Risk Management of Carbon Capture and
Storage: Overview and Future Steps



William Leiss, O.C., PhD, FRSC
Scientist
McLaughlin Centre for Population Health Risk Assessment
University of Ottawa
1 Stewart Street, Room 311
Ottawa, ON K1N 6N5 Canada
wleiss@uottawa.ca
www.leiss.ca








A paper prepared for the
Institute for Sustainable Energy, Environment, and Economy (ISEEE)
University of Calgary








June 2009

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Abstract

Carbon capture and storage (CCS) is the attempt to prevent large quantities of carbon dioxide
from escaping into the atmosphere and contributing to the greenhouse effect. The paper opens
with an introduction to what is involved in capturing carbon dioxide both from natural and
industrial sources, processing it, and then injecting it deep beneath land or oceans where it will
remain sequestered for a very long time. Public policy, regulatory, and public acceptance issues
related to CCS are reviewed briefly. The next sections of this paper first offer a sketch of how
risk management is undertaken, using what is known as an “integrated risk management
framework” to explain its unique, step-by-step approach. Then two prominent, long-running
and quite different Canadian cases in which a risk-based approach has been worked out in some
detail – long-term storage of nuclear waste (used nuclear fuel) and prion diseases (especially so-
called “mad-cow disease”) – are presented. The purpose of this case-comparison exercise is to
provide some real-world dimensions to the otherwise abstract discussion of risk management,
and to anticipate some of the ways in which the risk management approach to carbon capture
and storage is likely to unfold. The paper concludes with some comments on the nature of the
risk assessments, and the risk management framework, that will be required in order to build
public confidence in the demonstration stage of carbon capture and storage.

Note to the Reader
The first section, “Introduction and Overview,” is written for those who are generally less
familiar with the developments to date on carbon capture and storage. Other readers may
wish to skip or skim this section.


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1. Introduction and Overview.

According to the International Energy Agency, carbon capture and storage [CCS] “in power
generation, industry and fuel transformation could account for 20% of CO2 savings (6.5 Gt of
CO2 captured and stored annually in 2050),” making it one of the most important strategies in
any greenhouse-gas emissions stabilization scenario.1 CCS includes three separate processes
and their associated technologies:
(1) CO2 capture: Isolating the carbon dioxide gas that is naturally present in fossil
fuels (coal, oil, natural gas), as well as the gas produced in industrial waste
streams, such as at ethylene plants, and compressing it into a liquid state;
(2) CO2 transport: Moving the liquified CO2 from its point of origin to a suitable site
for long-term storage, either on land or beneath the ocean;
(3) CO2 sequestration: Injecting the liquified CO2 into a suitable geological medium
that is likely to hold it in place, deep underground, for thousands of years.

The longest-running project utilizing these processes is the one in Norway, at the Sleipner West
gas field operated by Statoil in the North Sea.2 Since 1996, one million tonnes (1 Mt) of CO2
annually have been injected into a sandstone formation aquifer at a depth of 1000 metres
beneath the ocean floor.

Other current operations include the Salah field in Algeria, run by British Petroleum and
its partners, which has been sequestering 1 Mt/year of CO2 annually beneath the Sahara Desert,
and the world’s first CCS coal plant near Spremburg, Germany (a relatively small facility).3
There are also complete demonstration projects such as Australia’s Otway Basin facility, where

1 Near-term Opportunities for Carbon Dioxide Capture and Storage (Paris: OECD/IEA, 2007), p. 3. The
Wikipedia entry (http://en.wikipedia.org/wiki/Carbon_capture_and_storage) provides a good
introduction to the subject.

