. It will
also be necessary to monitor the systems to ensure that storage is safe and secure, to provide data
for national inventories and to provide a basis for CO2 emissions trading.
The best way to consider the environmental impacts of the CCS is the Strategic Environmental
Assessment (SEA).
SEA is a systematic process for evaluating environmental impacts of proposed policies, plans and
programmes: in this case the idea to store CO2 from fossil fuel combustion is seen as a plan.
The concept of SEA developed from the Environmental Impact Assessment (EIA), when the EIA was
applied to larger plans and projects that needed considerations that were not traditionally taken into
account in the EIA. Authorities to assess large-scale infrastructure projects have mainly used the
concept. SEA is a useful tool in the evaluation of environmental aspects related to ZEFFPP. The
integration of the SEA in the decision making process is one way to predict and prevent unwanted
environmental consequences, on strategic as well as local level.
Large power plants with CO2 capture could be included in the framework of the IPPC (Integrated
pollution prevention and control) principles as well. In fact these plants could fall within the
point 4.2 of the Annex 1 of the IPPC directive (96/61/EC): chemical installations for the
production of basic inorganic chemicals (gases, ammonia, chlorine or hydrogen chloride, fluorine or
hydrogen fluoride, carbon oxides, sulphur compounds, nitrogen oxides, hydrogen, sulphur dioxide,
carbonyl chloride).

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2a.i. Environmental risks for CO2 capture
In this paragraph are synthesized the major environmental issues associated with the use of new
power generation and CO2 capture technologies considered in a ZEFFPP and the handling of carbon
dioxide common to all of these systems. Issues related to the subsequent environmental transport
and storage of carbon dioxide are presented in the following paragraph.
Plants with CO2 capture would produce a stream of concentrated CO2 for storage, plus in most cases a
flue gas or vent gas emitted to the atmosphere and liquid wastes. In some cases solid wastes will also
be produced. The captured CO2 stream may contain other gas components some which would have
practical impacts on CO2 transport and storage systems and also potential health, safety and
environmental impacts. The types and concentrations of impurities depend on the type of power
generation technology; capture process and detailed plant design.
The major impurities in CO2 are well known but, depending on the power generation technology
selected, there could be little published information on the fate of any trace impurities in the feed gas
such as heavy metals. If substances are captured along with the CO2 then their net emissions to the
atmosphere will be reduced, but impurities in the CO2 may result in environmental impacts at the
storage site. CO2 from most capture processes contains moisture, which has to be removed to avoid
corrosion and hydrate formation during transportation.
This can be done using conventional processes and the costs of doing so would have to be included in
costs of CO2 capture plants. CO2 from post-combustion solvent scrubbing processes normally contains
low concentrations of other gas components. Many of the existing post-combustion capture plants
produce high purity CO2 for use in the food industry (IEA GHG, 2004). CO2 from pre-combustion
physical solvent scrubbing processes typically contains about 1-2% H2 and CO and traces of H2S and
other sulphur compounds (IEA GHG, 2003). IGCC plants with pre-combustion capture can be designed
to produce a combined stream of CO2 and sulphur compounds, to reduce costs and avoid the
production of solid sulphur (IEA GHG, 2003). Combined streams of CO2 and sulphur compounds
(primarily hydrogen sulphide, H2S) are already stored, for example in Canada.
The CO2-rich gas from oxy-fuel processes contains oxygen, nitrogen, argon, sulphur and nitrogen
oxides and various other trace impurities. This gas will normally be compressed and fed to a
refrigeration purification process to reduce the impurities concentrations to the levels required to
avoid two-phase flow conditions in the transportation pipelines. CO2 could be produced above 90 %
purity and is a function of technologies used and site operation. Including distillation in a refrigeration
separation unit CO2 could be produced up to 99.99% purity, entailing higher costs. This can be an
area for further research. Alternatively, the sulphur and nitrogen oxides could be left in the CO2 fed to
storage in circumstances where that is environmentally acceptable.
Power plants with CO2 capture would emit a CO2-depleted flue gas to the atmosphere. The
concentrations of most harmful substances in the flue gas would be similar to or lower than in the flue
gas from plants without CO2 capture, because CO2 capture processes inherently remove some
impurities and some other impurities have to be removed upstream to enable the CO2 capture process
to operate effectively. For example, post-combustion solvent absorption processes require low
concentrations of sulphur compounds in the feed gas to avoid excessive solvent loss, but the
reduction in the concentration of an impurity may still result in a higher rate of emissions per kWh of
product, depending upon the actual amount removed upstream and the capture system energy
requirements. In the case of post-combustion solvent capture, the flue gas may also contain traces of
solvent and ammonia produced by decomposition of solvent. Some CO2 capture systems produce solid
and liquid wastes. Solvent scrubbing processes produce degraded solvent wastes, which would be
incinerated or disposed of by other means. Post-combustion capture processes produce substantially
more degraded solvent than pre-combustion capture processes.

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2a.ii. Environmental risks for CO2 transportation
Overlooking the safety and security risks related to the CO2 transportation by both land and marine
pipelines as such as by ships, the main environmental aspects concerns the CO2 fugitive emissions
due to the failure.
Carbon dioxide leaking from a pipeline forms a potential physiological hazard for humans and animals.
The consequences of CO2 incidents can be modelled and assessed on a site-specific basis using
standard industrial methods, taking into account local topography, meteorological conditions,
population density and other local conditions.
A property of CO2 that needs to be considered when selecting a pipeline route is the fact that CO2 is
denser than air and can therefore accumulate to potentially dangerous concentrations in low lying
areas. Any leak transfers CO2 to the atmosphere. If substantial quantities of impurities, particularly
H2S, are included in the CO2, this could affect the potential impacts of a pipeline leak or rupture. The
short term exposure limit (STEL) at which H2S is immediately dangerous to life or health, according to
the Air Liquide MSDS is 15 ppm, compared to 15,000 ppm for CO2. If CO2 is transported for significant
distances in densely populated regions, the number of people potentially exposed to risks from CO2
transportation facilities may be greater than the number exposed to potential risks from CO2 capture
and storage facilities. Public concerns about CO2 transportation may form a significant barrier to largescale use of CCS. At present most electricity generation or other fuel conversion plants are built close
to energy consumers, sources of fuel supply, and proper infrastructure such as water availability and
access to transmission lines/grid.
In order to prevent and mitigate the risks, the common practice is to monitor them internally by pigs
(internal pipeline inspection devices) and externally by corrosion monitoring and leak detection
systems. Monitoring is also done by patrols on foot and by aircraft.
Marine pipelines are monitored internally by pigs, and externally by regular visual inspection from
remotely operated vehicles. Some have independent leak detection systems.
Ship systems can fail in various ways: through collision, foundering, stranding and fire, but these
issues will be discussed in other parts of the general paper.
2a.iii. Environmental risks for CO2 storage
The environmental impacts arising from geological storage fall into two broad categories: local
environmental effects and global effects arising from the release of stored CO2 to the
atmosphere. Global effects of CO2 storage may be viewed as the uncertainty in the effectiveness
of CO2 storage.
Local health, safety and environmental hazards arise from three distinct causes:
!" Direct effects of elevated gas-phase CO2 concentrations in the shallow subsurface and nearsurface environment;
!" Effects of dissolved CO2 on groundwater chemistry;
!" Effects that arise from the displacement of fluids by the injected CO2.
Risks are proportional to the magnitude of the potential hazards and the probability that these
hazards will occur. For hazards that arise from locally elevated CO2 concentrations in the nearsurface atmosphere, soil gas or in aqueous solution the risks depend on the probability of leakage
from the deep storage site to the surface.
Regarding those risks associated with routine operation of the facility and well maintenance, such
risks are expected to be comparable to CO2 EOR operations. There are two important exceptions to
the rule that risk is proportional to the probability of release. First, local impacts will be strongly
dependent on the spatial and temporal distribution of fluxes and the resulting CO2 concentrations.
Episodic and localized seepage will likely tend to have more significant impacts per unit of CO2

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released than will seepage that is continuous and/or spatially dispersed. Global impacts arising from
release of CO2 to the atmosphere depend only on the average quantity released over time scales of
decades to centuries. Second, the hazards arising from displacement, such as the risk of induced
seismicity, are roughly independent of the probability of release. Although we have limited
experience with injection of CO2 for the explicit purpose of avoiding atmospheric emissions, a wealth
of closely related industrial experience and scientific knowledge exists that can serve as a basis for
appropriate risk management.
A very limited part of carbon dioxide will neither dissolve in underground water nor will it
chemically or physically combine with the caprock. This part will then exist as a separate phase
(supercritical, liquid or gas) which might escape from formations used for geological storage through
the following pathways, see Figure 2.
!" Through the pore system in low-permeability cap rocks such as shales, if the capillary
entry pressure at which CO2 may enter the caprock is exceeded;
!" Through openings in the cap rock or fractures and faults;
!" Through anthropomorphic pathways, such as poorly completed and/or abandoned preexisting wells.
For onshore storage sites, actions must be taken to prevent CO2 from reaching the water table and
migrating into the overlying vadose zone. This occurrence would likely include CO2 contact with
drinking water aquifers. Depending on the mineral composition of the rock matrix within the
groundwater aquifer or vadose zone, the reaction of CO2 with the rock matrix could release
contaminants. The US Environmental Protection Agency (USEPA) has witnessed problems remediating
any areas that were considered contaminated as such.

Figure 2. Some potential escape routes for CO2 injected into saline formations.
In general the CO2 releases involve the following systems:
!" Hazards to groundwater from CO2 leakage and brine displacement
Increase in dissolved CO2 concentration that might occur as CO2 migrates from a storage
reservoir to the surface will alter groundwater chemistry, potentially affecting shallow groundwater
used for potable water and industrial and agricultural needs. Dissolved CO2 forms carbonic acid,
altering the pH of the solution and potentially causing indirect effects, including mobilization of (toxic)
metals, sulphate or chloride; and possibly giving the water an odd odour, colour or taste. In the worst
case, contamination might reach dangerous levels, excluding the use of groundwater for drinking or
irrigation.

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!"

Hazards to terrestrial and marine ecosystems

Stored CO2 and any accompanying substances, may affect the flora and fauna with which it
comes into contact. Impacts might be expected on microbes in the deep subsurface and on plants and
animals in shallower soils and at the surface.
!"

Induced seismicity
Underground injection of CO2 or other fluids into porous rock at pressures substantially higher
than formation pressures could induce fracturing. Induced local fracturing and fault activation may
pose two kinds of risks. First, brittle failure and associated microseismicity induced by over pressuring
can create or enhance fracture permeability, thus providing pathways for unwanted CO2 migration.
Second, fault activation could, in principle, induce earthquakes large enough to cause damage.
The obvious comparison coming to mind is with underground storage of natural gas for which several
decades of experience has been gathered for both conditioning/transport and geological storage. Two
main areas of differences have to be considered (ref. T. Wildenborg - TNO,4- 2006):
CO2 Physical properties are;
More dense & more viscous
Lower entry pressure
Not explosive
Inert as a gas
Higher dissolution rate in water
Chemically reactive when dissolved in water
CO2 storage duration: 102 104 years: Unlike natural gas which is inherently stored for short period of
time to satisfy domestic and industrial seasonal demand. Significant differences will raise, influence of
external factors in terms of needs for monitoring and lack of knowledge of the geo-chemical
interaction properties with the surrounding storage environment.
HSE risks for environment and living species (ref: S. Benson LNBL51170-2002): CO2 is a safe and
non toxic inert gas. It is an essential part of the fundamental biological processes of all living species.
It is then not to be considered as a waste per se. It does not cause cancer, affect development, or
suppress the immune system in humans. It is a physiologically active gas that is integral to both
respiration & acid-base balance in all life. However, exposure to elevated concentrations can lead to
adverse consequences up to and including coma and death. The effect of elevated concentrations
depends upon the concentration and duration of exposure and presents a serious risk to living species
and this risk needs to be managed and minimized.
Humans can tolerate increased concentrations compared to the present atmospheric concentration of
370 ppm with no physiological effect up to 1% (10,000 ppm). For concentrations up to 3%,
physiological adaptation occurs without adverse consequences. Between 3 and 5%, significant effects
appear on respiratory rate together with some discomfort, but without sequel if exposure is not long.
Above 5%, physical and mental ability are impaired and loss of consciousness may occur. Beyond
10%, a prolonged exposure may lead to coma and potential death.
Effects of elevated concentrations of CO2 on natural resources: All air-breathing animals will present
similar respiratory symptoms as humans. Plants, insects, soil dwelling organisms have higher
tolerance to CO2 than other living species but will be affected by high concentrations. The dissolution
of large quantities in the ocean waters would lead to a sizeable acidification of sea surface waters,
which in turn would be very damageable to marine life species.

