CCS can give higher emission reductions and lower power prices by 2030

The report “Future Fossil Fuel Electricity Generation in Europe: Options and Consequences” looks at different combinations of overall energy policies, coal and gas prices, CO2 emission prices as well as the availability or not of CCS to identify the best ways to reach the EU’s objectives of reduced CO2 emissions and greater security of energy supply towards 2030.

According to the report, CCS is likely to be deployed from 2020 if the CO2 price exceeds €34-55 per tonne (this is largely within the range of earlier projections of future CO2 prices), depending on fuel price. Higher fuel prices result in more coal-fired power plants as opposed to gas-fired power plants – and because the cost of CCS is lower per tonne for coal-fired power plants, the “CCS threshold price” will tend towards €34 when fuel prices are high, and towards €54 if prices are low. Whenever the threshold price is exceeded, CCS will dominate new fossil fuel power generation, and could cover 33-40 percent of total installed power capacity in 2030.

Several of the scenarios that include CCS availability from 2020 result in significantly lower CO2 emissions by 2030 compared to the same scenarios without CCS availability.

The availability of CCS makes little difference to production costs per kilowatt-hour up until 2025, but in the scenarios with high CO2 prices (sufficient to trigger CCS deployment), production costs are 12-21 per cent higher in 2030 if CCS is not available. This is largely due to the fact that in the absence of CCS for coal, the relatively expensive natural gas will need to replace a greater share of the dirtier coal to make power, pushing up costs. 

The report is available online. Note that the “policy scenarios” (as opposed to the business-as-usual scenarios”) described in chapter 7 are largely in line with the EU climate and energy package adopted earlier this year.