CCS Infrastructure in the North Sea region Results from the ONE North Sea Project ZERO

1. CCS Infrastructure in the North Sea region Results from the ONE North Sea Project ZERO 28th October 2010 Dr. Shane Slater Element Energy Limited

2. The North Sea Basin Task Force • Purpose • Develop common principles for managing and regulating the transport, injection and permanent geological storage of CO2 in the North Sea sub-seabed. • Membership • Governments of the UK, Norway, the Netherlands and Germany. • Supported by industry, NGO and academic representatives. • Aims of the One North Sea project • establish a vision for the role of the North Sea in CCS deployment across Europe • understand when and where cross-border deployment is most likely • identify principles and steps the Task Force and its stakeholders could take to ensure efficient, timely deployment of cross-border CCS infrastructure

3. Our approach combined quantitative scenario modelling with extensive stakeholder consultation. • Assemble and verify database of potential CO2 sinks in N. Europe. • Primarily from Geocapacities + NPD GESTCO projects • Significant uncertainties on capacity estimates (methodologies differed) • Permission to use data refused by some countries due to complex private/public data ownership. • Predict overall level of demand for CCS from industry and power. • Predictions of Econ Poyry consistent with other data sources (e.g. Primes) • Extensive stakeholder consultation with over 50 parties • Optimise source+sink • Used in-house GIS based optimisation algorithm • Identify clusters where they are beneficial • Sensitivity analysis • No onshore storage • No cross border storage • Etc.

4. The total storage capacity in the 5 studied countries is c. 200Gt of CO2 including hydrocarbon and saline aquifers Total hydrocarbon storage capacity: 2030 – 15 Gt 2050 – 18 Gt

5. CCS deployment scenarios based on climate, energy and CCS support policies.

6. The “very high” scenario approaches the “medium” through series of restrictions.

7. Medium Scenario: Nearly 50Mt of CO2 are transported per year in 2030.

8. Medium Scenario:Restrictions strongly affect CCS in Germany and The Netherlands

9. Conclusion – Impact of restrictions differs greatly between countries. • Lack of obligation for CCS and policies favouring renewables greatly reduce the demand for CCS from large sources. • A ban on onshore storage greatly affects Germany and the Netherlands, while the UK and Norway have access to large offshore sinks. • A restriction on cross-border transport further restricts the sink capacity available to the Netherlands • Low levels of overall deployment suggest that point to point networks that ‘cherry-pick’ the best sinks are more cost-effective than integrated networks (but overall cost per tonne abated are much higher). • Uncertainty over storage is likely lower the willingness to invest in capture equipment for sources, and hence lower investments in detailed sink characterisation.

10. Very High Scenario:Annual CO2 storage increases to 270Mt in 2030

11. Very High Scenario:15% of CO2 is transported across borders

12. Conclusion – CCS can play a major role in European CO2 abatement by 2030 if there are few restrictions on transport and storage. • 270Mt/yr by 2030 in the North Sea is comparable with estimates for other studies (e.g. McKinsey, IEA) • Locations of sources suggest that there is a natural role for clustering and shared infrastructure. 7-8 such clusters could transport the majority of CO2 in 2030. • Cross-border transport plays a relatively minor role in 2030, except in the Netherlands. Significant opportunities for transport to northern North Sea by 2050, possibly re-using existing pipelines. • Overall CO2 flows in 2050 are equivalent to size of North Sea oil industry at its peak. Deploying CCS on this scale will require barriers to be lowered at every point in the value chain. It will clear price signals and strong incentives for CO2 sources, a high level of certainty on sink safety and well co-ordinated pipeline development.

13. There are significant cost implications arising from restrictions to CCS deployment.

14. Shared transport infrastructure could play a major role if CCS is to be widely deployed.

15. Case Study for a CCS network – The Tees Valley in North East England • Significant cuts are required in CO2 emissions for the North East of England and from the power and industrial sectors to meet the UK targets. • Payments from carbon intensive industry in the Tees Valley to the ETS could exceed £500m/year after 2020 (at £20/t CO2). • Inaction will lead to reduced competitiveness, profitability and viability of heavy industry - threatening 7,000 jobs in businesses which contribute £700m/year to the economy. Tees Valley Potential storage location Business as usual is not an option in the Tees Valley.

16. Deployment of CCS in the Tees Valley could meet 8% of the UK’s 2030 CO2 target at an average cost < £55/tCO2 abated. • A CCS network could transform the local economy. • Tees Valley has the expertise to implement CCS quickly and safely. • CCS demonstration projects provide an opportunity to develop the pipeline network. • Would require £200 m to fund future-proofing of an offshore pipeline. • Individual transport solutions could never be economic.

17. Thank you for your attention. In case of questions please email shane.slater@element-energy.co.uk