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2b: Risk assessment

2b.i CCS chain process risk assessment
From above, it is clear that the major risk of the CCS chain is related to potential large releases of CO2
exposing the environment and living species. The exposure to CO2 can affect the environment and
living species at either the local level (surface and subsurface), HSE, or global level (greenhouse
effect, ocean water acidification) as illustrated in the following summary diagram form Keith and
Wilson (2002):

Figure 3. Possible Consequences of Geological Storage

In addition to sources and impact of undesirable occurrence, one must consider relevant time scales
for CO2 geological storage because possible leakage can occur long after a storage site has stopped.
Thus the risk profile of geological storage changes over time.
The CCS process chain presents 3 phases, capture, conditioning and transport, and geological storage.
The schematics below (Ref. Haefali et a., IEA, 2004) describes the various points along the CCS chain
where CO2 might be released by leaking to the atmosphere.

Figure 4: Possible Emissions Occurring During CCS

Technical risks related to CO2 capture (pre-combustion, post-combustion or oxy-fuel) are very similar
to those related to industrial gas handling processes with in addition the fact that CO2 is basically inert.
The magnitude of the potential leaks cannot reach high levels and is easy to monitor, control and
correct. It does not constitute in any way a sizeable risk needing special attention beyond the present
regulation in industrial gases handling.

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Technical risks related to transport depend on transport mode, which can be via pipelines, trucking or
ships.
Pipelines, the risks are lower than hydrocarbons or H2 pipelines. Leaks can be controlled using
conventional and regulated processes to minimize significant releases in the atmosphere. The major
risk would be linked to a sudden large release in a confined area which could be harmful to human life
if concentrations above 7% are reached in volume in air. Massive releases related to acts of god like
storms, hurricanes, seismic events or acts of terrorism can be minimized with known and regulated
alarm and safety systems already in operation for hydrocarbons or H2 pipelines.
Trucking, the corresponding operation already is very well regulated and under control and in any
case far less dangerous than many other industrial gases.
Ships, the situation is different as to day the state of the art technology presents a 3 to 4 % leak per
1,000 km due to boil-off and exhaust from ship engines and this has to be definitely improved and
decreased below 1%.
Technical risks related to geological storage: present the major potential risk due to the magnitude of
the storage and the many parameters and conditions, which could lead to various mechanisms for
leaks from the reservoir to the surface or interaction with fresh ground water aquifers.
While there are a priori less risks for CO2 CCS than for natural gas underground storage and no more
risks than CO2 driven EOR/EGR/ECBM, three considerations have to be taken into account when
assessing the risks for CO2 geological storage:
a. The quantity of CO2 to be stored will be very significant (hundreds of
Mt per site),
b. The duration of storage will be very long: 102 to 104 years.
c. Unlike natural gas, CO2, when dissolved in water, is reactive and can induce
formation damage such as sealed fracture opening or well completion damages
through cement attack or steel corrosion.
The impact of leakage events may have four aspects:
a. Degradation of underground water sources of drinking waters
b. Localized toxic concentration of CO2 in soil
c. Stagnant pooling of CO2 on land, sea floor or as water clathrates
d. Release to atmosphere, contributing to green house effect and ocean water acidification.
The potential leakage features, events and processes are illustrated in Figure 5 and 6:

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Figure 5.
Four leakage mechanisms can be highlighted:
1. Well bores:
They represent the biggest potential leakage risk, with mainly the pre-industrial wells, but also
with modern wells completed without use of CO2 compliant cement exemplified by the failure
mechanism displayed in the attached well cross section figure:

Figure 6.

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2. Leakage through fractures:

Natural fractures or induced fractures linked to too high pressure injection or induced by
fracture seal dissolved by HCO3-.
3. Transport by natural hydrologic flows:
When aquifers are in hydraulic contact with surface recharge and discharge zones.
4. Seismic events:
Natural events induced by anthropogenic activities at surface.
In summary, well bores represent the biggest potential risk, then the potentially induced
cracking of the cap rock by CO2 injection, then the opening of sealed fractures by calcite
sealing dissolution, then the pollution of fresh water aquifers when aquifers are connected.
2b.ii Risk mitigation/minimization
The purpose is to set Risk Acceptance Criteria (RAC) which can then be qualified by certification
companies and then used as process standards to drive the regulations and be used to control
compliance to regulations from CCS operators.
The CCS storage process comprises four phases: preparation, operation, abandonment and post
abandonment illustrated in Figure 7.

Figure 7.
The Preparation Phase:
This phase is essential for the site selection and validation. It includes: site characterization
(static & dynamic) using a combination of state of the art technologies: seismic, logging,
testing, monitoring for geological; geo-mechanical reservoir characterization, determination of
aquifer, containment, assessment of unconformities, fracture network, aquifers
characterization and connectivity assessment; mapping of old wells and planning for
conditioning them against potential leaks; the design and completion of smart injection wells
and monitoring wells with CO2 compliant cement; the design of a down hole and surface
monitoring network for micro-seismic events surveillance during injection and further control
of potential leaks and the design of repeat seismic surveys (4D) for CO2 plume tracking.

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Figures 8 and 9 exemplify the methodology for risk management as used for well integrity
assessment and control.

GENERAL METHODOLOGY FOR

PERFORMANCE & RISK ANALYSIS

Figure 8.

Performance & Risk Analysis for Well Integrity

Figure 9.
The preparation phase should include the plan for site abandonment.
Operational phase includes:
a. The modelling of the short term prediction,
b. The operation of the plan designed during the preparation phase
c. The monitoring of the operation to verify the validity of the short term prediction and take
the necessary corrective actions.
Abandonment phase includes:
a. The update to the long term risk assessment and
b. The decision on duration of specific site monitoring.

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Post abandonment phase includes:
a. The update of the long term risk assessment and the plan for transfer of liability and
b. The decision on regional monitoring strategy.
In conclusion of this risk mitigation/minimization task, one can say that the key issue is the long term
performance of the site. In order to emphasize the application of the precaution principle and
provide the best chance for public and political acceptance, one must apply the above described
MMV strategy, which is based on site characterization, well mapping and conditioning, CO2 compliant
injection and monitoring wells, down hole and surface monitoring network with alarm systems
allowing to verify the model prediction and take contingency actions should anything unforeseen
happen.
2b.iii Site remediation and contingency plans
Following the results of the monitoring network and the comparison with the prediction, contingency
action can be taken to minimize the leakage process should it happen and recondition the faulty wells.
The issue of caprock integrity and the site selection in a non seismic region and in formations without
open fractures should take care of the risk of significant leakage provided the site characterization has
been done with the criteria defined above.
2b.iv Side option: reversible CO2 geological storage
CO2 is a product which has a lot of potential industrial applications in chemistry, materials, food
industry to name a few. Even though this use would not tackle in any sizeable fashion the GHG effect,
a certain amount of anthropogenic CO2 could be reversibly stored underground for further industrial
usage as exemplified by the study published by Pr G. Centi and S. Perathoner ( 2003).

2c. Recommendations
The following highlights the recommendations of WG4 on CCS and storage. In general we must state
that CO2 can be considered as a commodity, or as a by-product, but it must not be considered a
waste, as this would entail a whole range of legal ramifications. CO2 as we have done for decades can
be handled as any other product and any risks implied with its use can be managed or mitigated.
1. Ensure that CO2 is not qualified as a waste (OSPAR/London
protocol/UNFCCC/DOE-NERL).
2. Information, education & training of communities and regulators with
involvement from start of process.
In addition we also recommend the following measures to be taken immediately:
3. Set MMV standards in collaboration with certification companies, regulators
and NGOs
Based on the experience of a decade of monitoring, Sleipner, In Salah,
Weyburn, Gorgon, etc., and IPCC guidelines, common EU standards could
be given to certification companies or institutions as early as possible.
Projects could be agreed separately in each country to promote and/or
realize CO2 capture projects.
4. Use the MMV standards as RACs for input to new regulations (for site selection,
process control and validation)
5. Propose validation of CCS for eligibility for ETS- CDM credits when compliance
with MMV- RCA standards and linked to UNFCC work.
6. Contribute directly to regulation setting using MMV-RCA standards.

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Chapter 3: The Market for CCS

3a. Market Assessment
3a.i CO2 Emissions Growth and Storage Potential
The cumulative world CO2 emissions from an IEA database of 14 641 entries was estimated at 13.4
Gt/y in 2000. Point sources are defined as power plants, oil refineries, gas processing plants, major
industrial sources (ammonia, cement, and iron and steel plants), hydrogen plants, ethylene and
ethylene oxide plants.
These numbers were compared to IEA World Energy Outlook estimates and found to be in good
agreement. Total anthropogenic emission sources quoted in World Energy Outlook were 22.6 Gt/y in
1997 and 23.6 Gt/y in 2002. The difference between the power and industry source emission data in
the IEA GHG study and those from the World Energy Outlook can be explained because not all
industry sectors, which emit CO2, were considered in the IEA GHG study.
The distribution of stationary CO2 emission sources on a regional basis is shown in Figure 10. North
America is the region with the largest number of stationary CO2 sources (37%) followed by OECD
Europe (14%) and China (10%). Figure 1 indicates three large clusters of stationary CO2 emission
sources, in the mid and eastern states of the USA, in central regions of Europe (UK, Netherlands,
Germany, Austria, Hungary, Czech Republic) and in South East Asia (eastern China and Japan) with a
further smaller cluster around the Indian sub continent.

Figure 10. World Point Sources of CO2 Emissions - PCC Workshop 2002
The quantities of stationary CO2 emissions for each region are shown in Figure 11 as a proportion of
the total 2000 stationary emissions. This distribution indicates that the regions that are the largest
emitters of CO2 from stationary sources are: China, 25% (3.4 Gt/y), North America, 20% (2.69 Gt/y)
and OECD Europe, 13% (1.75 Gt/y). All other regions emit less than 10% of the total CO2 emission
from stationary sources in 2000.

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Figure 11. Regional Distribution of CO2 Emissions - IPCC Workshop 2002

The distribution of stationary CO2 emission sources by industry sector is shown in Figure 12. Power
plants dominate the statistics with 54% of all identified stationary CO2 emission sources. The next
highest category is the cement industry with 15% of all sources and the gas-processing sector, 12%
of all sources. However if we combine the CO2 emissions of the refining industry and the natural gas
industry, we have a total of 17%, thereby making the oil industry the second largest emitter after
power plants. Note, this does not take into account CO2 emitted in the production and distribution of
oil and the distribution of natural gas.

Figure 12. Distribution of CO2 Emissions by Industry - IPCC Workshop 2002

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Based on the IEA World Energy Outlook 2004, world energy demand, as per the Reference Scenario
should increase by 60% between 2002 (10.3 billion metric tonnes oil equivalent (MTOE)) and 2030
(16.5 billion MTOE), increasing at an average of 1.7% per year. Fossil fuels will remain the global
energy vector during the reference period, accounting for approximately 80% of the energy mix. This
is presented in Figure 13. Oil will remain the largest energy supply mode for the period, facing little
competition from other fuels.

Figure 13. World Energy Demand WEO 2004

As a result of the increased energy demand CO2 emissions will increase to an estimated 38.2 billion
tonnes by 2030. Most of the increase will be from developing countries (~70%) and should overtake
OECD countries between 2020 and 2030. The data is presented in Table 1 and Figure 14.

Power sector
Industry
Transport
Residential
and services
Other
Total

OECD
2002
2030
4793
6191
1723
1949
3384
4856

Transition
economies
2002
2030
1270
1639
400
618
285
531

Developing
countries
2002
2030
3354
8941
1954
3000
1245
3353

World
2002
2030
9417
16771
4076
5567
4914
8739

1801
745
12446

378
111
2444

1068
605
8226

3248
1924
23579

1950
888
15834

538
176
3502

1930
1142
18366

4417
2720
38214

Table 1. CO2 Emissions Estimates (Million Tonnes/Year) WEO 2004

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18 000

million tonnes of CO 2

16 000
14 000
12 000
10 000
8 000
6 000
4 000
2 000
0
1990
Power Generation

2002

2010

Other Transformation

2020
Industry

2030

Transport

Other Sectors

Figure 14. CO2 Emissions Estimates (Million Tonnes/Year) WEO 2004

Figure 15 below highlights the quality of these sources and illustrates the need to capture CO2 from
CO2 sources that are not very pure.

Database of 14650 CO2 Point Sources - #"= 13,5 Gt/y

CO2 from NG sweetening not included

2 000

0
0

200 0

400 0

600 0

8000

0% CO2 or no data

4 000

0-3% CO2: GasProc, Power

6 000

3-14% CO2: Ethylene,

GasProc, Power

8 000

>14% CO2: Iron&Steel,

Power

10 000

>20% CO2: Steel-BFG, Cement

12 000

>98% CO2: NH3, E-O, H2 (Amine-based)

14 000

100 00

120 00

140 00

N o of so urces

Figure 15. Different Sources of CO2 Emissions

Thus based on the information above, the power and oil industries will be the two largest emitters of
CO2. They will have to undertake CO2 sequestration projects, once regulatory and legal issues are
addressed.

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3a.ii Storage Potential

Considerable work has been done to determine the potential of CO2 storage, through depleted gas
wells, depleted oil wells/EOR, deep saline aquifers and unminable coal seams. Any estimates are a
matter of serious debate and/or controversy as different assumptions and methodologies all have pros
and cons to their results. Figure 16 highlights the different storage options, their storage potential as
well as uncertainties in their absolute values. We will not debate these as they have been presented in
the WG2 report. However, it must be stated that there is sufficient storage space to deal with the CO2
emissions problem for a long transition period, while attempting to resolve both our energy needs and
CO2 emissions within the next 100 years.

