CO2 Price to Spur Carbon Capture Will Fall From $125, Shell Says

The price of emissions needed to spur investment in carbon capture and storage, or CCS, projects will probably drop from a current estimate of about $125 a metric ton, according to Royal Dutch Shell Plc. (RDSA)

Technology costs for CCS are expected to fall as more pilot projects are built, pushing down the carbon price threshold, Angus Gillespie, vice president of CO2 at Shell, said today in an interview at the Carbon Expo conference in Cologne, Germany.

Shell, Europe’s biggest oil company, already bases plans for future fossil-fuel capital investments worldwide on the assumption it will have to pay $40 a ton for carbon emissions, Gillespie said. The price needed to spur CCS projects will probably be somewhere between the two figures, he said without being specific because the information is confidential.

Some companies involved in extracting and processing hydrocarbons such as coal, crude oil and natural gas assume a so-called shadow carbon price to help ensure that multibillion-dollar investments remain profitable for decades under even the strictest environmental rules. Exxon Mobil Corp. assumes a price of $60 a ton, according to a December report by CDP, a New York nonprofit formerly known as Carbon Disclosure Project that compiles environmental-performance data for investors.

“If we applied a shadow price just now of $125, we’d probably do CCS,” Gillespie told delegates at the conference.

The $125 a ton estimate is from Zero Emissions Platform, a lobby group for the CCS industry, Gillespie said.

CCS involves trapping carbon-dioxide emissions from factories and power plants and pumping them underground for permanent storage.

Climate policies may prompt Shell to raise its shadow carbon price while technology costs may drop, making carbon-capture projects viable, he said.

“That’s where we want to get to,” he said.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Andrew Reierson, Dan Weeks

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