Cost benefit analysis of climate change

Offshore CCS and ocean acidification: a global long-term
of climate change
mitigation
Bob van der Zwaan1,2,3 & Reyer Gerlagh4
Received: 8 April 2015 /Accepted: 8 April 2016 / Published online: 30 April 2016
# The Author(s) 2016. This article is published with open access at Springerlink.com
Abstract Public fear over environmental and health impacts of CO2 storage, or over potential
leakage of CO2 from geological reservoirs, is among the reasons why over the past decade CCS
has not yet been deployed on a scale large enough so as to meaningfully contribute to mitigate
climate change. Storage of CO2 under the seabed moves this climate mitigation option away from
inhabited areas and could thereby take away some of the opposition towards this technology.
Given that in the event of CO2 leakage through the overburden in the case of sub-seabed CCS, the
ocean could function as buffer for receiving this greenhouse gas, instead of it directly being emitted
into the atmosphere, offshore CCS could also address concerns over the climatic impacts of CO2
seepage. We point out that recent geological studies provide evidence that to date CO2 has been
safely stored under the seabed. Leakage for individual offshore CCS operations could thus be
unlikely from a technical point of view, if storage sites are well chosen, well managed and well
monitored. But we argue that on a global longterm scale, for an ensemble of thousands or millions
of storage sites, leakage of CO2 could take place in certain cases and/or countries for e.g. economic,
institutional, legal or safety-cultural reasons. In this paper we investigate what the impact could be
in terms of temperature increase and ocean acidification if leakage occurs at a global level, and
address the question what the relative roles could be of on- and offshore CCS if mankind desires to
divert the damages resulting from climate change. For this purpose, we constructed a top-down
energy-environment-economy model, with which we performed a probabilistic Monte-Carlo costClimatic Change (2016) 137:157170
DOI 10.1007/s10584-016-1674-5
Electronic supplementary material The online version of this article (doi:10.1007/s10584-016-1674-5)
contains supplementary material, which is available to authorized users.
* Bob van der Zwaan
[email protected]
1 Energy research Centre of the Netherlands (ECN), Policy Studies, Amsterdam, Netherlands
2 School of Advanced International Studies, Johns Hopkins University, Bologna, Italy
3 Faculty of Science, University of Amsterdam, Amsterdam, Netherlands
4 Economics Department, Tilburg Sustainability Centre, and CentER, Tilburg University,
Tilburg, Netherlands
benefit analysis of climate change mitigation with on- and offshore CCS as specific CO2 abatement
options. One of our main conclusions is that, even under conditions with non-zero (permille/year)
leakage for CCS activity globally, both onshore and offshore CCS should probably on economic
grounds at least – still account for anywhere between 20 % and 80 % of all future CO2 abatement
efforts under a broad range of CCS cost assumptions.
Keywords Onshore versus offshore CCS . Climate change . Ocean acidification . Cost-benefit
analysis. Monte Carlo analysis
1 Introduction
Although aspects of the technical and economic, as well as the legal, political and public
acceptance dimensions of CO2 capture and storage (CCS) still require deeper understanding,
CCS technology could, and perhaps needsto, play a major role in curbing global CO2 emissions.
According to the Special Report on CCS (SRCCS) of the Intergovernmental Panel on Climate
Change (IPCC), it is expected that CO2 artificially injected underground can remain securely
stored during at least centuries (IPCC 2005). In many cases the probability of long-term CO2
storage integrity is high, and it is likely that storage sites can be found, if well managed and
monitored, for which containment is practically guaranteed (Lackner et al. 2012). The Sleipner
storage project is a good and iconic example, as at this site since 1996 CO2 has been safely stored
in a geological formation deep under the North Sea with quantities of about a million ton of CO2
per year. Likewise, in the Barents Sea at the Snhvit storage site CO2 has been successfully and
securely stored under the seabed since 2008. The findings of the ECO2 project (BSub-seabed
CO2 Storage: Impact on Marine Ecosystems^, funded by the European Commission) confirm
that to date CO2 has been safely stored at these two locations. One can thus conclude that
contained storage of CO2 in the underground appears possible (ECO2 2015), but that claims on
this subject matter need to be made carefully: much more knowledge still needs to be developed
about the potential short- and long-term impacts of CO2 storage on marine ecosystems.
