Scoping Study of the Economics of CO2 Transport and Storage Options for Steel Manufacturing Emissions in Eastern Australia

Abstract

The main source of CO2 emissions in an integrated steel manufacturing plant comes from the need to use a carbon source, often coal, in the steel making process. Among the pathways for reducing CO2 emissions is the application of carbon capture, transport and storage (CCS) technologies. This study undertakes a scoping-level evaluation of the economic viability of transport and storage location options for CO2 captured from an iron and steel plant located in Port Kembla, NSW, situated on the eastern coast of Australia. Both pipeline and ship transport of CO2 are considered, as well as two injection locations: the Darling Basin in NSW and the Gippsland Basin in the state of Victoria, Australia. The cost of CO2 transport and storage are estimated for four specific transport and storage options in south-east Australia, including the cost of pipelines/shipping, boosters, wells, other facilities, monitoring, energy and on-costs. The cases consider either a single CO2 source (emissions from Port Kembla) to a single pipeline or shipping port, or the contribution by the CO2 source from Port Kembla to a collection of CO2 sources including other CO2 sources in NSW, into a pipeline network. The sensitivity of the results to several economic and design parameters, such as flow rate, and project lifetime, is also assessed. Scoping level cost estimates for transport and storage of the CO2 are lowest for the hub transport case injecting at the Gippsland basin and highest for the case involving shipping with injection in the Gippsland basin. For the single-source cases, transport via pipeline to the Darling basin is a slightly more attractive option in terms of unit costs. Although pipeline transport to both the Darling and Gippsland basins are very close in terms of transport and storage costs (less than 0.2% difference), the cost of transporting to the Darling basin is less sensitive to variations of the cost parameters explored in this study. The lowest transport and storage costs found in this study were for the pipeline hub transport cases, more than 35% lower on average than for the single source cases. Regardless of the sensitivity scenario, the hub transport cases were between two-thirds and half of the cost of the shipping case. This highlights the importance of economies of scale in CO2 transport, achieved by employing larger diameter pipelines. This leads to decreases in both the unit capital costs by allowing larger capacities of transport, as well as in operating expenses by decreasing pressure losses along the pipelines, thus requiring less energy for compression. Although the shipping transport option presented the highest cost of the cases considered, there is still a case to be made for ship transport if the project duration is short. As ship transport is less CAPEX intensive (35% of total cost), this mode of transport becomes competitive with pipeline transport if the project duration is decreased, or if the discount rate is increased. Further, shipping also becomes more competitive for longer transport distances. For example, if the hub transport options would take several years to implement, a case could be made for utilising ship transport for a few years while the hub pipeline is constructed, and then transporting via the hub once it is available.