Updates from Europe – Dr Graeme Sweeney - Global CCS Institute Members' Meeting – Rotterdam, May...

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EUROPEAN CCS UPDATE

GCCSI, Rotterdam

9th May 2011

Dr. Graeme Sweeney

Executive Vice President, CO2, Shell

Chairman, EU Zero Emissions Platform

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DISCLAIMER STATEMENT

The companies in which Royal Dutch Shell plc directly or indirectly owns investments are separate entities. In this presentation the expressions “Shell”, “Group” and “Shell Group” are sometimes used for convenience where references are made to Group companies in general. Likewise the words “we”, “us” and “our” are also used to refer to Group companies in general or those who work for them. The expressions are also used where there is no purpose in identifying specific companies.

The information contained in this presentation contains forward-looking statements, that are subject to risk factors which may affect the outcome of the matters covered. None of Shell International B.V., any other Shell company and their respective officers, employees and agents represents the accuracy or completeness of the information set forth in this presentation and none of the foregoing shall be liable for any loss, cost, expense or damage (whether arising from negligence or otherwise) relating to the use of such information.

All copyright and other (intellectual property) rights in all text, images and other information contained in this presentation are the property of Shell International B.V. or other Shell companies. Permission should be sought from Shell International B.V. before any part of this presentation is reproduced, stored or transmitted by any means.

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EUROPEAN LEADERSHIP IN CCS

EU policy process has been swift 2010 CCS European Industrial Initiative + CCS Roadmap

2009 EU passes legislation on CO2 geological storage

EU NER 300 funding provides a realistic and essential investment

Technology platforms such as the EU Zero Emissions Platform are delivering

ZEP Meeting CO2 Technology Centre Mongstad


COLLABORATION DRIVES PROGRESS – THE ROLE OF ZEP2007

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EU calls for CCS demo programme by 2015

2009EU CCS directive

and funding in place

2007 ZEP Vision for EU CCS demonstration programme

2008 ZEP proposal for CCS demo programme

2009 ZEP recommendations on NER funding

2009 ZEP CCS knowledge sharing proposal

CCS Project Network launch

2008 EU agrees to co-fund programme

2009 EU passes legislation on CO2 geological storage

2010 ZEP Long-Term R&D report

2010 CCS European Industrial Initiative + CCS Roadmap (within SET plan)


CCS CONTEXT: EU POLICY

2010 CCS European Industrial Initiative + CCS Roadmap (within Strategic Energy Technology Plan)

2009 EU passes legislation on CO2 geological storageETS Directive - 300m ETS allowances for CCS and innovative renewablesCCS Directive - A framework for permanent geological containment of CO2

European Energy Programme for Recovery (EEPR) - €1bn for CCS demonstration projects

2008 CCS Communication 2: Supporting Early Demonstration of Sustainable Power Generation from Fossil Fuels - Project Network - Supporting structure for CCS demo projects

2007 CCS Communication 1: Sustainable power generation from fossil fuels - Commercial viability by 2020Spring European Council - Financing of up to 12 demos by 2015Strategic Energy Technology Plan (SET-Plan) – CCS one of the six strategic energy technologies for 2050


BEŁCHATÓW, PL

PORTO TOLLE, IT

COMPOSTILLA, ES

HATFIELD, UK

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JÄNSCHWALDE, DE

EEPR selected projectsAdditional candidates Indicative - Non-exhaustive

ROTTERDAM, NL

NER300 Timetable:

Feb. 9: Proposals to Member States (MS)

May 9: MS applications to European Investment Bank (EIB)

By Feb. 9 2012: EIB evaluation & ranking

2H 2012: funds awarded 6

LARGE SCALE PROJECTS UNDER DEVELOPMENT


FUNDING - NER 300

New Entrant Reserve 300 under the EU's Emissions Trading

Scheme

Set up in 2008 to finance commercial-scale CCS and

innovative renewable energy demonstration projects

Provides 300 million allowances (depending on carbon price,

worth

some €4-5 billion) distributed through two rounds

Geographically balanced locations: 1 to 3 projects per Member

State

50% of relevant costs will be funded, per project max

NER 300 not part of EU budget – can be combined with other

instruments, including EEPR and Structural and Cohesion Funds

Implementation at EU level (COM), but with strong role for

Member States and with support from the European Investment

Bank (EIB)

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EUROPEAN INDUSTRIAL INITIATIVE ON CCS

2010 CCS European Industrial Initiative + within Strategy Energy Technology Plans

Collaboration between industry, Member States, the European Commission, research organisations and NGOs

Objective of the EII CCS is:

1. to enable the cost competitive deployment of CCS after 2020

2. to accelerate the required changes in policy, technology and financing

3. to identify priority actions and to manage synergies between ongoing activities

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TIMELINE FOR DELIVERING CCS IN EUROPE

