Carbon Capture and Storage A Global PerspectiveVirginia Coal and Energy AllianceMay 24, 2016

Cover image: Overlooking the Quest Capture facility located at Shell -Scotford, near Fort Saskatchewan, Alberta. Image provided by Shell.

Reserves to production ratio:

~75 years

An international membership organisation

Melbourne, Washington DC, Brussels, Beijing and Tokyo

Diverse international membership:

o governments

o global corporations

o small companies

o research bodies

o non-government organisations

Specialist expertise covers the CCS/CCUS chain

OUR MISSIONTo accelerate the

development, demonstration and deployment of CCS

globally.

1Fact-based, influential

advice and advocacy

2Authoritative knowledge

sharing

Our Vision for CCS:CCS is an integral part of a low-carbon future

The Global CCS Institute

The Institutes key publication

http://status.globalccsinstitute.com/

Full report is available online in the Institutes Members Portal.

The Global Status of CCS: 2015

Reserves to production ratio:

~75 years

CCS in Context

Fossil fuel demand is growing, reserves are robust

Source: BP Statistical Review of World Energy 2015

Fossil fuel proved reserves:

6 trillion barrels of oil equivalent

Reserves to production ratio:

~75 years

Source: IEA World Energy Outlook, 2015 (New policies scenario)

The Paris climate agreement sends a strong message

Bold ambition: Target of keeping temperature change to well below 2 C aiming for 1.5

C GHG emissions neutrality needs to be reached between 2050 and 2100 Both outcomes can only be achieved by including CCS and BECCS

Current post-2020 pledges (INDCs) amount to approximately 2.7 C (and more likely between 3.0 C and 3.5 C)

5 Yearly review of Nationally Determined Contributions (NDCs) and achievements Starting with a facilitative dialogue in 2018 and a global stocktake in 2023

Doubters: from is climate change real? to what, if anything, should be done?

Supporters: from how much to reduce? to how to reduce so much?

Non-OECD

OECD

~ 95 Gt CO2

Power

Industry

~95

Gt CO2

Source: IEA, Energy Technology Perspectives (2015).

CCS contributes 13% of cumulative reductions required through 2050 in a 2DS world compared to business as usual

CCS is critical in a portfolio of low-carbon technologies

*Percentage increase in total discounted mitigation costs (2015-2100) relative to default technology assumptions median estimate

Baseline cost with all mitigation options utilized

Source: IPCC Fifth Assessment Synthesis Report, Summary for Policymakers, November 2014.

Cost increase under limited technology availability scenarios

50

100

150

Perc

enta

ge*

Nuclear phase out Limited solar/wind

Limited bioenergy

No CCS

Carbon reduction costs more than double without CCS

Chart1

100

100

100

100

+ 7%

+ 6%

+ 64%

+ 138%

Sheet1

Nuclear phase out100

Limited solar/wind100

Limited bioenergy100

No CCS100

v

Sheet1

Reserves to production ratio:

~75 years

Global Projects Status

Much to look forward to over the next 18 months

Source: Large Scale CCS Projects database, Global CCS Institute (2016)

15 large-scale projects are operational

Source: Large Scale CCS Projects database, Global CCS Institute (2016)

7 new large-scale projects operational by 2017

North America dominates projects in operation and under construction, China has the most projects in planning

North America 1 1 5 10 17

Early planning

Advanced planning Construction Operation Total

China 5 4 - - 9

Europe 2 3 - 2 7

Gulf Cooperation Council - - 1 1 2

Rest of World* 4 - 1 2 7

Total 12 8 7 15 42

* Includes projects in Algeria, Australia, Brazil and Korea.

Project activity shifts from North America to China

44 large-scale CCS projects -combined capture capacity of 79 Mtpa*:

22 projects in operation or construction (40 Mtpa)

10 projects in advanced planning, five nearing FID (14 Mtpa)

12 projects in earlier stages of planning (25 Mtpa)

OECDNon-OECD

4,000 Mtpa of CO2captured by CCS by 2040

(IEA 450 Scenario)**

40 Mtpa

Global Status of CCS: 2015

*Mtpa = million tonnes per annum **Source: IEA, Energy Technology Perspectives (2015).

