96- www. world- petroleum. org 6.3- Understanding oil and gas government think tank, says CCS could pro-vide a fifth of the greenhouse- gas emis-sions cuts the world needs to make by 2050. However, the snag is that, unlike many other methods of cutting CO2 emissions - renew-ables, nuclear power and greater energy ef-ficiency - the idea remains untested at a commercial scale. Demonstration projects are urgently needed to show that the tech-nology can operate safely and economically. The EU's Zero Emission Fossil Fuel Power Plants ( ZEP) programme, for example, wants to have 10- 12 demonstration projects up and running by 2015. The problem of price But therein lies another problem: the plants are very expensive to build. According to Hydrogen Energy, a joint venture of BP and Rio Tinto, it costs $ 1.5- 2.0 billion to build a large power station with the equipment and infrastructure needed to capture the CO2, transport it and bury it underground. Energy companies don't have that kind of capital knocking around. Even if they did, no sen-sible chief executive would invest in some-thing as economically and technically spec-ulative as CCS, at present. The energy industry is well positioned to play a central role in developing the neces-sary technology, not only because the sus-tainability of its own operations is likely to rely on the deployment of CCS, but also be-cause of its expert knowledge of areas such as reservoir and pipeline management. However, the financial impetus must come from governments - at least until CCS is an established business with predictable streams of revenue and profit. When that happens, companies will be queuing up to invest: according to Gardiner Hill, head of CCS at BP, the CCS industry could be handling the equivalent of 120 mil-lion barrels of CO2 a day by 2050 - half as CCS: CO2 extracted from power plants, factories and other industrial facilities is injected into a secure underground storage site Illustration Prosjektlab/ Courtesy Bellona CCS

97- www. energy- future. com 6.3- Understanding oil and gas big again as today's oil industry. If a high enough economic value can be attached to decarbonising energy supply, you don't have to be Warren Buffett to work out that this could be big business. But how do you assign a value to low- car-bon energy that is high enough to get the necessary finance flowing? One option is to tax carbon emissions: that's worked at the North Sea's Sleipner West gas field. For over a decade, Norwegian energy company Statoil has been removing CO2 produced with natural gas from the Sleipner field and reinjecting it into an aquifer more than 800 metres below the seabed because that is cheaper than releasing the CO2 into the air and paying the taxes that this would incur. Cap and trade Another approach, being favoured by many governments around the world, is to create a marketplace in which carbon allow-ances - essentially the right to pollute the atmosphere with CO2 - can be bought and sold. Known as cap- and- trade schemes, the higher the price of the carbon allowances goes, the more expensive it becomes to pollute and the more profitable it gets to in-troduce pollution- saving technologies and equipment ( see p111). Another way of incentivising investments in CCS - and indeed other, expensive low-carbon energy systems, such as solar power - would be to provide subsidies from pub-lic funds. Yet another would be simply to ban power plants that aren't equipped to capture and store CO2. Why power plants? Because they're the best place to start fighting climate change. The power sector accounts for around 33% of greenhouse- gas emissions and 45% of CO2 emissions, says World Resources Institute, an environmental think tank. And over 40% of energy- related CO2 emissions come from coal, according to the IEA. That's because coal, when burned, produces twice as much CO2 as natural gas. Beyond carbon capture Carbon capture and storage ( CCS) is not the only way of cleaning up the coal indus-try. New clean coal- burning technologies - some of which can be applied not only to new capacity, but also to some exist-ing plants as they are upgraded - can cut coal's environmental footprint significantly. Part of the solution lies in improving ther-mal efficiency, so enabling plants to gener-ate more power from less feedstock. Germany's Siemens, for example, is planning to build what it calls the world's " most efficient coal- fired power plant", for power company E. On in Wilhelmshaven, Germany. The plant, which could be up and running as early as 2014, will oper-ate at a steam temperature of 700° C, com-pared with today's maximum of 600° C, giving it an efficiency rating of more than 50%, says Siemens. That improved effi-ciency should translate into 40% less coal being used than in a typical coal plant - and 40% less CO2 being emitted. Another idea is to mill renewable bio-mass, such as forestry residues and left-over agricultural products, into a powder and mix it with the pulverised coal before combustion - a process known as co- fir-ing. The UK's Drax power station is devel-oping what it claims will be the world's larg-est biomass co- firing project of its type: scheduled for completion in the first half of 2010, the facility will boost the plant's co-firing capacity to 500 megawatts of power and cut emissions from the North Yorkshire power plant, which has a total capacity of 4 gigawatts, by over 2.5 million tonnes a year. That, it says, is equivalent to the CO2 saving that would be achieved by generat-ing power from 600 wind turbines. Carbon- efficient fossil- fuel technolo-gies are applicable elsewhere, too. US oil company ExxonMobil, for example, has adapted a combined heat and power tech-nology called co- generation for use at some of its refineries - reducing its own energy bills and cutting CO2 emissions from its plants. ??