Japan-Asia CCUS Forum 2020

October 6, 2020

Economic Analyses on CCS by using an Energy
Systems and Climate Change Mitigation Model
Keigo Akimoto
Systems Analysis Group

Research Institute of Innovative Technology for the Earth(RITE)Overview of Analyses on CCS in Japan♦ Cost effectiveness of CCS is explored by using the DNE+ model, which is able to evaluatevarious technologies precisely in a bottom-up way considering regional differences.
♦ Cost effectiveness of CCS depends on various conditions, such as long-term CO2 emission
reduction level and the costs of other global warming mitigating technologies as well as CCS(related technologies). Those uncertainties are taken into account in the analyses.

Overview of DNE21+ (Dynamic New Earth 21+)
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Systemic cost evaluation on energy and CO2 reduction technologies is possible, not intending tocover the whole economy.
Linear programming model (minimizing world energy system cost)
Evaluation time period: 2000-2100
Representative time points: 2005, 2010, 2015, 2020, 2025, 2030, 2040, 2050, 2070 and 2100
World divided into 54 regions
Large area countries, e.g. US and China, are further disaggregated, totaling 77 world regions.
Interregional trade: coal, crude oil/oil products, natural gas, electricity, ethanol, hydrogen, CO2(provided that external transfer of CO2 is not assumed in the baseline), and CO2 credit
Bottom-up modeling for technologies in energy supply side (e.g. power generation sector) and CCS
For energy demand side, bottom-up modeling conducted for industry sector including steel, cement,paper, chemicals and aluminum, transport sector, and a part of residential & commercial sector.
Around 400 specific technologies are modeled.

2Assumed Costs and Potentials for CO2 transportation and Storage
CO2 storage potentials (GtCO2)【References】
IPCC SRCCS (2005)(GtCO2)

Storage costs ($/tCO2)*1

JapanWorldDepl. oil well (EOR)

0.0

112.4

Depl. gas well0.0

147.3 – 241.5

Deep saline aquifer

11.3

3140.1

103–104

5 – 38

Coalbed (ECBM)

0.0

148.2

3–200

27 – 122*2

675–900

57 – 69*2
9 – 59Note 1: It is assumed that the CO2 storage potentials of depl. gas well could be expanded to the upper limit in the table with the increase of future mining volume.
Note 2: It is assumed that the storage costs could rise within the range in the table with the increase of accumulated storage amount.
*1 The costs for CO2 capture is not included.
*2 The costs do not include the payoffs of obtained oil or gas.

The constraint on CO2 storage expansion is assumed considering the difficulties of its rapid expansion, e.g. limited number ofdrilling rigs; it can be expanded by 0.02%/yr until 2030 and afterwards by 0.04%/yr for domestic/regional total storage
implementation.
(The maximum storage potential in 2050 is 91MtCO2/yr in Japan’s case, where CCS is assumed to be available after 2030.)

CO2 transportation cost3

The CO2 transportation costs from the sources to the reservoirs are assumed separately as 1.36$/tCO2 (per 100km) and300km for average transport distance in Japan’s case.
For large area countries which are disaggregated in the models (US, Russia, China and Australia), the interregional CO2transportation costs are estimated according to the transportation distance.
The case of cross-border CO2 transportation, which might cause CO2 leakage, is not analyzed although it is possible to bedone in the models.

Emission Reduction and Technology Scenarios【Emission reduction scenarios】
Temperature targets

Emissions in 2050

B2DS-D

2 °C, >66% achievability World: -70% × Japan: -80%

2DS

2 °C, >50% achievability World: -40% (Equal marginal abatement costs among countries)【Technology scenarios】
CO2 capture cost・CCS investment risk

Constraint on CCS use

2030

Accelerated expansion ofCCS
Upper limit for annualexpansion
0.04%/yr until 2030,
afterwards 0.08%/yr

2050

Standard cost (Low)Standard case：
Upper limit for annual expansion
0.02%/yr until 2030, afterwards
0.04%/yr
Without CCS

Renewable energy(photovoltaic) cost

Capture costs
around 1500
yen/tCO2

Investment discountrate (Standard)

Capture costs
around 1000
yen/tCO2××
High cost
Capture costs
2000 yen/tCO2

Capture costs
1500 yen/tCO2

Standard cost
(High)[Ratio of total potential]
10 yen/kWh (1%)
12 -13 yen/kWh (20%)
15 -18 yen/kWh (79%)×

Investment discountrate (High)(large
uncertainty ininvestment inenvironment)：Standard+8% points

Cost (Iow)
2 yen/kWh (1%)
3 - 4 yen/kWh (20%)
6 - 9 yen/kWh (79%)

4Assumed Scenarios

5♦ For the economic evaluations on CCS considering several kinds of the related uncertainties, the results ofseven scenarios below are shown in this presentation. (Much more scenarios are analyzed.)