While the monitoring techniques applied in the ECO2 project did not detect any CO2 anomalies
in the sediments and bottom waters above the Sleipner and Snhvit storage complexes, highresolution seismic data revealed a large number of vertical pipes and chimney structures cutting
through the sedimentary overburden in the vicinity of both sites (ECO2 2015). The project found out
that the seabed above the Snhvit storage formation was characterized by a high density of circular
seafloor pockmarks, probably formed by gas and/or fluid ascent in the geological past. While there is
for the moment no evidence that these pockmarks emit any water or gas into the marine environment, some of them . Seepage of methane from the overburden into the
overlying water column was detected at numerous locations around the Sleipner site, which so far
seem to result from shallow seabed origins only. Releases of water from a geological formation were
detected through a 3 km long fracture-like structure 25 km north of the Sleipner platform, which to
date also prove to come from shallow sources. All these newly discovered geological features,
however, pose a number of questions, such as whether high permeability pathways exist for gas
flows cutting through the overburden and linking storage formations to existing seep sites and
pockmarks, and whether CO2 stored below the seabed may eventually leak through the overburden
via seismic pipe and chimney structures, fractures or abandoned wells.
In this article we take a global long-term economic approach towards CCS deployment and
the integrity of CO2 stored underground (we are thereby complementary to the local
Binvestment under uncertainty^ approach taken by Narita and Klepper 2015). In our analysis
158 Climatic Change (2016) 137:157170
we allow, probabilistically, for relatively small CO2 leakage rates, based on a number of
different types of arguments (see also the online appendix). First, scenarios can be envisaged in
which under continued storage activity at sites like Sleipner and Snhvit CO2 slowly migrates
horizontally in the storage formation under the cap-rock to eventually reach a vertical pipe or
chimney structure. Depending on their permeability and porosity, such structures could
function as transit medium allowing CO2 to dissipate upwards towards the seabed. Thus,
despite a variety of geochemical trapping mechanisms the CO2 would be subjected to during
its migration path, it is possible that it could ultimately reach the bottom levels of the sea water,
at these two storage sites and similarly at other locations with comparable geological features.
Second, in recent CO2 storage projects it proved that sometimes mid-term action is required in
order to maintain safe containment conditions. During the initial operation of the Snhvit CCS
project, for instance, it appeared that the storage capacity of the formation initially chosen was
insufficient, so that soon after the projects start another geological formation was chosen, in
which the storage of CO2 continued. On the basis of reservoir, seismic and geo-mechanical data
obtained at the In Salah CO2 storage project in Algeria, concerns arose about possible vertical
leakage of CO2 into the cap-rock, as a result of which the storage activities at this plant were
suspended in 2011 (de Coninck and Benson 2014). These two examples demonstrate that not
always all features of planned storage formations are fully comprehended before a storage project
is actually initiated. Indeed, sometimes more complete understanding of a storage sites containment integrity is only obtained after a project has been taken into operation. It is imaginable that
not in all possible future storage projects in the world a similar adaptive approach is adopted as in
these two cases. A lack of such approach could potentially lead to the eventual leakage of CO2
into the ocean, sea or atmosphere above the storage formations geological overburden layers.
Third, in the future not in all countries necessarily the same monitoring efforts will be
deployed, for a number of different reasons. For example, there may be a lack of technical
expertise required for such monitoring in a given country. It is possible that not everywhere the
same safety requirements are followed by lack of political will or absence of necessary safety
culture. It is conceivable that for institutional reasons no action is taken upon observed breach of
storage containment, for example as a result of unclear agreements over responsibilities and
liabilities. Whereas economic reasons may exist for initiating a CCS project, such as stimulated
by a carbon tax or other policy instrument, economic arguments may also exist for insufficiently
managing and monitoring a storage site or unsatisfactorily remediating a leakage in case CO2
dissipation is observed from the storage formation, e.g. if the costs of these activities are high or
there is inadequate clarity over who should pay for them. Such economic, institutional, legal or
social reasons for possible CO2 leakage phenomena may diverge substantially from one country
to the other, but should be taken into account when performing a global long-term analysis of
CCS deployment and CO2 storage integrity, as we do in this article.
For the present study we constructed a global top-down energy-environment-economy
model, called OCEAN (acronym for On- and offshore CCS and Energy-climate system
ANalysis), with which we performed a probabilistic cost-benefit analysis of climate change
mitigation with generic abatement activity as well as both on- and offshore CCS as two
complementary CO2 abatement options. With this model we try to answer several questions.
