Shell says carbon capture best hope

Projects to capture industrial emissions and store them in the earth's crust could cut CO2 pollution by up to 40%, according to officials from Anglo-Dutch supermajor Shell.

Carbon capture and storage (CCS) faces steep cost hurdles, but may someday be worth hundreds of billions of dollars a year, a Shell executive said.

"CCS is probably the largest source of potential carbon reduction for the next 30 years, and a way to deal with 30 to 40% of (global) emissions," Kimberly Corley, Shell senior advisor for CO2 and environmental affairs, said in a Reuters report.

The technology is now used from Texas to Algeria to pump CO2 into oil and gas reservoirs, pressurising them to increase output.

But Shell is betting on becoming an industry leader in storing its own and other companies' carbon emissions to tap into financial perks given for lowering emissions.

The company already has seven test-phase CCS projects underway and is looking to fund future projects through lucrative carbon credits.

"We think (CCS) is one of the few technologies that has the potential to become very big," Shell boss Jeroen van der Veer said in a conference call with reporters today.

Costs are a drawback due to the difficulty of trapping emissions as they spew from coal or oil-burning plants.

Building CCS projects now would cost Shell around $2 billion for each million tons a year of emissions, Corley said.

The US emits around 7 billion tons a year.

"No one knows the cost if you start to do it on a large scale," Van der Veer said.

Aggressive deployment of CCS could mean a billion tons of CO2 are stored by Shell and others annually by 2025, generating $50 billion, David Hone, Shell's climate advisor, said.

CCS hinges on financial rewards for emissions reduction, including cap and trade programmes, which Shell supports.

The Obama administration is pushing climate legislation, including cap and trade, to generate $650 billion between 2012 and 2019 and cut emissions by 14%.

Policy makers will gather in December in Copenhagen to discuss a replacement for the Kyoto Protocol, the global emissions reduction framework that expires in 2012.

The US is not a signatory to Kyoto.

Shell's plans include one to pump CO2 from its Pernis oil refinery near Rotterdam into spent gas reservoirs underneath a nearby town, which Corley expects to go ahead soon.

CCS critics say there's no guarantee that emissions will stay underground, and leaks pose dangers.

"We think we can do it safely," CEO Van der Veer said.

Shell's first commercial CCS project, worth more than $2 billion, is under feasibility study at the Athabasca oilsands project in Alberta, Canada.

The project, known as Quest, would be led by Shell and include US supermajor Chevron and US giant Marathon.