Workshop & Capacity Building
Technology and Scaling-Up Measures Paramount for CCUS Deployment in Asia
The CCUS Virtual Workshop, 18 January 2022: As a crucial component in Asia’s carbon-neutral aspiration, understanding the cost structure of Carbon, Capture, Utilisation, and Storage (CCUS) technology is essential for the region to realise its plans. Advancing towards a CCUS value chain in Asia will require a collective framework to successfully promote its deployment while also focusing on cost-reduction initiatives. A CCUS Workshop titled ‘CCUS Model Case Study Workshop,’ hosted by the Mitsubishi Research Institute (MRI) indicated that continuous technological development and scaling-up of CCUS volumes are equally important to make this technology affordable.
The workshop brought together stakeholders from the Asia region to discuss the cost structure of an ASEAN-wide CCUS deployment and the legal framework to support the initiative. The research findings, conducted by the MRI, provided answers and recommendations related to common concerns such as the capital-intensive costs of CCUS and CCS and the regulatory requirements to ensure its feasibility. The Economic Research Institute for ASEAN and East Asia (ERIA) as the secretariat of Asia CCUS Network (ACN) co-hosted the event on 18 January 2022.
Mr Shigeru Kimura, Special Advisor to the President on Energy Affairs, ERIA provided his Opening Remarks explaining the research objective and its relevance towards ASEAN’s low carbon energy transition. Although stakeholders now have initial research findings on CCUS and CCS deployment, Mr Kimura reaffirmed ACN’s ambition to continue subsequent studies on CCUS activities, potential storage mapping, and financial schemes to support its commercialisation. Future study findings will be shared through ACN’s workshops and knowledge-sharing conferences.
The first speaker of the workshop, Mr Ulysses Coulmas, Researcher, MRI provided in-depth insights of a model case study for a hypothetical CCS project in ASEAN to better visualise the cost scale and major cost components of this technology. MRI focused its study on cost estimation, regulatory and policy framework, and further actions for regional cooperation. The Java region in Indonesia and the Blora Regency in Central Java were selected for the CCS model case study due to previous international studies for carbon dioxide (CO2) storage and its favourable accessibility to CO2 sources. The CCS model case has a capture capacity of 2.87 million tonnes of CO2/year and MRI’s cost estimation assessment centred on the capture, transportation, and storage of CO2 of a retrofitted coal-fired power plant.
MRI referred to a 2005 study by the Research Institute of Innovative Technology for the Earth (RITE) to analyse capture costs of its CCS model case and discovered that capture costs were the most expensive encompassing 73.12% of the cost balance calculations. The capital expenditure figure (CAPEX) for CO2 capture was $433.05 million whilst the operating expenses (OPEX) totalled $89.63 million per year. Altogether, MRI estimates that the unit cost under the CCS model case study would be $37.27 per tonne of CO2 for capture.
The finding is around the same range as the Tomakomai CCS demonstration project in Japan, partly spearheaded by Japan CCS Co., Ltd (JCCS). During the Panel Discussion, Mr Yoshihiro Sawada, Corporate Adviser, General Manager of International Affairs Department, JCCS reported that CO2 capture of the Tomakomai CCS accounts for 76% of the total costs. As such, ‘reducing capture cost is important for reducing the CCUS cost’ which can be facilitated through technological innovation. Mr Sawada stipulated that reducing the OPEX in CO2 capture can be done by sourcing energy internally.
MRI referred to the Parker estimation model and the National Energy Technology Laboratory model to calculate the CAPEX and OPEX on CO2 transportation for its model case. CAPEX computation totalled $30.56 million and the OPEX figure amounted to $1.12 million per year. MRI examined pipeline costs as ‘this will be the main transportation method and project’ and the estimated unit cost for a 50-kilometre pipeline in the Blora Regency is around $0.82 per tonne of CO2. According to Mr Coulmas, ‘AMS can expect to spend between $50,000 to $700,000 per mile on CO2 pipelines determined by the terrain or for offshore projects.’ Overall, the transportation system is the least expensive of the three cost estimation components comprising 1.52% of the cost balance.
MRI referred to a RITE’s study to analyse the storage costs of the model CCS plant which would require drilling six 500 kilotonnes/year wells. For the CCS case study in Blora, the CAPEX for storage costs totalled $264.36 million whilst the OPEX amounted to $26.52 million per year. MRI’s unit cost estimation for CO2 storage is around $12.92 per tonne of CO2 with storage costs making up 25.36% of the cost balance. Mr Coulmas reiterated that considerable subsurface research must be conducted in the site screening and site selection phases since the costs of an injection site are site-specific thus affecting expenditures.
Mr Coulmas presented figures for CO2 shipping in ASEAN based on a Zero Emissions Platform study where he underscored that ‘it is inevitable to have a fleet of CO2 transport ships’ that covers all AMS hence it ‘will be essential to lower the cost for shipping to a feasible level.’ MRI’s CO2 shipping CAPEX estimation for a ‘point-to-point’ transport case ranged from $193.36 million for 180 kilometres (KM) to $297.95 million for 1,500 KM whilst annual expenses varied from $46.95 million per year for 180 KM to $68.99 million per year for 1,500 KM.
