Opening speech at the 2nd IEA/CSLF Workshop in Oslo

Opening speech by Minister Enoksen at the 2nd IEA/CSLF Workshop for the G8 on Early Opportunities for Carbon Capture and Storage:

Ladies and gentlemen, on behalf of the Norwegian Government, I take great pleasure in welcoming you all to the second IEA/CSLF workshop on early opportunities for carbon capture and storage. I am happy to see so many participants present from all over the world.

It is a great honour for Norway to host such an important workshop in support of the G8-Plan of Action from Gleneagles in 2005. The aim of the workshop is to assess where we are in terms of implementing carbon capture and storage technology today, and to provide inputs to a follow-up workshop in Canada in November. The final aim being to provide recommendations to the next G8 summit in Japan in 2008.

I assume that we all share the same ambition; namely that this workshop will contribute to a comprehensive common understanding among authorities and companies in different regions on how carbon capture and storage best can be implemented, - and thus be an important event in bringing CCS a step closer to full-scale and worldwide deployment.

Securing energy supply is a major challenge for the world. For the foreseeable future energy demand will continue to increase significantly. This growth will come  from both industrialized and developing countries. Let us not forget that 1,5 billion people are still without electricity. In countries like China and India, the growth in energy consumption is likely to accelerate, as the economy expands, the population gets wealthier and demands energy services comparable with those of the Western world.  Furthermore, studies by the International Energy Agency show that this growth will be impossible without using fossil fuels. In fact, if we continue on a business as usual path in the energy field, fossil fuels will have the same relative importance in the energy mix in the years to come as they have today.

Such a scenario would however be impossible. It would be impossible because “business as usual” would lead to a dramatic increase in greenhouse gas emissions leading to ever greater climate change effects. Our worries about climate change were recently confirmed by the UN’s Intergovernmental Panel on Climate Change. Their recent report highlights the scientific consensus regarding the quickening and threatening pace of human-induced climate change. If no action is taken, there could be a continuing increase in global temperatures and, by the end of the century, all regions of the world could potentially face serious consequences for their economies and ecosystems. Consequently, we are faced with a major challenge that requires us to take actions.

This highlights the main challenge: secure sufficient supplies of energy while at the same time curbing greenhouse gas emissions. The concern is increasing on a global basis, and the need to act is obvious. The recent IPCC report, The EUs ”Energy strategy”, the agenda of G8 and G8 + 5 meetings as well as the mentioned IPCC report and the Stern report all address this important challenge.

The International Energy Agency has estimated that Carbon Capture and Storage can contribute with as much as up to 30 per cent of total emission reductions by 2050 as compared to business as usual. Increasing energy efficiency and increasing the use of renewable energy sources will be important, but this shows that CCS can be an important part of the answer to the challenge. If we succeed in developing this option, it would dramatically reduce emissions to air from fossil fuels, allowing the world to continue using fossil fuels to meet future energy needs without harming the environment. 

For many years, there has been considerable international interest in developing CCS technology. In several countries the focus is on capturing and storing CO2 from coal-based power plants. In Norway the focus has been on capturing and storing CO2 from gas fired power plants.

Many CCS initiatives have already been taken, projects are progressing and plans are taking forms in different parts of the world. The EU has launched plans on developing large-scale demonstration plants testing various ways of integrating CCS in coal and gas power generation. In the US, CO2 have for many years been used for EOR purposes. Moreover, CCS initiatives are emerging in other regions as well, such as in Australia. 

However, even if there is a lot going on, there are some key challenges to large scale commercial deployment of CCS which must be dealt with. Most elements of the CCS chain are to a large extent proven technology. CO2 capture technology is, however, not yet applied in full scale power plants. The main reason for this being the high cost of both investment and operation of present technology. The cost of CCS needs to be brought down.

Storage of CO2 also represents safety and liability issues which have to be addressed. For example, what are acceptable levels of long-term physical leakage risk and uncertainty? – and who will be responsible for the stored CO2 and for how long?  These questions in turn are closely related to public acceptance. We will not succeed with CCS unless we can find good solutions to the difficult issues. The complexity of the task tells me that only trough increased international cooperation will we be able to move forward in developing and deploying CCS technologies at an acceptable cost necessary to enable a global market to the benefit of all.

