CO2 disposal in geologic formations: the economics?

Costs of CO2 sequestration — i.e., disposing of the CO2 in geological formations — is extremely variable and project-dependent, ranging from $5-50/ton.

Our base case is c$20/ton. This is the disposal price needed to earn a 10% post-tax IRR, transporting, injecting and monitoring CO2 in the sub-surface.

This model captures the economics and costs of CO2 sequestration in geological formations, as a function of a dozen input variables: such as CO2 prices, costs, transportation distances and reservoir properties.

Our capex and opex estimates are broken down, line-by-line across c30 different line-items, using granular technical disclosures from the EPA’s GEOCAT database.

Offshore sequestration costs. Our modelled costs are also compared with detailed estimates for offshore disposal beneath the UK North Sea, based on recent technical papers.

Regulation is also challenging. For example, some projects will be required to monitor the injection site for over 50-years after injection has ceased, to ensure CO2 does not leak back out again.

Please download the data-file to stress tests the economics. CO2 sequestration is one piece of a three-piece chain required for CCS, alongside CO2 capture (e.g., using the amine process) and CO2 transportation in a CO2 pipeline or with CO2 trucks. Our recent research has also sought to quantify the upside in CCS.

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