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Cicerone 6-2005

Technology as a driving force in climate policy

The newly established Gassnova represents the Norwegian government’s contribution to venture capital, expertise, and initiative in the development of gas-fired power plants with carbon capture and storage.

By Bjørn-Erik Haugan

New technology that is developed, tested, and implemented on a large scale will be an important contribution to addressing climate change. This can only take place if industry takes the lead and shows a shared willingness to work with the public sector.

Increased use of natural gas in Norway

In Norway, there is widespread agreement that increasing the use of natural gas in Norway will increase value added and improve the energy balance. Norway’s Kyoto targets, however, are a challenge because emissions are already higher than the targets. The biggest sources of concern are the transport and oil production sectors as well as possible new gas-fired power plants. The Norwegian Water Resources and Energy Directorate estimates that Norway needs to increase energy production by about 10% over the next ten years. This type of increase implies an investment in gas-fired power plants with carbon capture and storage (CCS).
On January 1, 2005, the Government established the company Gassnova to be the publicly-funded spearhead in the general investment in developing technology for gas-fired power with CCS. Gassnova and the Research Council of Norway have jointly established the Climit program, which covers the entire innovation chain from research to technology development to pilot and demonstration projects. The Climit program has an annual budget of about NOK 150 million to allocate to various technology projects. Joint financing with industry can result in an activity level of over NOK 400 million per year in Norway. This is ambitious.

Norway on the offensive

For countries with large pulse emissions from energy production, including the EU and the United States, CCS is primarily seen as one of many long-term measures to reduce emissions of greenhouse gases. Many CCS projects will not be initiated until 2020. Norway has opted to take on a more proactive role in these issues, and in many ways stands in a position to become a pioneer:
  • Motivation: Climate and CO2 issues have widespread acceptance and attention among the Norwegian general public, research communities, business and industry, and government.
  • Experience: Injection of CO2 in the Utsira Formation in the Sleipner Field s the largest offshore CCS project in the world.
  • Potential profitability: The possibility of injecting CO2 into oil wells to enhance oil recovery (EOR) gives Norway an opportunity that not all other countries have for generating income and perhaps creating profitable value chains.
  • Technology environments: The energy and oil industries represent strong technology environments for Norway with long experience in implementing new, advanced technology.
At the same time, we face some challenges: Energy technology is an international industry, while Norway is a small market with a small supplier industry.

How far has technology come?

In general, the maturity of the technology is low throughout the entire CO2 chain – both when it comes to capture of CO2, but also when it comes to geological storage and injection for enhanced oil recovery. With the significant R&D investment that is waiting in the wings internationally, there is hope that we can gradually see a significant reduction in costs and an improvement in performance. But development and maturation of CCS technology can only succeed through targeted long-term investment. There is good reason to dampen hopes for a quick “breakthrough.” This is especially true for expectations of immediate large cost reductions of carbon capture.


Carbon capture technology will primarily be used for major sources of pulse emissions, such as energy production and industrial emissions from cement and metal production, as well as from the petrochemical industry. Capture technology exists, but it has not been tested on a large scale on the type of exhaust flows emitted by gas-fired power plants. The development of a broad spectrum of capture technology is already taking place internationally, and also Norway is developing some very interesting concepts.
We expect that larger facilities for the demonstration of carbon capture from gas-fired power can begin relatively quickly (3-4 years), with a significant degree of certainty in costs and performance. Lower costs and improved performance can come about through process improvements and other technology concepts in the future. In the longer term (ten years or more), it is expected that there will be a number of advanced technologies that can provide additional improvements. Thus we must invest broadly in technology development and in close cooperation with developments internationally.

