Carbon Capture and Storage: A Solution to the Problem of Carbon Emissions

Related Expertise: Public Sector

Carbon Capture and Storage

A Solution to the Problem of Carbon Emissions

By Ramón BaezaBalu BalagopalEric BoudierMichael Buffet, and Ingrid Velken

Human activity generates about 28 gigatons (Gton) of carbon dioxide worldwide per year. Fossil-fuel-burning power generators, as well as industrial manufacturing facilities, are the major emitters of carbon dioxide, accounting for about 16 Gton annually. As the global demand for energy grows, fossil fuels will likely continue to meet most of that demand. Unless emissions from these stationary sources are reduced, it will be impossible to slow the increase in man-made production of atmospheric carbon dioxide—the largest contributor to global warming.

Carbon capture and storage (CCS) is a technically feasible solution for mitigating global warming. It does so by capturing carbon dioxide from large single-point sources and storing it underground rather than allowing it to be released into the atmosphere. In September 2007, The Boston Consulting Group analyzed global sources of carbon dioxide and determined that if CCS were implemented at the 250 largest stationary emitters worldwide, carbon dioxide emissions would be reduced by 4 Gton per year—25 percent of the total from all stationary sources worldwide. Implementing CCS at the 1,000 largest stationary sources would reduce emissions by 8 Gton per year—a 50 percent reduction.

Over time, the benefits of CCS would grow. By 2030, its use at the 1,000 largest stationary sources would reduce emissions by 15 Gton per year. That would represent a reduction of more than one-third of the 42 Gton of global emissions from all sources estimated for 2030—a significant contribution to solving the global warming problem.

The BCG analysis also looked at how to pay for CCS. We concluded that by 2030, assuming a stable global market price of €30 per ton, carbon trading would offset the likely cost of capturing, transporting, and storing the carbon dioxide emitted by stationary fossil-fuel-burning sources in Europe and North America.1 Notes: 1 Participants in carbon trading buy and sell contractual commitments or certificates representing specified amounts of carbon-related emissions that are permitted; that will be reduced through new technology, energy efficiency, or the use of renewable energy; or that can be offset through such technologies as CCS. In Europe, where prices are volatile, carbon emissions have traded in the range of €20 to €25 per ton over the past year. (See Exhibit 1.) Today, however, it would cost a minimum of about €45 per ton to implement CCS at these facilities. Our estimates indicate that financing the technological advancements that will lower the cost of CCS to the threshold of €30 per ton will require approximately €500 billion in government subsidies and company investments through 2030, most of which could be recovered through the trading of carbon certificates. Although the required government share of subsidies is difficult to predict, we expect it to be no more than about €100 billion, or one-fifth of the total estimated cost.

Carbon Capture and Storage