First, to what extent can CCS still contribute to CO2 emissions abatement if on a global longterm scale leakage occurs at relatively low seepage rates? Second, what can under such
conditions be the relative roles of onshore versus offshore CCS, given that CO2 seepage
damages incurred to the ocean are likely much less than those to the atmosphere? Third, can
moving storage activity from onshore to offshore projects constitute a stimulus for the largeClimatic Change (2016) 137:157170 159
scale deployment of CCS on purely economic grounds, in addition to the possible improvements hereof in terms of public acceptance, in the event that 100 % storage integrity cannot be
entirely ascertained for the ensemble of all storage sites internationally into the indefinite
future? In Section 2 we describe the main features of the model we use for our analysis and the
way in which we apply it for this papers purposes (while reserving the online appendix for the
details and equations of our model). In Section 3 we report the major findings of our research,
in terms of a series of model run outcomes. In Section 4 we summarize our main conclusions.
2 OCEAN model and methodology
For the purpose of answering these questions we constructed an optimal growth model in which
prices in the global economy yield general equilibrium between supply and demand of a growing
but stabilizing world population (UN 2009). A representative planner optimizes welfare, which
is expressed by the discounted sum of utility per time period. Welfare optimization leads to the
Ramsey rule for the intertemporal rate of exchange. The OCEAN model thus fits in the tradition
of top-down integrated assessment models, as initiated by Nordhaus (1994) with the DICE
model. Like DICE, our model accounts for damages incurred as a result of climate change and
proffers abatement options with which, at a certain cost, emissions of greenhouse gases can be
avoided (see the appendix in the online Support Information for the full details of our model). As
in Gerlagh and van der Zwaan (2002); Hoel and Sterner (2007), and Sterner and Persson (2008),
OCEAN also includes intangible damages (i.e. costs that are hard to quantify or express in
monetary terms) associated with climate change (see also Gerlagh 2014).
Our new model has certain similarities with the DEMETER model, which we previously
used for related analysis and has been instrumental for studying several climate-related policy
questions (see e.g. van der Zwaan et al. 2002, and Gerlagh and van der Zwaan 2006). Our new
model, like DEMETER, simulates the global use of fossil fuels, the CO2 emissions resulting
from their combustion, as well as the means that allow for avoiding these emissions. It includes
generic production and consumption behavior and a basic climate module, and is in several
ways an extension of DEMETER, since we have refined the simulation of atmospheric and
oceanic CO2 stock build-up as well as the corresponding climate change dynamics, and now
explicitly include impacts such as ocean acidification. Over the past years DEMETER has
been used specifically for the purpose of studying economic opportunities and conditions for
CCS deployment, including issues such as potential CO2 leakage (van der Zwaan and Gerlagh
2009; Gerlagh and van der Zwaan 2012). We here build on that work, as well as the broader
and still growing literature on this topic (see, for example, Ha-Duong and Keith 2003; Keller et
al. 2008; Keppo and van der Zwaan 2012; Teng and Tondeur 2007).
Unlike with DEMETER, we have now substantially simplified the simulation of energytransition dynamics, as we do not explicitly represent in our new model the replacement of
fossil fuels by mitigation options such as renewables, nor do we assume that the costs of
mitigation reduce according to learning-by-doing phenomena. Rather, we keep the energy
economy relatively simple, by allowing for a shift away from fossil fuels in a more stylistic
way. The social optimizer can choose between either continuing with the use of fossil fuels but
experiencing the damages emanating from climate change, or shifting away from them to
avoid these impacts but at a given abatement cost. An additional degree of freedom for the
social planner is that (like in DEMETER) CCS can be introduced as a means to decarbonize
fossil fuels, which would permit their continued usage but under extra abatement costs.
