Influence of Policy Decisions on CCS- System Development in Swedish Industries Master’s thesis in Sustainable Energy Systems SARA ERIKSSON DEPARTMENT OF SPACE, EARTH AND ENVIRONMENT CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2022 www.chalmers.se www.chalmers.se Master’s thesis 2022 Influence of Policy Decisions on CCS-System Development in Swedish Industries SARA ERIKSSON Department of Space, Earth and Environment Division of Energy Technology Chalmers University of Technology Gothenburg, Sweden 2022 Influence of Policy Decisions on CCS-System Development in Swedish Industries SARA ERIKSSON © SARA ERIKSSON, 2022. Supervisor: Sebastian Karlsson, Department of Space, Earth and Environment Examiner: Fredrik Normann, Department of Space, Earth and Environment Master’s Thesis 2022 Department of of Space, Earth and Environment Division of Energy Technology Chalmers University of Technology SE-412 96 Gothenburg Telephone +46 31 772 1000 Typeset in LATEX, template by Kyriaki Antoniadou-Plytaria Printed by Chalmers Reproservice Gothenburg, Sweden 2022 iv Influence of Policy Decisions on CCS-System Development in Swedish Industries Sara Eriksson Department of Space, Earth and Environment Chalmers University of Technology 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 interme- diate 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 emis- sions 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. Keywords: CCS, BECCS, Policies, Swedish industry, Carbon Pricing, Emission Budget. v Acknowledgements I would like to thank supervisor Sebastian Karlsson for the guidance and the discussions. His knowledge of GAMS and all the help with the GAMS model has been essential to the progress and results of this study. I would also like to thank assistant Professor Fredrik Normann for the knowledge he has provided during this master´s thesis. I want to thank SÄROgroup for the feedback and for presenting my work to you. My thanks to the Department of Space, Earth and Environment and especially the Division of Energy Technology for providing me with an office and computer during this spring. Sara Eriksson, Gothenburg, May 2022 Contents List of Figures viii List of Tables ix 1 Introduction 1 1.1 Aim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 Theory 3 2.1 European Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.2 Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.2.1 Emission Intensive Industries in Sweden . . . . . . . . . . . . . . . . 4 2.3 Carbon Capture and Storage . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.3.1 Bioenergi with Carbon Capture and Storage . . . . . . . . . . . . . . 7 2.3.2 Carbon Capture and Utilisation . . . . . . . . . . . . . . . . . . . . 7 3 Policies 9 3.1 Carbon Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.2 BECCS Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.3 Emission Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.4 Emission Trading System . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.5 Carbon Contract for Difference . . . . . . . . . . . . . . . . . . . . . . . . . 11 4 Methods 13 4.1 Mathematical model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4.1.1 Sensitivity analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 4.1.2 Equations for policies . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.2 Input data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 4.3 Policy scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 4.3.1 Carbon pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 4.3.2 BECCS credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 4.3.3 Emission budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 4.3.4 Annual emission budget . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.3.5 Carbon Contract for Difference . . . . . . . . . . . . . . . . . . . . . 20 4.4 Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 5 Results and Discussion 23 5.1 Carbon Pricing A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 5.2 Carbon Pricing B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.3 BECCS credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 5.4 Emission budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 vii Contents 5.5 Annual emission budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 5.6 Carbon Contract for Difference . . . . . . . . . . . . . . . . . . . . . . . . . 31 5.7 Sensitivity analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 5.7.1 Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 5.7.2 Growth limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 5.7.3 Investment cost for ships . . . . . . . . . . . . . . . . . . . . . . . . 34 5.8 Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 6 Conclusion 39 6.1 Future Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Bibliography 41 A Appendix I A.1 Nomenclature for mathematical model . . . . . . . . . . . . . . . . . . . . . I A.2 Equations for CAPEX and OPEX . . . . . . . . . . . . . . . . . . . . . . . III A.3 Equations for carbon capture . . . . . . . . . . . . . . . . . . . . . . . . . . V A.4 Distance between sites and hubs . . . . . . . . . . . . . . . . . . . . . . . . VI A.5 Policy cases and scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . X A.6 The location of the sites and emissions at each site . . . . . . . . . . . . . . XI A.7 Comparison of the results . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIV viii List of Figures 4.1 Simplified overview of the model in a flowchart. The dashed line surrounds the parts of the system that take place at site i∈I. . . . . . . . . . . . . . . 13 4.2 Map with sites included in the model . . . . . . . . . . . . . . . . . . . . . . 18 5.1 System cost when fossil emission cost for the period 2020-2045 are 0-125, 50-175 and 100-225 €/ton . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5.2 Captured emissions when the fossil emission cost for the period 2020-2045 are a) Scenario 1 0-125, b) Scenario 2 50-175 and c) Scenario 3 100-225 €/ton 24 5.3 Location of the transportation hubs used and sites captured from in a) scenario 1 and 2, and b) scenario 3 with one more heat and power plant in Gothenburg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.4 Captured emissions when the emission cost for the period 2020-2045 are a) scenario 1, 0-125, b) scenario 2, 50-175 and c) scenario 3, 100-225 €/ton . . 26 5.5 Location of the transportation hubs used and sites captured from in. a) scenario 1 and 2. b) scenario 3. Figure d) shows the location of the heat and power plants not included in scenario 1 and 2. . . . . . . . . . . . . . . 27 5.6 Captured emissions for Emission Budget A a) scenario 1, b) scenario 2 and c) scenario 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 5.7 Captured emissions for a) Annual emission Budget A scenario 1, b) Annual emission Budget B scenario 1 and c) Annual emission Budget C scenario 1. 30 5.8 Amount of carbon captured at each site during the period for scenario 1 and 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 5.9 Location on the transportation hubs used and sites captured from. a) sce- nario 1 and b) scenario 2 with one additional hub and site on Gotland. . . . 32 5.10 Location on the transportation hubs used and sites captured from. a) in- terest rate 1% and 3%, b) interest rate 5% and c) interest rate 7% and 9%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 5.11 Location on the transportation hubs used and sites captured from. a) case 1-3 and b) case 4 and reference case. . . . . . . . . . . . . . . . . . . . . . . 34 5.12 Carbon capture development with the captured carbon divided in from which of the transport hubs it is transported from a) scenario 1 when the investment of ships from Luleå is free, b) scenario 2 when Luleå and Slite is free, c) scenario 3 when Luleå and Gothenburg is free and d) scenario 4 when all ships are free . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 ix List of Figures x List of Tables 4.1 CO2 concentration and share of biogenic emission from the stacks included in the carbon capture system . . . . . . . . . . . . . . . . . . . . . . . . . . 17 4.2 Emissions from system without carbon capture . . . . . . . . . . . . . . . . 17 4.3 Distance from the hubs to the permanent storage . . . . . . . . . . . . . . . 18 4.4 Variables for absolute investment cost . . . . . . . . . . . . . . . . . . . . . 18 4.5 Emission cost, €/tonCO2, each year for the three scenarios . . . . . . . . . 19 4.6 Emission cost for each year for BECCS credits . . . . . . . . . . . . . . . . 19 4.7 Emission cost, €/tonCO2, for the cement industry and for each year for the two scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.8 Interest rate used in the 5 models . . . . . . . . . . . . . . . . . . . . . . . . 20 4.9 The maximum allowed investment and the emission cost, €/tonCO2, each year for the three scenarios and reference scenario . . . . . . . . . . . . . . 21 4.10 Where the investment for ships is free and the emission cost, €/tonCO2, each year for the four scenarios and reference scenario . . . . . . . . . . . . 21 5.1 The average investment cost for the stacks in each industry sector . . . . . 23 5.2 Total emissions and total system costs for Scenarios 1, 2 and 3 over the entire modelled period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.3 Total emissions, system costs and specific cost for Scenarios 1, 2 and 3 over the entire modelled period. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 5.4 The amount of invested ships for the hubs in Lysekil, Gothenburg, Helsing- borg, Varberg and the total number of ships for the system for the three scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 5.5 The hubs used to transport carbon for the sites where there are changes in transport hubs between the scenarios. . . . . . . . . . . . . . . . . . . . . . 27 5.6 Total emissions and system costs for policy BECCS credits A and B over the entire modelled period. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 5.7 The amount of emissions and share of the captured carbon from site with only fossil emission, biogenic emissions, or both for case BECCS credits A . 28 5.8 Total emissions, system costs and specific system cost for emission budget A, B and C scenarios 1, 2 and 3 over the entire modelled period. . . . . . . 29 5.9 Total emissions, system cost and specific cost for annual emission budget A, B and C Scenarios 1, 2 and 3 over the entire modelled period. . . . . . . 30 5.10 Total emissions, system cost and specific cost for carbon contract scenarios 1 and 2 over the entire modelled period. . . . . . . . . . . . . . . . . . . . . 31 5.11 Total emissions, system cost and specific cost for Scenarios 1-5 over the entire modelled period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 5.12 Total emissions, system cost and specific cost for Scenarios 1, 2, 3 and reference scenario over the entire modelled period. . . . . . . . . . . . . . . 34 xi List of Tables 5.13 Total emissions, system cost and specific system cost for Scenarios 1-4 and reference scenario over the entire modelled period. . . . . . . . . . . . . . . 