100,000
10, 000

Capacity (Gigatons)

6 000
5 000

Max St orage
For EOR Use

4 000
3 000
2 000
1 000
0

Deep
Ocean

Deplet ed
Deplet ed
Saline
Coal
Oil
Gas
Reser voir s
Seams
Reser voir s Reser voir s

Annual
World
Emissions

6.2
Gigatons

Storage Options: IEA Greenhouse Gas R&D Program ;

Advanced Resources International estim ates for coal seam s
World Emissions: International Energy Outlook 2000, Table A10

Figure 16: CO2 Storage Estimates

A larger issue that must be address is the linking of CO2 sources (be they pure or not) to appropriate
CO2 sinks. Figure 17 highlights possible areas of storage respect. While there appears to be
significant storage potential close to most sources, we must bear in mind that pipeline costs are
capital intensive while providing little return on investment (on their own). They must be linked to
either CO2 penalty aversion projects or EOR revenue generating projects, which are not always so
obvious. The obstacles and cost associated of pipelining of CO2 from sources to storage sites have
been presented in the WG1, WG2 and WG3 reports.

Figure 17. CO2 Geographical Storage Potential

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3b. Costs of CO2 Capture, Transport and Storage

There have been considerable studies on the capture of CO2 from power plants, be they natural gas
combined cycles, normal pulverized coal boilers and gasification plants. The scale of such projects,
their construction costs, operating costs, feedstock assumptions lead to very large ranges for CO2
capture, transport and storage. The numbers presented in this section of the report are based on the
IPCC December 2005 report, however, the ZEFFPP WG1, WG2 and WG3 have provided more detailed
numbers. As you will note in the table below (IPCC December 2005), the costs of capture from a
power plant, its transport and storage is superior to EUA values in phase 1 and, but can be similar to
EUA values in phase 2. The crux of developing any CCS project is the unpredictability of EUA values
within the two phases and any expected values post 2012.
Cost Range
Euro/Tonne
12 65
17
0.5 7
14 80

CCS Component
Capture from Power Plant
Transportation
Geological Storage
Total
Other Industries
Capture from Gas Processing
Other Industrial Sources

4 46
22 96

Comment
Net Captured
Transported 250 km
Injected
Net Captured
Net Captured

Unless there are significant technological improvements in CO2 capture (first) and transportation and
storage (second), industry will cope with CO2 emission constraints by absorbing any penalties and
then passing costs to consumers (industrial or residential) or (if possible) leave areas where they
would have to deal with emission limits. Secondly, the complexity of the business proposition as it is
presently structure will promote CCS in cases for EOR projects or strategic government decisions. The
next section deals with possible business models that could promote CCS or could reflect long-term
business propositions. They do not, (in any way) enable non-profitable enterprises as any business
requires a benefit / risk ratio which has not yet been observed for CO2. Figure 18 highlights this
concept. When forward prices of EUA in the mature EU Emission Trading System rise above the cost
of carbon capture, transport and storage CCS will start to be used on a commercial basis. Because of
the huge potential of CO2 reduction by CCS it is highly probable that the EUA prices will be fixed at a
level slightly above the CCS CO2 reduction cost. The reason is that at a higher price new CCS
installations will be attracted decreasing the EUA demand and pushing the price back to the
mentioned level. Therefore CCS will limit the EUA prices and their influence on energy prices for a
long period.
SOURCES

CAPTURE

HANDLING

USAGE

Todays: Business Gap!

$ 23 GT/y Total Emissions
$13 GT/y Industrial
Emissions

Medium Flue Gas

CO2 %

High Flue Gas

CO2 %

High Purity CO2 currently used

Cheaper Technologies
To Capture Lower Purity
CO2 Sources Required

EOR, ECBM and

Underground Storage

Investments

Low Flue Gas

CO2 %

Capture Costs
12 65 Euros/T

Transport Costs
1 7 Euros/T

Storage Costs
0.5 - 7 Euros/T
Source: E COFYS Study

Figure 18. Costs of CO2 Capture and Storage

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Chapter 4: Three Business Models for CCS

The drivers for CO2 Capture and Storage (CCS) have been discussed a length as the need to reduce
the emissions rate of CO2 into the atmosphere has become a goal by many countries and corporations
world-wide. The industries most affected by this change in operating paradigm, i.e., taking into
account the large externality of CO2 management and mitigation are; utility companies, oil and gas
companies, the cement and steel companies and finally the chemical companies. We will discuss only
the needs of the utility and oil and gas companies for this document.
Up to now, there has been no motivation to store CO2, since appropriate rewards have not been large
enough to compensate for the costs and risks involved of any projects. The projects that have
proceeded have been either linked to enhanced oil recovery (EOR) projects since they can produce a
sufficient cash flow or projects where governments have mandated the storage of CO2, via operating
permits or emission penalties. In this case, the increased costs of CO2 storage are included into to
original justification of the projects economics.
Essentially the implementation of any CCS project, to comply with present and future legislation will
entail the management of risks. These costs and these risks, when applied within a holistic value chain
approach highlights why CO2 projects have been few and far between and why, unless Clear,
Coherent and Stable regulations are forthcoming, will not motivate any entity to deal with the issue.
The CO2 value chain consists of CO2 Sources, CO2 Capture, CO2 Handling and CO2 Usage via EOR or
Sequestration. Note the use of CO2 in production of chemical, pharmaceuticals, or building materials,
while all possible, has not been taken into consideration for this document. The CO2 value chain
concept is presented in Figure 19.

SOURCES
INDUSTRIES
Chemical

CAPTURE
POST COMBUSTION
Absorption

Oil & Gas

Metals & Steel
Power Generation
Mineral
Pulp & Paper
SOURCE TYPES
Natural

HANDLING
LIQUEFACTION

USAGE
APPLICATIONS

NH3 Cycle

EOR

Chemical

CO2 Cycle

ECBM

Physical

Others

Underground Storage

Adsorption
Membranes
Cryogenic
DECARBONISATION
OXY-COMBUSTION

COMPRESSION

EGR

PURIFICATION

Oil Field Fracing

STORAGE
TRANSPORT
Ship

By-product

Trucks

Recoverable

Pipeline

POTENTIAL SYNERGIES
WITH IC ACTIVITY
Sourcing
New applications
Price
Legislation

Figure 19. The CO2 Value Chain

However, it must be clear, that corporations cannot be beholden to just societal needs in this case as
their shareholders and other stakeholders have different objectives. In order for projects to proceed
within a corporation, that meets; its mission for existence, its shareholders, stakeholders and societal
needs, it must take into account much broader of view. It must integrate its own products value chain
as well as the CO2 value chain. Thus for a utility or oil and gas company project coupled with CCS

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project to proceed, it must be essentially have sufficient rewards (short term and/or long term) to
compensate it for the costs and risks it will undertake. These project risks include:
1. Drivers
- Societal such as Kyoto and/or national (Pros and Cons of each)
- Company;
i. Return on investment and risk aversion
ii. Culture willing to undertake strategic projects considering several layers
of stakeholders and shareholders
2. Technical
- Site location, feedstocks supply infrastructure, and scale.
- Feedstock choice (natural gas, coal (types and proximity))
- Power production
- Environmental considerations and evolution
- Competitivity
3. Market Issues
- Product demand and growth
- Competition
- CO2 Issues
i. Regulation and Liabilities
ii. New markets development, i.e., CO2 use or disposal.
iii. Geological uncertainties of long term CO2 monitoring, verification and
storage.
This section describes three different business models (and hybrids thereof) that are possible for early
implementation of CCS in an industrial scale. As such, this section does not contain specific
recommendations on what policy makers should adopt to any or all of them. However, the
recommendations in the regulatory framework made in the appropriate sections of this document are
necessary pre-requisites for all models implementation.
This document will qualitatively describe three business models that could be used in CCS projects, as
they must be treated within the contexts of real projects and the risks mentioned above in more
detail. The chosen cases will highlight the drivers within the cases and how different risks, technical
and commercial could or should be addressed. It will present the positions of different parties involved
within the different sections of the value chain and how these can add or subtract risk from the overall
equation.

4a. Business Model 1: Power Company Case

4a.i: Drivers
The power industry is a capital-intensive industry requiring stable frameworks (within liberalized or
regulated contexts). The scopes of these projects require long term planning and vision in order to
maintain a proper balance between electricity supply (production) and demand (consumption) within
their sphere of operation. The industry will bear the brunt of any CO2 emission constraints, now and
post 2012 and as such must develop technical and commercial solutions to the dilemma.
The present ETS system is serving only to highlight the extent of CO2 impacts on the industry, as they
are too short in implementation period to have any real significance on project decisions without any
clear indication beyond the end of 2011.
Present market conditions and future trends have created considerable risk in the assessing new
projects for this industry. Natural gas as a feedstock has experienced considerable price variation and
supply risks have become a critical aspect as well. On the other hand coal supply can be considered
more plentiful; under more fragmentary ownership, but its impact on the environment is only now

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becoming apparent. In order to take these new risks (and other to be defined later) into account,
companies will be asking for higher returns on investments for shorter periods of time.
4a.ii: Technical Issues
In order to meet present and future CO2 limitations, power companies are evaluating projects
integrating conventional and new technologies that will help them capture CO2 and enable them to
prepare a CO2 stream for possible sale or disposal. Figure 20 highlights the context of such project
as Business Model 1.

e
rk
Ma

Natural Gas

Ma
rke
Co
tR
n
isk
t
e
Ris rac
s
t ua
ks
Pi p
or
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re
i
W
Steam / Power

Byproducts

Hydrogen

ASUs
Treatment

W
RA

NG
Ga

i ca
sif

Te

Co
m
Cu pan
ltu
y
re
S
n,
tio

y-C
Ox

COMPANY
SITE

TR

s ti
bu
om

on

PC

plic

ati

CO2 If storage is
close to the
Power Plant
2
CO

on

RISK
Value or
Price

Project Mgmt
Operational
Financial
Sources
Right of Ways

,A
MR

Ap

RISKS

Co
Te
ch
Ris ntrac
no
t ua
ks
log
l
i ca
gy
lR
isk
olo
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n
h

CO2 Recovery

e
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CO
RIS NT R
AC
K
Le
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T

Tim la
Dr
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Vo ,
So iv e
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c
r
Te ieta s
e,
ch
Pu
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,
no Leg
rit y
log
al,
y
Op
era
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na
l

Applications
NG Wells, ECBM
EOR, Aquifers

UA
L

RISKS
Characterization, Leakage, Monitoring
Emergency Response, Verification
Short and Long Term Liability
Social Response

Figure 20. Business Model 1 - Power Company Case

The first choices companies will have to make are feedstocks and technological choices. Based on
their past experiences or future strategic alignments they will have to determine if natural gas, liquid
or solid fuels will have to be used. Once the feedstock(s) has been decided, then the technology to
produce electricity will be required. In all cases and all technological choices, we must assume that
CO2 will be captured. The choices in this case will include:
-

Pre-combustion/gasification,
Gas turbines,
Oxy-combustion (boilers, including Circulating Fluidised Beds), and,
Pulverized coal boilers.

