To meet climate change targets, European Union (EU) countries need to significantly increase investment in carbon capture and storage (CCS) and show greater urgency to develop and deploy the technology. Installing 11 GW of CCS electricity generation in the EU by 2030, as envisaged by the EU Energy Roadmap, could cost between €18 and €35 billion. Current policies, including those envisaged by the 2030 framework for climate and energy and the emerging Energy Union, are unlikely to deliver this investment. Economic models indicate that CCS is crucial to the cost-effectiveness of Europe’s emissions reduction targets. CCS can provide flexible, mid-merit electricity generation, which will be much needed as the share of electricity from variable renewable sources increases. It is also, to date, the only technology that can help reduce emissions from industrial installations.
This policy brief identifies the key factors that currently hold back CCS investment in the European Union and explores ways that CCS can be made viable. A simple cash flow model is used to test various cost sensitivities on the only operating CCS power plant (Boundary Dam, in Canada), providing insights on the levels of investment required for CCS demonstration and the carbon price levels required for CCS to be cost competitive with other energy generation technologies.