The Costs of CO2 Transport

About the report

The companies, scientists, academics, and environmental NGOs that together make up the Zero Emissions Platform (ZEP) have undertaken a ground-breaking study into the costs of CO₂ Transport based on new data provided exclusively by ZEP member organisations on existing pilot and planned demonstration projects. The conclusion: following the European Union’s CCS demonstration programme, CCS will be cost-competitive with other sources of low-carbon power, including on-/offshore wind, solar power and nuclear.

Executive Summary

ZEP is an advisor to the EU on the research, demonstration, and deployment of CCS. Members of its Taskforce Technology have therefore undertaken a study into the costs of complete CCS value chains – i.e., the capture, transport, and storage of CO₂ – estimated for new-build coal- and natural gas-fired power plants, located at a generic site in Northern Europe from the early 2020s. Utilising new, in-house data provided by ZEP member organisations, it establishes a reference point for the costs of CCS, based on a “snapshot” in time (all investment costs are referenced to the second quarter of 2009).

Three Working Groups were tasked with analysing the costs related to CO₂ capture, CO₂ transport, and CO₂ storage, respectively. The resulting integrated CCS value chains, based on these three individual reports, are presented in a summary report.

This report focuses on CO₂ transport.

The most complete analysis of CO₂ transport costs to date

Initially, the intention was to build the report as a summary of existing studies. However, since these were found to be insufficient for the purpose, the bulk of cost data has been provided via member organisations and ZEP analysis, guided by the principle of consensus.

The approach has been to describe three methods of transportation and for each of these present detailed cost elements and key cost drivers. The three methods are:

1. Onshore pipeline transport
2. Offshore pipeline transport
3. Ship transport, including utilities.

Interface conditions such as pressure, temperature, and flow rates have been agreed with the respective Working Groups for Capture and Storage; and much effort was invested in detailing the assumptions made for each of the transport methods. The CAPEX and OPEX of each method of transport have been estimated using internally available information.

Several likely real-life transport networks are described as they may evolve: network parameters were selected with an eye to real scenarios, such as clusters of CO₂ sources and storage sites. The cost models operate with three legs of transport: feeders, spines, and distribution, each of which may be onshore pipeline, offshore pipeline, or ship. The volumes of transported CO₂ include a typical demonstration scenario similar to a commercial natural gas-fired plant with CCS, but primarily volumes are as may apply in a commercial market in, say, 2030-2040. Compared to previous studies, this report has given more attention to scenarios with shorter distances and transport to offshore storage locations.

The issues of short- and long-term cost and currency developments have been simplified by indexing all estimates to one specific period – the second quarter of 2009. Any user of the cost data in this report is therefore advised to estimate and adjust for developments after this period. Cost estimates are displayed as capital expenditure (CAPEX) annualised at 8% interest rate and 40 years lifetime, and annual operating expenditure (OPEX). Total annual network costs and a cost per transported tonne CO₂ are also presented. The networks have been specified with different transportation distances. For some pipeline cases, CAPEX per tonne per km is also presented, which offers a very useful tool for comparison.

The data and results provided in this report should therefore assist in the evaluation of both the costs of CO₂ transport and optimal solutions for specific projects.

The results

For CCS demonstration projects (and commercial natural gas-fired plants with CCS), a typical capacity of 2.5 million tonnes per annum (Mtpa) and “point-to-point” connections are assumed. The following table shows the unit transportation cost (EUR/tonne) for such projects, depending on transport method and distance:

Distance km	180	500	750	1500
Onshore pipe	5.4	n. a.	n. a.	n. a.
Offshore pipe	9.3	20.4	28.7	51.7
Ship	8.2	9.5	10.6	14.5
Liquefaction (for ship transport)	5.3	5.3	5.3	5.3

As shown, pipeline costs are roughly proportional to distance, while shipping costs are only marginally influenced by distance. Pipeline costs consist mainly (normally more than 90%) of CAPEX, while shipping costs are less CAPEX-intense (normally less than 50% of total annual costs). If there is considered to be any technical or commercial risk, the construction of a “point-to-point” offshore pipeline for a single demonstration project is therefore less attractive than ship transportation for distances also under 500 km. (Pipeline costs here exclude any compression costs at the capture site, while the liquefaction cost required for ship transportation is specified.)

Once CCS becomes a commercially-driven reality, it is assumed that typical volumes are in the range of 10 Mtpa serving one large-scale power plant, or 20 Mtpa serving a cluster of CO₂ sources. The unit transportation cost of such a 20 Mtpa network with double feeders and double distribution pipelines is estimated to be as follows:

Spine Distance km	180	500	750	1500
Onshore pipe	1.5	3.7	5.3	n a
Offshore pipe	3.4	6.0	8.2	16.3
Ship (including liquefaction)	11.1	12.2	13.2	16.1

Table 2 illustrates how pipelines benefit significantly from scale when comparing costs with the 2.5 Mtpa “point-to-point” solutions in Table 1, whereas the scale effects on ship transport costs are less significant. (Shipping costs here include the costs for a stand-alone liquefaction unit, i.e., remote from the power plant.) These figures assume full capacity utilisation from day one, which may well prove to be unrealistic for a cluster scenario. If, for example, volumes are assumed to be linearly ramped-up over the first 10 years, this increases the unit cost of pipeline networks by ~35-50% depending on maximum flows. For ships, ramp-up is achieved by adding ships and utilities when required, resulting in only marginal unit cost increases.

The main aim of this report is to provide cost estimates for large-scale CCS, rather than to recommend generic modes of transport. However, assuming that high CAPEX and high risk are obstacles to rapid CCS deployment, one conclusion that could be drawn from the results is that combining ship and pipe transport in the development of clusters could provide cost-effective solutions – especially for volume ramp-up scenarios. To achieve lowest possible transport costs for CCS in a large-scale, commercial market, central planning is already required in the demonstration phase.

Key conclusions

• Pipeline costs are mainly determined by CAPEX (capital expenditure) and are roughly proportional to distance. They therefore benefit significantly from economies of scale and full capacity utilisation.
• Ship transport costs are less dependent on distance and on scale of transport. CAPEX is proportionally lower than for pipelines and ships have a residual value in hydrocarbon gas transportation which significantly reduces the financial risk.
• Combining pipes and ships for offshore networks could provide cost-effective and lower risk solutions, especially for the early developments of clusters.
• For large-scale transport infrastructure, long range and central planning can lead to significantly reduced long-term costs.