Application of a Risk-Based Probabilistic Model (CCSvt Model) to Value Potential Risks Arising from Carbon Capture and Storage

Abstract

Abstract Over the past decade, carbon capture and storage (CCS) has moved from the planning phase to experimental phase (e.g., Alabama Gulf Coast-Plant Barry and Illinois Basin-Decatur), but has yet to be implemented at a commercial scale from an Electric Utility Generating Unit (EGU). Barriers to commercial-scale deployment of CCS include concerns regarding potential risks and financial liability related to human health, safety, the environment, and business interruption. Although the probability of a release may be small, prudent risk management requires estimates of the funds required to remediate or compensate for harm, should a release occur. The analytic tools exist to estimate dollar values of potential risks. Such estimates are a function of location, plant design (fuel source, technology), and must be estimated on a site-specific basis. This paper applies a stochastic Monte Carlo model (“CCSvt Model”) that estimates financial consequences arising from potential human health, safety, environmental and business interruption risks (events) associated with CCS, in light of their anticipated site-specific likelihood and magnitude. The authors contend that use of the CCSvt Model, and corresponding results, foster a best practice understanding of the potential risks and financial liabilities associated with proposed CCS projects. In the authors’ view, the results of the CCSvt Model can contribute to a more productive public dialogue regarding CCS, improved siting of CCS projects, and ultimately support the commercial-scale deployment of CCS- technology. The authors conclude that the CCSvt Model is sufficiently flexible in design that it can be adapted to estimate damages distribution curves for myriad types of CCS projects, scaled for plant design and geographic location. As a proof of concept, the authors apply the CCSvt Model to the Alabama Gulf Coast-Plant Barry pilot project in Mobile, Alabama.