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Power generation in Asia Pacific is a key area for exploring the
potential use of carbon capture and storage (CCS). In 2020, power
generation accounted for 36% of global carbon emissions, and Asia
Pacific represented a 47% (and growing) share of global power
demand. We identify three markets—Australia, Vietnam, and
China—as case studies to showcase the diversity in economic
development, power market structure, decarbonization goals,
resource availability, and affordability across the region. Without
carbon capture (CC), carbon emissions from a CCGT unit are
approximately half that from a coal unit, while CC equipment can
capture 90% of a plant's carbon emissions. Incremental CC capex
does not vary among different markets at the current stage.
However, CC premium as a percentage of total generation cost
diverges widely owing to the high level of variation of components
in the non-CC levelized cost of electricity (LCOE), impacting
coal-gas competition differently across the region.
Incremental CC capex on a coal-fired power plant is about twice
the incremental capex for a gas unit owing to the larger amount of
carbon that needs to be captured. In Australia and Vietnam, the
significant incremental cost of CC on coal-fired power compared
with on gas units will make coal-fired power more expensive than
gas-fired power running as baseload, midmerit, and peaker. As a
result, CC will not reverse the coal phaseout in these markets. The
role of thermal power with and without CC in the future capacity
mix will depend on renewables' and energy storage's penetration
levels to meet power demand and the action plans to achieve carbon
commitment in each market.
China stands out compared with the rest of the world as having
extremely low coal-fired power capex, making coal-fired power
generation cost much lower than gas-fired power in all capacity
factor levels without CC. Although installing CC will more than
double the generation cost from coal-fired power without CC in
China, gas-fired power with CC is still more expensive than coal
power with CC running as base load and midmerit. On the other hand,
given growing power demand and the large amount of coal-fired power
in the existing fleet and already under construction, gas-fired
power without CC could be a practical option in the medium term,
while retrofitting coal plants with CC equipment could help the
sector decarbonize in the long term.
Transportation and storage costs are significant elements that
need to be taken into account but do not change the conclusion that
with CCS gas power is cheaper than coal power in Australia and
Vietnam. In China, the high end of carbon transportation and
storage can alter the coal versus gas competitiveness in generation
cost. Nonetheless, the key conclusion for China also remains
unchanged—gas without CCS will be a medium-term decarbonization
option, while new coal-fired power, with or without CCS, will lose
favor owing to the global decarbonization ambitions and the supply
chain disruption that will follow.
Across the region, CCS can be a crucial tool for decarbonizing
the last mile in power generation, although diversification from
fossil fuels will remain the biggest contribution to carbon
emissions reduction from power generation. Non-fossil fuel power
capacity will be the largest contributor in reducing carbon
emissions from power generation in all three case study
markets.
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Jul 05
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