The Harvard University paper has been the latest in a sequence of reports published by private companies, consultancies and other organisations on the subject of CCS cost. Despite variations in the estimation of the actual price of CCS, these reports come to a similar conclusion; although the cost of operating CCS pilot plants will be proportionally high, significant cost reductions should be expected in the medium term. The considerable decrease in cost, combined with the expected increase in the price of CO2 emissions would render the technology commercially viable by 2030.

The Harvard University paper estimates the cost of implementing CCS in demonstration plants at €80-125 per tCO2 avoided.¹ This assessment does not differ significantly to those appearing in other relevant reports. According a report released by McKinsey in 2008 the cost of CCS during the demonstration stage was expected to be around €60-90. Boston Consulting Group would expect the initial cost to be at minimum €45, whereas Chevron claimed that the cost would be over €72.

The initial high costs expected from the operation of CCS pilot plants would essentially have to be covered, at least partly, by public funds as well as by utility owners themselves. Nevertheless CCS technology is also expected to bring significant economic returns in the future to those willing to invest in it.

Indeed a number of reasons are expected to drastically reduce the prices of CO2 sequestration in the near future making it profitable. The study by Harvard University holds that cost reductions mainly, but not only, emanate from the knowledge that will be gained during the operation of the first demonstration plants. Namely cost reductions can be expected to be realized from a range of sources;

• Economies of scale as CCS plants become bigger
• Better plant system integration and elimination of redundant components
• Lowering the costs of individual plant components through learning
• Shorter construction lead times and less conservative design assumptions

The aforementioned factors are estimated to bring about significant cost reductions in the implementation of CCS. Although there is some uncertainty as to their extent, most calculations concur that the cost will fall significantly below €50 by 2030. The paper by Harvard University estimates that CCS costs by 2030 will be between €25 and €50. McKinsey, Boston Consulting and Vattenfall estimates do not differ significantly placing the cost at €30-€45, €30 and €20-€40 respectively.

Most projections indicate that CO2 emission prices would be between €55 and €30 by 2030. Thus, CCS technology would be ‘economically competitive with conventional fossil plants by 2030’ under the majority of the aforementioned scenarios. That could provide investors with a strong financial incentive to engage in developing CCS technology now as a way of placing themselves in a favourable position for significant future gains.

¹ All paper’s cost estimations converted in Euros from Dollars for the purposes of  this article according to August 4, 2009 exchange rates