160 Climatic Change (2016) 137:157170
New in our current approach is that we represent two types of CCS options, one for which
storage of CO2 takes place onshore, the other one offshore. We make several key assumptions
for these options, in an attempt to let our model reflect stylistically some of the main features of
mitigation through CCS. First, both these types of CCS are characterized by an energy penalty
of 30 % (defined as the share of the electricity output of a power plant that needs to be
employed to operate the CCS facility), which yields lower levels of CO2 avoided versus the
levels of CO2 stored (Gerlagh and van der Zwaan 2006). Second and critically important in a
model such as OCEAN, based on publications such as by the IPCC (2005; 2014); Keppo and
van der Zwaan (2012) and Finkenrath (2012), we assume that the costs of onshore CCS
amount to 50 /tCO2 (median) with a lognormal uncertainty range of 17150 /tCO2 (2.5 %
and 97.5 % probability levels). This uncertainty range is especially broad since large-scale
deployment for CCS is still practically untested. Similarly, we assume for offshore CCS costs
of 75 /tCO2 (median) with a lognormal uncertainty range of 25225 /tCO2 (2.5 % and
97.5 % probability levels).1,2 The difference between the costs of these two types of CCS
reflects the fact that offshore activity is more expensive than onshore activity, and that for
offshore CCS additional and more advanced technology is required to perform geological
injection of CO2 through a layer of sea or ocean water, in comparison to the equipment needed
for onshore CCS (even while for the former existing infrastructure such as oil or gas rigs can
sometimes be used see e.g. the Sleipner project (Statoil 2013)). Third, we differentiate
between safe and unsafe storage sites, but assume that the type (i.e. safety level) of any
particular storage site is unknown in advance. We suppose that the majority of CO2 stored
geologically will stay underground forever, which is a necessary assumption if one wants CCS
to become deployable on a large scale: we stipulate that the share of storage sites with a
perfectly immobilized total quantity of CO2 amounts to 70 % (median) with an uncertainty
range of 4085 % for all injected CO2.
Fourth, we stipulate that for unsafe storage sites, CO2 stored onshore leaks with a rate of
0.33 %/yr. (median) with a lognormal uncertainty range of 0.11.0 %/yr.3 The reason for this is
not because we think that CO2 cannot be stored safely underground: quite on the contrary, we
think that sites can be found for which storage will be permanent or close thereto, if they are
well managed and monitored (Kharaka et al. 2006; Klusman 2003; Shaffer 2010). But, as
explained above, we leave open the possibility that as a result of economic, institutional or political reasons, and/or given the prevailing safety culture, storage activities
in some regions or countries may not necessarily be subjected to the measures
required for . Likewise, we suppose that from unsafe
offshore storage sites CO2 leaks with a rate of 0.5 %/yr. (median) with a lognormal
uncertainty range of 0.12.4 %/yr. As described in the introduction, such leakage
levels are speculative and little evidence exists to draw upon, but they are deemed
plausible by the CCS research community and match the possible figures 1001000 tCO2/
day estimated in several publications (ECO2 2015; IEAGHG 2009; Statoil 2013). On the basis
1 From here on we specify all uncertainty ranges as 2.597.5 % probability intervals. 2 For the standard abatement option with which CCS competes, marginal costs increase linearly with emission
reductions. Full emission reduction is achieved at marginal costs that, for the first period, are lognormally
distributed over the range 80320 /tCO2, with median 160 /tCO2. See the online appendix for more details. 3 The average expected leakage is thus 30 % unsafe storage times 0.33 %/yr., which equals 0.1 %/yr. This
leakage rate is consistent with the worst case scenarios investigated in the ECO2 project (2015), in which
plausible maximum rates of approximately 150 tCO2/day were found (assuming a 1 MtCO2/yr. storage project
operated for 50 years).
Climatic Change (2016) 137:157170 161
of the fact that injecting is technologically more challenging, and remediating less trivial, for
offshore than onshore CO2 storage activity,4 we justify our choice for higher leakage rates for
the former than for the latter.5
Fifth, we assume that CO2 (emitted or leaked) incurs two types of damages to the
environment (atmosphere or ocean) into which it is released: tangible and intangible
(see e.g. the seminal work by Nordhaus (1994) for a more detailed description of this
distinction). We assume that a 3 C temperature increase leads to a tangible damage
cost (emanating from GDP or consumption losses as a result of e.g. sea level rise,
extreme weather events or drops in fisheries and tourism) of 2 % (median) of gross
domestic product (GDP) with a lognormal uncertainty range of 0.58 %. The intangible damages from this temperature rise (such as in terms of reduced human wellbeing or satisfaction resulting from environmental degradation or biodiversity loss)
add another 1 % cost of GDP (median), with a higher lognormal uncertainty range of
0.1258.0 % to reflect the higher uncertainty for these intangibles.6 The tangible costs
resulting from an increase in ocean acidification corresponding to a decrease in the
pH parameter equivalent to 550 ppmv atmospheric CO2 concentration increase (including for instance the negative effects of ocean acidification on fisheries) amount to
0.1 % of GDP. Given the large uncertainties in this respect, we assume a wide
probability distribution of 0.011.0 % for these costs. Similarly, intangible costs
resulting from a corresponding drop in the pH-value (reflecting e.g. the loss of marine
biodiversity) amount to 1.0 % of GDP, with a lognormal uncertainty range of 0.2
5.0 %. Intangible damages are scaled for the base year (2020) and their value
increases with income. The pure rate of time preference is set to 1 %/yr. (range
0.52 %/yr). This means that the OCEAN model is calibrated so as to be consistent
with a robust decline in returns on capital when economic growth slows down, as
argued in Piketty and Zucman (2014). The assumed declining returns imply a robust
carbon price, robust optimal emission abatement levels, and moderate climate change
as the median outcome.
