The current fashionable and serious issue within the energy sector is tackling climate change. Nowadays, not one single energy company that has a foothold on a developed consumer market can afford to bypass the “Green Issue” in its communication strategy. Carbon Capture and Storage (CCS) has progressively arisen as the energy utilities’ magic wand to get closer to the “Large-Scale Zero-CO2 Energy Production”. But CCS may also suit numerous CO2-intensive industrial activities, like oil & gas production, steel and cement industry or even fermentation processes in the food & beverage sector. Carbon dioxide (CO2) emissions have accounted for most of the rise in global greenhouse gas (GHG) emissions and now makes up between 70% and 75% of total GHG emissions worldwide. The power sector alone accounts for roughly 30% of total CO2 emissions and more than 21% of total GHG emissions. Taking into account the extent of the other industrial processes on CO2 emissions (20%), CCS market share would be capped at 50% of total annual CO2 emissions. The IEA expects coal-based CO2 emissions to rise sharply till 2030, mainly driven by the construction of additional coal-fired power generation capacities in thriving economies like China, India, and the Middle East. This will contribute to distribute CO2 emission sources more evenly over the world. As a result, any future CO2 emission mitigation technology will find market opportunities in almost every country, ensuring great geographical diversification. CCS consists in picking up CO2 from a gas stream before it is released in the atmosphere and store it usually in underground reservoirs. It could be plugged to potentially many CO2 intensive industrial processes, but the bulk of the demand will likely come from the power sector. Three main technologies for capturing CO2 from power production are under development. The post-combustion technologies consist in taking out CO2 from the flue gases after carbonaceous fuels have been burned in a combustion system. The remaining stream is vented into the atmosphere. Pre-combustion capture enables to turn carbonaceous fuels into a stream mainly made up of CO2 and hydrogen (H2) which are then separated prior to H2 burning. Oxy-Fuel combustion, albeit less advanced, relies on the combustion of carbonaceous fuels in an almost pure O2 environment which facilitates subsequent CO2 capture. Capture technologies may allow retrieving roughly 80 to 95 % of the CO2 content of the gas stream although they involve a loss of 10-40% in net thermal efficiency. Capturing CO2 is by far the most capital intensive part of a CCS installation (approximately 50-80% of capex). Pilot or demonstration projects are being carried out but great uncertainties remain. As for natural gas, CO2 is relatively easily transported by pipeline. The main routes envisaged to store CO2 over extremely long periods of time rely to a great extent upon underground accumulation in saline formations, oil & gas fields or coal beds. CO2 will be stored in its supercritical state, under high pressure. Storage of CO2 is expected to make up a significant part of the total capex in a CCS project, roughly 10-25% based on preliminary estimates. Deep geological storage of CO2 involves the use of similar technologies as in the oil & gas exploration and production sector. Thus, the only hurdle remains to ensure that no leakage will occur. Further research is needed to properly estimate the long-term performance of CO2 traps. According to the Intergovernmental Panel on Climate Change (IPCC), observations from currently tested storage sites show that when properly selected and managed the envisaged geological traps are likely to retain 99% of the injected CO2 over 1,000 years. The areas where the largest sources of CO2 emissions are reported (Eastern USA, North Western Europe, Eastern China and India) are pretty close to the most promising storage sites. The IPCC calculated that many sources of CO2 emissions lie within a 300 km distance from a potential reliable storage area. It may result in greater integration between the CO2 emitting plants and storage site operators, thus increasing the possibility of a broad implementation of the CCS technology. Yet, some issues remain to address: - CCS envisaged technologies are not yet available for commercial implementation. 2020 appears as the most reasonable target date for it. - Considerable capex weigh on the economic feasibility of CCS - CCS does not suit small and non-stationary CO2 sources - CCS will put a brake on the upwards trend in energy efficiency gains. Indeed, CCS is a net consumer of energy, particularly in its capture phase (10-40% loss roughly). - Uncertain regulatory environment - Gaining public acceptance To gauge how big the economic hurdle is, we used 3 typical candidates for CCS among the power sector to go through the financial performance of theoretical CCS projects. Under our assumptions, gross CCS costs may reach 27.8, 15.4 and 18.4 EUR/MWh for our CCS-integrated coal-fired power plant, our Combined Cycle Gas Turbine (CCGT) and our coal-fed Integrated Gasification Combined Cycle (IGCC), respectively. Our IGCC and CCGT take advantage of reasonable additional investments and much less energy requirements for capture, while our coal-fired power plant suffers from the highest upfront investment costs for Post-combustion capture. Yet, the IGCC is hardly suitable for existing power plants which considerably limits its commercial development. Energy markets do not yet reflect the necessity of CCS to curb CO2 emissions. Like wholesale power prices, CO2 prices in Europe are not high enough to make up for the expensive capex required by CCS. Our CCS-integrated power plants are able to offset the investment in CCS as from 30 EUR/tCO2 for the IGCC, 45-50 EUR/tCO2 for the coal-fired power plant and beyond 55 EUR/tCO2 for the CCGT. Clearly, it appears that the IGCC benefits from moderate upfront investment for CCS and its high capture efficiency. Under our assumptions and current market conditions, investments in CCS are not yet profitable on a stand-alone basis without any additional external support. However, provided that the regulatory signal is strong enough (through tighter emission caps as from 2013 and exemption from surrendering EUAs for CCS installations in the EU ETS) and that the market considers that we cannot afford to rule out CCS to achieve the more ambitious emission reductions required, the energy markets will adjust and both power and CO2 prices will move upwards. Meanwhile, it is likely that further support will come from political and regulatory authorities, which will open up the door to private financing.

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