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Carbon Capture and Storage (CCS):
Costs and Project Financing
RECS
June 9, 2015
Howard Herzog / MIT Energy Initiative
Topics
Types of cost estimates
Bottom-up
Top-down
Definitions of key metrics

Comparing costs across technologies
Estimates of CCS costs
Financing CCS Projects
BECCS
Simplified View for the Use of

CCS Cost Estimates
Cost Estimates
CCS (and others)
Technology
Assessments
Policy
Assessments
R&D Priorities
Capital Investments
Marketing
Legislation
Regulation
Advocacy
Bottom-up Cost Estimates

Limited number of public comprehensive,
independent engineering studies
Quite a few derivative studies
Top-down Cost Estimates

Bottom-up estimates embedded
Usually need to translate estimates from
bottom-up studies
Multiple technologies each technology
may be from different sources no
guarantee they are on consistent basis
Top-Down Cost Estimate

IPCC Special Report on CCS
Levelized Cost of Electricity

Standard method used by utility industry
Costs are levelized throughout the plants
lifetime
It is calculated at the busbar (generating cost
only, excludes transmission and distribution)
The levelized cost is a breakeven cost (i.e.,
NPV=0) required to cover capital charges (debt
and equity) and operational charges (including
fuel costs)
Not a good metric to compare dispatchable to
non-dispatchable electricity sources
Cost of Electricity (COE)
Graphic courtesy of
Ed Rubin
Capture Cost vs. Avoided Cost

CO2 avoided can be looked at as net
amount of CO2 captured
CO2 avoided < CO2 captured
Cost = $/ton CO2
Avoided cost > Captured cost

For mitigation purposes (CCS), avoided cost is
used
For utilization purposes (CCUS), capture cost is
the better metric
CO2 Captured vs. CO2 Avoided

a) Reference Plant (No Capture)
CO2 to
atmosphere
2884 x 10 6
7210
Btu/hr
Btu/kWh
Energy Penalty
(400-314)/400
21.5%
270 tonnes/hr
(0.674 kg/kWh)
400 MW
b) Capture Plant
CO2 to
atmosphere
2884 x 106
9173
Btu/hr
Btu/kWh
28 tonnes/hr
(0.088 kg/kWh)
314 MW
CO2
captured
242 tonnes/hr
(0.769 kg/kWh)
CO2 Captured vs. CO2 Avoided

Emitted
Captured
Reference
Plant
CO2 avoided
CO2 captured
Capture
Plant
0.2
0.4
0.6
0.8
CO2 produced (kg/kWh)
Tons Capture vs. Tons Avoided

Define
X = Emissions from reference plant
f = capture rate
Ep = Energy Penalty
Amount captured = f * X/(1- Ep)

Amount avoided = X - X/(1- Ep) * (1-f)
Tons captured / Tons avoided = 1/(1- Ep/f)
Tons Capture vs. Tons Avoided
Mitigation (Avoided) Costs

Mitigation Cost = $/tCO2 avoided
For power plants
($/MWhcap $/MWhref) / (tCO2/MWhcap tCO2/MWhref)
For other industries (i.e., FT Diesel)

($/bblcap - $/bblref) / (tCO2/bblcap - tCO2/bblref)
Requires specifying a reference plant this

can lead to widely varying results
Mitigation Costs
COE (mills/kWh)
70
60
50
40
30
PC ($32 /tonne CO2 avoided)
20
10
0
0
0.2
0.4
0.6
CO2 Emissions (kg/kWh)
0.8
Mitigation Costs
COE (mills/kWh)
70
60
50
40
30
IGCC ($18/tonne CO2 avoided)
PC ($32 /tonne CO2 avoided)
NGCC ($41 /tonne CO2 avoided)
20
10
0
0
0.2
0.4
0.6
0.8
Mitigation Costs
COE (mills/kWh)
70
60
50
40
30
IGCC ($18 to $77/tonne CO2 avoided)
PC ($32 to $128 /tonne CO2 avoided)
NGCC ($41 /tonne CO2 avoided)
20
10
0
0
0.2
0.4
0.6
0.8
CCS in a Mitigation Portfolio

Many users of CCS costs are also interested
in costs of other CO2 mitigation
technologies
An important use of CCS costs are to
compare them to the cost of other CO2
mitigation technologies
Total Costs and Comparison to

Other Technologies
Mitigation costs are usually represented as $/tC or $/
tCO2
In theory,
Comparable to carbon price resulting from a carbon tax or a capand-trade system

Allows cost comparison across different technologies
However,
Even though same units, bases for the calculation can vary wildly
Most times they do not incorporate variability and uncertainty
Bias a concern - most people doing the cost estimates have a
vested interest in seeing their technology being successful
CO2 vs. C
100 t C = 370 t CO2

