Vattenfall, one of Europe’s largest energy producers, announced this week that it will discontinue its research and development activities in carbon capture and storage (CCS) for coal-fired power plants.
The move comes as Vattenfall looks to shore up costs as profits fall considerably for European power producers. Vattenfall said in a statement that research will continue in smart grid, wind, hydro, coal, and nuclear.
"Tough market conditions are expected to continue for another few years, and we are restructuring our research and development operations as it is becoming increasingly important to have the right knowledge at the right time to meet the ever-changing needs of business," Karl Bergman, head of R&D Nordic for Vattenfall, said in a statement.
Europe’s power producers are already losing money on many coal and natural gas power plants due to depressed wholesale electricity prices from the recession, coupled with increased renewable capacity due to decarbonization policies. A study earlier this year from Oxford University [PDF] found that coal prices have fallen by about one-third in Europe since 2011.
Despite years of research, CCS continues to be an expensive option to cut greenhouse gas emissions from coal-fired power plants. Even in the European Union, which has decarbonization policies, it has yet to become a commercial-scale, affordable option to keep older coal plants operating while producing fewer emissions.
Vattenfall does not have money to bet on technologies that might not pay off in the near term. The Oxford study found that the Swedish power giant wrote down €3.46 billion (US $4.78 billion) in 2013 related to losses from coal and natural gas plants in the Netherlands and Germany.
The Vattenfall announcement is another blow to CCS, but there are some other bright spots on the globe for the technology. A 110-megawatt coal-fired power plant refitted with carbon capture in Saskatchewan is expected to come online within weeks, according to MIT Technology Review. The utility that owns the plant, SaskPower, is using some CCS research from Vattenfall. Vattenfall said it would continue knowledge exchange with other entities even though it will not conduct further research.
Another project, in Mississippi, will install carbon capture on a coal plant and is expected to start up later in 2014. Like the Canadian project, it can reduce costs because it uses cheap lignite coal and it is can sell the carbon dioxide to nearby oilfield operators. In January, the U.S. Energy Department pledged $US 1 billion towards a carbon capture and storage project in Illinois.
But in most regions, the outlook for CCS is unsure at best. The Norwegian government announced last fall that it would not escalate a large CCS pilot project to commercial-scale operation.
CCS is not the only research area to get axed by Vattenfall. The company said it will also close down “a number of” projects in offshore wind and gas power. For wind and hydro, the focus going forward will be on lessening environmental impacts of new projects. Vattenfall’s nuclear research will continue into how to safely dispose of spent nuclear fuel and it will also continue to look at ways to use coal assets as a regulator for intermittent renewables.
"We now need to prioritize our R&D investments and choose whatever is most needed,” said Bergman. “We are opting for efficient research projects that can contribute further to our business operations, now and in the future."