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CCS from the gas-fired power station at Kårstø? A commercial analysis

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  • Osmundsen, Petter
  • Emhjellen, Magne

Abstract

Summary The article presents a commercial investment analysis of the carbon capture project at the Kårstø gas processing plant in south-western Norway. We update an earlier analysis and critically review the methods used--including those applied for cost estimating. Our conclusion is that carbon capture and storage (CCS) at Kårstø would be a very unprofitable climate measure with poor cost efficiency. It would require more than USD 1.7 billion1 in subsidies, or in excess of USD 133 million per year. That corresponds to a subsidy of roughly USD 0.1 per kWh on the power station's electricity output. The cost per tonne of carbon emissions abated is about USD 333, which is about 20 times the international carbon emission allowance price and many times higher than alternative domestic climate measures.

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  • Osmundsen, Petter & Emhjellen, Magne, 2010. "CCS from the gas-fired power station at Kårstø? A commercial analysis," Energy Policy, Elsevier, vol. 38(12), pages 7818-7826, December.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:12:p:7818-7826
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    1. Emhjellen, Kjetil & Emhjellen, Magne & Osmundsen, Petter, 2002. "Investment cost estimates and investment decisions," Energy Policy, Elsevier, vol. 30(2), pages 91-96, January.
    2. Flyvbjerg,Bent & Bruzelius,Nils & Rothengatter,Werner, 2003. "Megaprojects and Risk," Cambridge Books, Cambridge University Press, number 9780521009461, January.
    3. Osmundsen, Petter, 2009. "Time consistency in Petroleum Taxation - The case of Norway," UiS Working Papers in Economics and Finance 2009/18, University of Stavanger.
    4. Osmundsen, Petter & Emhjellen, Magne, 2010. "Decision criteria for climate projects," UiS Working Papers in Economics and Finance 2010/2, University of Stavanger.
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    Cited by:

    1. Magne Emhjellen & Petter Osmundsen, 2013. "CCS - Failing to Pass Decision Gates," CESifo Working Paper Series 4525, CESifo.
    2. Pet Pakchotanon & Amornvadee Veawab & Adisorn Aroonwilas & Teerawat Sema, 2022. "Atmospheric Dispersion of Gaseous Amine Emitted from Absorption-Based Carbon Capture Plants in Saskatchewan, Canada," Energies, MDPI, vol. 15(3), pages 1-15, February.
    3. repec:ces:ceswps:_4944 is not listed on IDEAS
    4. Kemp, Alexander G. & Kasim, Sola, 2010. "An Optimised Illustrative Investment Model Of The Economics Of Integrated Returns From CCS Deployment In The UK/UKCS," SIRE Discussion Papers 2010-126, Scottish Institute for Research in Economics (SIRE).
    5. Hanak, Dawid P. & Manovic, Vasilije, 2017. "Economic feasibility of calcium looping under uncertainty," Applied Energy, Elsevier, vol. 208(C), pages 691-702.
    6. Emhjellen, Magne & Osmundsen, Petter, 2012. "Rate of return requirement for climate versus petroleum projects," UiS Working Papers in Economics and Finance 2012/7, University of Stavanger.

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    More about this item

    Keywords

    Climate projects Decision analyses CCS;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General

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