$100/t C = $27 t CO2
McKinsey& Company
December 2007
CCS Cost Components

Capture
Separation
Compression
Sequestration
Transport
Injection
Elements of Capital Cost
From Toward a Common

Method
Capital Cost Trends
PCCI Power Capital Costs Index (excluding nuclear) (IHS-CERA, 2014)

CEPCI Chemical Engineering Plant Cost Index (CE, 2014)
CPI US Consumer Price Index (BLS, 2015)
Fuel Cost Trends for US Power Plants
Graphic courtesy of
Ed Rubin
Elements of Storage Costs
Wide range in costs (factor of 10) result from:

Geology (depth, porosity, permeability, lithologic complexity)
Access (surface constraints, proximity to existing O&G locations)
Category: (land vs OS, oilfield, gasfield, depleted?, age?, available infrastructure?)
Lowest cost category may be least available (large onshore O&G field)
Confidence level needed for final investment decision
Major cost BEFORE Investment decision is exploration (seismic + drilling)
Major cost AFTER decision is well construction
Could be spread across operating lifetime for large storage site
Monitoring costs are relatively small
Main cost items to consider:
Characterization costs (seismic, appraisal wells), success rate

Size of reservoir compared to volume of CO2 to be stored
Number of wells injectivity, redundancy, monitoring, maintenance!
Intensity of MMV (seismic + wells)
Offshore structure surface or seabed
Cost of ownership, liability
Contingency
2015 Cost Update

(J. Davison, H. Herzog, E. Rubin)
Compiled data from recent CCS cost studies in the
U.S. and Europe for new power plants with:
Post-combustion CO2 capture (SCPC and NGCC)
Pre-combustion CO2 capture (IGCC)
Oxy-combustion CO2 capture (SCPC)
Adjusted all costs to constant 2013 US dollars

Compared current cost estimates to SRCCS values
Notes on Costs
Output high purity supercritical CO2
There is much variability in the cost
Process Variability plant location, coal type,
criteria emission levels, process integration, etc.
Economic Variability fuel costs, cost of capital,
material and labor costs, capacity factor, etc.
Transport Cost: 0 7 USD/tCO2

Geologic Storage Cost: 1 - 12 USD/tCO2
EOR Credit: 15 40 USD/tCO2
Capture plus Geologic Storage

(Constant 2013 USD)
Fuel type
Coal
NG
Capture route
Post-combustion
Post-combustion
Total capital requirement reference plant (USD/kW)
2300 3000 (2600)
800 1400 (1050)
Total capital requirement capture plant (USD/kW)
4100 5300 (4600)
1400 2600 (2050)
58 91 (75)
76 121 (96)
61 - 79
42 - 83
LCOE capture plant (USD/MWh)
95 150
63 - 122
% increase LCOE
50 - 100
30 - 70
Energy penalty (%)
17 - 31
11.5 - 15
Cost of CO2 avoided (USD/tCO2)
50 - 100
60 - 140
% increase capital cost

LCOE reference plant (USD/MWh)
Capture plus EOR

(Constant 2013 USD)
Fuel type
Coal
NG
Capture route
Post-combustion
Post-combustion
Total capital requirement reference plant (USD/kW)
2300 3000 (2600)
800 1400 (1050)
Total capital requirement capture plant (USD/kW)
4100 5300 (4600)
1400 2600 (2050)
58 91 (75)
76 121 (96)
LCOE reference plant (USD/MWh)
61 - 79
42 - 83
LCOE capture plant (USD/MWh)
61 - 121
48 - 112
% increase LCOE
0 - 60
10 - 60
Energy penalty (%)
17 - 31
11.5 - 15
Cost of CO2 avoided (USD/tCO2)
0 - 60
10 - 110
% increase capital cost
The high parasitic energy load is a

significant factor in costs
Power
Capture
Capital
Power
Plant Technology Investment Output
PostSCPC
+38%
-21%
Combustion
$/kW
+75%
$/kW = 1.38/ (1-.21) = 1.75

Demonstration Project Costs vs. Cost Studies

(FOAK from GCCSI 2011 update)
4
RESULTS AND COMPARATIVE SENSITIVITY ANALYSIS (CONTINUED)

