New report finds that carbon capture and storage in California can concurrently serve local communities, the environment and the economy

Newswise — A new report co-authored by George Peridas of the Lawrence Livermore National Laboratory (LLNL) and Benjamin Grove of the Clean Air Task Force examines the economic viability of carbon capture and storage (CCS) projects in California and finds that several classes of projects are viable today.

These can help the state meet its climate goals and hold a sizeable potential to benefit host communities and landowners – provided project proceeds are shared fairly. Those classes of projects that are not viable today may become viable under new policies that are well within the bounds of existing programs and precedent.  

The new study “Sharing the Benefits: How the Economics of Carbon Capture and Storage Projects in California Can Serve Communities, the Economy, and the Climate,” examines the costs of carbon dioxide capture, transportation and geologic storage in California.

The team looked at published literature and models -- modifying these cost numbers where needed to fit California conditions more closely -- and conducted multiple interviews with project developers in the state.

Deployment of the technology is necessary for the state to reach its goal of becoming carbon neutral by 2045 and reduce statewide human-caused emissions by 85% from 1990 levels. Carbon neutrality refers to achieving net-zero carbon dioxide emissions by balancing any remaining atmospheric emissions with removal of carbon dioxide from the air, or simply by eliminating carbon emissions altogether. It applies to everything that generates greenhouse gases.

The report concludes that for carbon capture, removal and storage projects to succeed in California, they must concurrently serve three needs and interests: (1) the need to reduce emissions and atmospheric CO₂, (2) the need for projects to make economic sense for developers, and (3) the economic, social and environmental needs of local landowners and host communities.

The report, funded by the Livermore Lab Foundation (LLF), specifies that projects broadly fit into one of three categories:

• A small set of applications that includes ethanol and some refinery applications, which is readily economical, needs no additional policy support, and holds considerable potential for local benefits.
• A large class of applications that includes less amenable refinery applications and possibly some low-hanging fruit natural gas power plant applications, which can range from reasonably profitable to questionable, with economics that will depend heavily on project and local specifics.
• Applications that include most natural gas power plants and cement plants, will likely need additional revenue streams and/or policy support to become viable.

“While this economic picture is representative of first-of-a-kind and early-adopter projects, we expect that costs for subsequent, Nth-of-a-kind projects will decrease and become more economically favorable as these technologies are deployed more broadly commercially,” said Grove, carbon storage manager at the Clean Air Task Force – an environmental non-profit organization.

The team used case studies that are theoretical but based on existing types of facilities in California, including an ethanol plant in the vicinity of Stockton, a Bay Area refinery, a natural gas combined cycle power plant in the vicinity of Tracy, and a cement plant in the vicinity of Mojave or Tehachapi. Sensitivities to these case studies examine the effect of varying factors such as the incentive period and price, the rate of return, the means of CO2 transport, and others.

The report concludes that a compensation structure that considers individual project profitability, and that grows or shrinks compensation commensurate with actual project revenues, would spread the benefits most fairly without exposing the developer to undue risks and would likely result in broader project acceptance and proliferation.

While the practice of sharing and discussing individual project economics may not be common today, the authors believe that it is ultimately necessary. 

“The future of CCS and CDR in California hinges on finding ways to deploy projects that concurrently serve the climate, the project developer and the host landowners and communities,” LLNL scientist Peridas said. “A good-faith approach from all parties involved is required to enable such projects to materialize and succeed”