A major new study of the impact of likely future carbon pricing on electricity generation investment in Australia has been completed by the CRC for Coal in Sustainable Development (CCSD).

The unique modelling carried out for the CCSD by CSIRO’s Energy Transformed Flagship and Delta Electricity explores how carbon prices are likely to influence the choice of future clean technologies in the power sector.

Details will be unveiled at the CRC’s annual conference on 3-4 April, 2008 at the Gold Coast.

“The CCSD study predicted that a portfolio of new generation technologies, including renewables, gas, and ultra supercritical coal with carbon capture and storage would be introduced should deep emission reduction targets be set,” says Mr Paul Graham of CSIRO, who headed the team which carried out the options study on the effects of carbon pricing.

“It indicates that CO2 emissions permits in the price range of $40 to $70 a tonne may be sufficient to encourage the industry to commence capture and storage of carbon from coal based electricity by the mid-part of the coming decade.”

Of the fossil fuel options reviewed, the study indicates only natural gas combined cycle (NGCC) could proceed at these carbon prices. However, natural gas plants would also eventually need to be fitted with CO2 capture under a deep cuts scenario. This could be expected to occur, beginning with retrofitting existing plants from around 2020.

“It should be stressed that carbon price uncertainty is not the only uncertainty the power sector is grappling with,” Mr Graham says. “We are still not sure how these new post-combustion capture and storage technologies perform and what their real cost of operation will be. This will become clearer as post combustion capture is pilot-tested over the next five years.”

The study reviews three groups of competing CO2 capture and storage technologies that the coal industry is currently researching and developing – Post Combustion Capture, Oxy-firing and Integrated Gasification Combined Cycle.

“There are some truly outstanding technologies in the pipeline which use coal as a cost-effective energy source and sharply reduce carbon emissions. However choosing the right one is immensely difficult if you do not know what the price of carbon is going to be,” says Mr Frank van Schagen, Chief Executive of CCSD.

“That is the reason we commissioned this exceptional piece of research – to give industry a better handle on how certain technologies become progressively more viable as the carbon price increases.”

“Whatever carbon pricing mechanism system Australia adopts, it must be one that encourages the uptake of the right technology as well as the right technology mix to meet carbon abatement, sustainable economic development and energy security criteria.”