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V 11 - Final
Figure 21 illustrates the technical choices open to power companies to deal with the CO2 issue.
POSTCOMBUSTION

Natural Gas
PRECOMBUSTION

POSTCOMBUSTION

Coal
PRECOMBUSTION

Separation from
Flue Gases
CH 4 Reforming % H2
Air Based ATR
Oxy-Combustion
Separation from
Flue Gases

Gasification % H 2
Oxy-Combustion
Chemical Looping

Figure 21. Power Company Technological Choices

Each of these choices carries with them technological uncertainties that will have to be addressed
contractually, through licensor performance guarantees, government subsidies or will have to be
borne by the power company.
In general gas turbines are the least capital cost expense, but they do have large operating expenses.
If CO2 capture is added to the mix, lower efficiencies and operating costs increase. Secondly, there
has not been too much research and development in the recovery of CO2 from such installations as
they are considered having the least impact on the environment.
The use of pre-combustion is a very capital-intensive decision to make, especially if the power plant
will be based on coal feedstock. Coal gasification technology has been in operation for decades as
demonstration plants, where operational concerns and technological concepts have been tested. As a
result, these plants demonstrate the concepts intended, but can be laden with past capital limits or
present operational constraints. In general, these plants have operated within reasonable limits,
highlighting the strengths of feedstock flexibility, as well as the weaknesses of low on-stream factor,
power fluctuations and unprofitable operation. The process can be considered complex, as it is
somewhat more of a chemical plant than a combustion plant. There is also an inherent reticence to
the use of Oxygen, as it is incorrectly perceived as complex, unreliable or unsafe.
The cost of these demonstration units and their potential is pushing technology licensors to
standardize technology packages, develop alliances with engineering companies and provide
performance guarantees as well (if required) implementation deadlines guarantees and financing.
However, the cost of electricity from these units is considered prohibitive at this point, and unless
proper incentives and/or penalties are imposed, post Kyoto, such plants do not have a chance of
implementation prior to 2012.
Only one project, the North Dakota Gasification project, in Beulah, North Dakota has incorporated the
capture of CO2 to be sold to Encana Limited for an EOR project at Weyburn, Saskatchewan, Canada.
The operation of this site will teach other power companies of the technological choices they will have
to make. Gasification technology can be considered a CO2 ready technology as the process can be
modified to produce the maximum amount of H2 and to have a maximum amount of recoverable CO2.
If properly designed, CO2 could be recovered at costs 20 % more expensive than a normal gasification

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V 11 - Final
plant. These extra costs have to entail the loss of power required to deal with CO2 removal technology
and/or the estimated 10 % increased used for extra coal feedstock and Oxygen consumption.
Oxy-Combustion (OC) is a new technology under development that could carry with it several
advantages. Their operation (be they pulverized coal or circulating fluidised beds) is principally similar
to normal coal fired power boilers with a flue gas stream that could contain between 80 and 90% CO2,
the rest mostly Nitrogen. Depending on the possible applications near the operating site, the CO2
could be compressed and ready for use, requiring little if any further treatment or purification. The
costs of any flue gas treatment would be considerably reduced from a normal air based system, so
much so that it could offset the increased capital requirements of an Air Separation Unit (ASU). The
use of small amine (or other) and compression systems could be required for achieving the desired
CO2 specification. The technologys weakness is that it is still in the development stage and long-term
demonstration projects would be required. Such is a the case of the Vattenfall project in Schwarze
Pumpe, and the risks of its development are being borne strictly by the company and its partners.
Finally normal pulverized coal (PC) boilers are the most used of the coal power generating
technologies, however in order to mitigate the emission of CO2, it would require investing and
operating in very large amine systems. While technically not complex and already in use in many
applications, the scale of the treatment units would be large needing significant amounts of parasitic
power/steam. Secondly, the degradation of the solvents requires fresh make up material and
handling. The operation of a purification process is somewhat dependent on the final specification of
the CO2 requirement.
Presently none of any of the technologies proposed will enable any power company to gain a
competitive advantage over any of its competitors. The implementation of any projects will only
produce electricity at a higher cost than if it was produced without CO2 capture.
Demonstration projects underway, such as Vattenfalls Schwarze Pumpe project and RWEs
Gasification project will help the power company to claim green credits with the public. Unless
uncertainties on credit allocations for CCS projects are removed, there are no tangible drivers for
implementing these projects. Operators would be able to claim project implementation skills and
operational experience to be applied to any other similar project, but unless everyone in a specific
region or zone are constrained by similar legal or operational constraints, long term electricity
production projects will not materialize.
Secondly, it is surmised that a CO2 cap and trade system such as the EU ETS is not a sufficient
motivator for projects to proceed, since the present volatile, illiquid nature of EUAs does not
compensate a company to proceed with any projects, thus discussions of minimum EUA values carries
some weight.
4a.iii: Market Issues Perspective of a Power Company
There are two types of issues the power company will have to address for any ZEFFPP. The first issue
will be the power market it wants to address. With its own resources, it will evaluate the demand for
electricity and its trends for the future and take it upon itself to take the risks of addressing these
needs. We will not deal with this topic here, which is the essence of producing power. The second
more difficult issue will be to address the management and disposal of CO2. It is not clear how this
activity could become viable as it has not yet been defined; its players not yet fully committed and it
carries with it considerable risks to exploit.

We must assume at this point that a power company has undertaken the task to capture and purify
CO2 from its ZEFFPP, at which point it must deal with either; its transfer to a third party willing to
transport the product to a point of use, or to embark onto a whole new task to transport the CO2 to
point of use and either be remunerated. We are now at the handling and usage stages of the CO2
value chain. Should the power company do the former, its responsibility for CO2 credit allocations are

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not clear for the time being, however, its responsibility for its use or disposal is considered terminated.
Should it decide to do the latter, it would have to develop whole new resources and skill sets, away
from its core competencies.
The purchasing party (assuming a pipeline company) will take on the responsibility of distributing the
CO2 as efficiently as possible and finding specific customers for the CO2, either for EOR or for longterm storage.
If the CO2 were for EOR, or for Enhanced Coal Bed Methane (ECBM), its value would be greater than
if it were to be stored, which would motivate either the power company or the pipeline company to
find such customers or applications. However, the use of CO2 for EOR must be considered a niche
market as oil wells are usually not close to power plants, and its market is relatively small. Figure
22 highlights the sizes of the different CO2 storage venues. As an application, ECBM is still at its
infancy, but perhaps post 2015, there will have been sufficient trials to properly simulate CO2 within
coal seams for both natural gas production or for long term CO2 storage.

100,000
10,000

Capacity (Gigatons)

6 000
5 000

Max Storage
For EOR Use

4 000
3 000
2 000
1 000
0

Deep
Ocean

Depleted
Saline Depleted
Coal
Oil
Gas
Reservoirs
Seams
Reservoirs Reservoirs

Annual
World
Emissions

6.2
Gigatons

Storage Options: IEA Greenhouse Gas R&D Program ;

Advanced Resources International estim ates for coal seam s
World Emissions: International Energy Outlook 2000, Table A10

Figure 22. CO2 Storage Capacities

It is assumed that in most cases, especially at the beginning of this issue, power companies will ask
third parties to deal with the management and disposal of CO2. If a utility company decides to deal
with its disposal and if the CO2 usage is for long term storage only, as abovementioned, the power
company will have to develop geological understanding and expertise to undertake the project. If it is
granted the right to use the lease or own the land where CO2 injection would be done, then it would
take on the responsibility of ensuring:
1. The sites integrity,
2. Its ability to store enough CO2 for the lifetime of the project, within agreed to
emission/release criteria and
3. To ensure its long-term viability as a storage site.

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The power company would have to hire specialized skill sets to ensure objective assessment of the
sites ability to store CO2. Once at the projects end of life, and after the storage site has performed
within acceptable norms would the power company undertake negotiations with relevant governing
bodies to transfer the site to their responsibility. It is not conceivable that a corporation could be
responsible for ensuring the storage of CO2 beyond its charter as a company. Either we would have to
redefine what a companys role would be towards society or the governing body would assume the
final responsibility of the stored CO2.
If the power company is not entitled to use the lease or does not own the land, then it will have to
treat the storage company as a disposer. Through contractual obligations, the power company
would have to ensure that the disposer would have sufficient capacity to store the CO2 released from
its power plant. If it could not be assured of such, the power company would have to look for other
sites as part of a cumulative storage facility.
Within either CO2 usage application, the over-riding concern of a power company would be to find
sites with sufficient storage capacity or EOR capacity allowing the power plant to operate within its
environmental constraints.
While EOR projects can be more attractive and more easily justified, they have their own technical
and contractual dynamics. EOR projects could have increasing, steady or decreasing CO2 usage
profiles. The usage profile could have a meaningful impact on the CO2 price, since capital invested, by
either the power company or the pipeline company or the oil company would have to jump over
specific hurdle rates and meet appropriate rates of return. CO2 values will have to take into account
variable CO2 usage over short term and long-term scenarios. Any uncertainties in these cases would
have to be addressed by contractual clauses or indirectly dealt with through higher rates of return for
the power company. Finally, EOR projects are very dependent on crude pricing. If crude oil demand
drops or supply capacity is such that crude prices drop below the break-even point for it use, the
contracting parties would have had to ensure the eventuality. New users would have to be found or
the final user would have to compensate the emitter or transporters for any penalties they would have
to pay.
Since CO2 capture costs, handling costs, storage costs and liability costs are presently higher than the
value of EUAs, there is little incentive to perform this task. Unless CO2 credits can be allocated to the
application and unless technological development is sufficient to enable a reasonable cost of the value
chain, then, there will be a need to have either fiscal incentives or penalties on CO2 emissions to a
logical break-even point. This would be translated into higher electricity prices.
4a.iv: CO2 Market Issues Perspective from a user
The over-riding concern of a CO2 user would be to have a steady CO2 supply. This is much more
important if the application is for an EOR or ECBM, as the CO2 is a facilitator for higher oil recovery,
thus any loss of CO2 translates directly as lost or postponed production and lost revenue. The CO2
user in this case must ensure that he is protected from CO2 loss or is compensated for that loss. The
user would discount CO2 sources that; would have a variable production profile, would be from
technologically difficult or unproven processes, or from suppliers that would not consider CO2 as a
valuable product.
4.a.v: Conclusion
The power industry will be the most affected industry within a carbon emission constrained world. In
order to continue to operate they will have to adopt new technologies, which will incorporate postcombustion CO2 capture, pre-combustion technologies such as gasification, or oxy-combustion
processes. Capture of CO2 would be done to meet market specifications and then it would either be
stored on company premises, sold to pipeline companies or transported directly to users, be they for
EOR, ECBM or for final long term disposal and storage. Each step within the CO2 value chain carries
specific technological and commercial risk that must be properly evaluated. In any case, the over-

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riding concern of the power company would be to find a use of sufficient scale to take all the CO2
emitted by its plant over the course of its life. This could be integrated within the power companys
business value chain.
Any contracts to be undertaken within any party, i.e., power company, pipeline company and/or user
would have to be done within a Clear, Coherent and Stable regulatory and legal framework. Unless
these issues are tackled first, real long-term ZEFFPP projects cannot proceed.
As long as the cost of power production, CO2 capture, handling and usage is higher than the cost of
any penalties or benefits possible projects cannot proceed unless there are sufficient technological
advancements, fiscal incentives or broad based penalties. The latter would essentially become passed
onto consumers resulting in higher power prices.

4b: Business Model 2: Oil Company Case

4b.i: Drivers
Oil and gas companies are intimately involved in the Kyoto Protocol and EU ETS as they are perceived
as having a very large impact on CO2 emissions. These are either through the processes they master
and operate, i.e., oil and gas extraction, its transport, its refining or purification, distribution by
pipelines or other means, retailing, power production (by natural as plants or boilers), chemical
processes and gasification technologies and units. Figure 23 highlights the extent of CO2 emissions
within the total hydrocarbon chain.

CO2

CO2

CO2

CO2

LOCATION 3

LOCATION 1

SEPARATION

LOCATION 2

TRANSPORT

CO2

TAIL PIPE

COMBUSTION
ENGINE
ENERGY

CO2

EXTRACTION

D
C
GAS PROCESSING
/ CONV ERSION

TRANSPORT
SHIP
LAND
PIPELINE
NOTHING

E
REFINING /
PROCESS ING

TRANSPORT

ENERGY
PRODUCTION

SHIP
LAND
PIPELINE
NOTHING

FLUE GAS

THINGS

TIME

CO2
INCINERATION

CHEMI CAL
PRODUCTS
LANDFILL /
RECYCLE
(MINIMAL CO 2)

PRODUCTION PHASE

MANIPULATION PHASE

DISPOSAL PHASE

Figure 23. Hydrocarbon Emission Chain Oil Company Perspective

Oil and gas companies are not in the same position as other large-scale CO2, emitters, i.e., power
industry, steel industry, cement industry, etc., as they understand the whole hydrocarbon value chain
and the CO2 value chain, as it pertains to them and some are in a unique position to place themselves
within the CO2 value chain. Figure 24 highlights Business Model 2 as it pertains to an oil company.

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4b.ii: Technical Issues
Oil companies are not in the position of having to find generic solutions for their industry. They are
usually able to find solutions to specific emission problems in order to increase oil/gas production and
refining yields. They extract acceptable returns on their investments within the legal and regulatory
frameworks in which they exist.
Oil companies understand all the aspects of the CO2 value chain. They can assess geological
structures and their ability to retain CO2. They have the ability to recover and transport CO2 as many
of their processes entail recovery and purification of gases and pipeline transport of these within short
and/or long distances.

Natural Gas
Byproducts

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rk
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Co
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e
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ks
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Te
ch
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ks
gi c
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Ri
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CO2 Recovery

Treatment

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Ga

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on

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COMPANY
SITE

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RISK
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CO

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SK
AC
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ch
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EOR, Aquifers

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Emergency Response, Verification
Short and Long Term Liability
Social Response

Figure 24. Business Model 2 - Oil Company Case

It is the only industry that has used CO2 for EOR applications and to have committed capital and
operated CO2 storage projects. We cite the Weyburn CO2 EOR project in Canada, the Sleipner CO2
storage project in the North Sea and the In Salah natural gas CO2 storage project in Algeria as
examples. These have provided invaluable operating experience.
Oil and gas companies have begun proposing innovative ZEFFPP projects exploit or develop their
technical expertise and to position themselves to help other industries deal with their own CO2 issues.
We cite the BP Peterhead project in Scotland and the Shell/Statoil Power plant at Tjeldbergodden,
Norway as examples. These projects will test conventional technologies in new ways and scale and
will fully test all aspects of the CO2 value chain reducing capital and operational risks for subsequent
projects. While they may require regulatory and legal clarification and subsidies, they should become
the first ZEFFPP projects.

