Industry’s green warriors fight losing battle

The market for large-scale carbon-capture and storage technology, or CCS — the petroleum industry’s “secret weapon” in the fight against climate change — is “finished”, Norwegian business leaders have said.

State financial help was the Achilles' heel of projects aimed at separating climate-warming carbon dioxide gas from industrial and natural gases and pumping it into underground salt caverns. Even in subsidy-strong Norway, the finance schemes that have enabled state entities to match the money of oil companies while shielding CCS builders like Aker Clean Carbon are on the wane.

“The market has disappeared. Today support from the authorities and agreement among energy companies is no longer in place,” Aker chairman Øyvind Eriksen told newspaper Dagens Næringsliv.

Other carbon-scrubbing contractors, including US, Canadian and Japanese players, have at some point been incubated by Oslo’s money while they hunted for the right large-scale solution for separating carbon from gas.

Just two years ago, world leaders descended on Bergen for a look at Mongstad and Kollsnes, the oil refinery and gas export terminal where a CCS plant has been built. Norway’s 5 billion kroner project, the Test (CCS) Centre Mongstad, was to help save the planet.

Two years on, investments have been put on hold citing safety fears over a key solvent. Elsewhere, parallel markets have created separate prices for carbon-emissions credits and undermined faith that CCS players would have something to sell, like storage, processing or emissions credits.

Government support now, too, has retreated amid Europe’s sovereign debt crisis, a second credit crunch that has prevented governments from fronting the billions of dollars required to get companies to build on speculation.

Last week, London cancelled plans for full-scale CCS offshore Scotland. The plan was to store industrial gases in an old oilfield.

Meanwhile, Aker Clean Carbon’s market value was made “zero” in the financial results released by parent industrial group, Aker Solutions.

A final government investment decision on Mongstad, where construction continues, is seen coming in 2014. There’s no timetable for the return of CCS in Scotland or Australia, where government help would have been decisive but has been put on hold.

Scotland, meanwhile, hosts what will likely be a sombre meeting of the Intergovernmental Panel on Climate Change in January 2012. The “global financial crisis” overshadowed talk at the last IPCC meet in Panama in October 2011. 

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