Of course, a model like ours requires many more assumptions, regarding for
and income growth, baseline fossil fuel use and
associated CO2 emissions (energy and non-energy related), the radiative forcing
contributions from other greenhouse gases, return on capital investments and the
intertemporal elasticity of marginal utility, as well as the costs of generic abatement
activity. For the details behind the parameter values we assumed for these variables
we refer to the appendix in the online Support Information for this article. We ran
100 scenarios with parameter values that span the indicated uncertainty ranges, and
thereby perform a Monte Carlo type of analysis. We consider this in our context a
particularly appropriate approach, given the uncertainties involved in many parameter
4 Note that for monitoring the equivalent claim does not hold: offshore leakage detection, using standard
hydroacoustic echosounder systems (available at any ship), is much easier than onshore, since these systems
are many times more sensitive (and cheaper) than any onshore technique.
5 Indeed, from a purely geological point of view there should essentially be no difference between the two, that
is, leakage structures are likely to be approximately the same for offshore and onshore CO2 storage (but in the
former case they have perhaps been studied more extensively to date; see ECO2 2015). 6 All modeled climate-change-induced atmospheric damage costs are incurred with a delay of at least decades
(given the intrinsic interval between emissions and ensuing temperature change). We thus abstract from possible
immediate (tangible and intangible) seepage costs associated with onshore CCS, resulting from e.g. asphyxiation,
drinking water pollution, fear and/or social unrest.
162 Climatic Change (2016) 137:157170
values, but we are appreciative of the other possible frameworks that could be used to
explore this topic, among which for example Expected Utility or Decision under
Uncertainty analysis (see e.g. Held et al. 2009). We next report our results when
running our model in a cost-benefit mode for all these scenarios, for a set of generic
emissions-, climate- and ocean-related parameters, and for the listed variable values for the use
of CCS and potential leakage of CO2.
3 Simulations and interpretations
3.1 CO2 emissions and climate impacts
Figure 1 shows the results of our Monte Carlo analysis for CO2 emissions until the
year 2100. In almost all cases emissions peak before the middle of the century (only a
handful of scenario runs involve emissions that still rise after 2050), while more than
half of the 100 scenarios yield emission reduction profiles from already in or before
2020 (cf. the 50 % probability line), and only about 10 % of them reach their highest
emission level after 2040 (cf. the 90 % probability line). Around 90 % of the
scenarios yield zero-level emissions before 2100: our cost-benefit analysis thus implies
that the assumed level of climate change damages does no longer allow increases in
the atmospheric concentration of CO2 after 2100 in the majority of cases. In Fig. 2
we see that the concentration of CO2 in the atmosphere has reached its peak in more than
half of the scenarios before 2050. For only few of the cases this concentration keeps on rising
after this century, while emissions start declining during this century for all scenarios except one
(see Fig. 1). For all cases depicted in Figs. 1 and 2 we see a stark deviation from the business-asusual projection, for which both emissions and concentrations of CO2 rise rapidly during the
entire 21st century.