Geological storage

Over the last ten years, Statoil has injected about 1 million tons of CO2 per year into the Utsira Formation in the Sleipner Field. This pioneer program has been the object of comprehensive research efforts and has received a great deal of international attention. The experiences gained here have led to greater confidence that geological storage on a large scale can be a suitable instrument for handling the CO2 problem. Because must CO2 necessarily be stored safely over a very long time, there is a need for further development of internationally accepted methods for describing geological reservoirs in quantitative terms with respect to storing, development over time, monitoring methods, and contingency plans in case of accidents.
In 2006, Statoil will begin injecting CO2 under the Snøhvit Field in the Barents Sea. This will be an important step in our national learning curve towards an accepted method for CCS.

CO2 for enhanced oil recovery (EOR

So far, we have no technical, commercial, or operational experience with this method on the Norwegian continental shelf or any other location offshore. Again, it is important to carry out field-specific reservoir studies, especially in the light of the field’s life phase and other possible EOR measures. This will imply complex analysis. In addition, the EOR system has to be set up so that on a large scale there is a certain buffer capacity because CO2 production and application for EOR cannot be synchronized. We must thus have an ongoing transfer of CO2 production even though the need for EOR is not present.

Development of new energy technology – some observations

There are few actors in this market. Energy technology is a very costly and advanced area of technology where a few major companies comprise the leading global suppliers. They have a great capacity for technological innovation and strong financial resources that they can put towards applications where they see a major market. Today, these growth markets are in countries where the climate perspective and CO2 have so far been secondary to the desire for rapid economic growth.
Technology has a long development and lifetime. Modern gas-fired power plants have improved their degree of effectiveness by as little as two-three percentage points over the last ten years, and only after investments of several hundred million dollars. When a gas-fired power plant is built, it is an investment that is meant to last for many decades.
The demand for security in the choice of technology is critical for customers. Suppliers of new power plants must provide comprehensive guarantees of performance and operational security. Suppliers can only provide this kind of security after comprehensive and time-consuming verification and operational experience in new technology.  

Not just technology

The issue of managing CO2 after capture in a power-generation facility or in industry also poses some economic challenges. The value chain involved in oil and gas production and distribution, in energy production, and in carbon capture and storage is long and complex – crossing traditional industry and administrative boundaries. Decision-making mechanisms become complicated, the need for investment is great, and many are concerned about the risk.
The climate debate is often centered on the Kyoto targets and meeting the protocol’s formal requirements. The emissions entitlement regime that was established to ensure that the commitments can be upheld can be powerful. Nevertheless, the time perspective (2008-2012) in our view is too short to provide a sufficient incentive for technology development and investment decisions for new facilities. The work to establish long-term and predictable instruments in the value chain must continue. 

What does the future look like?

At Gassnova, our view is that it will be sensible to prioritize the following:
  • Step-by-step implementation of new technology for carbon capture through financing of demonstration facilities. In the short term (2-7 years), there is a need for upgrading of post-combustion capture with amine solvents, improvement in efficiency, and a reduction in costs.
  • Technology development: in the longer term, other technologies can prove to be more optimal.
  • The technology strategy must therefore be broad: no single technology stands out today as dominant. Gassnova thus wishes to invest in several parallel technology concepts with varying risk profiles and degrees of maturity.
  • Development of better methods for characterizing geological storage, particularly physical security, leakage security, prognostication of the reservoir’s development and monitoring.
  • Development of infrastructure for geological storage of CO2.
  • Improved methods for evaluate EOR for specific fields, including risk elements.
Implementing these measures requires that industry accept the challenge in cooperation with public authorities.

Last updated: 31.12.2005

NATURAL GAS. In Norway there is widespread agreement to increase domestic use of natural gas. A solution to achieving this without increasing emissions of CO<sub>2</sub> may be gas-fired power plants with CCS.NATURAL GAS. In Norway there is widespread agreement to increase domestic use of natural gas. A solution to achieving this without increasing emissions of CO2 may be gas-fired power plants with CCS.

“Establishing an infrastructure for the CO2 logistics chain will be a major financial challenge, not least if it is expected that investments are to be fully borne by the field(s) that first applies CO2 in EOR.”

Bjørn-Erik Haugan is Executive Director at Gassnova.
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