36 A.1 The decisions variable used in the GAMS model . . . . . . . . . . . . . . . I A.2 Other variables from the GAMS model, table 1 . . . . . . . . . . . . . . . . I A.3 Other variables from the GAMS model, table 2 . . . . . . . . . . . . . . . . II A.4 The sets from the GAMS model . . . . . . . . . . . . . . . . . . . . . . . . . II A.5 The policies modelled in this study. . . . . . . . . . . . . . . . . . . . . . . . X A.6 The definition of the abbreviation of the stack types . . . . . . . . . . . . . XI A.7 The location of the sites, the stack types available for caption and the annual emissions from the stacks at each site. . . . . . . . . . . . . . . . . . . . . . XI A.8 The location of the sites, the stack types available for caption and the annual emissions from the stacks at each site. . . . . . . . . . . . . . . . . . . . . . XII A.9 Stack types available for caption and emissions for heat and power site . . . XIII A.10 Total emissions, system cost and specific system cost for all policies cases over the entire modelled period. . . . . . . . . . . . . . . . . . . . . . . . . . XIV xii 1 Introduction In 2015 when the Paris agreement was signed, the leaders of the world decided to decrease the greenhouse gas emissions due to the rising global average temperature and climate change. The 196 Parties attending agreed on limiting global warming to below 2°C but preferably below 1.5°C[55]. The Intergovernmental Panel on Climate Change (IPCC) have reported scenarios for the future climate with different assumptions on future GHG emis- sions. In the reports the global average temperature is compared to pre-industrial levels. Between 2011 and 2020 the global surface temperature was 1.09°C higher than the period of 1850-1900[36]. The increase of temperature has resulted in rising global sea levels due to ice loss and thermal expansion. Thermal expansion stood for 50% of the rising sea levels between 1971 and 2018. Since 2006 the biggest contributors have been ice sheet and glacier mass loss[36]. The largest contribution of the rising greenhouse gases in the atmo- sphere is carbon dioxide and it is considered to be the primary driver of global warming. Scientists suggest global warming will stop if a net zero global anthropogenic carbon diox- ide emission is reached[27]. When anthropogenic carbon dioxide emissions are stopped the global average temperature will continue to rise due to inertia in the climate system[29]. The global temperature change is roughly proportional to cumulative emissions of car- bon dioxide. Therefore, there is an emission budget for the different temperature targets. Because of climate sensitivity it is hard to determine how small the budgets need to be. IPCC’s best estimation shows a doubling of carbon dioxide concentration resulting in an increase of 3°C[36]. For the different 1.5°C scenarios presented in IPCC’s report[27], all the scenarios depend on a decreasing use of fossil fuel and for most scenarios Carbon Capture and Storage (CCS) and Bio Energy Carbon Capture and Storage (BECCS) are included in the plans. 1.1 Aim The aim of this master’s thesis is to determine the effects of policy decisions and incentives on the development and cost of a system for capture and storage of carbon dioxide in Swedish industry. The work investigates whether there are synergies in implementing several policy decisions or whether certain policies counteract each other. The goal is also to investigate differences in targeting biogenic and fossil carbon. 1 1. Introduction 2 2 Theory The policies for carbon capture and storage in Sweden are affected by the climate laws in both Sweden and the European Union. Some technical and legal limitations in de- velopment of carbon capture are described in the following chapters as well as the most promising policies to increase the speed of development. 2.1 European Union The European Union’s climate law has a target for all the member states 2050. By then all states should achieve net zero GHG emission. The law also includes a target of reducing the net GHG emission in 2030 by at least 55% compared to 1990[11]. The European Union can see the benefits of using carbon capture technologies in process and power industries and how these can contribute to mitigating climate change. There is a European Union directive on the geological storage of carbon dioxide, this directive says that geological storage sites require a storage permit. The permits are given to the sites that meet the re- quirements of the directive and are therefore managed in an environmentally safe way[13]. The directive urges the member states to strengthen the research and development of carbon capture and storage. The geological storage of carbon dioxide within research and testing of new products and processes are not included in the directive. Neither are storages with less than 100 kilotons required to have permits to store carbon dioxide. Development of carbon capture and storage have been a focus in some member states in the European Union. These countries have expressed positive reactions to the directive. Other member states have been critical of the proposal[37]. They suggest that developing carbon capture technologies will benefit the countries with oil and gas production and carbon capture and storage will not help in the quest of reaching the goals in the Paris accords. In the directive on the geological storage of carbon dioxide the European Union has addressed these concerns and written that the development of carbon dioxide storage should not lead to an end of the efforts to reduce emissions nor a reduction in the support for renewable energy and sustainable technologies[13]. The first London protocol was signed in 1972 and the purpose was to protect the marine environment from human activities. This was one of the first international agreements of this kind. The protocol includes prevention of uncontrolled disposal of wastes into the ocean. Sweden signed the first protocol and the first rewritten protocol from 1996 but they have not agreed on the suggestions from 2006 and 2013. In 2006 an alteration was made regarding carbon dioxide storage. The suggestion was to allow storage of carbon dioxide under the seabed. According to the London protocol it is allowed to store car- bon dioxide under the seabed, but only when it is safe to store[26],[24]. According to the latest approved London protocol it is however not allowed to export carbon dioxide for geological storage purposes[29] and some members of the London convention think 3 2. Theory it should be an exception. To make it possible for Sweden to export carbon dioxide for permanent geological storage, Sweden ought to ratify the proposed change. In addition to Sweden’s approval, there is a requirement that two thirds of the parties must ratify the changes[39],[26]. Only six out of 53 parties have approved the changes from 2006. As of 2019 it is possible to export carbon dioxide intended for storage under the seabed provided that the exporting and importing countries enter a bilateral treaty. 2.2 Sweden In 2017, it was decided to acquire a new climate law in Sweden with the aim of reducing carbon dioxide emissions[38]. This includes both preserving and creating new functions to counteract climate change and working towards the long-term goal to have zero net GHG emissions by 2045. The emissions in 2030 must also be at least 85% lower than in 1990 ac- cording to the Climate Policy Council[31]. Emissions in the trading sector in 2045 must be at least 85 percent lower than emissions in 1990[42]. To achieve net zero emissions, nega- tive emissions are needed in other areas. After 2045 GHG emission must be net negative in Sweden, meaning that complementary measures need to capture more GHG than emitted. Of the total emissions in Sweden, heat and power plants and industrial processes ac- counted for around a third of the emissions in 2018. Industries which emit high amounts of fossil carbon dioxide are iron, steel, minerals, cement, refinery, and chemical industry. Heat and power emit about one tenth of the total emissions in Sweden. Sweden does not have any specific regulations for carbon capture and storage and the technology is not used at any industrial sites. In a regulation on state support for measures that contribute to reduced industrial climate change from 2017, the Swedish Energy Agency may provide state aid for measures that contribute to negative emissions through capture and geolog- ical storage of GHG of biogenic origin or gases captured from the atmosphere if there is money in the budget[38]. 2.2.1 Emission Intensive Industries in Sweden The cement industry is one of the largest fossil CO2 emitters in Sweden. The calcination process, when limestone is heated to produce calcium oxide, accounts for about two thirds of the production’s emissions, the rest of the emission comes from the fuel used to heat up the cement kiln. The cement industry has a mixture of fossil and biogenic emissions and it is possible to reduce the emission by using alternative fuels for the cement kiln and using fly ash in the cement. However, there will still be carbon dioxide emissions from the calcination process. Cementa (the largest cement manufacturer in Sweden) has started a carbon capture and storage project at their site in Slite on Gotland and their plan is to be climate neutral in 2030. Slite produces three fourths of the cement in Sweden and has been the second largest single site emitter in Sweden in recent years[57],[?]. The plan is to take inspiration from Norcem’s cement production in Brevik, Norway and capture and store carbon dioxide under the seabed. Norcem has started to build the first carbon capture site applied to a cement plant in the world, and the facility is planned to be in operation by 2024 and achieve net zero emissions by 2030. The emission from the facility is about 800 000 ton CO2 annually[44]. In the European Union the cement industry does not pay much for their carbon dioxide emissions, this is because they receive large amounts of free allocation in the emissions trade system (EU ETS). In Sweden, Cementa has received more free allocations than released emissions. This means that Cementa could sell the 4 2. Theory surplus allowances to other companies[34]. The metal industry stands for another large part of the carbon dioxide emissions in Swe- den. For every ton of steel produced, twice as much carbon dioxide is emitted[19]. One option to reduce the carbon dioxide emission in iron and steel production is to use hy- drogen made from renewable electricity in the direct reduced iron production[49]. The byproduct would then be water instead of fossil-based carbon dioxide. CCS would be another option to reduce the carbon dioxide emissions from the steel production. Pulp and paper industry is energy-intensive and has high levels of biogenic GHG emis- sions. In Sweden most of the fossil fuels used in the processes have been replaced with biofuel, which have resulted in a large reduction of carbon dioxide emissions[40],[20]. The emissions are mostly biogenic and therefore would investing in carbon capture technology result in net negative emissions. Fossil fuels are used as raw materials in both refineries and chemical industries. It is difficult to replace fossil fuels in these processes, but with funding is it possible to develop substitutes which are bio-based[40]. Both refinery and chemical industries are candidates for carbon capture and storage. The heat and power sector is important in a northern country like Sweden. GHG emis- sions from district heating and electricity production accounted for 9% of the total fossil emission in Sweden in 2018. Since 1990, emissions from this sector have decreased sig- nificantly, mainly due to the transition from fossil fuel to biofuel and waste in electricity and district heating production[40]. Today, almost all use of fossil fuel has been phased out and the electricity production in Sweden is mainly hydro, nuclear and wind power. In combined heat and power plants, bioenergy is most commonly used. The heat and power sector’s emissions are mainly biogenic and therefore the potential for BECCS is great. 