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4b.iii: Market Issues

Some oil and gas companies, within the foreseeable future, will be able to fully take charge of all
aspects of the CO2 value chain and could decide how best to match their sites CO2 emissions with
EOR and CO2 storage projects. They could be in a position to federate other industry/site CO2 needs
for projects as they have done in South-western United States. They can comprehend the vagaries of
EOR projects and since they can undertake technical and commercial risks, they only need to justify
projects on economic bases.
The ZEFFPP projects they have announced will place them in a position to provide prepared gases,
i.e., N2/H2 mixtures to the power industry, as these gases could be used in emissions free power
production. Only the capital requirements/costs of these processes, combined with CO2 capture
technologies and storage, would delay their deployment in the near future. As well, subsidies, royalty
reductions and taxation regulation changes could be required for initial projects.
If oil companies decide to enter the green power market, then they may want to partner with power
companies or company retailers to reduce off-take risks, as again they are taking technical and
commercial risks on the remainder of the project. In our opinion, this business model has the most
chances of implementing projects since some oil companies are assuming many of the responsibilities
and risks that would be difficult for other entities to undertake and master.
Finally, control of the CO2 value chain can help oil and gas companies gain access to exploiting or
operating in fields beyond their present reach. Just as their expertise in deep water exploration and
gas-to-liquids technology and project implementation enable them to operate in areas beyond
National Oil Companys (NOCs) expertise, CO2 recovery and use will enable them to facilitate EOR
projects in new geographies. If required they may also develop specific alliances with technology
providers.
It is assumed that they would want to take the same position as other industries vis--vis long-term
CO2 storage liability. Once they could ensure that any of the oil reservoirs, coal seams or CO2 storage
sites have been demonstrated to be stable and releasing less CO2 than prescribed limits, over an
agreed to period of certified monitoring and verification, then, they would want to revert the
responsibility of the stored CO2 to appropriate governing bodies.
4b.iv: Conclusion
The oil and gas industry has technical, engineering, commercial, and financial resources to enable
them to undertake CO2 recovery and EOR/storage projects. Their understanding of the hydrocarbon
and CO2 value chains enable them to deal with most eventualities, while also enabling them to enter
new markets such as prepared gases. What they need to facilitate further CCS project deployment is
a clear, coherent stable regulatory and legal framework.

4c: Business Model 3: Government Case.

4c.i: Drivers.
In view of the reluctance of large emitters to start CCS projects due to technological and commercial
risks, as outlined in section 3.1, a governments involvement could help them participate more
willingly. The business model for the government case is highlighted in Figures 25 and 26.
As compensation for dealing with the reduction of risks to companies in its territory, the government
could own CO2 rights and as it uses these for EOR and CCS projects, it would benefit of EUA values

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(once these can be attributed to EOR and CCS applications). Coupling this revenue stream with
increased oil production and its royalties, and possibly reduced financing hurdles, this case could
prove profit for the government and its citizens.
4c.ii: Technical Issues
The CO2 value chain for this case can be quite flexible, i.e., begin at a sites emission stack and
recovering its CO2 emissions, linking the recovered CO2 to a CO2 trunk line whereby it is transported to
an EOR or CCS injection site. The government would then take responsibility for its use and long-term
storage. Decisions of which CO2 recovery system would be employed, at a site, would be done in
cooperation with the site owners in order to have an optimised solution, however, once installed, the
site owners would have very little interaction with this unit, within or off of its property.
It could as well be limited to the implementation of a common carrier CO2 trunk system under a
strongly regulated monopoly, be it delegated to private owned companies or another type of body.
The government could also act as a physical layer for a new CO2 accounting system. This common
carrier solution would remove any questions of contamination of CO2 within a pipeline system, as the
government would set its specification since it is its only user.

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Figure 25. Business Model 3 - Government Case

4c.iii: Market Issues
The obvious benefit to this business model is that a government could take on the costs and risks of
building CO2 capture units, pipeline systems and injection platforms. Few companies could have the
resources, experience or inclination to build an infrastructure. The government in this case also
ensures that a ready market exists either for EOR or CCS projects, although governments with EOR
potentials within its territorial boundaries would be more inclined to proceed on such an endeavour
than countries that must deal solely with CCS potentials or related applications. A governments
compensation for such an investment would be increased oil production, associated royalties and CO2

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credits (when possible or available). In order to improve efficiency, at a later date (after some
operational experience is achieved), an outsourcing strategy could be employed; it could outsource its
capture assets first, then its injection assets second and finally/possibly the pipeline infrastructure.
Finally, the business model, by definition undertakes the long-term liability of the stored CO2.

Figure 26. Government Case - CO2 Value Chain

There are possible caveats to this business model. Starting from the source of the CO2, the site/source
would still have to be incentivised/subsidized in some way to continue to operate efficiently. Perhaps
market signals on its product yield profile would be sufficient, but this would have to be evaluated.
The outsourcing of a capture plant is logically feasible, but since the capture company is essentially
sandwiched between the source and a common carrier pipeline, its return on investment is essentially
set by the rate permitted by the government and the on-stream factor of the source. There are few
companies that would want to be limited in this way; unless there are contractual clauses that permit
compensation to the CO2 capture company even within force majeure events. However, this does
not address the need for revenue growth for such a company since it may not be motivated to
improve its processes or operations, stifling innovation as technology providers may have little
leverage to market to a government body that would set market access and possibly costs.
A common carrier pipeline system can be a facilitator to begin an industry, however, it could prevent
the construction of proprietary pipeline systems between contracting entities. The lure of a common
carrier trunk line, if not properly implemented, could lead to sub-optimal distribution solutions
between two parties. Having to comply with possible government business edicts to ensure that its
supply of CO2 is maintained and not diluted could actually reduce the implementation of new
technologies and/or applications. A proper legal framework limiting the governments monopolistic
actions would have to be implemented.
Finally, the government would have to be involved in any EOR project (at least) and every CCS
project. We may question that it already is, since royalties and/or taxation regulations require this.
Unless, the governments record and participation is convincingly transitional, many companies would
tolerate such a scheme only if their scale of operations were extremely large and would see the
government as a partner. It is important to note that the government would be capable of such a
project only if the country had a culture of government involvement in all aspects of its economy.

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4c.iv: Conclusion
This business model can be very appealing. It could be used to promote the recovery, transport and
use of CO2 in its developmental or transitional phases. It could become a profitable investment if the
country can use the CO2 for increased oil production; not be the case for most countries.
The governments involvement could to be transitory and limited as the deployment of CO2 capture
units, a massive common carrier trunk pipeline and injection assets could be too restraining for many
companies. A strategy to enable innovative capture technologies to be adopted would be required.

4d: Overall conclusions

The three business models all have different pros and cons in their deployment for a CO2 constrained
world. We believe that business model 1 (Power Company Case) could have the most opportunity to
engage the most players, technology providers and investors in the long run once some
demonstration projects have been implemented. The open structure and scale of the opportunities
would motivate companies to enter the CO2 capture market, its transport and finally use, once
regulatory and legal issues for long term CCS storage are addressed.
Business model 2 (Oil Company Case) has the ability to initiate and develop projects faster than any
other model, since capital investments, technology and operational risks are borne by oil companies
that have the wherewithal to undertake such projects. They need clarification on regulatory and legal
issues for long term CO2 storage and possibly some subsidies for the very first demonstration projects.
Business model 3 (Government Case) has appeal, as it reduces risks at all levels of the CO2 value
chain. A governments need to deal with Kyoto and CO2 CCS and its lower project hurdle rate would
promote project implementation and in some countries actually produce a profit.
It bears repeating the costs of CCS are larger than most, if not, what all companies are
willing to accept. Both appropriate fiscal incentives (carrots) and/or constraints (sticks)
would have to be implemented to bring these technologically complex projects ahead.
Finally proper legal frameworks with appropriate liability assurances would be required to
address concerns of the general population and companies.

Chapter 5: European regulations affecting CCS

5a. Overview of existing legal framework and regulations
Many international, regional and EU legal frameworks are relevant to ZEFFPP activities and many
definitions and prohibitions within these frameworks are sufficiently broad to encompass and regulate
various power generation, CO2 capture and geological storage activities. However, only a few of the
frameworks reviewed (notably the UNFCCC, Kyoto Protocol and the EUs Monitoring and Reporting
Guidelines) explicitly address ZEFFPP activities and either include them or exclude them from their
scope. Clear and appropriate inclusion in, or exclusion from, legal frameworks will increase
transparency, provide regulatory certainty, and facilitate ZEFFPP activities and methodologies that are
agreed to be consistent with international, regional and EU frameworks1.

From a study done by Field and Ecofys for the EU Commission(DG ENV) on
IMPACTS OF EU AND INTERNATIONAL LAW ON THE IMPLEMENTATION OF
CARBON CAPTURE AND GEOLOGICAL STORAGE IN THE EUROPEAN UNION

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This section identifies circumstances in which existing EU directives could unnecessarily prevent or
restrict CCS projects. We make recommendations intended to avoid this problem. However it would be
wrong to assume that these directives would apply to all CCS projects. Discussions on the necessary
amendments should keep in mind that some projects may not need the proposed amendments
International law (focused on ocean storage)
!" London Convention (Convention on the Prevention of Marine Pollution by Dumping Wastes
and other Matter of 1972)
!" UN Convention on the Law of the Sea (UNCLOS)
!" Paris Convention (OSPAR)
!" North Sea Conference
European directives
!" 96/61/EC: IPPC Directive on Integrated Pollution Prevention and Control
!" 2001/42/EC: SEA Directive on the assessment of the effects of certain plans and programmes
on the environment
!" 85/337/EEC as amended by 97/11/EC and 2003/35/EC: EIA Directive on the environmental
effects of those public and private projects which are likely to have significant effects on the
environment
!" 2004/35/EC: Directive on environmental liability with regard to the prevention and remedying
of environmental damage
!" 75/442/EEC as amended by 91/156/EEC, 91/692/EEC and 2006/12/EC: Directive on waste
!" 2000/60/EC: Water Directive establishing a framework for Community action in the field of
water policy
!" 80/668/EEC on Groundwater
The technical options pursued within the scope of ZEFFPP cannot be examined comprehensively here
for the time being for their European law aspects. Therefore, the survey will concentrate on the
variant of permanent underground storage of liquefied CO2. The necessary technology requires
installations for the power generation, separation of CO2 from the combustion process and CO2
liquefaction, installations for the transport of the liquefied CO2 to the place of underground storage
and installations for permanent storage underground. National environmental legislation is more or
less specific in each country; generally CCS is not yet included in national legislation.

5b. The OSPAR and London Conventions

When the international maritime laws to prevent pollution and dumping at sea were developed, the
concept of storage of CO2 in geological structures beneath the seabed, being relatively recent, was
not taken into account. This means that the present legislation does not offer an appropriate
framework for CO2 storage. The two main relevant international agreements are the London
Convention and OSPAR.
The London Convention of 1972, sets out rules to prevent marine pollution by the dumping of
waste world-wide, and has over 77 countries as parties. It was extended by a 1996 Protocol to the
London Convention which is more stringent, and this was ratified and came into force in March 2006.
OSPAR was set up in 1992 to prevent and eliminate pollution in the marine environment of the
North-East Atlantic, and entered into force in 1998. Its parties are Denmark, the EC Commission,
France, Germany, the Netherlands, Norway, Spain and the UK.
Environmental lawyers have been making preliminary assessments of whether these treaties permit
CCS. It is considered that the London Convention permits storage for R&D and demonstration
purposes under a purpose other than mere disposal, and both London Convention and OSPAR
permit use of CO2 for enhanced oil recovery for the same reason. The London Convention only
applies to the water column, but its 1996 Protocol extends it to the seabed and the subsoil. Whilst it
prohibits disposal from sea, in principle it could allow disposal to sub-seabed repositories accessible

