The Emerging Electrical Markets for Copper
Figure 91: Hypothetical Failure Scenarios for Integrated CCS Projects
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- Figure 92: Alternative CCS Roll Out Timelines 30
- Figure 93: CCS Market Growth and Copper Use
Figure 91: Hypothetical Failure Scenarios for Integrated CCS Projects
In its study, the Global CCS Institute explained the prospects for success of current and planned projects with reference to an asset lifecycle model. The confidence of a project achieving the “Operate” stage increases as it progresses through its lifecycle, as uncertainty surrounding the project’s technical and commercial viability reduces. But, projects fail as each decision gate is reached. Those projects reaching the “Define” stage are quite likely to go ahead, but already 10-15% of a project’s installed cost has been incurred by the time it reaches this stage. Looking at the 62 integrated projects planned, most of them are still at the “Identify” or “Evaluate” stage, so failure is still possible, indeed likely in many instances. The CCS provided three scenarios for the likely success of the 62 projects. It showed 18 coming to fruition as its realistic scenario, most of those relating to oil and gas extraction and incorporating EOR or natural gas processing. This is not an optimistic picture, and suggests that full commercialisation of CCS, especially outside the limited confines of the oil and gas extraction business, is still a long way off. This view is confirmed by others. It is still the case, however, that there are major projects going ahead which will demonstrate the viability of the alternative CCS technology options, providing a testing ground that will provide good practical experience that can be used in cheaper, more commercial projects soon after. There is a real disadvantage to those funding early, large scale, commercial development of technologies such as CCS. The investment required is large, technology risks high, and the first developments are almost certain to be followed by cheaper ones soon after. This being said, once the initial hurdle has been crossed, expansion can go ahead quickly. We believe that current developments will be sufficient for the cost and technology hurdle to be crossed successfully around the middle of this decade. In looking at the timing of CCS roll out in Europe, McKinsey came up with two scenarios. It shows the development of significant pilot and demonstration capacity from around 2015. Thereafter, in its higher roll-out scenario, it shows a fast take off in CCS from around 2017 onwards. In its slower roll out scenario, it shows the market being virtually flat until 2020, as the experience from existing plants is consolidated into a more secure technology. Figure 92: Alternative CCS Roll Out Timelines30 
In our forecasts, we take a position between the extremes, showing relatively slow but significant development from 2018 onwards. We also take into account the IEA’s assessment of where CCS development is likely to be geographically. The Impact on CopperThe discussion above in Section 3.9.4 indicates that by 2020 we will still be at a very early stage of the CCS business. The projects concerned will account for a tiny portion of total power generating stations, and will have barely touched industry. Because of this, the amount of copper consumed within our forecast horizon will be small. Longer term, we envisage strong market growth to create a substantial market for copper. To give an idea of the scale of development achievable by 2020, we forecast CCS abatement of 400 MtCO2 p.a. by 2020. This is equivalent to the output of just 2.7 GW of fossil fuel power station capacity, or only about 0.07% of all emissions by the electricity sector (based on an assumed 600 grams emission per kWh). Our assumed ratio of copper use to power station capacity is 700 tonnes of copper to 1 GW. This includes not only the works at the power station, but also copper use in transport and in storage. Put alternatively, we put the ratio at around 1 kt of copper to a little more than 20 MtCO2 /yr abatement. Based on these ratios, we forecast an installed base of copper in CCS of 19 kt by 2020, the amount being installed that year standing at 5.5 kt in that year. For Europe, we forecast 2.0 kt consumption in 2020. Winding wire in pumps, motors and transformers will be an important element in the copper consumption profile in CCS. Energy cable use will also be significant. Where offshore storage is involved, some copper nickel alloys may be required for corrosion protection. Figure 93: CCS Market Growth and Copper Use 
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