2.3 Carbon Capture and Storage Carbon capture and storage is a technology that includes several steps. The first part is when carbon is separated from other gases. This can be done in several ways. Collection from the air is called direct air capture. The advantage with direct air capture is that it can be done everywhere. The low concentration of carbon dioxide in the air complicates the process and makes it expensive due to energy consumption and equipment requirement[54]. Another, more cost-effective option, is to capture the carbon from a point source, such as industrial sites with large CO2 emissions. The carbon can be separated before the com- bustion by removing carbon from fossil fuels. Gasification of the fuel at elevated pressure with low oxygen levels produces syngas, which consist mainly of carbon monoxide and hydrogen[17]. Water is added to the syngas and the CO2 can easily be captured. Left is a fuel gas rich with hydrogen which can be used in the combustion. This is an efficient but expensive technology. The carbon dioxide can also be collected after the combustion before the gas is vented to the atmosphere. This is done by separating the carbon dioxide from the flue gases. There are relatively low CO2 concentrations in the flue gas which is a challenge when the separa- tion is done. This is not as efficient as pre-combustion carbon capture, but the investment 5 2. Theory cost is lower and post-combustion can be used at all types of industrial sites and without any rebuilding of the process only an extension for capturing the CO2 from the stacks[48]. There are various methods that can be used to capture CO2. It can be done with cryogenic distillation, membrane separation, adsorption, and absorption[47],[48]. The most ma- ture technology is absorption[35]. In the CO2 absorption process with monoethanolamine (MEA), two sub-processes take place. The first is an absorber and stripper section and the second is a compression or liquefaction process, depending on the transport conditions of the CO2. After combustion, the flue gases are fed into a direct-contact cooler to reduce the temperature[15]. The water used in the direct-contact cooler is sent to a water treat- ment after use. In the absorber, the flue gases are mixed with an MEA solution which the carbon dioxide is absorbed in. The flue gases are purified before being released from a stack. There is a requirement of larger compressors and increased cooling with an increase of CO2 volume flow[15]. Depending on whether the CO2 is going to be transported by trucks and ships or pipelines, it is either compressed to high pressures (approximately 100 bar) or liquefied (at e.g., 15 barg and -26 ◦C)[4]. This process consumes a large amount of energy. In oxy-combustion the fossil fuels are combusted in nearly pure oxygen, rather than air. This means the flue gases contain mostly carbon dioxide and water. The CO2 can easily be separated by condensing the water[47],[48]. This technology is not cost-competitive due to high capital cost, energy consumption and challenges in the oxygen separation[41]. There are a few options for permanent storage and the most talked about is geologi- cal storage. The goal of CO2 storage is to isolate CO2 from the atmosphere. It is injected in the bedrock and the geological storage retains the CO2 in the rocks deep in the ground. The Norwegians have been researching and developing carbon capture and storage sys- tems for many years. The leading storage project is called Northern Lights. The CO2 will be transported by ships to a terminal on Norway’s west coast where the CO2 is pumped offshore via pipeline to a structure at the seabed. The CO2 is then injected in a permanent storage about 2600 meters below the seabed[45]. Large scale carbon dioxide transportation can be done via ship or pipeline. For short distances and small volumes, the CO2 can be transported by truck or rail. It is important that the transportation is safe and reliable. Ships and pipelines are the cheapest options, but they have some limitations. Pipelines are of course the cheapest transportation option onshore. It is sometimes also the cheapest option offshore, depending on the distance and volume. Shipping through pipelines has been used for many years. Pipelines need regu- lar maintenance to maintain a safe operation both for environmental and health reasons. Land pipelines are monitored from the air by aircraft and by patrols on foot. Pipelines underwater are inspected with the help of small unmanned submersibles[5]. For transportation by ships, truck, or rail there is a need to liquefy the CO2. Ship transportation includes a temporary storage on land. The size of the storage depends on the number of ships, the capacity of the ships, the time one trip takes and the capture rate. The CO2 is unloaded from the ships at the delivery point and left at temporary storage tanks. Geological storage site under the seabed requires a floating storage facility where the ship can unload the CO2. There are various kinds of tank structures for trans- portation of liquid gas on ships. A combination of high pressure and low temperature is a requirement for CO2 to remain in the liquid state[23]. Trucks are adaptable but the 6 2. Theory operation cost of transported CO2 is high. Sweden does not have a permanent storage site for CO2, so it needs to be transported to Norway. In the long run, pipelines will be cheaper, provided that CCS is implemented at scale, but then a substantial investment is required[18]. 2.3.1 Bioenergi with Carbon Capture and Storage Similar to carbon capture and storage is CO2 capture and permanently stored in a geo- logical storage. The difference is that the carbon comes from biomass and CO2 storage creates negative emissions of CO2. The combustion part of the process can be considered carbon neutral. The process is considered net negative when the carbon emitted has been captured and permanently stored. In Sweden, the forest is not logged to burn biomass. The trees are mainly used for timber and paper[28]. The biomass most used for biofuel is forestry litter, almost 85 percent[32]. The rest of the fuel is waste, peat and residues from arable land. Some people argue that bioenergy with carbon capture might give a false sense of security. The actions to reduce climate change and fossil fuel use might be delayed when there is hope for negative emissions. The potential for negative emission with BECCS is unlikely to meet the climate targets on its own. In none of the 2°C sce- narios made by the IPCC is bioenergy with carbon capture and storage the only solution. The use of fossil fuels must be reduced. Another concern is that the green carbons from bioenergy combustion are stored and not used to replace fossil carbon in the refinery and chemical industries[14]. 2.3.2 Carbon Capture and Utilisation The captured CO2 can be applied in other processes. This means the CO2 will be recycled and industrial processes can benefit through the reuse of the CO2. Permanent geological storage is not the result nor aim in carbon capture and utilisation. However, the aim to reduce the amount of CO2 in the atmosphere is similar to the one for carbon capture and storage. The CO2 can convert materials into more valuable materials or products while the production process remains carbon neutral. Carbon dioxide can be used in various sectors, such as fuels, chemicals, building materials, yield boosting, solvent, and heat transfer fluid[25]. Other commercial uses of carbon dioxide include welding, medical use, food, and beverage. CO2 can be used when converting hydrogen into a synthetic fuel. CO2 can also replace fossil fuels when some chemicals are produced. It can be used to enhance oil recovery. The CO2 is then injected into existing oil fields, this will make the oil thinner and collecting of oil becomes easier[25]. One advantage compared to carbon capture and storage is that the CO2 dioxide can be sold. One disadvantage with carbon capture and utilisation is that CO2 is a stable and relatively inert molecule which makes chemical reactions challenging[2]. 7 2. Theory 8 3 Policies A policy provides guidance for decisions and is applied to achieve certain goals. Not man- aging to follow a policy might lead to punishment but comparatively less severe penalties for non-compliance with the law. Policies for carbon capture can be regulated with a price for emitting carbon, credits for capturing biogenic emissions, a carbon budget, an emission trading system and carbon contracts for difference. 3.1 Carbon Pricing Carbon pricing is a strategy for reducing climate change by having the responsible emitters pay for the carbon emitted. Carbon pricing ensures that climate risks are included in the cost of doing business. The responsible emitters are given an opportunity to either reduce emissions by transforming their activities and not have to pay the carbon tax or continue to emit CO2 but pay for the emissions[56]. The revenue from the carbon pricing can be used to help communities in vulnerable areas adapt to the effects of climate change[56]. The revenues can also be used for research and development into green technology and the transition to a low-carbon economy. Carbon pricing is a low-cost and effective method[56] and an advantage of CO2 pricing is that it tries to change people’s behaviour. It is beneficial for companies that use renewable technology and processes with low climate impact. Unfortunately, it is uncertain to predict the environmental performance of carbon dioxide pricing. There may be many who choose to emit CO2 rather than change their processes, especially if the price is low. Some experts suggest carbon pricing should be combined with complementary energy and environment policies in order to exploit the full potential of carbon pricing[56]. 3.2 BECCS Credits Biomass energy with carbon capture and storage offers added value compared to avoiding emissions. This is one of the few options for reducing the levels of carbon in the atmo- sphere. Other options are afforestation, reforestation, ocean fertilization and direct air capture. BECCS credits are the carbon that counts as negative emissions as the carbon has been captured from the atmosphere and before they are released again it is captured and stored. The efficiency of the separation process, the transport and the global carbon cycle feedback leads to those credits of negative emissions being reduced compared to how much carbon is combusted[52]. 3.3 Emission Budget Emission budgets for GHG are set to limit global warming. Countries or companies are not allowed to emit more CO2 than the cap specified in the emission budget. The 9 3. Policies emitters can choose when the CO2 is emitted, but the total emissions must not exceed the budget. The budgets are usually in line with scenarios for limiting global warming to 1.5 or 2°C above pre-industrial levels. The European Union and Sweden both have emission targets for 2030 to reduce the emission to 55% and 85% of the emissions in 1990, respectively[11],[31]. There are also zero emission targets by 2050 and 2045, respectively. This system provides clarity about the environmental impact of the emissions because it is known in advance how much emissions will be allowed. 3.4 Emission Trading System In an emission trading system there is a budget for how much may be emitted and the activities included in the system must have emission allowances that correspond to their carbon emissions. The emission allowances are partly distributed free of charge, partly auctioned. The motivation behind the free allowances is to counteract the risk of carbon leakage. Some facilities are given free allowances, but most buy them on the market. Each company must at the end of each year hand in enough allowances to cover all emis- sions. During the year those who have less allowances can either reduce their emissions or buy more emission allowances. Too many allowances enables the owner to either save the spare allowances for the future or sell them to a company which is short of allowances. The facilities included in an ETS do not pay carbon tax but pay for the emission allowances. The system is designed to decrease the emission cap (i.e., the amount of total allowances in the system) each year and enable companies to slowly adapt to more ambitious emission targets. This method offers flexibility for companies since the actors can decide whether they want to buy allowances or take action and reduce emissions. In industries where the allowance price is higher than reduction costs, companies are encouraged to take action. For emitters who have higher reduction costs, the actions are postponed. The price for emission allowances is decided by the market and affected by how many allowances are available in the system. Excess allowances leads to low prices which in turn may lead to participants in an emission trading system not taking measures to reduce emissions. This has been the case in the EU Emissions Trading Scheme (EU ETS). To provide price stability the Market Stability Reserve (MSR) was introduced in 2019[12]. The MSR enables the availability of emission allowances to respond to changes in demand. The aim of the reserve is to provide a long-term solution to the growing surplus of emission allowances and thus maintain the balance in the system[?]