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Demo projects

CCS KPIse.g. CO2 stored

R&D

Post 2015 plan

Public comm.& Education

Regs & Policy

2010 2012 2015 2020 2030

EIICurrent

EII ImplementationPlan I

EII ImplementationPlan II

Projects call Project selection Implementation

Technology today

Cumulative stored CO2

Lighthouse projects

2nd generationtechnology 3rd generation technology

Develop post 2015 plan including infrastructure

Education & AwarenessLocal public buy-in & permittingEducation & Awareness

Coms Educate & Awareness - Demo programme and Lighthouse / R&D programme

8 projects - 12 projects

Implement post 2015 plan Commercialdeployment of CCS

Develop + set enduringtransition policy

M.S. Regs & Policy

NER 300

Phase to Carbon price

Develop Lighthouse programme

Projects callDevelop KPIs Monitor & report KPIs


CCS DEMONSTRATION PROJECTS

Final investment decisions for up to 12 CCS demonstration projects

KPI: minimum 6 projects by 2012 and minimum 10 projects by 2016

EU CCS Project Network to ensure knowledge sharing

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Demo projects

2010 2012 2015 2020 2030

Projects call Project selection Implementation 8 projects - 12 projects

http://www.ccsnetwork.eu./index.php


CCS R&D

Second generation CCS post-2020 & 3rd generation post-2030

R&D actions that lead to commercial results by 2020-2025

Spanning the entire CCS chain: capture, transport, storage

Basis for programming R&D actions: long term R&D plan developed by industry, research

organisations & NGOs (ZEP) & EERA’s R&D agenda for public research organisations Need for CCS Lighthouse projects

Public / Private priority actions for creating momentum

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R&D

2010 2012 2015 2020 2030

Technology today

Lighthouse projects

2nd generationtechnology 3rd generation technology

Develop Lighthouse programme


FORWARD VISION, POLICY AND PUBLIC COMMS

Develop forward view: vision on required actions beyond 2012 and 2015

Support transposition of CCS directive

Exchange information on public awareness and support

Initiate international cooperation

Need to ensure sufficient funding for demos and timely delivery

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Post 2015 plan

Public comm.& Education

Regs & Policy

2010 2012 2015 2020 2030

Develop post 2015 plan including infrastructure

Education & AwarenessLocal public buy-in & permittingEducation & Awareness

Coms Educate & Awareness - Demo programme and Lighthouse / R&D programme

Implement post 2015 plan Commercialdeployment of CCS

Develop + set enduringtransition policyM.S. Regs & Policy

NER 300Phase to Carbon price


KEY ISSUES

1.Long term planning of infrastructure needs

2.CCS regulatory framework needs to progress to implementation

3.Monitoring, reporting and verification of storage operations

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LONG TERM PLANNING OF INFRASTRUCTURE

Recommendation Member states should develop

National CCS Master Plans and align with ongoing EU-initiatives, such as Europipe

First CO2 infrastructures projects,

starting around 2015, need to be future-proof to guarantee economy of scale when new CCS projects will come on stream

This will require a coordinated planning approach but also the design of a funding mechanism - national, European or both - to support up-scaling of CO2 pipelines

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Issue: risk that early demonstration projects will be isolated, point-to-point solutions without scope to grow

Original North Sea Infrastructure Project (CENS)


CCS REGULATORY FRAMEWORK

Recommendation The National Master Plans should

address preferred regulatory regimes, business model and specific issues such as rights of access to 3rd parties (all likely to be very different for CO2

transport and CO2 storage)

Open liability issues need to be addressed urgently in a manner both practical and equitable

The London Protocol has recently been amended to permit the cross-border transfer of CO2 but is yet to be ratified 04/07/2023 15

Issue: uncertainty in most Member States on future regulatory regimes and business models for CO2 transport and storage including the roles for (semi) state companies, has led to companies taking a wait-and-see approach, hampering the deployment of CCS.


MONITORING, REPORTING & VERIFICATION

Recommendation

Process to improve MRV and the safeguarding of CO2 storage

agreed by the EU and Member States. Solutions could range from:

a central EU CCS MRV Bureau agency the creation of dedicated (national) public entities to take on

liabilities and monitoring activities after industry handover the establishment of a knowledge sharing network for Member

State agencies involved in CO2 storage

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Issue: Expertise to do MRV of CO2 storage operations is just emerging and varies by Member State. Also public safety concerns focus on how the storage of CO2 can be safeguarded in the long term.


ACCELERATING CCS

Timelines must be improved In the EU, the role of the Zero Emissions Platform needs to be

strengthened Government, industry and academia must work together. There is

a need to establish ZEP type technology platforms in other regions Continue reduction of CCS costs (Capture, Transport, Storage) Agree fit-for-purpose CCS standards, for example on MMV More funding for CCS demos Need to ratify the OPSAR amendment Enable deployment of CCS in emerging economies

Build on proven CO2-EOR industry where possible

CO2 infrastructure development

Transposition of CCS into national legislation


Public perception of CCS is a potential barrier to the implementation as a CC mitigation technology.

Active public engagement is key to building public understanding

• Public awareness is generally low, the role of CCS is not understood.

• Concerns amongst local communities about project safety

• Environmental and health concerns• Rationale for CCS versus other options, e.g.

Renewables

Demonstration projects have a key role to show safe & responsible operations

ADDRESS PUBLIC WARENESS AND SUPPORT FOR CCSBRINGING THE PUBLIC WITH US

http://sites.google.com/site/noco2wasteindarke/home/WDTN.jpg?attredirects=0

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