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only from land, e.g. a pipeline from the shore. The OSPAR Convention prohibits injection from an
offshore installation and ship, but not from a pipeline or using a purpose built offshore structure.
5b.i: Recent developments
While these treaties provide options for CO2 storage they do restrict operations in ways which may not
benefit the environment as a whole. Whilst the treaties were not designed with CCS in mind, it would
be better to consider amendments to cover CO2 storage rather than to try and use the existing
restrictive existing options in them to permit storage of CO2.
Therefore the UK, with Norway, has been taking the initiative to stimulate the debate amongst the
parties to the two treaties to review and amend to permit CO2 storage, driven by the fundamental
arguments of the need to reduce global warming and hence greenhouse gas emissions, and the
detrimental effect of increased atmospheric CO2 on the acidity of the sea with the potentially serious
negative impact the on marine ecosystems.
A seminar was organised in October 2003, to promote discussion among OSPAR parties. In parallel
the OSPAR Commission asked its legal experts to provide advice on compatibility of CCS with the
treaty. Following on from this, OSPAR held a workshop in Trondheim in October 2004 to consider the
environmental implications of CO2 storage in the marine environment. This workshop concluded that
Geological storage of CO2 is technically feasible and makes use of established technologies. There is

a significant potential for geological storage in structures in the OSPAR maritime area. Studies of
natural analogues and experience from ongoing storage projects give confidence that CO2 can be
safely contained in geological formations for millions of years. Guidelines for the assessment of
potential storage sites, with a view to select sites with a very low risk of leakage, would be useful.
Risk and effects of leakage of CO2 stored in geological structures have to be evaluated against the risk
to the marine environment posed by elevated atmospheric levels of CO2. Various methods for longterm monitoring of stored CO2 are available and should be used in a site-specific manner to detect
and enable the remedy of possible leakage.
These conclusions were considered and accepted by the OSPAR Biodiversity Committee (BDC) and Oil
Industry Committee (OIC). The OIC then initiated further work to investigate the technologies for
monitoring CO2 and for risk assessment. The BDC initated further work to examine the environment
issues. These reported to their respective OSPAR Committee meetings in February and March 2006.
As a result of the wider interest in these two pieces of work, OSPAR then issued a press release in
March 2006 and will issue these reports on its web site. The press release concludes OSPAR reports
on the rapid increase in ocean acidification from carbon dioxide in the atmosphere, and on the
technical aspects of CCS. CCS in sub-seabed geological structures is technically feasible, using existing
tried and tested technology. The North-East Atlantic offers significant potential for CCS: it could take
most of the European Unions CO2 emissions from major point sources for several centuries. With well
selected, designed and managed sites, retention of CO2 for several thousand years (or even longer)
could be achieved. Evaluation of any proposed sites needs to take account of the risks to the marine
environment as well as the benefits in mitigating climate change and acidification of the oceans.
At the 26th London Convention annual meeting in November 2004, the UK initiated a working group
on CO2 storage. This group agreed to work to enable the London Convention to form a view on CCS,
to assess the environmental risks, and to identify the need for additional regulation in relation to the
London Convention and the 1996 Convention. Work was undertaken on defining the legal questions
for resolution for the 2005 meeting, and a seminar was organised to inform the London Convention
Scientific Group, and discuss the environmental risks, on 20 May 2005.
The 2005 annual meeting of the London Convention took place from the 24-29 October, at the
International Maritime Organisation in London. CO2 was top of their agenda. All the years work was
considered, and a working group instigated to consider the legal and policy recommendations. This
group recommended that there was no way of resolving the divergence in views of interpretation, so
therefore the Protocol and London Convention should consider the options for facilitating.CO2
sequestration.including clarification (and if appropriate amendment) of the Protocol and London

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Convention. The main meeting endorsed these conclusions, as well as agreeing that CCS was
important to the marine environment, and that the London Convention should play a facilitating and
regulatory role.
5b.ii: Next steps
It is likely that CCS will be considered at the OSPAR annual meeting in June 2006.
Options and suggestions for amendments were submitted by parties to the London convention, and
were considered at a legal working group meeting on 10-12 April 2006. This meeting agreed that
amendment of an Annex (Annex 1) was the best way forward and prepared a draft amendment to
recommend to the next annual meeting to be held on 30 Oct - 3 Nov 2006. The recommended
amendment, being an annex, could be agreed and adopted at the annual meeting if voted for by 2/3
majority. If so, then it would take effect 100 days later. This would allow CO2 geological storage sub
sea bed, and is considered excellent and rapid progress for a large international treaty. One area that
was identified as needing further legal work is the topic of export of CO2 for CCS. This will take longer
to consider and it was decided to focus on the annex amendment for 2006. In addition, a working
group under the London Conventions Scientific Group also met in April 2006 to review the IPCC
Special Report on CCS for relevant information, and develop a risk assessment framework in line with
other materials for dumping. A draft was produced to submit to the LC SGs meeting in June in China.
This working group recommends that the London Convention continues and the OSPAR
convention starts work on CCS.

5c. EU regulations CO2 capture in power plants

We may assume that under EC legislation carbon capture from the flue gas produced by combustion
processes is to be treated as part of combustion plant operation. As a result, the requirements to be
met by plant operation in terms of carbon capture are based on the applicable EC provisions for the
relevant combustion plant. For large power plants, for example, this is Directive 2001/80/EC of 23
October 2001 on the limitation of certain pollutants into the air from large combustion plants (Large
Combustion Plants Directive; OJ EC 2001 L 309/1) and, more generally, Directive 96/61/EC of 24
September 1996 concerning integrated pollution prevention and control (IPPC Directive; OJ EC 1996 L
257/26, most recently amended by Directive 2003/87/EC of 13 October 2003, OJ EC 2003 L 275/32).
The requirements of these Directives concerning the approval and operation of combustion plants are
unlikely to pose particular obstacles to the use of carbon capture. Significant amendment of the EU
legislation appears unnecessary.

5d. EU regulations concerning transport of liquefied CO2

The transport of liquefied CO2 to the place of underground storage can be either by transport vehicles
(trucks, trains, ships) or pipelines. All of these activities already take place in Europe on a small-scale.
If CCS would be deployed at a large scale required to tackle climate change, the involved volumes of
CO2 would be much greater necessitating pipeline transportation in the vast majority of cases.
Due to the low hazard potential of liquefied CO2 in transportable quantities, we can assume that the
EC law requirements in respect of the technical safety of the vehicles used for the transport of
liquefied gases are appropriate and sufficient. Particular obstacles are not to be expected in this
regard, as the national laws are supposed to be consistent with the UN regulation for international
inland vehicle transportation of dangerous goods in Europe (RID/ADR). Transport by pipelines is
governed by the relevant national requirements applying to the safe operation of such pipeline
systems. Laying of the pipelines may be subject to particular requirements, depending on the
dimensioning of the pipelines, of Directive 85/33EEC of 27 June 1985 on the assessment of the effect
of certain public and private projects on the environment (OJ EC 1985 L 175/40), for example, most
recently amended by the Directive 2003/35/EC of 26 May 2003 (OJ EC 2003 L 156/17).

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Particular obstacles to the approval of the relevant pipeline systems used for the transport of liquefied
CO2 are not to be expected from these provisions. A special need for adjustment is not discernible.

5e. EU regulations concerning CO2 storage

Concerning the European legal aspects of CO2 storage underground, comprehensive studies have
already been prepared that give a more or less complete survey of the possible legal problems arising
under EU legislation.2
Within the scope of this survey, we can at best only give a rough survey of the possible conflicts of
CO2 underground storage with the EU law requirements as mentioned by the available studies.
According to these studies, particular limiting requirements to be met by underground storage of CO2
can result above all from two legal EU regimes and their national transpositions: EU waste law and
EU water protection law.

5f. CO2 and EU waste law product or waste?

As a current commercial product, carbon dioxide is subject to classification and regulations. The
classification of carbon dioxide is dependent on its physical state (gas, liquid or solid), its
concentration, impurities present and other criteria established by national legislative classification in
different regions of the world. During the capture, transport and storage process, changes in the
quality and physical properties of the CO2 can change the classification of the substance. The
environmental, monitoring, risk and legal aspects associated with carbon dioxide handling and storage
are well established in the processing industry. However, much larger volumes are targeted for carbon
dioxide processing for purposes of ZEFFPP than the volumes handled at present. At present, carbon
dioxide typically occurs and is mainly traded as a non-flammable gas (Classification Class 2.2). The
international classification system3, all classify carbon dioxide in class 2.2, non-flammable, noncorrosive and non-poisonous gases. Although carbon dioxide is increasingly used as a gas or a liquid
or as a feedstock for the production of chemicals or food products, it is not classified in the European
Inventory of Existing Commercial Chemical Substances or other international lists, whereas in Canada
it is classified as a compressed gas (class A) on the Canadian Energy Pipeline Association Dangerous
Substances List (Hazardous Substances Data Bank, 2002). This matter should be addressed in a
future review of the relevant legislation.
According to the above-mentioned studies by Hendriks et al. and Wall et al. we can assume thatdue
to the wide definition of waste under EU lawliquefied CO2 captured from flue gases (postcombustion) could be regarded as waste in the context of EU legislation, and is governed by the
provisions of the EU Directive of 15 July 1975 on waste4, most recently amended by a Regulation of 5
April 20065. Hence, for post-combustion capture, project approval under waste law would have to be
issued as defined by the provisions of this Directive. Also in the latest revision the scope of the waste
concept explicitly remains unchanged, so that liquid waste and hence liquid CO2 as well, will continue
to be subject to the requirements of this Directive. For liquid CO2 too, any transport processes that
serve the purpose of disposal are therefore generally subject to approval under waste law by the
relevant member state.
2

In particular Hendriks (Ecofys)/Mace (FIELD)/Coenraads (Ecofys): Impacts of EU and international law on the

implementation of carbon capture and geological storage in the European Union, study by order of the European Commission,
Directorate-General Environment, June 2005; Wall/Bernstone/Ofvstam: International and European legal aspects on
underground geological storage CO2, 2005).
3

Transport Dangerous Goods, International Maritime Organization/International Maritime

Dangerous Goods and International Civil Aviation Organization/International Air Transport
Association
4
75/442/EEC, OJ 1975 L 195/47
5
OJ EC 2006/ L 114/9
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However pre-combustion separation of CO2 from hydrogen as part of an industrial process is more like
the manufacture of a product, especially when the CO2 is used as raw material for another industrial
process, such as urea, methanol and polyurethanes production, ECBM or EOR.
The capture, transport and storage of CO2 will be stringently regulated at all points in the chain, and
to regulate it additionally as waste can be expected to create problems for CCS which would not be
justified by the purposes of the Waste Framework Directive.
Our recommendation is that CO2 separated from other fluids as a result of an industrial
process (such as a synthetic fertilizer, hydrogen plants, or zero emission power
generation) should not be classified as a waste (subject to appropriate specification),
especially when the CO2 is used as input to a further industrial process (such as urea,
methanol and polyurethanes production, ECBM or EOR). Appropriate specification can be
an area of further research and development.
In any case where EU waste law applies, a particular obstacle to an approval could arise under
Directive 1999/31/EC of 26 April 1999 on the landfill of waste6, most recently amended by a
Regulation of 29 September 20037. It is not clear whether; this Landfill Directive also applies to
landfills below the earth's surface, i.e. underground, and obliges the member states expressly in
Article 5, para. 3 (a) to take measures in order that liquid waste is not accepted in a landfill.
Although this requirement is certainly to be seen in the context of stability and the particular problems
posed by a mixture of liquid waste with other waste types on landfills open to the public, this
requirement could nevertheless be used to forbid the storage of liquefied CO2 in deep geological
formations. Liquids placed on surface landfill are entirely different from liquids stored in secure
geological formations. This definition needs to be tightened up and could be dealt with by
appropriate site-certification standards.
Clarificatory guidance should be provided by the EC that CO2 captured in a CCS process for EOR is not
a waste. Article 2 of the Waste Framework Directive should be amended to exclude CO2 from its
scope. We note that under Article 2 gaseous effluents emitted into the atmosphere are excluded
from the scope of the Directive. It would seem perverse for the Directive to apply to CO2 which is
being captured instead of emitted to atmosphere. Other EU environmental legislation, which employs
the Waste Frameowkr Directive definition of waste, should be reviewed and if necessarily amended.
Examples include the Trans-frontier Shipment of Waste Regulation, the Hazardous Waste Directive
and the Landfill directive.
On a local and regional level, additional emergency response and other regulatory measures can be
expected in the future, depending on the rate of development of CCS. It is anticipated that human
capacity will be developed to assess the monitoring, risk and legal aspects as required by the market.

5g. Requirements of EU water protection law

Since the injection of liquid CO2 underground could also tend to involve an injection into deep saline
formations, this process also affects the scope of Directive 2000/60/EC of 23 October 2000
establishing a framework of Community action in the field of water policy (so-called Water Framework
Directive; OJ EC 2000 L 327/1). In Art. 11, para. 3) (j), this Directive contains a general indirect ban
on the direct injection of pollutants into the groundwater.
As with EU waste law, the potential application of EU water law needs careful consideration. In
particular the injection of CO2 into deep offshore saline formations is considered to be outside the
scope of the Water Framework Directive (Article 11(3)(j)) and there is doubt whether deep saline
formations would always constitute groundwater. However amendment of the directive is required to
6
7

OJ EC 1999 L 182/1
OJ EC 2003 L 284/1
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address those cases where Article 11(3)(j) does apply to CCS projects. We therefore recommend that
either clarifiction is made that CO2 is not a pollutant for the purposes of this directive, or an exclusion
is made from the requirements of Article 11(3)(j) equivalent to the exclusion of natural gas or LPG.
This provision gives the member states the possibility to allow "the injection of natural gas or liquefied
petroleum gas (LPG) for storage purposes into geological formations which for natural reasons are
permanently unsuitable for other purposes".
This expressly provided temporal exception for natural gas does not directly cover permanent storage
of liquefied CO2. Therefore, it is not clearly regulated whether an injection of liquefied CO2
underground can be exempted in the same way as natural gas or liquefied petroleum gas from the
general ban on direct injection of pollutants into the groundwater. Since in many cases CO2 is
clearly not a pollutant, neither would it be stored anywhere near useable groundwater,
this definition of a pollutant needs to be tightened up, and liquid CO2 should be defined
separately and dealt with by appropriate site-certification requirements.
Similarly its seems possible that CCS might in some cases involve the injection of CO2 into
groundwater protected by the Groundwater Directive (or by its daughter Directive being developed).
We recommend that if CO2 might be considered a List II substance under the Groundwater Directive,
amendment be made to ensure that this does not prevent CCS. We also recommend that the
daughter directive be monitored as it develops to ensure it does not restrict CCS.

