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11| Comparison with other carbon abatement options
To put the analysis of CCS economics in context, the costs were compared with those of carbon abatement using other low-carbon power generation technologies. These included onshore wind, offshore wind, biomass, wave, tidal, Combined Heat and Power ( CHP) and nuclear power generation.
Carbon abatement cost (£/t CO 2) is calculated as the additional cost of generating a given amount of energy using each technology in place of a conventional plant divided by the carbon savings that would be achieved. Lower abatement cost is better because it means that a greater amount of CO 2 is abated for each £ spent and thus greater revenue in terms of carbon credits. In market terms, it indicates the price of CO 2 needed to cause an informed investor to switch from building a conventional generation plant to one based on the alternative technology.
The alternative technologies were examined under certain assumptions regarding costs and commodity prices, and taking a simple view of comparable discount rates (taken at 10% across all technologies). Energy efficiency, large-scale industrial Combined Heat and Power ( CHP) plants and new build nuclear power generation appear as the most cost-effective options for carbon abatement. However, CHP is challenging to install and nuclear has a very long lead in time and significant issues concerning waste disposal and decommissioning. The abatement costs of CCS Gas and CCS Coal appear to be slightly greater than that of onshore wind, rather less than offshore wind and significantly less than tidal stream or wave power generation.
Realistically, it must be recognised that carbon abatement in Scotland in 2020 will not simply reflect relative costs. Other factors limit the deployment of these technologies. For example, growth of CHP will be limited by the availability of an appropriate heat load, and the present position of the Scottish Government on nuclear power suggests that no new nuclear capacity will be added. Also, most of the potential for onshore wind capacity renewable generation is likely to have been achieved by 2020, with the best and cheapest sites, supported by schemes such as the Renewable Obligation Scotland, fully occupied. It is unlikely that the challenge of reducing carbon emissions in 2020 will be fully met by the alternative technologies examined. In addition, several studies have shown that the variability of wind power will require either very large EU-sized interconnectors or 80% backup generators from fossil fuels. Scotland has to examine and deliver CCS to achieve its present low-carbon aims.
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