The cost of a geosequestration project is both site-specific and process-specific. For example, where the emission stream is rich in carbon dioxide and the storage site nearby, the cost is likely to be no more than a few dollars per tonne of carbon dioxide whose emission to the atmosphere is avoided. If, however, the emission steam has only a low percentage of carbon dioxide and the storage site is hundreds of kilometres away, then the cost could be $60 or more per tonne of carbon dioxide.
With conventional coal-fired power stations, where carbon dioxide makes up only a small percentage of the exhaust gases, separating and capturing the carbon dioxide is likely to make up about three quarters of the cost of a geosequestration project. With processing of natural gas, cement manufacture, and coal-to-liquids plants, where the exhaust gas is relatively pure carbon dioxide, the cost of capture is likely to be only a small proportion of the total cost of the geosequestration project.
Studies by CO2CRC indicate that, after the carbon dioxide has been captured, storage could in many cases be undertaken for $10 or less per tonne of carbon dioxide whose emission to the atmosphere is avoided.
The CO2CRC has undertaken research into “low-emission hubs” in Australia as a way of achieving economies of scale. Regions with high concentrations of emission sources can potentially adopt a co-ordinated approach to decreasing carbon dioxide emissions. Areas in Australia which offer scope for this approach include the Latrobe Valley in Victoria, Kwinnana and the Burrup Peninsular in Western Australia, the Sydney-Newcastle region in NSW, south-east Queensland and the Gladstone-Rockhampton district of central Queensland.
A low-emission-hub approach would require capturing carbon dioxide from a mixed gas stream from a variety of sources. Industrial processes most suited could include electricity generation, natural-gas processing, furnaces, boilers, aluminium smelters, cement kilns and sugar mills. If a number of these were brought together, then economies of scale could be achieved.
There are good grounds for expecting the costs of capturing carbon dioxide to fall in the future as technological improvements are made. The 2005 Intergovernmental Panel on Climate Change Special Volume on Carbon Dioxide Capture and Storage states: “Over the next decade the cost of capture could be reduced by 20 per cent – 30 per cent, and more should be achievable by new technologies that are still in the research or demonstration phase”. The CO2CRC has identified, and is developing, such technologies. Assuming a 30 per cent reduction, and given that capture costs are a significant portion of the total costs of geosequestration, we might expect that the average costs of geosequestration in the Latrobe Valley region of Victoria will fall to $30 or less per tonne of carbon dioxide. Individual processes producing relatively pure carbon dioxide (such as converting coal to liquid fuels) would have significantly lower total mitigation costs.
CO2CRC and other organisations have set a target of $20 per tonne of carbon dioxide emission avoided for all three components of geosequestration – capture, transport and storage.
What does this mean in terms of future energy costs? That depends on where one is in the “electricity chain”. For example, a mitigation cost of $20 a tonne of carbon dioxide translates into an increase in electricity cost to the generator of about 50 per cent. Because the price paid by the domestic consumer covers the cost of supply and distribution infrastructure as well as generation, the increase in cost to the domestic consumer would be about 20 per cent. As the conversion of power generation to sequestering its carbon dioxide emissions could be expected to take place of many years, the increase in price to the domestic consumer should similarly be phased in over a long period.
Projected costs of geosequestration compare favourably with renewable energy costs. In its target year, 2010, the cost of abatement through the Federal Government’s Mandatory Renewable Energy Target is expected to be $32 per tonne of carbon dioxide equivalent avoided.