BP official says economics of CO2 capture, storage will improve

BP official says economics of CO2 capture, storage will improve

Miami (Platts)--24Apr2006

Companies working on projects to capture and store greenhouse gas
emissions face price risks as the carbon market develops, but improvements in
technology and other factors should lower those risks, a senior BP official
said Monday.

In remarks to an Environmental Markets Association meeting in Florida,
Cameron Byers, BP's president of gas and power in North America, described two
carbon capture and storage projects that his firm is developing.

The first is a plan to pump gases from energy production in the North Sea
for conversion to hydrogen fuel for a power plant in Scotland. The second is a
project for capturing carbon from a California power plant to enhance oil
refining.

The total emissions reductions from the two projects is 5 million mt,
Byers said.

BP's effort to capture and use GHGs is critical because of the need to
address global warming and climate change, Byers said.

The world has enough coal, natural gas and oil to last between 40 and
roughly 100 years, he said. But Byers added that the increasing reliance for
energy on "geographically sensitive areas," such as the Middle East, make the
cleaner energy use essential.

Byers was asked how carbon capture can be viable economically given that
the practice costs between $20/mt and $40/mt while the value of emissions
credits is expected to be capped by states and the federal government at
roughly $7/mt.

He said technology costs for cleaner energy are continually dropping and
said the cost of solar panels, for example, "have come down by half in the
last three years."

Although Byers did not address the issue of government subsidies, BP
expects to get some funding for both the California and UK projects, according
to a company official who did not wish to be identified.

Asked whether carbon should be taxed out of gasoline or how the rising
emissions from transportation should be addressed, Byers noted that BP has
partnered with Ford and General Motors on how to make cleaner fuels
voluntarily.

---Marty Coyne, martin_coyne@platts.com

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