Models for Transport and Storage of Captured CO2
Carbon capture projects require guaranteed, reliable access to safe and cost-effective CO2 transport and storage. Without this it will not be possible for capture projects to secure investment, or for CCS to play the role it needs to play in reaching emissions reductions goals.
Summary:
- Carbon capture projects require guaranteed, reliable access to safe and cost-effective CO2 transport and storage. Without this it will not be possible for capture projects to secure investment, or for CCS to play the role it needs to play in reaching emissions reductions goals.
- Pipeline transport of CO2 has large economies of scale, and so a tendency towards natural monopoly, with typically no alternative networks available to a capture project. In this CO2 transport resembles other networks, including, for example, those for natural gas, electricity and water. Storage sites and transport by ship are also likely to be subject to only limited competition, especially in the early years of CCS deployment.
- This dependence of capture projects on one or two transport and storage providers means that some form or regulatory oversight is necessary to prevent the abuse of monopoly power.
- Regulation may be in the form of direct government control, or an independent regulator acting to fulfil objectives specified by government.
- Ownership arrangements may also contribute to regulation. Full or partial state or local authority ownership may allow direct influence over decisions on transport and storage, and enable management of risks. However private ownership with regulation can also secure policy objectives. The choice will depend on project circumstances, established practice for other sorts of network, and political culture.
- Economies of scale in pipelines means that it will usually be preferable to build pipelines with greater capacity than required by initial projects. Again, CO2 networks resemble many types of networks in this respect. This creates financial opportunities and challenges which need to be addressed by design of access pricing and financing arrangements.
- There are volume risks for the transport and storage provider, for example due to delays in capture projects. These are reduced if there are clusters of capture projects.
- Cross chain risks also need to be allocated, with some form of government participation likely necessary to address risks unmanageable and uninsurable by the private sector.
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