2http://www.statoil.com/statoilcom/SVG00990.NSF?OpenDatabase&artid=01A5A730136900A3412569
B90069E947

3 http://www.bp.com/sectiongenericarticle.do?categoryId=9025049&contentId=7046578 and
http://www.sindark.com/2008/09/22/spremberg-clean-coal-plant/

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methane and CO2 are separated, then the CO2 is liquified and transported through a pipeline to a
well drilled into a depleted natural gas field, where 100,000 tonnes per year are being injected
some 2 km underground.4 Finally, in addition to simply storing compressed CO2 underground,
a process known as EOR (enhanced oil recovery) first uses the gas to increase the amount of oil
that may be pumped out of a field when it is close to being depleted. Canada’s Weyburn-Midale
Project in Saskatchewan, the largest CO2 sequestration facility so far, takes 3.5 Mt of compressed
CO2 annually, which is shipped through a 300-km pipeline from a coal gasification plant in
North Dakota, for use in EOR (resulting in a 50% increase in oil recovered), and which is then to
be sequestered permanently underground.5 There is also a natural gas facility in Fort Nelson,
British Columbia that presently captures both CO2 and hydrogen sulphide (H2S). In 2008 a
feasibility project for a storage phase was announced, involving the drilling of test wells into a
saline aquifer; if successful, the facility will sequester 1 Mt/year of carbon dioxide.6

There are many challenges still to be overcome before CCS can fulfill its potential for
being a major contributor to GHG emissions reductions.7 At the moment there is general
agreement that cost represents a formidable obstacle to commercial-scale development: When
CO2 does not have an economic value, as it does when it is used in enhanced oil recovery, all
activities associated with CCS will represent an additional cost of production. For the earlier
phases of development, incremental costs in Canada are estimated to be in the range of $40-
$140 per tonne of CO2 abated, although costs will fall later. (A recent McKinsey & Company

4 http://www.co2captureandstorage.info/project_specific.php?project_id=160

5 http://www.ptrc.ca/weyburn_overview.php and http://www.gov.sk.ca/news?newsId=d88b80b2-458d-
49e2-9033-a2d5d5295ee7

6 http://www.scandoil.com/moxie-bm2/carbon/technology_carbon/spectra-energy-to-pursue-
feasibility-of-large-scal.shtml

7 The challenges are presented effectively in the article, “Trouble in store,” The Economist, 5 March 2009:
http://www.economist.com/displayStory.cfm?story_id=13226661&fsrc=nwlgafree.

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report looked at the period beginning in 2020, when the early full commercial-scale CCS
projects are expected in Europe, and estimated the costs per tonne of CO2 abated at €35-50,
totaling €30 for capture, €5 for transport, and €10 for storage.8) Another way of representing
these costs, for an energy-production facility such as a coal-fired electricity plant, is to calculate
the expected increase in the costs and price of energy when CCS is added. Again, estimates vary
widely at this early stage of analysis; one 2007 projection for coal-fire electricity-generating
plants, from the U. S. DOE, forecast a cost increase of between 150 and 300 per cent and
something close to a doubling of electricity prices.9 Everyone agrees that it will be necessary for
governments to create a market for carbon (in other words, treating carbon as a commodity), in
which the market price is sufficiently high to justify the costs of CCS, before any commercial-
scale CCS-only facilities can be built and operated.

Another significant challenge is the need for a comprehensive policy, regulatory, and
legal framework for CCS in every relevant jurisdiction; for Canada, this will involve some type of
joint federal–provincial framework.10 (In addition, international agreements will be needed,
through which national or regional GHG-management initiatives can be integrated – for
example, emissions trading regimes and the Clean Development Mechanism under the Kyoto
Protocol.) The policy dimension would cover, for example, the sharing of responsibilities as
between different levels of government as well as between governments and the private sector,
including possible public – private partnerships. The regulatory dimension would include GHG

8 McKinsey & Company, Carbon Capture & Storage: Assessing the Economics, 2008, p. 16:
http://www.mckinsey.com/clientservice/ccsi/pdf/CCS_Assessing_the_Economics.pdf.

9 Cited in: U. S., General Accounting Office (2008), p. 23.

10 For the U.S. see Marston & Moore (2008), Wilson et al. (2003), and Wilson et al. (2007); for a brief
overview across the developed world, see International Risk Governance Council (2008) and Resources
for the Future (2007).


