The concept and technology of deep underground carbon capture and storage (CCS) facilities globally is still in its infancy, and some would say it is only fledgling technology on a wish list of major polluters from a variety of industrial sectors. Business reporter Simon Hartley looks at CCS and a new report released this week which specifically considers options for it in New Zealand, including a controversial southern lignite-to-fertiliser scenario.
Carbon capture and storage facilities in New Zealand - costing hundreds of millions of dollars to develop - could be viable for the country, but the concept carries a variety of risks, including uncertainty over effects from potential gas leaks into eco-systems and waterways.
At one extreme are the major carbon emitting industries which consider CCS could be the "silver bullet" to dealing with their emissions, in the context of New Zealand's commitments to the Kyoto Protocol, while some environmentalists take the line it is an overly expensive folly which could do more harm than good to the environment.
While no CCS facility exists in New Zealand, the South Island is singled out in a report released this week with a "hypothetical" scenario for a CCS plant near a lignite conversion plant - costed at more than $940 million to establish, plus $20 million to run each year.
In Southland, Solid Energy is, coincidentally, considering a lignite to urea (fertiliser) option at present, alongside having already started building a $25 million pilot lignite to briquette plant near Mataura. The state-owned enterprise is also studying lignite to diesel conversion.
There are an estimated 12 billion to 15 billion tonnes of low-grade lignite around Southland and South Otago.
This week, political lobby group Straterra, funded by major mining companies such as Solid Energy and Oceana Gold, released a report collated in 2009 by the New Zealand Carbon Capture and Storage partnership, which includes contributions from the government and industry.
The report is by an international consortium of industry consultants under Transfield Worley Ltd, which compiled the 161-page report CCS in New Zealand in 2009.
While the report notes eight North Island industries which would be suitable for CCS, including an oil refinery, steel mills and power stations, it also identifies companies in the South Island including Solid Energy, listed L and M Energy and cement manufacturer Holcim, which could benefit.
Straterra chief executive Chris Baker and Green Party MP Kennedy Graham, spokesman for energy and international climate change, both welcomed the publication of the report as a discussion point.
Mr Baker said, "We can stop carbon entering the atmosphere, but it is expensive to bring these technologies together at scale.
"This will be of interest to coal, including lignite, and gas-based industries in New Zealand," he said in a statement.
Mr Graham was contacted and said he was supportive of the report, saying it was a "genuine attempt" to get information out, albeit "by, for and in the interests of the industry" and without any environmental group input.
"It would be a massive leap to go from the report to CCS being 'ready to go'," he said.
Given the costs of CCS, estimated in hundreds of millions of dollars per site, Mr Graham said the money would be better spent on exploring renewable energy sources.
Based on the overseas projects, he understood the energy required to run a CCS facility added 25% to the costs of coal and 10% to gas.
Rather than forging ahead with plans to utilise coal and lower-grade lignite, Mr Graham is adamant the worst effects of climate change can only be avoided if four-fifths of the world's known oil and coal reserves are left in the ground.
Yesterday, Coal Action Network Aotearoa announced a Keep the Coal in the Hole Summer Festival, to be staged on a farmer's property near Mataura in late January.
"Coal is the worst fuel for the climate, and lignite is a particularly dirty, low-grade form of coal. Banning new coal mines is the first step towards this," Coal Action spokesperson Tim Jones said.
Mr Graham accused the Government of "speaking in two tongues", by acknowledging the need to move to a low carbon economy, but then targeting net oil exports by 2030, and also the use of lignite.
Technology development and industry potential aside, it will likely be the potential environmental effects of CCS which will grab the headlines.
The report says "the area of greatest [environmental] uncertainty concerns the impact of carbon dioxide escaping from the underground reservoir".
If the carbon dioxide leaked into the atmosphere it would readily disperse and cause "few, if any" direct environmental effects.
"If, however, it leaked in sufficient quantities into a shallow aquifer or a lake or a stream that was used for drinking water, it could cause contamination," the report says.
While small seepages may produce no detectable impact, a relatively large release of gas "may cause measurable harm".
