International Transport of Captured $$\hbox {CO}_2$$ CO 2 : Who Can Gain and How Much?

Abstract

If carbon capture and storage (CCS) is to become a viable option for low-carbon power generation, its deployment will require the construction of dedicated CO2 transport infrastructure. In a scenario of large-scale deployment of CCS in Europe by 2050, the optimal (cost-minimising) CO2 transport network would consist of large international bulk pipelines from the main CO2 source regions to the CO2 sinks in hydrocarbon fields and saline aquifers, which are mostly located in the North Sea. In this paper, we use a Shapley value approach to analyse the multilateral negotiation process that would be required to develop such jointly optimised CO2 infrastructure. First, we find that countries with excess storage capacity capture 38–45 % of the benefits of multilateral coordination, implying that the resource rent of a depleted hydrocarbon field (when used for CO2 storage) is roughly \({\$}1\) per barrel of original recoverable oil reserves, or \({\$}2\) per boe (barrel of oil equivalent) of original recoverable gas reserves. This adds 25–600 % to current estimates of CO2 storage cost. Second, countries with a strategic transit location capture 19 % of the rent in the case of national pipeline monopolies. Liberalisation of CO2 pipeline construction at EU level could eliminate the transit rent and is shown to reduce by two-thirds the differences between countries in terms of cost per tonne of CO2 exported. Reaching agreement on such liberalisation may be politically challenging, since the payoffs are shown to be strongly divergent across countries.