Carbon capture and storage for fossil-fired plants risks worsening energy inflation

IEEFA argues the economic case for CCS in fossil-fired power plants is weak. 

Carbon capture and storage technology for fossil-fired power plants will likely worsen energy inflation, the Institute for Energy Economics and Financial Analysis (IEEFA) said. 

The increase in electricity prices will likely affect the public, businesses as well as the government the most. 

“The economic case for CCS in the power sector is weak, considering input cost and funding uncertainties, continued failures of the technology, and the constantly improving alternatives,” Christina Ng, IEEFA’s Research and Stakeholder Engagement Leader, Debt Markets, said.

“Yet, policymakers are recognizing it as a sustainable investment or providing generous financial incentives too easily to CCS producers and developers.”

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In the case of Australia, for instance, if CCS is funded through electricity prices, these prices could increase by A$100 to A$130 per megawatt-hour. This is up from between A$75 to A$95MWh annual volume weighted average wholesale prices. 

“Consumers, businesses, industry and retailers alike would logically seek out the most affordable electricity options that meet their needs, a more immediate priority for many than environmental and social factors,” Michael Salt, a guest contributor with IEEFA and an energy economics and finance analyst, said.