LONDON Carbon capture and storage (CCS) in the European Union is at a crossroads as to whether it will succeed or fail as a key technology to fight climate change, a senior executive at oil giant Royal Dutch Shell told Reuters.
"We are behind the curve now. The next 18 months will be a 'make or break' period for CCS," said Graeme Sweeney, executive vice president, CO2, at Shell.
Several demonstration projects have been postponed or delayed in Europe over the past couple of years due to constrained financial conditions, cooling its ambition to lead the CCS technology race.
While CCS remains unproven on a commercial scale it is widely seen as crucial in fighting to climate change by trapping and burying greenhouse gas emissions, while maintaining stable energy supply.
Experts say at least 20 large-scale CCS demonstration projects need to be developed globally by 2020.
According to the Global CCS Institute, the world is still on track to deliver this target -- despite projects being delayed or postponed.
There are eight projects incorporating elements of carbon capture and/or storage operating today, two of which are in Europe.
The EU was aiming to lead the CCS technology drive with a target to trial up to 12 commercial-scale plants by 2015 but governments and companies have prioritized finance for more reliable low-carbon technologies in the face of slow economic growth and the subsequent euro zone crisis.
Last year, the EU launched a funding programme called the NER300 for eight eligible demo projects to be given a share of the proceeds from the sale of 300 million carbon permits. The winners could be awarded funding by the end of next year.
However, the value of EU carbon permits has fallen by over 30 percent this year -- which has reduced the amount of expected funding.
"If we can't find a way to take more projects forward through the NER, we are going to need to reappraise the timeline," Sweeney said.
"But if we can do that, we can still aspire to delivery in the early 2020s," he added.
Last month, the UK government canceled the proposed Longannet CCS project in Scotland, suggesting the technology remains too costly and undermining Britain's ambition to become a clean technology leader.
Britain is unlikely to see commercial CCS projects by 2020, putting its future energy security in danger, a UK parliament report has warned.
The UK National Grid's future distribution networks manager, Marcus Stewart, told reporters in London last month that he did not see CCS as a viable technology in the UK until 2040.
Sweeney agreed that the investment environment is currently very difficult but Britain should not give up its aspiration to be a major player in the technology drive.
"The conditions in the UK are the most advanced overall in Europe (to support CCS) -- with the carbon floor price and electricity market reform to assist with differences in operating costs," Sweeney said.
Ultimately, CCS will be worth the investment as coal and gas CCS will become fully competitive low-carbon power sources in the 2020s, Sweeney argues.
"Right now, displacing coal with natural gas is the fastest and lowest cost way to decarbonize the power sector," he said.
"By 2050 CCS on gas and coal power plants, as well as other industrial facilities, could provide one fifth of the CO2 mitigation effort needed."
As well as small-scale projects in Europe, Shell is involved in large-scale demonstration projects outside Europe -- the Quest CCS project in Canada and the Gorgon project in Australia, which should have CCS up and running by 2014, Sweeney said.
Shell Global Solutions' subsidiary Cansolv Technologies Inc. is also developing a commercial CCS project at the Boundary Dam coal plant in Canada, to come online in 2015.
(Editing by Jason Neely)