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emissions-reduction targets over time as well as health, safety, and environmental protection
standards and environmental monitoring protocols. The legal dimension must include
specification of ownership of the commodity and the liabilities associated with all the phases of
CCS (capture, transport, storage), especially the risks of re-release or other adverse events,
especially over longer time-frames, at the storage facility.

Recent contributions have advanced our understanding of three of the significant public
policy issues, in a Canadian context, associated with CCS, namely: (1) economics and financing,
(2) ownership and liability of the carbon captured for long-term storage, and (3) the legal
framework for regulation.11 However, the nature of the risk assessment and risk management
frameworks needed for CCS in Canada have not been adequately described to date.12 It is
important that a sustained discussion of these frameworks, involving all interested parties,
should be begun as soon as possible, in the context of the imminent launching of large-scale
demonstration projects for CCS in Alberta.

Finally, there are challenges arising out of public awareness and acceptance of CCS, in
terms of the understanding of the technologies, the policy objectives in relation to climate
change issues, and the risk assessment and risk management methodologies for CCS. Citizens
are likely to evaluate the prospects for CCS in the context of broad energy policy criteria, that is,
the way it may affect the whole mixture and balance of future energy supply alternatives – in

11 See Pembina Institute and ISEEE, “Carbon Capture and Storage: Forum Proceedings” (November
10, 2008): http://pubs.pembina.org/reports/ccs-forum-proceedings.pdf; and the papers by Nigel
Bankes, Mary Griffiths, and Marlo Reynolds & David Keith.

12 The situation in the U. S. is quite different; see, e.g., the discussion of the FutureGen project in section
5, below. Also: “The United States has considerable experience injecting fluids underground – both on
land and under the sea floor – for purposes of storage, recovery, and disposal” (Wilson et al. [2003], p.
3481; see also Keith et al. [2005]).

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particular, the relation between fossil-fuel sources, nuclear, hydro, and “alternatives” (solar,
wind).13 As stated in a recent document from the Pembina Institute: “It is critical that CCS be
considered as part of a portfolio of solutions, and that adequate attention also be paid to more
sustainable, low-impact energy solutions, especially renewable energy and energy efficiency.”14

According to the IEA’s “World Energy Outlook 2008,” the world’s level of dependence on
fossil-fuel energy in 2030 will be about the same at it is today – roughly 80% of the primary
energy mix.15 When energy mix scenarios are discussed, a key factor for many people is the
distribution of various types of public subsidies across energy types. A number of governments,
notably in Canada, have announced large subsidies, in the billions of dollars, for R & D on
carbon capture and storage, dwarfing by several orders of magnitude the support for alternative-
energy projects. Thus in this context CCS could be interpreted as a strategy to “lock in” our
dependence on fossil fuels, over the long term, and thereby to inhibit the “rebalancing” of energy
options. This perceived bias in favour of fossil fuel sources of energy is very likely to be a major
public policy issue throughout the period of the demonstration phase of the feasibility of large-
scale carbon capture and storage, and it will have to be addressed by proponents of CCS.

This paper is devoted largely to only one of these challenges, namely, the need to develop
robust risk assessment methods and risk management practices for carbon capture and storage.
Such methods and practices become part of the response to every one of the challenges outlined
above: for example, with respect to the policy dimension, they are essential for the

13 Palmgren et al. (2004) and Chapter 6 (pp. 117-39), “The public perception of carbon dioxide capture
and storage in the UK,” by S. Shackley, C. McLachlan, and C. Gough, in Gough and Shackley (2005).

14 “The Pembina Institute’s Perspective on Carbon Capture and Storage,” 19 February 2009:
http://alberta.pembina.org/pub/1787.

15 http://www.worldenergyoutlook.org/docs/weo2008/WEO2008_es_english.pdf.

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determination of acceptable levels of risk and thus the validation of CCS as a strategy for GHG
emissions reduction; with respect to the regulatory dimension, they specify not only the risks
but the cost of risk control options, thus allowing us to do risk-risk, risk-benefit, and risk-cost-
benefit analyses; and finally, with respect to public awareness and acceptance, when risk
assessment and risk management are carried out in credible ways, they make up an essential
component of the public’s responses to new technologies.