Figure 3 (with a time scale until 2300) shows that the global stabilized temperature increase
stays below the internationally agreed 2 C limit in about 50 % of the cases, whereas a subset
thereof yields a temporary overshoot (during only several decades) slightly above 2 C around
the end of the 21st century. In slightly under 90 % of the scenarios the global average
Fig. 1 Monte Carlo runs for
annual emissions as calculated
with the OCEAN model
Climatic Change (2016) 137:157170 163
temperature discontinues to rise after 2100. The share of scenarios for which the temperature
increase stays always below this target is around 40 %. All scenarios reach their temperature
peak before 2300 (but in one case this peak is as high as about 5 C). Some 10 % of the
scenarios stabilize with a temperature increase of around 1 C or lower, with a peak occurring
well before the end of the 21st century of at most 1.5 C, the enhanced climate change control
target adopted at COP-21 in Paris in December 2015 (UNFCCC 2015). For around 10 % of
the scenarios we find temperature increase peaks that are above 3.5 C, which typically take
place around the end of the century. In Fig. 4 (with again a time scale until 2300), we see for
these scenarios the corresponding oceanic acidification increase, as expressed by measure of
pH decrease, since much of the CO2 released into the atmosphere is absorbed by the surface
layer of our planets oceans. As one can observe from this Figure, the pH decrease amounts to
at most 0.1 for around 90 % of the scenarios. In about 10 % of the cases we see that the pH
parameter dips deeper than a change of 0.1, and in one case even by as much as 0.3. For all
scenarios we see that after a minimum of the pH value around or before 2100, it increases
Fig. 3 Monte Carlo runs for
global temperature increase from
the OCEAN model
Fig. 2 Monte Carlo runs for
atmospheric CO2 concentration as
calculated with the OCEAN model
164 Climatic Change (2016) 137:157170
again during the subsequent two centuries: at the background of large-scale emission abatement activity, the pH decrease patterns revert into positive changes from 2100 onwards.
3.2 Onshore versus offshore CCS
We find that CCS is broadly deployed as CO2 abatement option to manage global climate
change, and that CO2 is stored both onshore and offshore. In Figs. 5 and 6 we see that in some
50 % of our scenarios we obtain a level of around 20 GtCO2 of storage per year at some point
during the second half of the century, both for onshore and offshore CCS. In the majority of
cases we see that already 10 GtCO2 is geologically stored every year by the middle of the
century, and for about 10 % of the cases even as much as 40 GtCO2 annually by 2100, with
again no large differences between onshore and offshore CCS. Hence, under our set of
assumptions, we observe substantial storage activity for both types of CCS, with onshore
CCS benefiting from its lesser deployment costs and lower leakage rate, while offshore CCS
profiting from the smaller damage it incurs.
Figures 7 shows that if the minimum value of the costs of the two CCS options is 20/tCO2
or lower, some 80 % of overall CO2 abatement takes place through CCS, rather than other
Fig. 5 Monte Carlo runs for
annual storage of CO2 onshore as
calculated with the OCEAN model
Fig. 4 Monte Carlo runs for ocean
acidification from the OCEAN
model
Climatic Change (2016) 137:157170 165
options such as renewables. Even at a minimum cost for CCS at 50/tCO2, its
contribution to total mitigation efforts can still be large, with a share amounting to
anywhere between 0 % and 60 %. At CCS costs between 100/tCO2 and 150/tCO2,
the use of CCS is significantly curtailed, but can still amount to a level contributing
by approximately 20 % to overall climate mitigation. In Fig. 8 we indicate under what
cost conditions which of the two CCS types dominates. If the injection of CO2 at
offshore locations is at most 10 % more expensive than onshore injection, then there
is a high probability that offshore CCS is the preferable option, accounting for at least
60 % of all CCS deployment. For a cost difference of 30 %, onshore CO2 storage
becomes more attractive, with a high probability that it accounts for more than 60 %
of all CCS. The explanation for the fact that relatively higher offshore CCS costs can
be permitted is the lower level of damages incurred to the environment in the case of
leakage of CO2 into the ocean, in comparison to the case in which leakage occurs
into the atmosphere.
Fig. 7 Share of CCS in overall
emissions abatement versus costs
from the OCEAN model
Fig. 6 Monte Carlo runs for
annual storage of CO2 offshore as
calculated with the OCEAN model
166 Climatic Change (2016) 137:157170
4 Conclusions
The findings reported in this article are different from the conclusions we drew in our earlier
work, in which we asked ourselves similar questions on the economics and feasibility of CCS
under leakage of CO2 (van der Zwaan and Gerlagh 2009; Gerlagh and van der Zwaan 2012).
