International Transport of Captured $$\hbox {CO}_2$$ CO 2 : Who Can Gain and How Much?

Abstract

If carbon capture and storage (CCS) is to become a viable option for low-carbon power generation, its deployment will require the construction of dedicated CO 2 transport infrastructure. In a scenario of large-scale deployment of CCS in Europe by 2050, the optimal (cost-minimising) CO 2 transport network would consist of large international bulk pipelines from the main CO 2 source regions to the CO 2 sinks in hydrocarbon fields and saline aquifers, which are mostly located in the North Sea. In this paper, we use a Shapley value approach to analyse the multilateral negotiation process that would be required to develop such jointly optimised CO 2 infrastructure. First, we find that countries with excess storage capacity capture 38-45 % of the benefits of multilateral coordination, implying that the resource rent of a depleted hydrocarbon field (when used for CO 2 storage) is roughly $1 per barrel of original recoverable oil reserves, or $2 per boe (barrel of oil equivalent) of original recoverable gas reserves. This adds 25-600 % to current estimates of CO 2 storage cost. Second, countries with a strategic transit location capture 19 % of the rent in the case of national pipeline monopolies. Liberalisation of CO 2 pipeline construction at EU level could eliminate the transit rent and is shown to reduce by two-thirds the differences between countries in terms of cost per tonne of CO 2 exported. Reaching agreement on such liberalisation may be politically challenging, since the payoffs are shown to be strongly divergent across countries.

The economic evaluation of the benefits and costs of carbon capture and storage

“…Opportunities to decrease capture and storage costs exist through networking and cooperation among sources and sinks (Kuby et al, 2011;Middleton et al, 2012b). However, they represent a small portion of the costs and the realised proportion of savings is subject to transit and storage rent extraction (Morbee, 2014).…”

“…It should be noted that the above savings can only be fully realised if there is costless cooperation among sources. Morbee (2014) highlights the benefits of international cooperation using the pipeline network optimisation model InfraCCS. It is based on SimCCS by Middleton and Bielicki (2009); it adds techniques from computational geometry and a time component (Morbee et al, 2011).…”

Unlocking CO2 infrastructure deployment: The impact of carbon removal accounting

“…One of these crucial yet often-overlooked barriers is the deployment of CO2 transportation and storage infrastructures, which are, by nature, costly, capital intensive, and likely to exhibit substantial economies of scale (Butnar et al, 2020;Krahé et al, 2013). A large and growing literature on CO2 pipeline deployment has already highlighted the need for shared infrastructures with either a regional/national scale (Kemp and Kasim, 2010;Klokk et al, 2010;Massol et al, 2018Massol et al, , 2015Middleton and Bielicki, 2009;Spiecker et al, 2014) or a continental (European) scale (Morbee, 2014;Morbee et al, 2012;Oei and Mendelevitch, 2016). It is important to stress that these studies concentrate on infrastructures that are solely connected to FECCS emitters, de facto overlooking the access of BECCS emitters to the infrastructure.…”