. Between 2019 and 2023, the percentage of allowances in circulation invested in the reserve is planned to go from 12% to 24% in the European Union. After 2024, the share that will be placed in the reserve will return to 12%[9]. From 2023, the emission allowances in the reserve that exceed the previous year’s auction amount will no longer be legitimate[12]. This system is used within the European Union and is one of the main strategies for reducing emissions within the union[?]. It was implemented in 2005 to ensure that the emission target GHG would be achieved in a cost-effective manner. The total reduction in the emission cap was 21 percent in the years between 2005 and 2020[3],[6]. Of Sweden’s national fossil emissions, the facilities included in the EU-ETS account for 37 percent. It is primarily industry and energy production that are included in the system. The carbon price in Sweden is higher than the allowances in the EU-ETS. The emission allowances cost were only about 50-60€ in 2020, but in the year or 2022 were the cost between 80 10 3. Policies and 100€, compared with the Swedish carbon dioxide tax of 115 euro per ton[53],[50]. In order to cut GHG emissions by at least 40% in 2030 compared to the levels in 1990 the allowances need to keep the reduction rate[10]. The annual reduction rate in the period of 2013-2020 was 1.74% and from 2021 onwards is the annual rate 2.2% in order to meet the goal for 2030[12]. In 2021 the European Commission published a proposal to amend the Emission Trading System Directive. The new proposed reduction factor is 4.2[8]. Most of the reduction is done by investing in more efficient technology and reducing the production. The CCS system is still a long way from being the solution in Europe. Ac- cording to an analysis made by the International Energy Agency (IEA) the development of carbon capture will be slow in the beginning and most emission reduction will be an effect of changes to renewables in the electricity generation and improvement of technology performance[1]. 3.5 Carbon Contract for Difference One way to minimize the carbon price uncertainty is Carbon Contracts for Difference (CCFD)[16]. An agent (e.g., an industrial plant owner) and a government agree on a fixed carbon price, the strike price, over a period. The difference between the market price and the strike price will be paid by either the government or the agent depending on whether the market price is lower or higher than the strike price. According to Gerres Linares[16], carbon contracts for difference are the most powerful option for reducing uncertainty about carbon prices. The regulatory risk can be reduced with perfect forecasts on reduction goals, but this does not reduce other risks, which are not controlled by national policies, according to the two authors. The authors argue that the regulatory uncertainty is not necessarily reduced if there are caps and floors on the carbon price, like those implemented by the EU ETS Market Stability Reserve, but the variability in carbon prices is only short-term[16]. 11 3. Policies 12 4 Methods The theoretical basis of this work is based on a literature study, using industrial databases, techno-economic evaluations and other literature containing information about policies. This information was used to construct policy scenarios which were evaluated in the op- timization model. 4.1 Mathematical model The Mixed Integer Program (MIP) optimization model used in this work finds the cheapest option for collecting CO2 from the industrial sites included in the system. The reference GAMS simulations were made by Sebastian Karlsson[30]. Considers both investment cost and operating cost. An overview of the model and the parts of the CCS chain can be seen in Figure 4.1. The carbon is captured from stack type j∈J and then liquefied at liquefaction facility k∈K both these are located at a site i∈I. Each site is limited to one liquefaction facility but there can be more than one stack at each site where CO2 can be captured. CO2 is transported to a transport hub l∈L by truck and transported by ship from the transport hub to the final storage. The number of sites and stacks available for the CCS system is constant during the modelled period. Figure 4.1: Simplified overview of the model in a flowchart. The dashed line surrounds the parts of the system that take place at site i∈I. 13 4. Methods The objective function, Equation 4.1, is to minimise the net present value of the total cost for the studied period min ctot ≥ ∑ y∈Y cannualy (1 + r)y−2020 (4.1) ctot is the net present value, y is the years studied, r is the interest rate, r this is 5% and cannualy is the total annual cost. The annual cost is calculated by adding the annual investment and operation cost for all sites, liquefaction plants, transportation, and storage. cannualy ≥ ∑ i∈I (cCAPEX,capturei,y + cOPEX,capturei,y ) + ∑ k∈Ki (cCAPEX,liqj,y + cOPEX,liqk,y + cCAPEX,storage,liqk,y + cOPEX,storage,liqk,y ) + ∑ k∈Ki ∑ l∈L (cCAPEX,truckk,l,y + cOPEX,truckk,l,y ) + ∑ l∈L (cCAPEX,hubl,y + cOPEX,storage,hubl,y ) + ∑ l∈L (cCAPEX,shipl,y + cOPEX,shipl,y ) + ∑ et∈ET cemissionet,y ∀ y ∈ Y (4.2) Where cCAPEXy and cOPEXy is the annual investment and operation cost for each part of the CCS chain. The equation for each part is displayed in Appendix A.2. The investment cost is calculated with an annuity factor. The annuity factor method shows the profitability of an investment in terms of the lifetime of the technology. α = r (1− (1 + r)(−LT ) (4.3) Where r is the interest rate and LT is the lifetime of the equipment. 4.1.1 Sensitivity analysis Sensitivity analysis was done in order to see how stable the result was. The first check was how the interest rate changed the result. This was done by changing the parameter r in the total cost and annuity factor equation 4.1 and 4.3. The second sensitivity analysis was to check the growth rate of the system, meaning the annual size of investments in capture and liquefaction equipment is limited according to Equation 4.5. bcapturei,j,y = bcapturei,j,(y−1) − a capture i,j,(y−LT ) + acapturei,j,y ∀ i ∈ I, j ∈ J, y ∈ Y (4.4)∑ i∈I ∑ j∈J acapturei,j,y ≥ ∑ i∈I ∑ j∈J bcapturei,j,(y−1) + gcapturey ∀ i ∈ I, j ∈ J, y ∈ Y (4.5) Where acapturei,j,y is the investment in capture capacity at stack j at site i and bcapturei,j,y is the installed capacity at stack type j at site i. gcapturey is the maximum allowed investment in year y. The impact of transport investment cost on the development of the CCS system was investigated by changing Equation 4.6 in the model. By dividing the investment cost calculations for each hub could the investment cost for each hub easily be changed, see Equation 4.7-4.11. When all hubs have zero investment costs can this easily be done by setting CAPEXship as zero in Equation 4.6. cCAPEX,shipl,y ≥ bshipl,y · CAPEX ship · α ∀ l ∈ L, y ∈ Y (4.6) 14 4. Methods When only one or a few hubs have free investment cost for transportation by sea were the investment cost for respective transport hubs set to zero. cCAPEX,shipl,Ostrand,y ≥ bshipl,Ostrand,y · CAPEX ship · α ∀ l ∈ L, y ∈ Y (4.7) cCAPEX,shipl,Oxelsund,y ≥ b ship l,Oxelsund,y · CAPEX ship · α ∀ l ∈ L, y ∈ Y (4.8) cCAPEX,shipl,Lysekil,y ≥ bshipl,Lysekil,y · CAPEX ship · α ∀ l ∈ L, y ∈ Y (4.9) ... (4.10) cCAPEX,shipl,Skelleftea,y ≥ b ship l,Skelleftea,y · CAPEX ship · α ∀ l ∈ L, y ∈ Y (4.11) 4.1.2 Equations for policies In carbon pricing is the cost for emitting CO2 was calculated with Equation 4.13. eannualet,y ≥ ∑ i∈I eCO2 i,et − e capture et,y ∀ et ∈ ET, y ∈ Y (4.12) cemissionet,y ≥ eannualet,y · cCO2 et,y ∀ et ∈ ET, y ∈ Y (4.13) Where eannualet,y is the annual emissions of et ∈ ET given in tonCO2, eCO2 i,et is all emissions from site i of emission type et each year, ecaptureet,y is the amount of CO2 of respective emission type that has been captured in year y, cemissionet,y is the annual emission cost for respective emission type and cCO2 et,y is the cost for emitting CO2 in M€/tonCO2 of respec- tive emission type each year. For BECCS credits, emitting fossil CO2 results in a carbon tax, but capturing biogenic emissions counts as negative emissions and the companies capturing biogenic emissions were compromised with money. This was implemented by changing the equation for cal- culating the emission, Equation A.16 in Appedix A.3, for the biogenic emissions. For the annual biogenic emissions only the captured CO2 accounted for, this because the emitted biogenic CO2 is assumed to be net zero, see Equation 4.14. eem,annualbio,y ≥ −ecapturebio,y ∀ y ∈ Y (4.14) Where ecapturebio,y is the captured biogenic CO2 of year y. The emission cost is calculated with equation 4.13 but cemissionbio,y will be equal to zero or negative. A budget for the model period is implemented by using Equation 4.15. The budget was investigated but setting a budget for fossil and biogenic emissions separate, see equation 4.16. etotal ≥ ebudget (4.15) etotalet ≥ ebudgetet (4.16) Where etotal is the total emission and etotalet is the total emissions during the period for emission type et. ebudget is the budget for the period and ebudgetet is the set budget emission type et. The annual budget is implemented by setting a constraint on the annual emissions, eannualy 15 4. Methods and like the total emission budget is the annual emission budget divided in emission type when there is a separate budget for respective emission type, eannualet,y . ssumet,y = ∑ i∈I ∑ j∈J sCO2 i,j ·m bio j ∀ y ∈ Y, et = bio (4.17) ssumet,y = ∑ i∈I ∑ j∈J sCO2 i,j · (1−m bio j ) ∀ y ∈ Y, et = fossil (4.18) eannual ≥ ∑ i∈I ∑ et∈ET eCO2 i,et − ∑ et∈ET ssumet,y · (y − 2019) · zreduction (4.19) eannualet,y ≥ ∑ i∈I eCO2 i,et − s sum et,y · (y − 2019) · zreduction (4.20) Where ssumet,y is the sum of the supply of the available CO2 for capture of emission type et year y, sCO2 i,j is the supply of the available CO2 for capture at site i and stack type j, mbio j is the share of biogenic emissions from stack type j. eCO2 i,et is the total emissions emitted at site i and zreduction is the reduction rate for the budget. The policy carbon contract for difference needs some changes in the equations. CCfD requires that the annual emission costs are different depending on which industry sector the sites are part of. Implementing CCfC was done by changing the equations for an- nual capture (equation A.13), annual emissions (equation A.16) and annual emission cost (equation 4.13) so that this is dependent on the site i, and not by only emission type and years. So, the amount of annual capture changed from ecaptureet,y to ecapturei,et,y the same changes were done for the other two equations. The cost for emitting CO2 is then calculated with a carbon price for each industry sector. ecapturei,et,y = ∑ i∈I ∑ j∈J ∑ k∈K x1 i,j,k,y ·mbio j ∀y ∈ Y andet = biogenic (4.21) eannuali,et,y ≥ eCO2 i,et − e capture i,et,y ∀i ∈ I, et ∈ ET, y ∈ Y (4.22) cemissioni,et,y ≥ eannuali,et,y · cCO2 i,et,y∀i ∈ I, et ∈ ET, y ∈ Y (4.23) cannualy ≥ ∑ x∈X cCAPEXx,y + ∑ x∈X cOPEXx,y + ∑ i∈I ∑ et∈ET cemissioni,et,y ∀i ∈ I, et ∈ ET, y ∈ Y, x ∈ X (4.24) 4.2 Input data The data used in this study was collected from other case studies. The data for the indus- trial sites included in this study were gathered from case studies made by Svensson[51]. From these the location of the site and emissions from each site, as well as the distribution of emissions and CO2 concentration from the different stacks were found. For the sites that lack information on the