Figure
4-1Installed
costs
550MW
net generation
CO2 capture
facility (FOAK)
Figure 4.1
Installed Costs
for for
550MW
Net Generation
and COand
Facility (FOAK)
2 Capture
Capital costs (US$/kW)
1,000
2,000
3,000
4,000
5,000
PC supercritical
Supercritical 2
RETROFIT
COST (in $/
kW)
Peterhead
(hydrogen from
natural gas)
2840
Antelope Valley
(coal-fired)
2392
AEP Mountaineer
(coal-fired)
2843
Longannet
(supercritical)
5835
Plant Barry
4375
Average
3657
GCCSI Estimate
Ultra-supercritical
Oxy-combustion supercritical
Oxy-combustion ultra-supercritical
Oxy-combustion ITM supercritical
~2000 + T&S
IGCC
NGCC
Region: United States
Without capture
With capture
Levelised cost of electricity

COAL-FIRED
COST (in $/
IGCC
Capital costs presented above, along with transportation and storage capital costs (based on
kW)
matching the captured CO2 flows), were used as inputs to the economic assessments. The
LCOEs for FOAK and NOAK plants are presented in tabular form in Table 4-1 and graphically in
Goldenbergwerk
Janschwalde
8065
Figure 4-2.
and cost of CO2
The cost parameters calculated from the LCOEs, the cost of CO
2 avoidedGasification
Sweeny
Kingsnorth
8330
captured (including transportation and storage), in the economic assessment are provided for
(supercritical)
FOAK and NOAK units in Table 4-2 and shown graphically forZeroGen
FOAK units in Figure 4-3.
avoided
and
captured
have
decreased
slightly since the 2009 report.
The
costs
of
LCOE
and
CO
2
Average
8189
This is likely to be a reflection of the revised fuel costs for thisTaylorville
update.
GCCSI Estimate
~4500 +T&S
Average
GCCSI Estimate
COST (in $/
kW)
9091
6003
10616
5814
7881
~4600 + T&S
Major Demonstration Projects

Phase 1 Pioneer Projects (little/no govt
money)
Natural Gas Processing (4) Sleipner (Statoil),
In Salah (BP), Snovit (Statoil), Gorgon
(Chevron)
Synfuels - Weyborn (Dakota Gasification),
EOR driven
Major Pilots - Schwarze Pumpe (Vattenfall),
capture, no storage
Sleipner (North Sea, Norway)

Phase 2 CCS RD&D Programs
Power Plants
Operating Boundary Dam (Canada)
Under Constuction Kemper (US), Petra Nova (US)
Planning TCEP (US), HECA (US), White Rose (UK),
Peterhead (UK)
Industrial Facilities
Operating - Air Products (US, Methane Reformer), ADM (US,
Ethanol)
Under Construction Quest (Canada, Methane Reformer),
Alberta Trunk Line (Canada, pipeline between refinery and
fertilizer plants to EOR)
Major Pilots Mongstad (Norway), capture, no storage


Role of EOR
Phase 2 CCS RD&D Programs
Power Plants
Operating Boundary Dam (Canada)
Under Constuction Kemper (US), Petra Nova (US)
Planning TCEP (US), HECA (US), White Rose (UK),
Peterhead (UK)
Industrial Facilities
Operating - Air Products (US, Methane Reformer), ADM
(US, Ethanol)
Under Construction Quest (Canada, Methane
Reformer), Alberta Trunk Line (Canada, pipeline
between refinery and fertilizer plants to EOR)
Boundary Dam
Worldss first CCS Power Plant
BOUNDARY DAM
140
120
CCS Capital Costs
100
Non-CCS Capital Costs
80
Fuel Costs
O&M Costs
60
40
Subsidies and Revenues
20
Net Costs
Null
0
BD Initial Federal
CO2
BD Final Base Load
CoE
Subsidy Revenues
CoE
NGCC
Source: Adapted from SaskPower
37
Levelized Cost of Electricity [$/MWh]
160
4 Reasons BD can compete with

NGCC:
1. Federal Subsidy
2. EOR (sulfuric acid and fly ash)
3. Low lignite costs compared to NG
4. Lower capital costs due to retrofit
Paying for CCS Projects

Markets
Carbon markets
Electricity markets
EOR
Others (e.g., polygeneration)
Government
Cost-sharing, Tax credits, etc.
Rationale
Encourage early action (before markets develop)
Help defray first-mover costs
Industry
Cost of doing business
RD&D Expense
Regulatory Compliance
Paying for CCS Projects

Boundary Dam
Markets
Carbon markets
Electricity markets
EOR
Others (e.g., polygeneration)
Government
Cost-sharing, Tax credits, etc.
Rationale
Encourage early action (before markets develop)
Help defray first-mover costs
Industry
Cost of doing business
RD&D Expense
Regulatory Compliance
Incentivizing CCS
US
Comprehensive Climate Policy
New Source Performance Standards
Clean Power Plan
CCS-Specific Mechanisms
Stimulus Money ($3.4 billion) expiring
Investment Tax Credit
Tax Credit for CO2 stored
IPCC Working Group 3