5h. Suggested changes to the Water Framework Directive and EU Waste

Directive
When the above-mentioned EU regulations were enacted, the problems of CO2 storage underground
were quite evidently not taken into account. It is obvious that neither the EU Water Framework
Directive nor the EU waste Directive intend to govern the issue of CO2 underground storage.
Therefore, an adjustment or extension of this EU legislation is called for.
In view of the fact that CCS will soon require evidence of safe availability of CO2 storage on an
industrial scale to be furnished, many aspects suggest a swift and straightforward removal of the legal
obstacles, that obviously have not taken into account until now.
To this end, we recommend that the waste directive requirements are eased by an exception
in favour of CO2 storage underground. By analogy with the exception permitted by the Water
Framework Directive for the injection of natural gas or liquefied petroleum gas, the member states
should be able to allow CO2 storage underground both under the waste and the water legislation. To
this end the existing provisions of the EU legislation should not forbid such an approval. This
requires the above-mentioned directives, in particular Art. 11, para. 3 (j) of the Water
Framework Directive, to be supplemented, so that the injection of other gases is possible for
permanent storage underground into geological formations which for natural reasons are permanently
unsuitable for other purposes.
The prerequisites under approval law for underground storage of liquefied CO2 would
then have to be created by the member states and adjusted to the particular geological
conditions prevailing there and the legal provisions for underground activities existing in
the various member states. Such regulation at member state level is supported by the legal EU
principle of subsidiarity of EU law that is applied where no EU-wide regulation of the matter seems to
be necessary. In the case of liquefied CO2 storage underground this is justified in particular because of
the extremely differing geological conditions for such storage in the various member states.

5i. Ownership of and Responsibilities for Storage Sites

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A system will need to be created to address ownership and responsibility issues for CO2
stored within geological storage sites, and for the purposes of public access to
information on storage sites and risk. The system may also involve the tracking of ownership
issues related to the CO2 stored within these sites. The principle of subsidiarity should apply to this
issue, where appropriate competencies already exist at a national level.
The lack of existing criteria for monitoring and reporting captured and stored CO2 presents a barrier to
large-scale CCS activities. Monitoring systems are needed for three major purposes: (1) to protect
health and safety by confirming the integrity of geological reservoirs; (2) to enhance public
confidence; and (3) to provide data in support of accounting for GHG emissions, to verify credits for
CO2 emission reductions8.
Storage sites would need to be controlled under an appropriate regulatory regime. This is not in place
yet in the EU Member States, but the optimal solution would appear to be subsidiarity whereby
guidelines are provided at a European level, but regulation, certification and administration are
implemented at a national level. Some considerations for storage site permitting and licensing are as
follows:9
(i)
The storage site operator would be required to show appropriate due diligence
during storage site selection, such that all the available geological survey data
and other evidence regarding the security of gas storage in the reservoir
suggest, within reasonable expectation, that the reservoir would not leak.
(ii)
In the event of any short-term leakage, an emergency plan should be in place to minimize
losses.
(iii)
Storage site operators would be required to make a commitment to monitor and report
quantified emissions of CO2 leaking, by seepage or sudden release from the site, using
good practice techniques likely to evolve over time.
(iv)
These losses would need to be reported to the host government, who would then take
them into account in his National Greenhouse Gas Inventory under the UNFCCC.
(v)
The operating licenses could be time-limited and subject to renewal/approval on the
grounds that the storage site was operating satisfactorily (i.e. not leaking at an
unacceptable rate).
(vi)
The requirement to monitor and report leakage by seepage or sudden release would be
ongoing after the sealing of the injection wells and closing of the site. Ultimately, this
responsibility would fall to the government under whose territory the CO2 is being stored,
i.e. the host government would make a long-term commitment to take responsibility for
the stewardship of a storage site, including emissions monitoring and measurement, and
also in the event of insolvency of the site operator, or licence withdrawal or expiry. This
issue should be further addressed in cooperation with the Mirror Group of the
ZEFFPP Technology Platform.

5j: R&D Needs in EU Technologies and Policies

Due to the fact that fossil fuels will continue to take essential shares in the future energy supply, there
is a need to reduce and avoid CO2- emissions along the processes which are affected. The future
regulation and policy frameworks should incentivise the near-term industrial-scale
deployment of appropriate CCS technologies.
In ZEFFPP all basic technologies options (including technology potentials of efficiency
increase on energy conversion as well as pre- and post combustion capture processes and
oxygen firing) must be focussed on including the energy efficiency of those processes.
There is also an important need to focus on options for transport and storage technologies and
infrastructure.
8

From a study done by Field and Ecofysfor the EU Commission(DG Env.) on IMPACTS OF EU
AND INTERNATIONAL LAW ON THE IMPLEMENTATION OF CARBON CAPTURE AND
GEOLOGICAL STORAGE IN THE EUROPEAN UNION.
9
From a study by ERM and DNV
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As basic technologies are still being identified there are strong and strictly forced developments
necessary to make CO2- capture technologies available. Equipment development, up- scaling and
consumption tasks must be solved. Examinations and application tests are urgently necessary to join
the equipment to functional processes and systems.
The improvement of efficiency of fossil fuel energy conversion processes is identified as a significantly
necessary precondition to adopt CO2- capture and separation technologies by avoiding negative
affects of fossil fuel dedication. Therefore also strong R&D efforts must be made to develop
new efficient conversion technology systems and to integrate the CO2- capture
technologies. This needs basic examinations as well as test and demonstration programs on
different scales.
Not the least CO2- transport and storage facilities and infrastructure need to be developed and
provided so that access for different applications of CO2- production sources is reliable.
The regulation and policy framework must ensure that R&D activities initiate that at last
the most fossil fuel efficient equipment and process systems will be developed, tested
and integrated to complete balanced CO2- infrastructure transport and storage systems.
This incites that possible options of regulation and policy instruments have to be created and
evaluated with regard to their effects onto the required technology research and applicable
deployment.
There is a need for further development of monitoring technologies and methodologies for CO2 in
geological formations.
There is a need for improved understanding of well integrity, including failure processes, and well
integrity needs to be included within the modelling and simulation of CO2 behaviour and storage site
integrity.

Chapter 6: Suggested Treatment of CCS in the EU

Emissions Trading Scheme
6a: Treatment of CCS The EU ETS is the main market-based instrument for the reduction of
greenhouse gas emissions across the EU. The EU ETS commenced on 1 January 2005 and is the first
international scheme of its kind to operate. Under this scheme, installations, which are large emitters
of CO2, have a cap of emission allowances and the ability to trade these allowances.
The EC produced in early 2004 guidelines for monitoring and reporting of greenhouse gas emissions
from installations covered by the EU ETS Directive. Decision C(2004) 130 Final of 29 January 2004

establishing guidelines for the monitoring and reporting of greenhouse gas emissions pursuant to the
Directive 2003/87/EC of the European Parliament and Council (Decision C(2004)130) sets out the

methodologies operators should apply when calculating their annual emissions of greenhouse gases.
It outlines a mixture of calculation- and measurement-based methodologies, and sets out varying
levels of rigour, based on the materiality of total annual CO2 emissions from the installation. Decision
C(2004)130 does not include any specific guidelines for monitoring and reporting greenhouse gas
emissions from CCS. However, under Section 4.2.2.1.3 of the Decision, the Commission says that:

Member States interested in the development of such guidelines are invited to submit their research
findings to the Commission in order to promote the timely adoption of such guidelines (Textbox
below)

To date, no Member State has formally submitted interim guidelines for the monitoring and reporting
of CCS. The UK has initiated an EU Group of Experts who have drafted recommended monitoring and
reporting guidelines, which have been shared with the Commission, but not formally submitted.

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More specific guidance in relation to CCS is given under Section 4.2.2.1.3:

The Commission is stimulating research into the capture and storage of CO2. This research will be
important for the development and adoption of guidelines on the monitoring and reporting of CO2
capture and storage, where covered under the Directive, in accordance with the procedure referred to
in Article 23(2) of the Directive. Such guidelines will take into account the methodologies developed
under the UNFCCC. Member States interested in the development of such guidelines are invited to
submit their research findings to the Commission in order to promote the timely adoption of such
guidelines.
Before such guidelines are adopted, Member States may submit to the Commission interim guidelines
for the monitoring and reporting of the capture and storage of CO2 where covered under the
Directive. Subject to the approval of the Commission, in accordance with the procedures referred to in
Article 23(2) of the Directive, the capture and storage of CO2 may be subtracted from the calculated
level of emissions from installations covered under the Directive in accordance with those interim
guidelines.

A significant barrier to CCS is whether the avoidance of emissions to the atmosphere through longterm geological storage should be treated as equivalent to emissions reduction at the source. Our
recommendation is that this should be the case, subject to clear provisions in a
monitoring and reporting system.
It is proposed to maintain the environmental integrity of a cap and trade scheme such as the EU ET.
Therefore, fugitive emissions occurring in any part of the CCS chain outside the
installations boundaries (as presently defined) should be taken into account within the
annual reporting of the EU ETS process. However, because storage involves longer timescales and
different regimes to those in the EU ETSs annual accounting process, and because of the problems
with using discount factors for hypothetical leakage rates, we propose that CO2 geological storage
would be better managed and regulated outside of the ETS scheme by being handled by
separate permitting regulation.
For the time being, pipelines are not listed as installations under the EU ETS, and therefore have no
direct regulatory or financial incentive to limit CO2 emissions. Geological storage sites also are not
installations per se (although many offshore platforms are included as installations under the EU ETS,
and thus venting of breakthrough CO2 in ECBM or EOR activities could be apportioned to their
allowance allocation/level of allowance surrender required for compliance).
Therefore, for the purposes of reconciliation, a methodology must be developed for calculating
those emissions, and including them in the same scheme as the exporting installations,
for which transferring CO2 to a CCS system should be credited as a CO2 emissions
reduction.
Consequently, the following boundary and completeness criteria are considered to be appropriate for
CCS under the EU ETS:
(i)
(ii)
(iii)
(iv)

all CO2 produced at each installation should be calculated according to the existing
guidelines for that installation as outlined in Decision C(2004)130
energy used for powering the CO2 capture equipment and for initial pipeline compression
at the installation (the energy penalty) will be incorporated into the net calculation for
each installation of (i),
any fugitive CO2 emissions occurring at each installation through inefficiencies in the
capture process as any stack emissions of CO2, should be reported and reconciled with (i)
any fugitive emissions arising from transport of the CO2 to the storage site, either through
background leakage, pipeline venting, blow down or accidental release should be reported
and attributed to the transport system that should be considered as an installation.

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(v)
(vi)

any fugitive emissions occurring during injection at the storage site injection head should
be reported and attributed to the transport system that should be considered as an
installation.
any fugitive emissions occurring from the storage site - post injection do not need to be
reconciled with (i) but should be dealt with specifically within the permitting regime.

A factor which could affect the way any monitoring and reporting guidelines for CCS work in practice
will be potential amendments to Directive 2003/87/EC. Annex I of this Directive sets out the criteria
for qualifying installations.
As part of the review of the Directive (The European Commission will submit a paper to the Council
and Parliament before 30 June 2006), it is likely that further clarity will be sought on how to define an
installation for Period 2 of the EU ETS. We are advised that this is unlikely to influence CCS.

6b. Allocation of quotas for CCS in the ETS

The way that CCS is treated in the Member States National Allocation Plans under the EU ETS or in
subsequent schemes will be important. As ZEFFPP is very capital intensive, and not competitive in the
present regulatory and economic context, industrial projects will require a substantial financial or fiscal
incentive during quite a long period.
Our recommendation is that incentives for CCS should be implemented as follows in the
EU ETS for Phase I and II (where allocations of EUAs will be made by MS NAPs and where
CO2 storage sites will not be classified as installations). Power plants with CO2 capture
should be granted allocation EUAs, with due recognition of CO2 emission reductions
afforded by CCS, and with regard to other incentive schemes for CCS that may exist.
CCS measures should also be recognized as JI/CDM projects and relevant arrangements
be stipulated, so that the CO2 emission reductions feasible with CO2 sequestration can be
applied on a global scale.
It can be assumed that the ETS will remain effective as a market economy system after 2012 as well.
Non-market based instruments acting in a different way, such as a CO2 tax, would need to be
considered carefully for compatibility with the EU ETS. Carbon contract incentive schemes are
another option, being readily compatible with the EU ETS.
All emissions trading schemes require some form of reconciliation, in other words a process whereby
the emissions reductions attached to a project, or an installations emissions allowances, are checked
off against the actual emissions arising from the activity over a given time period.
CCS under the EU ETS will claim that the tonnes of CO2 they have delivered to a CO2 storage facility
were not emitted in the calendar year during which they were exported. Thus, the sum of EUAs,
which the installation must surrender for compliance under the EU ETS, will be reduced by the amount
of tonnes of CO2 sent to the storage. However, it will be necessary to reconcile the tonnes of CO2
that a ZEFFPP can claim with any CO2 leakage that might occur during the transfer of CO2 from the
installation to a CO2 storage facility, subject to ex-post verification. Considering the CCS chain as
a set of installations subject to the ETS or any subsequent scheme would address this
issue.
Liability in this context refers only to the assigning of responsibilities for monitoring and reporting of
CO2 emissions across a CCS chain. Associated with this will be the debiting of physical CO2 leakage
against the amount of emissions reductions attributable to an exporting installation, or the amount of
emissions allowances that must be surrendered by an installation under a cap and trade scheme (or
reconciliation).