CO2 concentration and distribution of emission between stacks, it was assumed to be the same as other sites in the same industrial sector. In Table 4.1 is the CO2 concentration and the biogenic fraction for each stack type presented. For the pulp and paper sites and the heat and power sites with bio-based fuel is all the emission biogenic carbon. The cement industry has mostly fossil emissions but there are some bio- genic emissions. In the heat and power plants with waste as fuel, two thirds of the waste that is burned is assumed to be non-fossil products[46]. This master’s thesis will only 16 4. Methods cover the largest industrial sites in Sweden, with 100 kilotons of emissions per year and the reference system is the Swedish industry in 2019. It is assumed that the production from the sites is unchanged during the period and therefore the emission from the stacks is constant each year and the emissions will only be reduced if CCS were implemented at the stacks. The industrial sites included in this study are all part of the emission trading system in 2020[43], even the biogenic emission sites. The period studied is 2020 to 2045. Table 4.1: CO2 concentration and share of biogenic emission from the stacks included in the carbon capture system Sector Stack CO2 concentration [%] Percent biogenic emissions [%] Pulp and paper Recovery Boiler 13 100 Pulp and paper Lime Kiln 20 100 Pulp and paper Other stacks 13 100 Cement Combine stack 20 10 Refinery Hydrogen production unit 24 0 Refinery Other stacks 13 0 Iron and steel Power plant 30 0 Iron and steel Other stacks 20 0 Chemicals Cracker furnace 5 0 Heat and power Waste 13 65 Heat and power Bio-based 13 100 Heat and power Fossil-based 13 0 The lifetime for trucks is assumed to be 10 years and for the rest of the equipment is the lifetime 25 years. The sites are mostly located in the south of Sweden but there are some facilities on the east coast in northern Sweden, see Figure 4.2. In the figure are the sites categorised by which industry they are a part of. The amount of emission from all the sites is shown in table 4.2, here is both the total emissions and the emissions from the stacks J presented. Table 4.2: Emissions from system without carbon capture Emissions One year [tonCO2/year] 26 years [tonCO2] Availible for capture Bio 31 358 891 815 331 169 Fossil 9 288 151 241 491 918 All emissions from sites Bio 34 529 589 897 769 314 Fossil 12 895 674 335 287 524 The distance from the hubs to the Norwegian permanent storage were assumed and the values used in the model can be found in table 4.3. The distance between the site and the hubs were measured in a GIS-software, these distances are presented in Appendix A.4. 17 4. Methods Figure 4.2: Map with sites included in the model Table 4.3: Distance from the hubs to the permanent storage Hub Distance to storage [km] Hub Distance to storage [km] Östrand 2 200 Varberg 840 Oxelösund 1 650 Kalmar 1 350 Lysekil 685 Gävle 2 040 Göteborg 770 Norrköping 1 650 Helsingborg 960 Örnsköldsvik 2 350 Stockholm 1 850 Umeå 2 450 Luleå 2 700 Skellefteå 2 580 Slite 1 520 The investment cost for the capture and liquefaction equipment was calculated using the equation below. These calculations are based on the work by Eliasson[7]. The investment cost is dependent on the CO2 massflow and the value of two variables, these changes depending on the CO2 concentration. The variables for the closest concentration are used. CAPEXA = α · 10000 · ṁβ CO2 [ke] (4.25) Where ṁCO2 is the mass flow of the captured CO2 out from the stacks. The values for α and β are chosen depending on the CO2 share in the flue gas, see Table 4.4. Table 4.4: Variables for absolute investment cost Share CO2 α β 9% 1.174 0.6017 13% 1.552 0.6339 25% 1.183 0.6326 18 4. Methods The specific investment cost was then calculated using the following equation. CAPEXS = CAPEXA ηcapture · ṁstack CO2 [Me/tonCO2] (4.26) Where CAPEXA is the absolute investment cost in M€, ηcapture is the capture rate which is assumed to be 90% in this model and ṁstack CO2 is the CO2 supply from the stack in tonCO2. 4.3 Policy scenarios The scenarios investigated in this work are shown in Appendix A.5, based on the findings in the literature study. A more detailed explanation on the data used in each policy model can be found in 4.3.1 - 4.3.5. 4.3.1 Carbon pricing The emission cost was tested for three scenarios, 0, 50 and 100 €/ton in 2020 and each year the cost was increased by 5 €/ton, see Table 4.5. In the first case Carbon pricing A, there were only one cost to emit fossil CO2. In the second policy case, Carbon pricing B, there was an emission cost for both fossil and biogenic emissions. The emission cost followed the same increase as the previous scenarios but both the fossil and biogenic emissions need to be paid for, see Table 4.5. Table 4.5: Emission cost, €/tonCO2, each year for the three scenarios Scenario Emission Cost [€/ton] 2020 2021 2022 2023 . . . 2044 2045 1 0 5 10 15 120 125 2 50 55 60 65 170 175 3 100 105 110 115 220 225 4.3.2 BECCS credits The first policy case, BECCS credits A, where the money gained for capturing one ton CO2 is the same price as for emitting fossil emissions each year. The second policy case, BECCS credits B, is when two ton captured biogenic emissions compensate for the emissions of one tonne of fossil emissions. Table 4.6: Emission cost for each year for BECCS credits Case Scenario Emission Cost [€/ton] 2020 2021 . . . 2044 2045 Fossil Bio Fossil Bio Fossil Bio Fossil Bio A 1 0 0 5 5 120 120 125 125 2 50 50 55 55 170 170 175 175 B 1 0 0 5 2.5 120 60 125 62.5 2 50 25 55 27.2 170 85 175 87.5 3 100 50 105 52.5 220 110 225 112.5 4.3.3 Emission budget The first emission budget case, Emission budget A, considers a fossil emission budget for the entire modelled period. The total fossil emissions from all sites must be lower 19 4. Methods than 100, 125 and 150 Mton. The second emission budget model, Emission budget B, considers a total emission budget including both fossil and biogenic emissions. The system could either capture fossil or biogenic emissions or both. The size of the emission budget studied is 200, 300 and 400 MtCO2. Emission budget C has a separate budget for biogenic and fossil carbon emissions. The three scenarios have a budget of 100, 150, 200 Mton for respective emission types. 4.3.4 Annual emission budget Annual emission budget A, scenario 1, reduces the fossil emissions budget by 2.2% each year similar to the reduction of emission allowances in the EU ETS. Annual emission budget A, scenario 2, considers a reduction of the fossil emission budgets by 3.8% each year. By 2045 almost all emissions available to capture from the stacks will be captured. The EU ETS system does not only depend on CCS to reduce all the emissions and annual emission budget A, scenario 3, would be a more reasonable scenario with a yearly reduction rate of 0.44%. The annual emission budget B, scenario 1 to 3 are with the same reduction rate as for annual emission budget A, but there is an annual budget on the total emissions. Annual emission budget C have the same reduction rates but here have fossil and biogenic emissions separate budget. 4.3.5 Carbon Contract for Difference This policy is modelled with 2 different prices decided in the contract for the cement industry. All other fossil emissions follow the emission cost of 50 €/ton in 2020 and an increase with 5 €/ton each year, see table 4.7. Table 4.7: Emission cost, €/tonCO2, for the cement industry and for each year for the two scenarios Scenarios Cement emission cost [€/ton] Emission cost [€/ton] 2020 2021 2022 2023 . . . 2044 2045 1 80 50 55 60 65 170 175 2 90 50 55 60 65 170 175 4.4 Sensitivity Analysis The sensitivity to interest rate was performed with an emission cost of 50 €/tonCO2 in 2020 with an annual increase of 5€/tonCO2. The interest rates investigated are presented in Tabel 4.8. Table 4.8: Interest rate used in the 5 models Test Interest rate 1 1% 2 3% 3 5% 4 7% 5 9% The sensitivity case on the growth rate of the system, were done for carbon pricing 20 4. Methods A with scenario 2, see Table 4.9. The cases were simulated with different amounts of maximum annual installing capacity. Table 4.9: The maximum allowed investment and the emission cost, €/tonCO2, each year for the three scenarios and reference scenario Scenario Max investment per year [ton] Emission Cost, €/ton 2020 2021 . . . 2044 2045 Fossil Bio Fossil Bio Fossil Bio Fossil Bio 1 5 000 50 0 55 0 170 0 175 0 2 50 000 50 0 55 0 170 0 175 0 3 500 000 50 0 55 0 170 0 175 0 Ref unlimited 50 0 55 0 170 0 175 0 The sensitivity analysis of the effect of the investment cost for transportation was done with four tests, the investment cost for ship transportation was set to zero according to Table 4.10. All tests had an emission cost of 50€/tonCO2 in 2020, like carbon pricing A scenario 2, see Table 4.5. Table 4.10: Where the investment for ships is free and the emission cost, €/tonCO2, each year for the four scenarios and reference scenario Test Free ship investment cost Emission Cost [€/ton] 2020 2021 2022 . . . 2044 2045 1 Lulea 50 55 60 170 175 2 Lulea and Slite 50 55 60 170 175 3 Lulea and Gothenburg 50 55 60 170 175 4 All hubs 50 55 60 170 175 Ref No free investment cost 50 55 60 170 175 21 4. Methods 22 5 Results and Discussion This section presents and discusses the results from the modelling performed in this work. System cost is defined as the investment and operation cost for all parts of the CCS-system. The model minimise the net present value of the system cost. The lowest average investment cost is at the cement and chemical sites, followed by pulp and paper, and iron and steel. The highest average investment cost is at the heat and power sites. The average investment cost is almost over 7 times higher than the cement sites, but the fossil heat and power sites do not have as high invest- ment cost as the other heat and power sites, this is more than half of the other heat and power sites. The investment cost will be divided and paid over the 25 years of the equipment’s lifetime. Table 5.1: The average investment cost for the stacks in each industry sector Sector Average investment cost [€/tonCO2] Cement 126 Chemical 197 Pulp and paper 380 Iron and steel 382 Refineries 474 Heat and power 945 5.1 Carbon Pricing A The annual system costs for the three scenarios are presented in Figure 5.1. Scenario 2 starts to capture carbon in the year of 2027 when the fossil emission price is 85 €/ton. In scenario 1 the price is 80 €/ton 2036 when the system starts collecting carbon dioxide. This is because the optimization model finds the lowest net present value in 2020. In 2036 the investing cost is considered to be lower in 2020 than in- vesting in the same amount in 2027. Scenarios 1 and 2 follows a similar trend when the fossil emission price is over 85 €/ton. The same investments are done in sce- nario 2 in the years between 2027 and 2031 as for the years 2037 to 2041 in scenario 1. 