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At an abatement cost of €40/tCO2e, the present value of the required abatement until 2030 is estimated to be €2 billion for coal CCS, €43 billion for solar PV and €7 billion for wind. Additional subsidies at an abatement cost of €0/tCO2e required in 2002 present value is estimated to €123 billion for coal CCS, €60 billion for solar PV and €66 billion for wind power. A cost comparison of the abatement costs and the required subsides shows that the 2030 abatement costs amounts to €360-960 billion costs p.a. and that the total required subsidies in 2002 present value would amount to approximately €350 billion. It shows that the required innovation support is limited compared to the overall abatement costs.
The individual technologies in the CCS process are already available, however not yet proven at scale. Nevertheless, several pilot projects have been initiated. The use of the CCS technology is assumed to be technologically proven by 2015-2020. The abatement cost of CCS is then assumed to be €25-40/tCO2e. With this marginal abatement cost, the volumes are assumed to ramp up to an implementation rate of 85% of newly built coal plants by 2020-2030. The cost of abatement has been calculated by comparing a new plant with CCS to a new plant with the same technology but without CCS. The main potential of introducing CCS is hence on new coal plants, but considering the lead times of commercialisation, the cost of using CCS on gas plants and as retrofitting on old plants is more expensive. CCS on gas in a larger scale is unlikely since coal CCS is cheaper in terms of the cost per MWh. In addition to traditional power plants, the CCS technology could also be used on biomass power plants. This would create a net sink of carbon dioxide emissions. The specific cost of CCS is similar to that for a coal plant. Although the introduction of large scale CCS is assumed to be introduced by 2030, the main element of uncertainty in availability and applicability of this method is the cost development of the technology. This has not been exhaustively studied yet.
The marginal costs of wind-power, biomass and solar power are assumed to decrease and become cost competitive at €40/tCO2e in the period 2015-2020. The decrease in marginal costs is assumed to be driven by learning curve effects. Until 2015-2020, renewables will require subsidies to be implemented. By 2030, emerging renewables are assumed to amount to 16% of power production.
Nuclear power is a proven technology with well-known advantages and disadvantages. Regarding cost improvements for this technology, it is assumed to be driven by reduced cost of capital. Volume development is driven mainly by political decisions. However, according to the World Nuclear Associations (WNA) optimistic scenario, an aggressive development is feasible.
The industry expects technological improvements, but even with improvements, nuclear will require a CO2 price of €5-20/tCO2e in the near term to be cost competitive with coal or gas. However, by reducing investments risk nuclear power could be a zero cost abatement alternative.
According to the International Energy Agency (IEA), nuclear power can grow to the double capacity compared to BAU by 2030. This takes into account that nuclear power plants are deployed across all regions. However, due to construction lead-times, only a small share of the capacity can be deployed by 2020. Growth beyond the BAU scenario corresponds to 1.3Gt CO2e abatement.
The assumptions for the nuclear power deployment are based on the WNA aggressive scenario. In this scenario, the assessments of volumes for 2012 and 2020 are based on a plant-to-plant assessment for all countries that currently have plans for nuclear power production.
For the nuclear power deployment post 2020, the assessments are based on an analysis of the political attitude toward nuclear power for each region.
Overall, the political environment for using nuclear power is currently improving, due to increased awareness of climate change effects and to the development of new, safer technology (pebble-bed technology). The political acceptability is naturally a major factor for nuclear.
CO2–efficient fossil fuel technologies are proven and existing technologies. Use of gas power production instead of coal and replacement of old power plants with more efficient ones. In the BAU scenario, technological efficiency improvements are assumed in both gas and coal power production.
The break-point for generating a fuel-shift from coal to gas depends on the price spread between the fuels. Considering a gas price of approximately USD 3/mbtu, the required cost of CO2 to facilitate a fuel shift would be in the range of €3-16/tCO2e.
The cost of shifting from coal to gas in existing assets is approximately €35/tCO2e and the cost of shifting investments from coal to gas in new-built plants is approximately €20/tCO2e.
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