Early Carbon Capture May Lose 1.1 Billion Euros, McKinsey Says

By Mathew Carr

Sept. 22 (Bloomberg) -- The first projects to capture and store carbon dioxide from coal-fired power stations in Europe may lose as much as 1.1 billion euros ($1.6 billion) before they reach sufficient scale, McKinsey & Co. said in a report.

Early projects with a capacity of 300 megawatts will cost 60 euros to 90 euros a metric ton of carbon dioxide abated, ``representing an economic gap of 500 million euros to 1.1 billion euros,'' to net present value, New York-based consulting firm McKinsey said today in an e-mailed report. Project costs may drop to 45 euros a ton of carbon dioxide captured and stored by 2030 as they gain in size, the report said.


Carbon-capture technology gathers the gas during power generation and pipes it into underground storage rather than venting it into the air. The technology will allow power producers to avoid buying emissions allowances.

``Scale-up is key,'' the report said. ``Timing of demonstration plants, speed and approach to commercial roll-out and availability of regional storage are crucial to shaping the 2030 carbon-capture and storage landscape in Europe.''

Royal Dutch Shell Plc, Europe's largest oil company, backs a plan by the European Parliament to offer 500 million EU carbon dioxide allowances worth about 14.8 billion euros for carbon- capture and storage. The plan may help curb emissions by 80 million metric tons a year from 2015 through 2020, Shell estimated in July.

EU carbon dioxide allowances for December today increased as much as 67 cents, or 2.7 percent, to 25.35 euros a metric ton on London's European Climate Exchange. Permits for December 2012 were today at 29.55 euros, up 2 percent on Sept. 19.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net