The remainder of this paper first offers a sketch of how risk management is undertaken,
using what is known as an “integrated risk management framework” to explain its unique, step-
by-step approach. Then two prominent, long-running and quite different Canadian cases in
which a risk-based approach has been worked out in some detail – long-term storage of nuclear
waste (used nuclear fuel) and prion diseases (especially so-called “mad-cow disease”) – are
presented. The purpose of this case-comparison exercise is to provide some real-world
dimensions to the otherwise abstract discussion of risk management, and to anticipate some of
the ways in which the risk management approach to carbon capture and storage is likely to
unfold. The paper concludes with some comments on the nature of the full risk assessment that
will be required for carbon capture and storage.

2. The Risk Management Approach.

Risk management has been called “a comprehensive, systematic process that assists decision
makers in identifying, analyzing, evaluating, and treating all types of risks, both internal and
external to the organization.” Further, “the objective of risk management is to ensure that
significant risks are identified and appropriate action is taken to manage these risks to the
extent that is reasonably achievable.”16 In more concise terms, we may refer to risk

16 Jardine et al., 2003, p. 129.
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management as an attempt to anticipate and prevent or mitigate harms that may be
avoidable.

The effort to manage risks takes place on a daily basis at every level of activity in present-
day society: at the level of individuals and families, neighbourhoods and communities, urban
and rural regions, large private enterprises, provincial and federal governments, and in many
dimensions of international affairs for global issues. Individuals and families, for example, have
a very broad range of primary responsibilities for their well-being, particularly in the areas of
health and personal security; this is indicated by the fact that some three-quarters of lifetime
health outcomes are related to risk factors over which individuals have some large measure of
personal control. Large corporate enterprises, especially in the industrial sector, have both legal
and fiduciary responsibilities to shareholders, governments and local communities in the areas
of employee health and safety, environmental protection, and prudent financial management.
Senior levels of governments within nations have the broadest range of formal duties in this
regard; through regulatory systems, for example, they set levels of acceptable risk, in
occupational settings and for the general public, for literally thousands of different types of
exposures to potentially hazardous substances, activities, and technologies. Even within some
specific areas, such as the safety of donated blood, the risks are diverse, complex and ever-
changing, requiring ceaseless vigilance on the part of the regulators (Canadian Blood Services
and Héma-Québec). Finally, there is a wide variety of global risks – armed conflict, infectious
diseases, environmental pollution, climate change, and many others – which can only be dealt
with through concerted action at the international level.

Risk itself is defined here as “the chance of harm.” The conception of risk management
as an attempt to anticipate and prevent or mitigate harms that may be avoidable indicates its


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key objectives. Seeking to anticipate events that may prove to be harmful and investigating risk
control options that will at least reduce the scope of possible future harms, if they cannot be
prevented entirely, is a program of action that can have very large payoffs in terms of avoiding
costs that otherwise might be payable. The whole of preventive medicine, such as smoking
cessation and many other types of behavioural modification programs, is an exercise in risk
management as defined. Environmental protection regulations are designed to prevent release
of pollutants, and other types of adverse human impacts, as opposed to cleaning up after the
fact.

One of the great strengths of the risk-based approach is that it can find various ways of
accommodating progressively larger sets of decision inputs while maintaining an acceptable
level of technical rigour. This is shown in the following schematic:

Science
Risk Management
Public Policy

(1)



(2)



Interface
(1):
Interface
(2):

Risk
Assessment
Public
Perception
of
Risk


Risk
Control
Risk
Acceptability

Risk
Mitigation
Public
Trust


First, at the interface of science and risk management, we find the technical disciplines of risk
assessment, control, and mitigation, which ideally tell us what are options are, how well certain
precautionary measures are likely to perform, what consequences are likely to follow from
failures in risk control, and what it will cost us to achieve certain levels of risk mitigation. And
yet this is now known to be only one-half of the full equation. At the second interface, between
risk management and public policy, decisions on how to manage a whole host of major risks,
such as pandemic influenza and climate change, now occur in an open international arena in
which a large number of interested parties, members of the general public, and governments
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