The European Union has established ever more ambitious objectives for its climate goals. The European carbon credit system, the EU Emissions Trading System (EU ETS), was designed as a tool to incentivise industries to reduce their emissions. Carbon capture takes this one step further by removing carbon dioxide from the atmosphere, ideally at a lower cost than the price paid by an enterprise for emitting it—thus enabling industries to continue operating without releasing carbon into the atmosphere.
Carbon capture technologies are broadly divided into two main categories:
- Direct Air Capture (DAC)
- Post-combustion Carbon Capture
Both processes require electricity and heat, often in large amounts. It would be counterproductive to capture carbon while emitting it—such as when using fossil fuels to power the capture systems. In post-combustion capture, the efficiency of the process is highly dependent on the concentration of CO₂ in the exhaust gases, which varies significantly between industries. Some sectors emit exhaust with high CO₂ concentrations, making capture more efficient, while others do not.
This variability presents a real positioning and economic challenge, as the financial viability of combining SMRs with carbon capture and storage (CCS) depends largely on the cost of capturing one tonne of CO₂. The higher the CO₂ concentration, the “easier” and more cost-effective the capture becomes. However, it also raises questions about the scale and capacity of the power supply needed to support the extraction process.
Damona analysed the CCS market for an SMR vendor considering proposing the deployment of its technology to supply electricity and industrial heat to CCS systems:
- Overview of the European CCS market, including main projects
- CCS KPI such as pricing
- Review of the different budgets associated with EU CCS projects
- Stochastic model to forecast the price of EU ETS
- Review of the costs of CCS, depending on the industry
- Analysis of all CCS technologies, including technical parameters such as industrial heat temperature required. Classification against the output temperature provided by the reactor
- Deep dive on a specific technology, deemed the most compatible with the SMR technology output parameters
- Estimation of the Total Accessible Market, in 2030, 2040 and 2050
- Financial model comprising both CCS system and SMR to estimate the amount of CO2 to be captured, the electricity/heat price to have both CCS system and SMR profitable
- Review of the most polluting sectors in Europe
- Presentation of the regulatory frameworks impacting carbon capture
- Presentation of the grants supporting CCS
- Identification of the CCS ecosystem: End users, project developers, engineering/manufacturing firms, universities, trade associations
date: 6th of July 2024