23 5. Results and Discussion Figure 5.1: System cost when fossil emission cost for the period 2020-2045 are 0-125, 50-175 and 100-225 €/ton The captured emissions each year in Carbon pricing A scenario 1-3 over the period are presented in Figure 5.2. The emissions are captured from five of the six sectors. After the year of 2034 is the captured amount almost the same for scenario 2 as for scenario 3. The emission cost is 125 €/ton in scenario 2 in 2035. This means that perfect foresight has a big effect on the result because other wise would not scenario 2 and 3, with a 50€/tonCO2 difference, have the same annual capture amount after 2034. a) b) c) Figure 5.2: Captured emissions when the fossil emission cost for the period 2020-2045 are a) Scenario 1 0-125, b) Scenario 2 50-175 and c) Scenario 3 100-225 €/ton The total emissions, total system cost and specific system cost is presented in Table 5.2 for scenario 1, 2 and 3. The amount of captured biogenic emissions is low for all three cases. The biggest difference between the Carbon pricing A scenarios is 24 5. Results and Discussion the amount of captured fossil emissions. The higher the capture amount the higher will the specific system cost be. This is because the sites with low cost will be included in the system when the carbon price is low but with a higher carbon price the system will be bigger and stacks with higher cost will also be included in the carbon capture system. The cost for each captured ton CO2 will therefore be higher for scenario 2 and 3 compared to scenario 1. The sites captured from in scenario 1 are also captured from in scenario 2. The same transportation hubs are also used, see Figure 5.3. Scenario 3 has the same hubs and sites included but there is one additional heat and power site in Gothenburg where carbon is being captured from starting in 2040. Table 5.2: Total emissions and total system costs for Scenarios 1, 2 and 3 over the entire modelled period. Scenario Total fossil emissions [MtonCO2] Total biogenic emissions [MtonCO2] Total system cost [M€] Specific system cost [€2020/tonCO2] 1 272 896 5 280 70.5 2 198 894 11 657 72.5 3 141 893 16 623 74.8 Figure 5.3: Location of the transportation hubs used and sites captured from in a) scenario 1 and 2, and b) scenario 3 with one more heat and power plant in Gothenburg 5.2 Carbon Pricing B Adding a cost for emitting biogenic CO2 results in an increase of invested carbon capture technology in the pulp and paper industry and heat and power industry. The captured emissions each year over the period presented in Figure 5.4 for the three scenarios. In scenario 1 is the cement industry included in the system 2035 and the following year is one pulp and paper site investing in carbon capture technology. The fossil emission cost affects the system at first but the second year there are more biogenic emissions captured. This is because both cement and pulp and paper have low investment cost for capture equipment and the pulp and paper site only have biogenic emissions, and at cement sites the biogenic fraction is 10%. 2037 is 25 5. Results and Discussion half of the emissions captured from the pulp and paper industry and in 2039 heat and power have the second highest amount of carbon captured. The reason for this is because the emissions from pulp and paper, and heat and power are much higher than the emissions from other sectors and the emission cost will therefore be much higher for these sectors when there is both an emission price on all emissions. a) b) c) Figure 5.4: Captured emissions when the emission cost for the period 2020-2045 are a) scenario 1, 0-125, b) scenario 2, 50-175 and c) scenario 3, 100-225 €/ton Table 5.3: Total emissions, system costs and specific cost for Scenarios 1, 2 and 3 over the entire modelled period. Scenario Total fossil emissions [MtonCO2] Total biogenic emissions [MtonCO2] Total system cost [M€] Specific system cost [€2020/tonCO2] 1 262 690 24 305 74.2 2 166 375 61 146 77.0 3 97 109 92 492 80.4 In scenario 3 is carbon dioxide captured from all sites but there are four transporta- tion hubs that are not used: Oxelosund, Varberg, Umeå and Skellefteå. These hubs are not used in scenario 1 either. In scenario 2 however, is the transport hub in Varberg used. There is some other difference between the usage of the hubs. The number of ships invested in 2045 in their hubs are presented in Table 5.4. For all scenarios there are seven ships in Lysekil. In scenario 2 is the amount of carbon transported to the Lysekil hub the same amount as for the other two scenarios. The big difference between scenario 2 and 3 is the changes of ships going from Gothen- burg, Helsingborg and Varberg, see Table 5.5. 26 5. Results and Discussion Table 5.4: The amount of invested ships for the hubs in Lysekil, Gothenburg, Helsing- borg, Varberg and the total number of ships for the system for the three scenarios. Scenario Ships Lysekil Gothenburg Helsingborg Varberg Total number of ships 1 7 5 5 0 109 2 7 4 5 2 114 3 7 7 6 0 114 Table 5.5: The hubs used to transport carbon for the sites where there are changes in transport hubs between the scenarios. Scenario Hubs used to transport carbon from sites PP10 PP25 R2 HP14 1 Gothenburg Lysekil Gothenburg Helsingborg Gothenburg Lysekil 2 Gothenburg Varberg Helsingborg Varberg Gothenburg Lysekil Gothenburg Lysekil 3 Gothenburg Gothenburg Helsingborg Gothenburg Gothenburg Scenario Hubs used to transport carbon from sites HP18 HP25 HP47 1 Lysekil Norrkoping Helsingborg - 2 Gothenburg Lysekil Helsingborg Varberg Lysekil 3 Gothenburg Helsingborg Gothenburg Lysekil a) b) c) d) Figure 5.5: Location of the transportation hubs used and sites captured from in. a) scenario 1 and 2. b) scenario 3. Figure d) shows the location of the heat and power plants not included in scenario 1 and 2. 27 5. Results and Discussion 5.3 BECCS credit The results from the BECCS credit A, scenario 1 and 2, are presented in Table 5.6 together with the result of BECCS credit B. The captured emissions are very similar to the policy carbon pricing when there is the same emission cost for biogenic and fossil emission, carbon pricing B. The two scenarios 2 had no difference in fossil carbon emissions and only a difference of 5 MtonCO2 during the whole period. The specific cost for scenarios 1 and 2 in carbon pricing B is a little bit lower compared to the specific system cost in this policy case, because there are lower emissions than these results. The case BECCS credits B had a lower system cost, however the biogenic emissions was higher. Table 5.6: Total emissions and system costs for policy BECCS credits A and B over the entire modelled period. Case Scenario Total fossil emissions [MtonCO2] Total biogenic emissions [MtonCO2] Total system cost [M€] Specific system cost [€2020/tonCO2] A 1 259 676 25 860 74.4 2 166 370 61 708 77.2 B 1 271 895 5 470 70.0 2 187 843 17 051 72.5 3 114 584 46 167 75.5 In scenario 1 when the carbon price is low is carbon capture only invested at site which emits fossil emissions or both fossil and biogenic emissions, see Table 5.7. It is only when the carbon price increases that it is profitable to invest in carbon capture techniques in the pulp and paper industry and heat and power plants with biogenic fuel. Table 5.7: The amount of emissions and share of the captured carbon from site with only fossil emission, biogenic emissions, or both for case BECCS credits A Scenario Capture at sites with both biogenic and fossil emissions Capture at sites with fossil emissions Capture at sites with biogenic emissions [MtonCO2] [%] [MtonCO2] [%] [MtonCO2] [%] 1 18.7 27.9 48.4 72.1 0 0.0 2 68.7 33.7 105.0 51.5 30.2 14.8 3 128.2 24.0 151.0 28.2 255.6 47.8 5.4 Emission budget The emissions, system cost and specific system cost for Emission budget A-C is presented in Table 5.8. Comparing emission budget B and C more fossil emission are captured if the system can choose if capturing biogenic or fossil emissions, like in emission budget B. 28 5. Results and Discussion Table 5.8: Total emissions, system costs and specific system cost for emission budget A, B and C scenarios 1, 2 and 3 over the entire modelled period. Case Scenario Total fossil emissions [MtonCO2] Total biogenic emissions [MtonCO2] Total system cost [M€] Specific system cost [€2020/tonCO2] A 1 100 821 28 107 80.1 2 125 866 20 979 77.1 3 150 890 16 207 74.4 B 1 96 104 94 006 81.3 2 111 189 83 680 79.4 3 134 266 74 357 78.4 C 1 100 100 93 456 80.8 2 150 150 84 265 80.1 3 200 200 75 192 79.5 For Emission budget (EB) A the capture is mostly done at sites with only fossil emis- sion and cement industry (90% fossil emissions), however there are some biogenic emissions captured from waste heat and power plants as well, see Figure 5.6. a) b) c) Figure 5.6: Captured emissions for Emission Budget A a) scenario 1, b) scenario 2 and c) scenario 3. The capture from waste heat and power plants is higher in EB A scenario 1 and 2 compared to EB A scenario 3. In EB B there are more biogenic emissions captured. Of the total biogenic emissions is 88% of the emissions captured in scenario 1 and 78% of the fossil emissions is captured. When the system can choose fossil or biogenic emissions, Emission budget B, is more cost efficient compared when the budget is divided for the emission types. In emission budget B scenario 3 is 33.5% of the emissions from fossil based carbon and 66.5% are from biogenic carbon but there is much more biogenic emissions captured compared to fossil emissions, see Figure 5.6. Of the total fossil emissions is 40% captured and for the biogenic is 30% captured in 29 5. Results and Discussion emission budget B scenario 3, so despite capturing more biogenic emissions is there a lower share of the emissions captured. 5.5 Annual emission budget In annual emission budget (AEB) A and C the capture of fossil emissions is the same because in AEB C is the fossil budget the same as for AEB A, see Table 5.9. This means that all additional biogenic carbon capture when there is an annual budget on the biogenic emissions is captured from pulp and paper industry and heat and power plants with biogenic fuel. Table 5.9: Total emissions, system cost and specific cost for annual emission budget A, B and C Scenarios 1, 2 and 3 over the entire modelled period. Case Scenario Total fossil emissions [tonCO2] Total biogenic emissions [tonCO2] Total system cost [M€] Specific system cost [€2020/tonCO2] A 1 264 898 5 976 72.8 2 211 887 11 418 74.0 3 321 898 1 304 79.8 B 1 205 715 25 813 71.9 2 170 521 46 174 74.4 3 305 865 4 928 68.6 C 1 264 656 25 955 72.3 2 211 480 46 539 75.0 3 321 849 5 056 70.5 The amount of carbon capture in each sector in scenario 1 for all three types of annual emission budget cases is presented in Figure 5.7. a) b) c) Figure 5.7: Captured emissions for a) Annual emission Budget A scenario 1, b) Annual emission Budget B scenario 1 and c) Annual emission Budget C scenario 1. 30 5. Results and Discussion An interesting observation is that the specific system cost in scenario 1 is higher for AEB A compared to AEB C in the same scenario, but the AEB A has a lower specific system cost in scenario 2. This is because the capture of biogenic emission is lower for some parts of the sites, but when almost everything needs to be captured there are a couple of small sites that have to be included in the system and the cost for capture at these is higher compared to the large iron and steel facilities. When comparing Annual emission budget B and C both the total system cost and specific system cost are lower when the system can choose how much emissions of the respective emission type is captured. In AEB B the amount of fossil emission captured is higher for all three scenarios compared to AEB C. 5.6 Carbon Contract for Difference In scenario 1 when the carbon price for cement was 80 €/ton no CO2 from the cement industry was captured, no biogenic emissions were captured either. In scenario 2 the only biogenic emission captured came from the cement site at Gotland, and this was low because the share of biogenic emission is only 10%. There is perfect foresight in the modelling and therefore is it easy to know when to invest and not. The tricky part of this policy is that it is not known how high the emission cost will be in the future. The contract is written with some prediction on how the future carbon pricing will be but the exact number is unknown. Table 5.10: Total emissions, system cost and specific cost for carbon contract scenarios 1 and 2 over the entire modelled period. Scenario Total fossil emissions [MtonCO2] Total biogenic emissions [MtonCO2] Total system cost [M€] Specific system cost [€2020/tonCO2] 1 230 898 8 937 73.8 2 198 894 11 564 71.8 The total system cost is lower for scenario 1 when the carbon strike price is low enough for the system not to invest in carbon capture at Gotland, however is the specific system cost higher. This is because the specific cost of capturing carbon from the cement sites is low compared to most other sites. Looking at the specific cost would scenario 2 be the best option for the system but usually every company pays for their respective costs and for the companies in the cement industry, in Sweden Cementa, would scenario 1 be better. The investment of carbon capture is made at the same sites in the two scenar- ios, the only difference is the cement facility on Gotland, see Figure 5.9. The carbon capture from the cement industry is also the largest difference in how much carbon that is captured at each site. The iron and steel industry in Luleå and chemical in- dustry in Stenungsund has the same amount of carbon captured in both scenarios. The other seven sites were a total of 1 ton additional carbon captured in scenario 1, see Figure 5.8. 