These issues could be countered with proper site selection and risk mitigation, meaning the probability of either a "slow seepage" or larger unintended gas release was "very low".
The report notes that now the cost of carbon has a price, emitters must decide whether to invest in CCS to reduce emissions, or buy emission permits under the Emissions Trading Scheme, saying there was "considerable uncertainty about future carbon prices".
The report gives two hypothetical case studies of a natural gas combined cycle power plant in Taranaki being converted to include CCS, but costing more than $560 million and meaning electricity production would fall; it was "unlikely to be economically viable", unless the price of carbon credits increased "significantly" from $25 per tonne.
However, at $25 per tonne, the hypothetical case of lignite to fertiliser conversion in Southland "may be viable", and that is at a "broad estimate" cost of $940 million to build and annual operating costs of $20 million.
However, there was the "considerable uncertainty" of finding and appraising a suitable storage site, seismic studies plus property rights and regulatory approvals.
"Altogether, it may take many years of exploration and appraisal to determine whether or not CCS will be feasible and cost effective for any particular project," the report says.
Finding and assessing a storage site could take "many years" and cost from $25 million to $150 million to determine its capacity and suitability, vulnerability to leaks and also seismic activity.
"There is still relatively little information publicly available to support decisions about potential CCS reservoirs," the report says.
CCS is more than just a wish list. By 2010, there were five large-scale projects in operation elsewhere in the world and a study in that year identified another 80 large-scale projects under development in various parts of the world by governments and industry, notably in the US, European Union, especially the UK, Canada and Australia.
The International Energy Association has estimated CCS could account for an almost 20% capture of emissions to stabilise global carbon, to less than the 450 parts per million which is near the benchmark at the forefront of climate change statistics.
Regulation and legislation appear to present formidable hurdles to CCS, with the Resource Management Act imposing some "specific barriers" by classing carbon dioxide as a contaminant; the issue of discharges to the environment; and concerning the liability of reservoir leaks, the report says.
Also, there are aspects of several other Acts, including the Crown Minerals Act, and those covering climate change response, building, gas, continental shelf and marine and coastal areas.
"CCS is one of a suite of low-carbon and carbon mitigation technologies that could play roles in supporting economic growth, while also allowing us to meet our obligations under the Kyoto Protocol," the CCS report says.
Mr Baker, of Straterra, said all low-carbon technologies, including renewables, needed assistance to progress.
He said the report highlighted that, for CCS specifically, New Zealand's regulatory regime and laws did not easily support its development, adding to the cost and risk for companies.
No doubt environmentalists will claim the CCS in New Zealand report is skewed in places to reflect resource sector sentiment, but the report is at least a starting point for long overdue discussion on how emerging technologies may make the use of low-grade resources, such as lignite, more palatable to the carbon-aware world.
Given the widespread barriers and costs to CCS, and its reliance on future per-tonne carbon emission costs, the scenario for development may become an intergenerational issue, as opposed to a credible option to be developed during the next decade.
CO2CRC is . . .
The Co-operative Research Centre for Greenhouse Gas Technologies (CO2CRC) is a collaborative research organisation focused on carbon capture and storage (CCS).
CO2CRC is a joint venture of Australian and global industries, universities and other research bodies in Australasia, and Australian Commonwealth, State and international government agencies; resourced by the Australian Federal Government Co-operative Research Centres Programme, including participants from the wider industry.
Report author
Transfield Worley Ltd . . .
Plus an international consortium of industry consultants, from Australia; Schlumberger, CSIRO and Baker and McKenzie, Worley Parsons from the US, MWH (Montgomery Watson Harza) from New Zealand and Evans and Peck management consultants of Australia.
Carbon capture and storage is . . .
The capture of carbon gas emissions generally from major industries. The gas is heated and compressed to behave like a liquid and pumped through a pipeline to a pumphouse, where it is injected into porous rock at least 800m underground, which soaks up the carbon as a sponge would, trapping it.
Rock which has had oil or gas removed, or a depleted saline aquifer, are ideal, but key to the process is having a layer of less porous "cap rock" lying above the carbon trap to prevent the gas from escaping to the atmosphere.