We have here attempted to shed light on the possible attractiveness of offshore geological CO2
storage, and have inspected what the economic benefits could be of complementing onshore
CCS with offshore CCS. For certain countries, like the UK, this is particularly pertinent, as the
majority of potential CO2 storage sites it possesses are located in offshore waters. As was
shown in Section 3, we find that by allowing for offshore CO2 storage one could possibly
significantly stimulate the usefulness of CCS from a cost-benefit perspective, and thus expand
its implementation on such grounds. Offshore CO2 injection may also substantially reduce
public opposition to CCS, which currently plays a sizeable role in impeding its deployment
onshore. On the basis of both these perspectives, one may conclude that partly moving CCS
from onshore to offshore locations may be a beneficial path to take to render CCS practically
more feasible as well as more realistic as climate mitigation option.
In short, our argument goes as follows. First, it may well be that CO2 abatement through
offshore CCS is more expensive than via onshore CCS up to 75 /tCO2, i.e. up to 100 % in
relative terms given that it is harder to undertake geological CO2 injection activity under the
seabed than directly in open air at the surface of the underground. Second, while not all
uncertainty is yet resolved in this domain (as described in the introduction, including in relation
to the so far promising and successful Sleipner and Snhvit storage projects), it seems likely that
near zero-leakage storage sites can be found, operated, maintained and secured (onshore as well
as offshore) from a natural scientific point of view. But based on economic, political, institutional and safety cultural arguments one may reason that on a large global scale in which many
thousands of CO2 storage sited are operated, leakage may ultimately not be zero. Third, in such
a context, one may claim that offshore leakage is potentially higher than onshore leakage, since
the injection process is technologically more requiring and remediation, if needed, is less trivial.
We hypothesize that leakage rates could be 50 % higher for offshore than for onshore CCS.
One may have different opinions on these three assumptions, and over time they may prove
not to hold out. But our main point can be drawn despite these hypotheses: also under these
Fig. 8 Share of offshore CCS in
total CCS versus cost differential
from the OCEAN model
Climatic Change (2016) 137:157170 167
conditions, as we demonstrate, offshore CCS may be as interesting from an economic perspective as onshore CCS. The reason for this finding is that there is high likelihood that the damages
from CO2 leakage into the atmosphere are more costly than those from seepage into the ocean.
Hence, if the circumstances are one day such that a possibility exists for CO2 leakage, then it
becomes less costly to let the leakage occur into a medium in which the damage costs are more
modest (whether tangible or intangible) than into one for which these costs are almost certainly
high. On the basis of our findings in this economic perspective, we argue that the prospects for
CCS could be substantially improved if one were to shift a good share of global CCS activities
from onshore to offshore territory. Our outcome is aligned with similar conclusions based on
public acceptance arguments, which also point towards a shift from onshore to offshore CCS,
since the latter can avoid Not In My Back Yard (NIMBY) sentiments.
In the that we use for our study, and under the range of
stylistic assumptions that we have had to make in order to perform this type of global economic
analysis, we find that if offshore storage is at most as costly as onshore storage, then at least 60 %
of all CO2 capture and storage should probably take place through offshore CCS. At a 50/tCO2
cost of CCS we think that CCSs contribution to total mitigation efforts should typically be about
30 %, whereas with CCS costs between 100/tCO2 and 150/tCO2, the use of CCS ought to be
significantly diminished but could still amount to a contribution of around 20 % to overall
climate mitigation. If the injection of CO2 offshore is at most 10 % more expensive than onshore
injection, then offshore CCS is the preferable option, accounting typically for at least 60 % of all
CCS deployment. Of course, improvements in other technologies such as renewables have the
potential to substantially reduce the deployment of CCS and hence de-emphasize the importance
of potential CO2 leakage as expressed in this paper. This is a subject that deserves further
research. Likewise, in future work the introduction of learning curves in a model like OCEAN
deserves reconsideration, as this form of expressing learning-by-doing phenomena can play a
large role in the outcome of scenario runs, as we previously demonstrated with our DEMETER
model (see van der Zwaan et al. 2002, and Gerlagh and van der Zwaan 2012).
The ECO2 project, in the context of which much of the above research has been performed, has
advanced the field of CCS research substantially, particularly the offshore CO2 storage integrity
and marine impacts dimension thereof (ECO2 2015). As was pointed out, the data and knowledge
generated in this project have led to further questions related to both the likelihood and mechanisms of leakage. These new questions need to be assessed in what hopefully will be more
research projects in this area. They also will have to be considered by storage site operators. When
answers are found to (some of) these new questions, and while the field further develops its
understanding of the integrity of climate change control induced CO2 storage, we recommend that
the local and global economics of onshore and offshore CCS activities are also revisited.
Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International
License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a
link to the Creative Commons license, and indicate if changes were made.
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