New report finds CCS to be far more economically viable than previously estimated

In a recent report, Professor Stefan Reichelstein and Ozge Islegen have found that the break-even price for the adoption of CO2 capture and storage (CCS) technology is just $25 to $30 per ton of CO2 emissions. Moving anywhere above this range would render CCS more economically viable than purchasing emission permits. This contrasts the 2007 McKinsey & Co. study (download PDF to right) which anticipated that the price of permits would have to reach at least $50 per ton.

In addition, the report explains that the price of electricity for consumers would only rise up to 23 percent, which, as Professor Reichelstein put it, is a “surprisingly small amount”. Moreover, the authors point out that in regulated markets, such as the United States, the increase in consumer prices will rise more slowly and at a more affordable rate than in unregulated markets.

"The higher costs would only be gradually phased in, and it would take 30 years for prices to rise to their new equilibrium levels," said Reichelstein.

Nevertheless, the report underlines the need for further legislative certainty in order to guarantee the much-needed wide-scale investment in CCS technology.

"People in the industry are quite reasonably wondering if they should invest in a project with a useful life of 40 to 50 years given the uncertainty of the regulatory situation, the potential costs of permits, and the viability of new technologies.” Assessing

“This study points to the need for long-term certainty of incentives to phase out unabated coal-fired power generation. Existing emission trading schemes are not enough,” says Eivind Hoff from Bellona Europa. Read more on the report here.