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6c: Legal Treatment of Storage Sites in the ETS

In order to account for any potential future emissions of the stored CO2 back to the atmosphere, some
observers have suggested that any emissions reductions credit given to project or installation
operators employing CCS should be subject to some form of discounting. Alternatively, it has also
been suggested that default factors could be developed and applied that assume a standard rate of
leakage. However, these approaches are considered to present a number of problems in that:
(i)
they assume that the storage site will leak over a set time frame
(ii)
this time frame, and the flux rate can be established ex ante based on detailed
understanding of the storage reservoir characteristics and the behaviour of the subsurface stored CO2
(iii)
potentially the discount factor applied could be so small as to have little relevance when
converted back to the CO2/yr basis (i.e. less than 1 tonne CO2 or 1 EUA per year)
(iv)
the point in time at which any leakage might occur may not be relevant to any
institutional structures and arrangements that currently exist
(v)
it is unclear upon which basis appropriate discount rates or default factors could be
selected.
Therefore, for the monitoring and reporting framework methodology for CCS under the
EU ETS it has been proposed that the issue of CO2 emissions from storage sites should not
involve discount rates of default factors, and should be further examined in order to make
sound proposals. The EU Group of Experts suggests that leakage should be managed and
accounted for under an appropriate permitting and regulatory regime, where there are a
range of options open to the regulator and operator to ensure EU ETS integrity. These
options include making a requirement for the operator to purchase of EUAs equal to the
amount leaked, the setting aside of a proportion of EUAs from the project or the purchase
of EUAs at the start of a project.
In the short to medium terms, it is difficult to see the EU ETS providing sufficient
incentives for early deployment of CCS projects. Accordingly other incentives will be
required. Where these are at Member State Level it is important that the EU framework
encourages rather than discourages such Member State incentives (eg State Aid
Guidance). We also recommend that careful consideration be given to the interaction
between the EU ETS and MS incentives

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Annex 1: Clean fossil fuel technologies for power

generation
The interest of the European Commission in cleaner fossil fuel technologies is not new, in fact this
topic has been in the research agenda since 50 years ago and the European Commission has actively
participated in discussion forums such as the Cleaner Fossil Technology (CFT) Industry Forum.
During the Ninth EU Cleaner Fossil Technology Industry Forum Meeting, held at the ECs Albert
Borschette Conference Centre Brussels on 14th March 2005 major areas of agreement emerged were:
!" Global increases in energy demand dictate that a portfolio approach is essential to meet
future energy needs and that fossil fuel sources will make a major contribution for several
decades to come.
!" The necessity for fossil fuel research to be included within the VII Framework Programme
!" The urgency to establish a Technology Platform for Clean Fossil Fuels Power
Generation. The scope of the Technology Platform was defined, namely: To drastically
reduce the environmental impact of fossil fuel use, particularly coal, aiming at highly efficient
power generation plants with near zero emissions. This includes CO2 capture and storage, as
well as clean conversion technologies leading to substantial improvement in plant efficiency,
reliability and costs.
The Zero Emission Fossil Fuel Power Plant (ZEFFPP) concept involves four stages/technologies:
!" Power Generation Technology: Where besides the power, the CO2 emissions are produced;
!" CO2 Capture;
!" CO2 Transport;
!" CO2 Storage.
The environmental problems involve all the above mentioned stages and the phase connected to the
plant authorization.
A Zero Emission Fossil Fuel Power Plant is a new concept, but supported by previous developments
carried out in recent years in order to achieve a Cleaner Fossil Fuel Power Plants. Some of those
previous technology developments are summarised as follow:
The European Commission has been financially supporting technical and economic research relating to
the production and use of fossil fuel, and particularly to occupational safety in the coal industry since
the European Coal and Steel Community Treaty came into force in 1952.
Financial support has covered research and demonstration projects in fossil fuel combustion and
gasification. Main research programmes were:
!" The European Coal and Steel Community (ECSC): During its more than 50 years of existence,
ECSC research supported the efforts of the Coal and Steel Industry by increasing overall
research efficiency, enabling these industries to tackle jointly large projects which could not
have been carried out by individual companies, and creating throughout the Member States a
network of researchers, through which there is an effective exchange of information related to
the projects and their results.
!" The THERMIE programme: It focused on the need to take short-term actions to assure
reliable clean coal technologies for the future electricity generation. The European
Commission funded a series of demonstration projects under the IV Framework Programme,
among them some of the main projects were:
!" The Puertollano IGCC plant (contract number SF337/91 ES): In the late eighties, a group of
European electric utilities, led by Endesa and EDF, promoted the project involving the design,
construction and demonstration of a power plant using the emerging technology of
Integrated coal Gasification in Combined Cycle (IGCC). The European Commission selected
this initiative as target project. In keeping with this designation, the ELCOGAS Company was
formed in 1992 by European electric utilities to develop the IGCC power plant project, with a
gross electric output of about 330 MWe (ISO conditions), to be built in the central south area
of Spain, close to Puertollano, Ciudad Real. The Commission energy program objectives were
met, at large extent, by the project:
!" Demonstrate the feasibility of operating an IGCC plant (1 gasifier fed with coal and petroleum
coke and 1 gas turbine), size over 300 MWe, to serve as reference for future technology
choices in the context of clean coal technologies.

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!" Promote cooperation among European utilities and technology/equipment suppliers and
achieve a project financing with limited shareholders liability.
!" Second generation PFBC co-generation plant for eastern German lignite (contract number SF
264/97): This Pressurised Fluidised Bed Combustion (PFBD) co-generation plant is part of a
power and heat station, operated by Stadtwerke Cottbus GmbH, and located within the city
boundaries of Cottbus, Germany. The plant uses lignite as its fuel, which is obtained from a
local supplier and is in plentiful supply. The centrepiece of the PFBC plant is a bubbling
fluidised bed combustor located within a vessel pressurised at 12 atmospheres with
combustion air. Dolomite is injected together with the lignite fuel and serves to remove
sulphur oxides while combustion takes place, forming calcium sulphate. The gas turbine
produces 15 MWe and the plant has a total nominal output in the region of 80 MWe at more
than 42% efficiency, when operated in condensing mode.
!" Demonstration of British Gas/Lurgi (BGL) gasification under optimised conditions for the
European and Asian markets (contract number SF 0008/98): The counterflow type of
gasification equipment is part of a major plant complex at SVZ Schwarze Pumpe GmbH,
Germany. The equipment is designed to gasify feedstock that consists of local lignite, coal,
biomass, waste plastics, domestic waste and sewage sludge mixtures prepared as briquettes
or extruded pieces, with a mixture of steam and oxygen, at pressures in the region of 30
bars, to produce a synthesis gas, that is currently being converted to high grade methanol for
fuel cells. A minor part of the gas is used as a fuel in combined cycle power production but
this latter is not as economically attractive as methanol production.
!" The CFB Alholmen (contract number SF 214/98): This project is a large power and heat
generating station fuelled by coal and wood waste). The plant, located at Pietarsaari on the
west coast of Finland, is based on a CFB combustor/steam generator and a three casing
bleeder condensing turbine, with sea water condenser. The turbine drives a 306 MW
electricity generator. The plant can produce 240MW power in condensing mode or 205 MW
power, 100MW process steam and 60 MW district heating.
!" The Cleaner Coal Technologies (CARNOT) programme: In December 1998 the Council of the
European Union approved a multi-annual programme of technological actions promoting the
clean and efficient use of solid fuels (1998 to 2002) referred to as CARNOT. The term "solid
fuels" covered hard coal, lignite, peat, orimulsion, oil shale and the heavy fraction of
petroleum products. When mixed with solid fuels, biomass and refuse-derived fuel could also
be considered. CARNOT promoted the use of clean and efficient technologies in industrial
plants using solid fuels. The aim was to limit emissions, including carbon dioxide emissions,
from such use and to encourage the uptake of advanced clean solid fuel technologies in order
to achieve improved Best Available Technologies (BAT) at affordable cost. Cleaner and
efficient solid fuels technologies which are likely to enhance the solid fuels public and political
IMAGE and present them as a reliable, readily available, competitive and environmentally
compatible energy source were considered as particularly important. Likewise, actions aiming
to remove barriers to worldwide market penetration of European cleaner and efficient solid
fuels technologies were given preference. In particular, the transfer of technologies aiming to
increase thermal efficiency in coal-fired power generation was of the utmost importance.
Some of the main projects were Provence Power Station Unit 4 (Gardanne 250 MWe
Circulating Fluidised Bed): The SOPROLIF boiler is the world's most powerful Circulating
Fluidised Bed (CFB) unit. The method used in Gardanne is the LURGI process, which, in
particular, consists of fluidised bed heat exchangers which favour the temperature control of
the furnace and therefore a high level of desulphurisation whatever the operation conditions.
This 250 MWe boiler, combination of manufacturer ALSTOM Energy and the LURGI process,
intended to be a step towards the construction of units with higher capacities (500 or 600
MWe ) to be used as an option to replace France's fossil-fired power facilities.

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Annex 2: List of articles and reports on CCS

BODE, Sven JUNG, Martina (2005) CCS liability for non-permanence under the UNFCCC Hamburg Institute of International Economics Discussion paper
CURNOW, Paul Baker & McKenzie (2005) CCS in the carbon marker Key legal issues - IETA
Side event, COP11 & COP/MOP1 2/12/2005
ECN (2005) CCS state of the art in the climate negotiations ECN-RX--05-204
ECN (2005) Klimaatneutrale elektriciteit en de MEP Een verkenning naar de onrendabele top van
elektriciteit met CO2-afvang en opslag ECN-C05-033
ERM-DNV (2005) Developing monitoring, reporting and verification guidelines for CO2 capture and
storage under the EU ETS
Report no. COAL R277 DTI/Pub URN 05/583
ERM-DNV (2005) Outline template for draft interim monitoring and reporting guidelines for CO2
capture and storage under the EU ETS
Report no. COAL R289 DTI/Pub URN 05/1564
EU Commission DG Environment (2006) The second European Climate Change Programme
Report of Working Group 3 Carbon Capture and Geological Storage (CCS) (2006)
FISCHER, Bernhard E.ON (2005) Needs for R&D View of European utilities
TP Advisory Council, Brussel 10/08/2005
HAEFELI, Susanne DNV (2004) Best verification/certification agency GHG Emission, global
Environment Finance 12/04-0/05
HEIDUG, Wolfgang OGP (2006) Geological Storage of CO2: an industry perspective
Brussels, 27/02/2006
HENDRICKS, Chris ECOFYS (2006) CCS and risks an introduction
HOUSE OF COMMONS Science and Technology Committee (2006) Meeting UK Energy and climate
needs: the role of CCS First report of session 2005-06
IEA - OECD (2004) Energy technology analysis - Prospects for CO2 capture and storage
IEA - OECD (2005) Legal aspects of storing CO2
INDUSTRY POSITION PAPER (BP, Shell, Statoil, Chevron) (2006) CCS as a clean development
mechanism project activity
IEA Greenhouse Gas R&D programme, IETA, CO2 capture project
MATHIEU, Philippe ULg Belgium CO2 Capture & storage technologies for deep reduction of CO2
emissions
MEYER, Leo IPCC WG3 (2006) The IPCC special report on CCS
WMO UNEP presentation ECCP-2, EU Com. DG Environment, 27/02/2006
OBRIEN, Denis EU Commission DG Research (2005) R&D on CCS within the EU CCS Where
are we today? - AC Meeting 10/08/2005
OSPAR COMMISSION (2006) Placement of CO2
OIC, Presentation by the Netherlands, Copenhagen 20-24/02/2006
PETTERSSON, Magnus VATTENFALL (2006) CCS Critical environmental issues
ECCP II WG3, 03/2006
REPUBLIQUE FRANCAISE Coal working group (2006) Climate change, energy and sustainable
development: how to tame King Coal? Vision paper, revised 12/1/2006
THE ROYAL SOCIETY (2002) Economic instruments for the reduction of carbon dioxide emissions
- Policy document 26/02
VGB POWER TECH (2004) CO2 capture and storage A VGB report on the state of the art
ZAKKOUR, Paul ERM (2005) CCS in the EU ETS ERM Energy & climate change services - IETA
Side event, COP/MOP Montreal 2/12/2005
ZAKKOUR, Paul ERM (2005) The role of CCS in the carbon market
IETA Side Event, COP/MOP Montreal 2/12/2005

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