CCS deployment a major challenge within one generation

Reserves to production ratio:

~75 years

CCS by Region

Has well over half the large-scale projects in operation or under construction

Home to all three of the worlds large-scale CCS power projects in operation or under construction

CO2-EOR provides significant business case support

Policy actions and incentives must complement regulatory action on emissions standards

US: DOE supports an extensive R&D program into CCS technologies

Canada: harvesting learnings from $3 billion + CCS investments

Brazil and Mexico: advancing CCS/CCUS programs

Regional headlines North America

New projects will build interest, perhaps momentum

Kemper Project(Photo courtesy of Mississippi Power)

Illinois Industrial(Photo taken from http://status.globalccsinstitute.com/)

NET Power

Existing projects from criticism to positive examples

Boundary Dam(Photo courtesy of SaskPower)

Quest(Photo taken from http://status.globalccsinstitute.com/)

China: follows the US as the most active country in CCS/CCUS

Australia: Worlds largest dedicated geological storage project Gorgon Carbon Dioxide Injection Project operational in the next 18 months

Japan and Korea: CCS activities at pilot and demonstration scale

o Japan the Tomakomai and Osaki CoolGen projects are in construction

o Korea KEPCO is testing advanced capture technologies

Key focus: increasing knowledge of storage potential in the region

Legal and regulatory advances: required in some jurisdictions to provide greater certainty to project proponents

Regional headlines Asia Pacific

CCS ambition at start of the decade has not been realized

Recognition of CCS in the October 2014 European Council conclusions is a positive sign of support

Netherlands: The Dutch ROAD project is critical for CCS in Europe

UK: 1 billion in grant funding for the Carbon Capture and Storage Competition is no longer available

Peterhead CCS Project subsequently cancelled

Future of the White Rose CCS Project unclear

Regional headlines Europe

Early stages of CCS/CCUS deployment

Saudi Arabia: home to the regions first operational large-scale CCS project

UAE: hosts the worlds first CCS/CCUS project in the iron and steel sector

The focus of CCS/CCUS activity in the region is two-fold:

o validate large-scale projects under local conditions

o support for R&D activities

Confidence from these programs is a key driver for longer-term deployment

Regional headlines Gulf Cooperation Council (GCC)

Reserves to production ratio:

~75 years

The Road Ahead

CCS is indispensable in a least-cost approach to global decarbonization

Opportunities for cost reductions are being identified

The task is enormous the urgency of CCS deployment is only increasing

Deployment is not a technology challenge

Supporting CCS in industrial applications and non-OECD countries is very important

In North America, incentives for CO2 capture and EOR-storage are key

Policies that spur investment are the missing pieces to the puzzle

The future of CCS action is required

Data source: Bloomberg New Energy Finance as shown in IEA presentation Carbon Capture and Storage: Perspectives from the International Energy Agency, presented at National CCS week in Australia, September 2014.

USD billion Scale of renewables

investment is instructive

CCS has not enjoyed commensurate policy support

EOR has provided impetus in North America

How do we get CCS onto a similar curve?

Strong policy drives investment

Chart1

20

1929

Sheet1

CCSAll clean energy

201929

Sheet1

Includes technology development, projects, M&A. Source: IEA.

Clean energy investment* between 2004-2013 (USD)

Industry and government: move advanced projects across the finish line

Supportive policy

Providing predictable and enduring policy arrangements

Implementing effective and cost-efficient CCS law and regulation

Incentivizing early storage site identification and characterisation

Increasing R&D efforts to reduce costs and increase efficiency

Encouraging efficient development of hub and cluster arrangements

The future of CCS action is required

1. We cannot hope to tackle the scale of the climate challenge without CCS

2. It is time to implement effective policies which focus on this outcome

3. Strong leadership is needed by decision-makers in government and industry to realize the full potential of CCS

4. Collaboration among CCS proponents is essential

In conclusion

www.globalccsinstitute.com

jeff.erikson@globalccsinstitute.com

Operating 20172016

Hydrogen production

Natural gas processing

Chemical production

Iron and steel production

Synthetic natural gas

Fertiliser production

Oil refining

2018 2019 2020

= 1Mtpa of CO2 (areas of circle are proportional to capacity)

Coal-to-liquids

* Injection currently suspended

Boundary Dam

Kemper

Petra Nova

ROAD

Sargas Texas

Sinopec Shengli

Illinois Industrial

YanchangSinopec

Qilu

Abu Dhabi

ACTL Agrium Coffeyville

Century Plant

Enid Fertilizer

Val Verde

Air Products

Lost Cabin

Lula

SnhvitSleipner

Shute Creek

In Salah*

Uthmaniyah

Quest

Gorgon***

ACTL Sturgeon

Petro China Jilin

Great Plains

** Storage options under evaluation

TCEP

Actual and Expected Operation Dates for CCS Projects

Carbon Capture and Storage A Global PerspectiveThe Global CCS InstituteSlide Number 3Slide Number 4Fossil fuel demand is growing, reserves are robust Slide Number 6CCS is critical in a portfolio of low-carbon technologiesCarbon reduction costs more than double without CCSSlide Number 9Much to look forward to over the next 18 months15 large-scale projects are operational7 new large-scale projects operational by 2017Project activity shifts from North America to ChinaCCS deployment a major challenge within one generationSlide Number 15Slide Number 16Slide Number 17Slide Number 18Slide Number 19Slide Number 20Slide Number 21Slide Number 22Slide Number 23Strong policy drives investmentSlide Number 25Slide Number 26Slide Number 27Actual and Expected Operation Dates for CCS Projects