While Carbon Capture and Sequestration (CCS) is viewed by many as a pie in the sky solution to the challenges of CO2 emissions it is receiving more attention now that policy makers are focused on the climate change issue worldwide.

CCS uses various techniques to scrub and capture CO2 from generation plant flue gasses, and then pipes the CO2 to an underground cavern or ships it for deep ocean storage. It’s costly, but has proven effective and may help policy makers achieve their goals.

In the United States, the Waxman-Markey Climate Bill (H.R.2454) passed the U.S. House of Representatives a few months back. Globally, general concern over climate is driving the discussions that will be taken up at the United Nations Climate Change Conference in Copenhagen in December. Similar carbon reduction legislation either exists or is underway in other G-20 countries such as UK, Germany, Japan, and Norway.

As mentioned, CCS is not entirely new. In Norway, Statoil’s Sleipner West oil and gas field in the North Sea has been sequestering CO2 since 1996. A map of existing and proposed CCS locations is maintained by the Scottish Center for Carbon Storage, School of Geosciences, University of Edinburgh. Simply perusing the listed pushpins provides a view of the large number of new initiatives that soon will be established.

Microsoft partner Alstom and its customer AEP  have moved the commercialization of CCS one step closer to reality with the successful demonstration of the AEP Mountaineer Plant CCS Project. Philippe Joubert, Alstom EVP and President of the Alstom Power Systems business pointed out on a recent CNBC interview that coal and oil are such a large part (60%) of the global energy mix that CCS will be an unavoidable enabler.

CCS projects have experienced one critical stumbling block: funding. CCS implementations can exceed $1 billion – an investment amount that few utilities can afford, especially with a technology that is not fully proven. It is significant that the EU, the U.S., and Canada have begun allocating funds to further the development of this fledgling technology. The EU established a $1.46B CCS stimulus fund to demonstrate the technology in coal fired power plants. The US has identified $3.5B in stimulus funding for CCS and Secretary Chu has restarted the FutureGen Alliance project. Canada has set aside $650M and Australia is investing $1.2B. The level of these investments is unprecedented.

Still, the question remains: Will CCSS really take off?

 In Norway, policy makers set their carbon tax at $50 per metric ton, a figure which significantly increased the incremental cost of energy. With this added cost, the economic business justification for CCS is evident.

But if carbon credits cost only $20 per metric ton, will the marginal cost justify the cost of CCS? Or, will generating companies be better off to rely on the emissions allowances? These trade-offs are not quite so clear given current CCS cost projections. We need rapid advances in reducing CCS costs to ensure broad adoption of the technology. The large number of new demonstration projects and the various government stimulus funding sources should help accelerate the understanding of commercial production costs.

Regardless, some issues will remain. The US Senate may help support the financial case because they are looking at more stringent targets than those in the House bill. The environmental impact of sequestered carbon still is a concern to some. However, it is clear that unfettered CO2 plant emissions are not sustainable. Based upon the success of StatOil’s Steiner West field, and of the Alstom/AEP Mountaineer Project, CCS technology appears viable, and commercial availability may not be as far off as you think!