Summary for Policy Makers
April, 2014
CCS mentioned 35 times
Key points:
CCS reduces costs of meeting key stabilization
targets (i.e., 450 and 550 ppm)
Strong call by IPCC for negative emissions by
BECCS (bio-CCS)
Without CCS, certain targets cannot be met
(due in part to CCS role in negative emissions)
BECCS Ampere Study

450 ppm case
BECCS
Without CCS, there will be no BECCS
Cost of BECCS > CCS
At high enough C price, may reverse
Issues with storage are identical
Why did IPCC highlight BECCS

Without negative emissions, 450 ppm (2 degree
C) scenarios are hard to justify
BECCS is basically an accounting trick to keep
the 2 degree C aspirations alive
Contact Information
Howard Herzog
Senior Research Engineer
Massachusetts Institute of Technology (MIT)
Energy Initiative
Room E19-370L
Cambridge, MA 02139
Phone: 617-253-0688
E-mail: hjherzog@mit.edu
Web Site: sequestration.mit.edu
Bibliography
Toward a Common Method of Cost Estimation For CO2 Capture and
Storage at Fossil Fuel Power Plants: A White Paper, prepared by the
CCS Costing Methods Task Force: Ed Rubin (Carnegie Mellon
University), George Booras (EPRI), John Davison (IEAGHG), Clas
Ekstrom (Vattenfall), Mike Matuszewski (USDOE/ NETL), Sean
McCoy (IEA), and Chris Short (GCCSI)
http://www.epri.com/abstracts/Pages/ProductAbstract.aspx?
ProductId=000000003002000176
John Davison, Howard Herzog, Edward Rubin, The Cost of CO2

Capture and Storage, International Journal of Greenhouse Gas
Control (2015).
In press
Clark, V. "An analysis of how climate policies and the threat of

stranded fossil fuel assets incentivize CCS deployment," M.I.T.
Masters Thesis, May (2015).
http://sequestration.mit.edu/pdf/2015_VictoriaClark_Thesis.pdf

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Carbon Capture and Storage (CCS):

Costs and Project Financing

Howard Herzog / MIT Energy Initiative

Definitions of key metrics

Simplified View for the Use of

Howard Herzog / MIT Energy Initiative

Bottom-up Cost Estimates

Howard Herzog / MIT Energy Initiative

Top-down Cost Estimates

Howard Herzog / MIT Energy Initiative

Top-Down Cost Estimate

Howard Herzog / MIT Energy Initiative

Levelized Cost of Electricity

Cost of Electricity (COE)

Howard Herzog / MIT Energy Initiative

Capture Cost vs. Avoided Cost

Cost = $/ton CO2

Avoided cost > Captured cost

CO2 Captured vs. CO2 Avoided

Howard Herzog / MIT Energy Initiative

CO2 Captured vs. CO2 Avoided

CO2 produced (kg/kWh)

Howard Herzog / MIT Energy Initiative

Tons Capture vs. Tons Avoided

Amount captured = f * X/(1- Ep)

Tons Capture vs. Tons Avoided

Howard Herzog / MIT Energy Initiative

Mitigation (Avoided) Costs

For other industries (i.e., FT Diesel)

Requires specifying a reference plant this

Howard Herzog / MIT Energy Initiative

PC ($32 /tonne CO2 avoided)

CO2 Emissions (kg/kWh)

Howard Herzog / MIT Energy Initiative

CO2 Emissions (kg/kWh)

Howard Herzog / MIT Energy Initiative

CO2 Emissions (kg/kWh)

Howard Herzog / MIT Energy Initiative

CCS in a Mitigation Portfolio

Howard Herzog / MIT Energy Initiative

Total Costs and Comparison to

Comparable to carbon price resulting from a carbon tax or a capand-trade system

100 t C = 370 t CO2

Howard Herzog / MIT Energy Initiative

CCS Cost Components

Howard Herzog / MIT Energy Initiative

Elements of Capital Cost

From Toward a Common

Capital Cost Trends

PCCI Power Capital Costs Index (excluding nuclear) (IHS-CERA, 2014)

Fuel Cost Trends for US Power Plants

Howard Herzog / MIT Energy Initiative

Elements of Storage Costs

Wide range in costs (factor of 10) result from:

Main cost items to consider:

Characterization costs (seismic, appraisal wells), success rate

Howard Herzog / MIT Energy Initiative

2015 Cost Update

Adjusted all costs to constant 2013 US dollars

Howard Herzog / MIT Energy Initiative

Transport Cost: 0 7 USD/tCO2

Capture plus Geologic Storage

Total capital requirement reference plant (USD/kW)