31 5. Results and Discussion Figure 5.8: Amount of carbon captured at each site during the period for scenario 1 and 2. a) b) Figure 5.9: Location on the transportation hubs used and sites captured from. a) scenario 1 and b) scenario 2 with one additional hub and site on Gotland. 5.7 Sensitivity analysis The result of the three sensitivity analysis is divided into three chapters. 5.7.1 Interest rate The result of this analysis is presented in Table 5.11. The interest rate, looking at policy Carbon pricing A scenario 2, has a large effect on how much fossil emission is captured and also the cost. For this period it is unlikely for the system to have a 7% and 9% interest rate. Somewhere between 1% and 3% is more reasonable. In this system an interest rate of 5% used and change in interest rate will have effects on the results. 32 5. Results and Discussion Table 5.11: Total emissions, system cost and specific cost for Scenarios 1-5 over the entire modelled period. Total fossil emissions [MtonCO2] Total biogenic emissions [MtonCO2] Total system cost [M€] Specific system cost [€2020/tonCO2] 1% 185 894 11 481 74.7 3% 191 894 11 698 79.0 5% 198 894 11 656 83.1 7% 206 895 11 582 87.4 9% 213 895 11 604 92.6 Which sites that are included in the system are not affected by the interest rate for Carbon pricing A scenario 2 but which hubs are used are. For 1% and 3% are the transport hub in Gothenburg used. For 5% interest rate is both the hub in Gothenburg and Lysekil used for transport and in the case of 7% or 9% is the Lysekil hub used but not the one in Gothenburg, see Figure 5.10. a) b) c) Figure 5.10: Location on the transportation hubs used and sites captured from. a) interest rate 1% and 3%, b) interest rate 5% and c) interest rate 7% and 9%. 33 5. Results and Discussion 5.7.2 Growth limitations The limitations on how much capacity that is possible to invest every year have effects, Table 5.12. Comparing the limitation by 5 000 ktonCO2/year and when the investment is limitless it is clear that the system does not capture as much emissions but the specific cost for these two scenarios is almost the same. There is not much different between the cases when the limit are 50 000 and 500 000 and the reference case. Table 5.12: Total emissions, system cost and specific cost for Scenarios 1, 2, 3 and reference scenario over the entire modelled period. Limitation Total fossil emissions [MtonCO2] Total biogenic emissions [MtonCO2] Total system cost [M€]/[M€2020] Specific system cost [€2020/tonCO2] 5 000 210 895 10 685 72.3 50 000 199.038 894 11 575 72.3 500 000 198.523 894 11 663 72.6 Ref 198 894 11 657 72.5 5.7.3 Investment cost for ships In all scenarios with free ship investment and the reference case the number of ships is 22 in 2045. The difference is where the ships retrieve the carbon. Case 1, 2 and 3 when the investment was free for Luleå and Gothenburg or Slite were four hubs used. When all ships have a free investment cost and the reference case when no ships were free were five hubs used, with an additional hub used in Lysekil, see Figure 5.11. a) b) Figure 5.11: Location on the transportation hubs used and sites captured from. a) case 1-3 and b) case 4 and reference case. The development of CCS starts 2024 for case 1-4, see Figure 5.12. For all four cases 34 5. Results and Discussion the system captures carbon from the steel industry in Luleå in 2024. The next site to invest in carbon capture technology depends on which hubs have free investments. The system invest in carbon capture in the cement industry in 2025 when the ships from Gotland are free. When the ships are free from Gothenburg is carbon from two refineries and one chemical site close to Gothenburg being captured starting at 2026. When all hubs have free ships is two iron and steel sites and the cement site on Gotland part of the CCS-system from 2024 and the refinery closest to Lysekil is included in the system from 2025. a) b) c) d) Figure 5.12: Carbon capture development with the captured carbon divided in from which of the transport hubs it is transported from a) scenario 1 when the investment of ships from Luleå is free, b) scenario 2 when Luleå and Slite is free, c) scenario 3 when Luleå and Gothenburg is free and d) scenario 4 when all ships are free The cheapest specific system cost is when all investment cost for ships is free and this scenario capture also most emissions. The interesting result from this is the comparison between scenario 2 and 3. There is more emission captured and trans- ported via Gothenburg than Slite in both cases, 47.97 Mton and 29.59 Mton for 2 and 44.85 Mton and 26.77 Mton from 3. But there are more emissions captured in scenario 2 when the ships from Slite is free. The specific system cost is also lower for case 2. The investment of transportation by ship is high compared to the investments of the trucks needed. The investments are affecting the development of the CCS system but there is a large cost for the government if they were to finance the cost of ships. 35 5. Results and Discussion Table 5.13: Total emissions, system cost and specific system cost for Scenarios 1-4 and reference scenario over the entire modelled period. Case Total fossil emissions [MtonCO2] Total biogenic emissions [MtonCO2] Total system cost [M€] [M€2020] Specific system cost [€2020/tonCO2] 1 193 894 11 398 68.3 2 189 894 11 441 66.8 3 191 894 11 302 67.0 4 180 894 11 407 62.7 Ref 198 984 11 657 72.5 5.8 Comparison In Appendix A.7 is a table with most of the results from the policy models. For the models with carbon pricing and BECCS credits are the specific cost increase between the three cases with the same rate. The same is true for emission bud- get A but the specific cost difference between the scenarios in emission budget B is smaller. The annual emission budget B scenarios has an increased specific cost when the annual budget reduction increases. In the annual emission A model is this not the case. Here is scenario 1 with a reduction rate 2.2% lower than scenario 3 with 0.44%. This can be explained by looking at which sites that are included in the system for the two scenarios. In scenario 1 is sites for cement, refinery, iron and steel, and chemical industry included, but in scenario 3 is only one site in the iron and steel industry included. There are only 3 ships bought and most of the years these are not filled, this is one reason for the high specific cost together with lower in- vestment cost for cement and chemical industry compared to iron and steel industry. The different policies show potential but there are both advantages and disad- vantages with each policy. Carbon pricing is a good cost-efficient way to reduce emissions and as can been seen in the results of carbon pricing A and B. If the price increases, will more polluters prevent emissions, but this policy does not set a cap and it will be hard to limit to a specific emission budget with carbon pricing. Carbon pricing is a good solution both for the environment and economy at the moment, but it might not be the solution to the problem. As long as the big pol- luters can afford to pay for the emissions will the emissions not decrease. Including biogenic emissions in policies will in most situations reduce the total emissions. In some circumstances will the specific system cost decrease but this was not the case for the scenarios in carbon pricing B. A disadvantage of BECCS credit A and B is that it entails a cost for the state. Money used to pay for the captured CO2 is money that could be used for something else that would benefit the country’s population or be used for other environmental improvements. This policy may be very expensive in the future with much biogenic emissions being captured and may not be the best policy in the long run without large changes. The benefits with BECCS credits are good but the results are sim- ilar to carbon pricing B. It is also difficult to determine how much money should be reworded for capturing biogenic emissions. Too high a price will result in a lot of companies investing in capturing equipment in facilities with biogenic emission 36 5. Results and Discussion and a high cost for the government and with too low reward money will the policy not have any effect. Comparing BECCS credits B scenario 1 and carbon pricing A scenario 1 is the amount of emissions about the same but the specific system cost is 0.5€/ton lower for BECCS. For the same cases but scenario 2 is the specific cost the same but here is the BECCS credits option also better for the system, there is 62 Mton more emissions captured. One way to ensure that not too many emissions are emitted is by setting a budget. The good thing with emissions budget is that the companies can choose when and where the emissions are emitted. The result of emission budget A-C and annual emission budget A-C may be the best policies models when regarding the foresight. In all models there is perfect foresight but is policies would be implemented in the Swedish industry would not the system have any foresight on how the situation will be in the future. With a budget is the amount of emissions already decided, but the problem with the model for the budget policies is that the production and therefore emissions will change over the years. It is unknown if the production will increase in 2030 or if some of the processes will be electrified. In the system modelled is the budget for the whole system. This requires good communication between every industry sector and sites. If the emission budget were to be implemented in the Swedish industry, would it be a good idea to divide the budget between the sectors or sites. When there is a plan on how emissions will be reduced, and a policy has been chosen is it important that a clear long-term plan is communicated to all actors so that the plan is followed. Depending on the goals set for Swedish industry, the emission budget would be a good option. The carbon pricing cannot be limited by a budget but will be af- fected by how much the companies are willing to pay. The positive aspect of carbon pricing is that it can easily be changed over the years. This is also easier to change the annual emission budget compared to a total budget over a period. The highest carbon price on fossil emissions, staring at 100€/ton in 2020, results in 141 Mton fossil emissions and 893 Mton biogenic emissions and the specific cost for this policy is 74.8 €/ton, see ??. This can be compared to two other policy scenarios. Emission budget of 150 for fossil emissions, with 150 Mton and 890 Mton emissions and a specific cost of 74.4 and total annual emission with 2.2% reduction rate with 211 Mton fossil emissions and 887 Mton biogenic emissions. The specific cost with annual emission budget is 74.0 €/ton. The difference in emission between carbon price and emission budget is not much, only 6 Mton, but the specific cost in lower for emission budget. The specific cost is lowest for annual emission budget but there is 58 Mton more emissions compared to the emission budget. Comparing carbon pricing and emission budget when the policies includes both fossil and biogenic emissions shows that carbon pricing is the better option for the modelled period when the emissions is about 200 Mton. Carbon pricing with 100 €/ton for all emissions result in 97 fossil emissions and 109 biogenic and a specific cost of 