Ms Ayami Saimura, Researcher, MRI spoke regarding the significance of having a legal and regulatory framework. A framework that covers the entire life cycle from planning to post-closure and clarification on the processes and responsibilities ‘is an important step for removing risks and barriers that inhibit investment into CCS and lead to advancing CCS deployment.’ Ms Saimura offered three approaches to realise the framework, namely:
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To formulate legal and regulatory frameworks by individual countries and utilising existing laws and regulations governing oil and gas;
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To formulate legal and regulatory frameworks by individual countries as well as to formulate stand-alone CCS-specific legal frameworks; and
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To formulate ASEAN-wide cooperation frameworks on legal and regulatory issues for CCS through setting basic principles on a regional basis then transferring them to countries’ specific regulations.
Ms Saimura explained that rolling out an ASEAN-wide cooperation framework for CCS will require in-depth studies and consultations with stakeholders. Ms Saimura additionally proposed the ‘Asia CCUS Collective Action Initiative’ tentatively to reinforce regional cooperation and facilitate CCS deployment across Asia. The initiative would address a multitude of issues such as providing clarity to risk and liability, and by collectively addressing such matters, the region can determine basic principles for each country to incorporate. Ms Saimura is confident that more country involvement would enable further deployment and scaling-up of CCUS.
Ms Kikuko Shinchi, Senior Researcher, MRI moderated the Panel Discussion session which featured five industry experts as panellists. Speaking on the issue of CAPEX and OPEX reduction potential, Mr Sawada clarified the link between scaling up and cost reduction where the unit cost of the Tomakomai CCS decreased from $123 to $67 per tonne of CO2 as the capacity increased five-fold from 200,000 tonnes per year. He called for more CCS demonstration projects in Southeast Asia to abet cost reduction measures. Mr Sawada recommended ASEAN create a business model that will enable AMS to jointly reduce emissions followed by a joint feasibility study. He also warns that while AMS is projected to have high CO2 storage potential, it is only an estimate thus conducting studies and surveys are integral to confirm its real potential.
Regarding policy and legal requirements, Dr Mohammad Rachmat Sule, Lecturer, Faculty of Mining and Petroleum Engineering, Institute of Technology Bandung (ITB) shared updates on Indonesia’s latest CCUS-related regulatory framework. Indonesia first developed the framework with the Asian Development Bank (ADB) in 2019 but has moved ahead with revisions in which the latest draft regulation is expected to be finalised by end of January 2022. The framework features new aspects including the monetisation of CO2 as well as the methods to implement the monitoring, reporting, and verification process. Based on Indonesia's enhanced awareness of CCUS through its various partnerships, Dr Sule champions knowledge sharing activities to disseminate best practices and improve understanding of the technology.
Mr Jinmiao Xu, Energy Specialist, Energy Sector Group, Sustainable Development and Climate Change Department, ADB offered his views on strengthening regional cooperation. Due to the scale and complexity of CCUS technology, Mr Xu believes that collaboration would reduce the high risks presented at the early stage and decrease uncertainty on environmental issues. Improving trust between governments can encourage regional cooperation and collaborations on many levels hence platforms like the ACN is crucial in meeting such objectives. To better ensure all AMS partake in the CCUS industry value chain, Mr Xu proposed the introduction of a regional CCUS fund to facilitate its deployment in Asia and to support intergovernmental partnerships. He mentioned discussions on a regional carbon market and the inclusion of CCUS in a green financing framework as priority areas to explore.
Ms Yukimi Shimura, Director, Planning & Development Department, Sustainable Business Division, MUFG Bank, Ltd. expressed her thoughts on project development requirements towards CCUS commercialisation. Ms Shimura explained that banking institutions that have pledged to decarbonise must remain open to supporting unconventional business areas like CCUS. She added that banking institutions must ‘make the unknown known for banks to decide to what extent we can actually assume risks in lending for those projects.’ As ASEAN forges ahead with its CCUS ambitions, Ms Shimura advocated for a bankable business scheme which will especially require government commitment on long-term financial support.
Even though ASEAN can learn from the experiences of Europe and the United States concerning CCUS, Ms Shimura cautioned that no one single legal regulatory framework can be duplicated to Southeast Asia due to numerous differences. Nonetheless, Southeast Asia can take lessons from advanced economies regarding incentive schemes to make CCUS profitable. Ms Shimura expressed how banks and insurance companies would appreciate being involved in discussions on CCUS-related legal and regulatory issues.
As part of his commentary on the model case study, Mr Coulmas shared that more work is needed to secure public funding and clearance to build a CCUS project. ‘Most people agree that a CCUS project is very expensive so any party that would like to develop such a big project needs some kind of funding,” he explained. Matters such as easing access to public funding, accelerating cooperation between the private and public sectors, and assessing the profitability of CCS and CCUS are potential topics for upcoming studies.
Ms Shinchi summarised the key points of the conference underlining how capacity building and knowledge sharing can contribute to cost reduction, advancements, and the development of a regulatory framework. ‘The region can do a lot but the least we can do is to work together to boost confidence and I think today’s discussion would definitely contribute to that as the first steppingstone,’ Ms Shinchi remarked.
Dr Han Phoumin, Senior Energy Economist, ERIA congratulated the MRI team in his Closing Remarks, adding that ‘without this understanding and study, it would be difficult to properly understand the context of CCUS deployment in ASEAN and East Asia.’ Dr Phoumin reminded participants that a future CCUS regulatory framework must be robust, flexible, and suitable for each project in the region. Although ASEAN has begun developing its original taxonomies for green financing, Dr Phoumin reasserted the importance of clearly defining CCUS as ASEAN strives toward a carbon-neutral region.