Scenarios

Emission CO2 storage
pathways assumptions

Discount rateof investment
for CCS(return ofinvestment)

Solar PV

Standard 1500 JPY/tCO2 1000 JPY/tCO2

Standard

Standard

CO2 capture costs
Year 2030

Year 2050

1

B2DS-D

Infeasible 2

B2DS-D

Not available Standard 1500 JPY/tCO2 1000 JPY/tCO2

StandardStandard

3

B2DS-D

Acceleration

Standard 1500 JPY/tCO2 1000 JPY/tCO2

Standard

Standard

4

B2DS-D

Standard

High cost 2000 JPY/tCO2 1500 JPY/tCO2

Standard

Standard

5

B2DS-D

Standard

Standard 1500 JPY/tCO2 1000 JPY/tCO2

HighStandard

6

B2DS-D

Standard

High cost 2000 JPY/tCO2 1500 JPY/tCO2

High

Low cost

72DS

Standard

Standard 1500 JPY/tCO2 1000 JPY/tCO2

Standard

Standard

Standard There is no feasible solution for the 80% reduction by 2050 in Japan in the case of Scenario 2 which assumes that CCS is unavailable.

CO2 Marginal Abatement Costs, and the Balances of CO2 Capture, Utilization and Storage
Year 2040
B2DS-D

CO2 capture, utilization and storage [MtCO2/yr]

200150627$/tCO2546$/tCO2629$/tCO2634$/tCO2879

2DS529$/tCO2142$/tCO2$/tCO2914$/tCO2Year 2050
B2DS-D908$/tCO2917$/tCO2

2DS740$/tCO2160$/tCO2100

6Capture

CO2 capture
CO2 capture: crinker
CO2 capture: iron & steel
CO2 capture: hydrogen production
CO2 capture: baiomass power

50

CO2 capture: gas power
CO2 capture: oil power

0

CO2 capture: coal power

CO2 storage and utilization-50

CO2 storage: EOR, ECBM, depl. gas well
CO2 storage: deep saline aquifer-100

CCU in cement
CCU in petrochemical-150-200

Scenario 1 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Scenario 7 Scenario 1 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Scenario 7
2040

Storage/utilization

2050

 For the 2DS (Scenario 7), the amounts of CO2 capture from coal power are large, but for the B2DS scenarios, large amounts of CO2captures from gas and biomass are economical in order to meet the deep emission reductions.
 In the case of the constraint on CO2 storage expansion, CO2 capture from coal power increases.
 All of the assumed maximum CO2 storage capacity are economical in Japan for all of the assumed scenarios due to high marginal
abatement costs.

Benefits of CCS in Japan (annual average between 2030 and 2100)
Benefit of CCS (annual average of thecumulative benefits between 2030 and 2100)[billion US$/yr]

4.0
3.5

B2DS-D (2℃, >66% achievability)
3.59

3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0

Scenario 3(Acceleration ofCO2 storage)

-0.27

-0.39

Scenario 4

Scenario 5(High cost ofCO2 capture)(High risks ofCCS investment)※ Emission reduction costs relative to those of Scenario 1 (These are converted to the price in 2030 adopting the discount rate of 5%/yr)

 In the acceleration of CO2 storage scenario, a large amounts of benefits, about 3.6 billion $/yr, are expected.
 The benefits by the reductions in CO2 capture costs and discount rate of CCS investments (reductions in the investment
risks) are expected to be about 0.3 and 0.4 billion $/yr, respectively, compared with the standard technology assumption.

7Global CO2 Storage by Region/Country
30

CO2 storage and utilization [GtCO2/yr]

25Year 2040
B2DS-D

2DSYear 2050
B2DS-D

82DSOthers
RussiaM.&S. America
Africa20

M. EastOther Asia

15India
10China
Australia

5JapanEU28

0Scenario 1 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Scenario 7 Scenario 1 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Scenario 72040

US2050The deployments of CCS is a cost-effective option even in Japan. However, the expected amounts of CCS deployments
are relatively small compared to those in the world. Therefore, the deployments within Japan should be pursued, but
the CCS contributions should also be considered over the world, particularly in Asian countries.

Conclusions♦ According to the analyses using an energy systems model, CCS is one of the cost-effective measures after 2030 for the long-term emission reductions consistent withthe Paris Agreement in Japan, even in consideration of the several kinds ofuncertainties.
♦ Under the 80% reduction by 2050 in Japan, there is no feasible solution in the CCS
unavailable case in this study.
♦ For the 80% reduction by 2050 in Japan, BECCS is an economical option because it
will be able to reduce net emissions within the limited potentials of CO2 storage.
When the CO2 storage potentials are expanded, CCS for coal power is also
economical.
♦ CO2 captures not only from power but also from iron and steel are cost-effective forthe 2 °C target in Japan.
♦ For CCS, international collaboration and co-operative deployments will be also
important from the global viewpoint.

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