80.4 €/ton. Emission budget B scenario 1 have a specific cost of 81.3 €/ton, 96 fossil emissions and 104 biogenic emissions. There is 6 Mton more emissions for carbon pricing scenario but the total system cost resulting in a lower specific cost 37 5. Results and Discussion for the carbon pricing scenario. Depending on the policy, different sites are included in the CCS system. The an- nual emission budget for fossil emission is a higher amount of carbon captured from iron and steel sites. Both with carbon pricing and emission budget is high amount emissions captured from iron and steel, but the cement sites and chemical industry is included earlier and more emissions is captured from these sites. Looking at the same policies but including biogenic emission is the emissions captured from iron and steel sites higher for annual emission budget B compared to carbon pricing B and emission budget B. But for all three policies is the highest amount of emissions captured from the pulp and paper industry. The reason for higher percent of the carbon captured from iron and steel industry in annual emission budget is that these are big sites with many emissions. In this policy is the increase each year small and there is not a bigger investment any year. Therefore, is there system focusing on some sites with high emissions instead of investing in more sites. Sweden is country with a lot of pulp and paper industry and therefore there are great opportunities to capture biogenic emissions. Including biogenic emissions in the policies do affect the system greatly. The difference between the policies for fos- sil emissions and the policies for all emissions is that there are much more emissions to take into account and therefore it is difficult to compare the different policies. The cheapest investments are to only capture from a few fossil emissions sites but with large amounts of emission captured will it be cheaper to capture both fossil and biogenic emissions. There is a synergy between the two emission types. Cement industry emits both biogenic and fossil but there are much more fossil emissions. The heat and power sites with waste as fuel have however a more even distribution of biogenic and fossil emissions. By capturing emissions from waste heat and power sites will both the fossil and biogenic emissions be reduced. But it will be cheaper for the system to capture from cement or chemical sites and the pulp and paper industry to capture both types of emissions. Reaching net zero emissions by 2045 will be tough without CCS in the biggest industries, but CCS will not be the only solution in reducing the amount of carbon dioxide being released in the atmosphere. There has to be an increase in efficiency in all processes, reduction in fossil fuel and reduction of production in most industries. There is a long way to go before CCS can be implemented in a large extent in the Swedish industry. CCS will not be the only thing that will get us to meet net zero emissions but maybe it can cover 10 or even 20% of today’s emissions in the future. Reaching a net zero can be done by investing in some carbon capture technology each year or investing much in the ten years before 2045. CCS is a good option for reducing fossil emissions that are difficult to reduce by changing the production processes and it is a good option for negative emission by capturing and storing biogenic emission. 38 6 Conclusion In this work, a mixed integer programming optimization model has been used to find the lowest net present value of carbon capture and storage system for Swedish industry. The implementation of policies resulted in various amounts of carbon cap- tured and different annual system costs. The choice of policy affects how much CO2 are captured, and from which sites these are captured from. Most of the policies investigated gave a specific capture cost of 69-81 €/tonCO2. The most important differences between the policies are the amount of emissions captured and the total system cost. The implementation of the CCS system is greatly affected by the amount of CO2 captured. Carbon capture with carbon pricing policies give a threshold effect, there is a large increase in carbon captured over a few years. The choice of carbon price increase has little effect on how much is captured in 2045, the carbon price rather affects how much emissions are captured during the period. The carbon price does not affect the share captured from each industry. The carbon captured when there is an emission budget do also have some thresh- old effects, but the increase is not as large at the end of the period as for carbon pricing. With emission budget, the emission sources with low investment cost are included early in the period. The amount of carbon captured the following years is almost constant for these low-cost sources. The more expensive sources invest in carbon captured later, the year depends on how low the budget is, with a budget of 100 Mton fossil emissions is biogenic heat and power plants included from year one. In the Swedish industry is the sites with biogenic emissions more affected by the emission budget when there is a total budget for all emissions. When there is a continuously decreased annual emission budget the increase of carbon captured linear. The investments are the same size each year. The annual investment size influence which sites are includes in the CCS system. Having an annual emission budget result in more emissions captured from the iron and steel industry. There is also less sites included in the CCS system and the share of emis- sions captured from the site is higher compared to other policies. With total emission budget and total annual emission budget the system bene- fits from choosing between fossil and biogenic emissions. For these cases there are fewer fossil emissions but there are higher amounts of biogenic emissions captured. For the largest total emission budget tested, 400 Mton, which is about 32% of the 39 6. Conclusion emissions, 60% of the total fossil emissions captured and 70% of the biogenic emis- sions captured. A total annual emission budget with a reduction rate of 2.2% there is a higher share of the fossil emissions captured compared to the percent of the biogenic emissions. With a reduction rate of 2.2% is 39% of the fossil emissions are captured and 20% of the biogenic emissions. When more emissions are captured and when the reduction rate is 3.8% is the percentage 42% and 49% for fossil emissions captured respective biogenic emissions captured. 6.1 Future Work Here is a list of suggestions that could be included in future work with studies like this. - Not have perfect foresight. - Have an increase or decrease on the production at the sites and therefore emissions. - Divide the policies more by each sector or company, so budget can be set for respective company. - Look at more policies were the policies for fossil emissions are stricter than for the biogenic emission policies. 40 Bibliography [1] Agency, I. E., 2020. CCUS in the transition to net-zero emissions, Paris: IEA. [2] Al-Mamoori, A., Krishnamurthy, A., Rownaghi, A. A. Rezaei, F., 2017. Carbon Capture and Utilization update. In: Energy Technology. s.l.:s.n., pp. 834-849. [3] Appunn, K., 2021. Understanding the European Union’s Emissions Trading System (EU ETS). Avail- able at: https://www.cleanenergywire.org/factsheets/ understanding-european-unions-emissions-trading-system [Accessed 21 Mars 2022]. [4] CCS Norway, n.d. The CCS chain. Available at: https://ccsnorway.com/ full-scale-capture-transport-and-storage/ [Accessed 02 February 2022]. [5] Doctor, R. et al., 2005. Transport of CO2. In: Carbon Dioxide Capture and Storage. s.l.:Intergovernmental Panel on Climate Change. [6] Eichhammer, W. Chlechowitz, M., 2021. Does the EU Emission Trading Scheme ETS Promote , s.l.: Odyssee Mure. [7] Eliasson, Å. et al., 2021. Integration of Industrial CO2 Capture with Industrial District Heating Networks: A Refinery Case Study, s.l.: s.n. [8] European Commission, 2021. Proposal for a Directive of the European Parlia- ment and of the Council amending Directive 2003/87/EC, Brussels: s.n. [9] European Commission, 2021. Revision for phase 4 (2021- 2030). Available at: https://ec.europa.eu/clima/eu-action/ eu-emissions-trading-system-eu-ets/revision-phase-4-2021-2030_en [Accessed 16 Mars 2022]. [10] European Commission, n.d. 2030 climate energy framework. Available at: https://ec.europa.eu/clima/eu-action/climate-strategies-targets/ 2030-climate-energy-framework_en [Accessed 14 Mars 2022]. [11] European Commission, n.d. En europeisk klimatlag. Available at: https://ec.europa.eu/clima/eu-action/european-green-deal/ european-climate-law_sv [Accessed 26 January 2021]. [12] European Commission, n.d. Market Stability Reserve. Available at: https:// ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/ market-stability-reserve_en [Accessed 14 Mars 2022]. [13] European Parliament, 2009. Directive 2009/31/EC: the geological storage of carbon dioxide and amending. s.l.:European Union Law. [14] Fossilfritt Sverige, 2021. Strategi för Fossilfri Konkurrenskraft - Bioenergi och Bioråvara i Industrins Omställning, s.l.: s.n. [15] Garðarsdóttir, S. Ó., Normann, F., Skagestad, R. Johnsson, F., 2018. In- vestment costs and CO2reduction potential of carbon capture fromindustrial 41 https://www.cleanenergywire.org/factsheets/understanding-european-unions-emissions-trading-system https://www.cleanenergywire.org/factsheets/understanding-european-unions-emissions-trading-system https://ccsnorway.com/full-scale-capture-transport-and-storage/ https://ccsnorway.com/full-scale-capture-transport-and-storage/ https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/revision-phase-4-2021-2030_en https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/revision-phase-4-2021-2030_en https://ec.europa.eu/clima/eu-action/climate-strategies-targets/2030-climate-energy-framework_en https://ec.europa.eu/clima/eu-action/climate-strategies-targets/2030-climate-energy-framework_en https://ec.europa.eu/clima/eu-action/european-green-deal/european-climate-law_sv https://ec.europa.eu/clima/eu-action/european-green-deal/european-climate-law_sv https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/market-stability-reserve_en https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/market-stability-reserve_en https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/market-stability-reserve_en Bibliography plants–A Swedish case study. International Journal of Greenhouse Gas Con- trol, Volume 76, pp. 111-124. [16] Gerres, T. Linares, P. 2020. Carbon Contracts for Differences: their role in European industrial decarbonization, s.l.: Climate Friendly Materials Platform. [17] Gibbins, J. and Chalmers, H. (2008) Carbon Capture and Storage. Energy Policy, 36, 4317-4322. [18] Gode, J., Stigson, P., Höglund, J. Bingel, E., 2011. Förutsättningar för avskiljn- ing och lagring av koldioxid (CCS) i Sverige. – En syntes av Östersjöprojektet, s.l.: IVL Svenska Miljöinstitutet. [19] Hall, J., 2021. Cleaning Up The Steel Industry: Reducing CO2 Emissions with CCUS, s.l.: Carbon Clean. [20] Hub, E. S., 2018. How EU pulp and paper industry can reduce green- house gas emissions. Available at: https://ec.europa.eu/jrc/en/news/ how-eu-pulp-and-paper-industry-can-reduce-greenhouse-gas-emissions [Accessed 26 January 2021]. [21] HUR-gruppen, 2021. Marknadsstabilitetsreserven. Available at: https://www.energimyndigheten.se/klimat--miljo/ handel-med-utslappsratter/om-utslappshandel/utslappshandel-i-eu/ marknadsstabilitetsreserven/ [Accessed 16 Mars 2022]. [22] HUR-gruppen, 2021. Utsläppshandel i EU. Available at: http://www. energimyndigheten.se/klimat--miljo/handel-med-utslappsratter/ om-utslappshandel/utslappshandel-i-eu/ [Accessed 28 02 2022]. [23] IEA Greenhouse Gas RD Programme, 2004. Ship Transport of CO2. [24] IEA Greenhouse Gas RD Programme, 2021. Exporting CO2 for Offshore Stor- age – The London Protocol’s Export Amendment and Associated Guidelines and Guidance, s.l.: s.n. [25] IEA, 20