Tue, Nov 5 2024 5 November, 2024

Storage, regulation are main hurdles to carbon capture in Europe: ICM Forum

Storage bottlenecks and a fragmented regulatory framework are the main obstacles to carbon capture and storage development in Europe, a conference heard.

A panel session at the ICM Forum in Pau, southwest France (Photo: Gas Outlook)

The nascent carbon capture and storage (CCS) industry is hampered by “high costs, regulatory disparities and insufficient coordination” between EU states, EU energy commissioner Kadri Simson told the Industrial Carbon Management Forum in Pau, France, on Thursday.

While the past year has marked significant progress with the announcement of the industrial carbon management strategy, there’s a need to “implement de-risking measures” to address the “high capital investment costs seen in all emerging markets.”

Moreover, fragmented regulation means “emitters lack visibility or equal access to storage,” she said at the ICM Forum.

To address that, the new EU Commission will need to work on a “comprehensive EU (regulatory) package” to create “an integrated network, diminish risk and bring down costs.”

Europe is targeting 50 million tonnes/year of CO2 storage capacity by 2030 as part of its Net Zero Industry Act, rising to 280 million tonnes by 2040 based on the impact assessment on the EU recommended climate target for 2040.

However, projects are struggling to reach FID amid regulatory and financing uncertainties.

The 27 members of the EU, along with the UK, have pledged to reach net-zero emissions by 2050, and they have positioned carbon capture as a crucial component of their transition.

Yet the EU’s bet on carbon capture could require ‘eye-wateringly high subsidies,’ and the technology also has a dismal track record, a new report published on Thursday found. Heavy reliance on CCS could result in the EU badly missing climate targets, it warned.

Storage capacity

Long-range CO2 transport is “needed to make export hubs viable” however “these require massive investments and need to be open-access,” Frank Lueders, vice-president of large industries, South-West Europe, at Air Liquide said.

He said the EU Commission must go beyond what was stated in the ICM strategy, particularly regarding storage availability.

“In a number of cases, storage capacity is a bottleneck for CCUS projects to go through….The net zero industry act sets targets for that within EU” but there needs to be collaboration with extra-EU States, including the UK, he stressed.

He added that harmonisation of CO2 specifications is also a key concern for the industry.

So far, the EU has selected 14 CO2 storage and transport projects under the EU’s Project of Common Interest (PCI) and Projects of Mutual Interest (PMI) schemes.

These include the Northern Lights projects in Norway, the Callisto project in Italy and the Prinos project in Greece.

The Energean-operated Prinos facility obtained an exploration permit in 2022, and is targeting 1 million tonnes/year capacity in the initial phase, potentially rising to 3 million tonnes/year.

At the same time, “the market is desperate to find additional storage capacity” and is looking at international partners including Romania and Egypt as part of the solution, Aristofanis Stefatos, CEO, Hellenic Hydrocarbons & Energy Resources Management said.

“Cross country cooperation is very high in the (political) agenda over next 12 months” he said, adding that Contracts for Difference (CfDs) were being considered in Greece to support projects.

Meanwhile, Eni and Snam inaugurated in Ravenna, Italy the first phase of the Callisto project, developed in cooperation with Air Liquide, with 2,000 tonnes/year of captured CO2 injected into the Porto Corsini depleted gas field in the Adriatic Sea.

The project, the first CCS project to become operational in Italy and Southern Europe “brings credibility to the companies and the whole sector” and hinges on cooperation between companies, Caroline Rossi, head of CCUS business development and orchestration at Eni said.

Phase 2 of the project targets 4 million tonnes/year of capacity.

Depleted offshore gas fields in the Adriatic Sea are estimated to have a CO2 storage potential of up to 500 million tonnes/year.

Last week, Eni also secured government funding in the UK for its Liverpool Bay CO2 transport and storage project, part of the HYNet cluster.

The project benefits “from a very stable legal framework” in the UK and “was the first to agree a regulated asset base model” she said, adding that government support was key in developing CCS capacity.

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