Influence of policy decisions on CCS-system: Development in Swedish industries

Abstract

This report uses an optimization model that minimizes the net present value of a carbon capture and storage system for Swedish industry. The systems include the capture units at the industrial site, liquefaction process, transport by truck and ship and both intermediate storage and permanent storage under the seabed. The optimization model invests in carbon capture at large industrial sites for pulp and paper, cement, refinery, iron and steel, chemicals and heat and power production. The implementation of policies for carbon reduction in the model and how these impact the development of CCS is investigated. The choice of policy affects the amount of CO2 captured and from which sites the emissions are captured. The Swedish industry is dominated by pulp and paper and the total amount of captured CO2 is higher for policies incentivizing capture on biogenic emissions. Carbon pricing, gives a threshold effect as CCS becomes cost effective. The system invests in fossil carbon captured at a carbon price at about 80-85 €/tCO2. An emission budget for the entire period incentivizes carbon captured at the sites with lower investment cost early in the period. The timing of the early investments depend on the size of the budget. A continuously decreasing annual emission budget gives a linear increase on investment of carbon capture equipment. CCS in Swedish industry will require clear goals and policies. In order for CCS to be involved in achieving net zero emissions in 2045, the investment must begin in the coming years to avoid large annual investments in the years just before 2045. Investing in certain industries within a couple of years can lead to low costs for the system while capturing much carbon dioxide throughout the period.