Let me now turn to Norway and say a few words about our policies and actions on CCS. The Government’s policy is that Norway shall be a leading nation in environmental and energy policy. Norway is a major energy supplier, and as such we have an ambition and an obligation to be a leader in safeguarding the environment – not least through the development of low-carbon and green technologies.

We are focusing on developing CCS as an option for mitigating climate change. The policy of the Norwegian government is that all new gas-fired power plants shall have CO2 capture technology. The government will co-operate with the industry to realize this as soon as possible.

As many of you probably are aware of - Norway has 10 years of CO2 storage experience:  since 1996, Statoil has stored 1 million tonnes of CO2 every year from the Sleipner field in a geological formation 1 000 metre below the seabed in the North Sea. This is the only facility in the world where large quantities of CO2 are stored in a geological formation under the seabed. Statoil has meticulously monitored the formation for more than 10 years now, and it is clear that the CO2 stays in place. A similar solution will be used later this year, when production of natural gas and condensate start from the Snøhvit field in the Barents Sea.  Here 700 000 tonnes of CO2 will be separated annually from the natural gas and re-injected and stored in a formation 2 600 meters below the seabed. 

Last year, Statoil applied for permission to build a Combined Heat and Power (CHP) plant at Mongstad. As a consequence of the Government’ policy on CCS, the Norwegian state and Statoil signed an agreement to establish a full-scale CCS project in conjunction with the CHP plant. To my knowledge this is the first time a Government has made such a commitment.

The project will develop in two stages. The first stage of the project, the technology development stage, will be in place at the start-up of the cogeneration facility in 2010. In this first stage, several technological solutions will be tested in parallel. The purpose is to develop the technology in order to bring down capture costs and risks. This testing activity could be of considerable interest also to owners of other fossil-fuelled power plants. In stage two of the project, a full scale CCS facility will be constructed. This should be operational by the end of 2014, capturing 1,3 million tonnes of CO2 per year from the CHP plant.

The government is also planning a retrofit CO2 capture facility at the Kårstø gas-fired power plant. The aim is to have a full scale capture and storage plant in operation as soon as possible. Preparatory work shows that a full-scale carbon capture plant at the earliest could be operational by 2011/2012. The net present value of total cost of such a plant is estimated at Euro1.3 billion. This clearly illustrates that the costs of CCS-plants are very high and that there is an urgent need to bring the costs down in order to commercialise this technology. Consequently, the development activity at the Mongstad test centre will be utmost important. 

In an effort to speed up the development of commercially viable CCS technologies, the Norwegian centre for sustainable gas technologies, Gassnova was established in 2005 . Gassnova’s main task is to support demonstration and pilot projects. Together Gassnova and the Research Council of Norway administer about 17 million Euros annually to support research, development and demonstration of such technologies. Joint efforts with industry could bring up the rate of activity to a hundred million euros per year. This is a considerable effort in an international context. Gassnova focuses on a broad portfolio of different technology options. Following this strategy we could succeed in realizing more cost efficient technologies in a relatively short time horizon, while simultaneously working with less mature technologies that could decrease costs in the more distant future.

Summing up, global energy demand is increasing and the world is in need of concrete actions to curb CO2 emissions. Carbon capture and storage could play an important role in the portfolio of greenhouse gas mitigating actions. However, we have to acknowledge that realizing carbon capture and storage on a large scale is still a very challenging task, which requires close cooperation between institutional and commercial players.

The Norwegian Government has ambitious goals regarding capture and storage of CO2. The commitment to develop gas-fired power stations with carbon capture and storage in Norway is an important element in our energy and climate policy. Succeeding with our efforts, will imply achieving a more secure energy supply and through technology development contribute to substantial reductions of greenhouse gas emissions.

In order to succeed international co-operation is vital. Therefore, Norway participates in the Carbon Sequestration Leadership Forum (CSLF) and in the IEAs efforts in this area.

You are all aware of the important work that will take place at this workshop. The G8 has asked the IEA and CSLF to provide advice on how to implement carbon capture and storage, with special view to possible early market opportunities. You are gathered here today to provide your knowledge and input to this process. I sincerely hope that the workshop will live up to your expectations and that the output will form a good basis for the third and final workshop which will be held in Canada.  I know you have two interesting days ahead of you and wish you all the best in your important work.

Thank you!