Historical variation in the capital costs of natural gas, carbon dioxide and hydrogen pipelines and implications for future infrastructure

K. Schoots, R. Rivera-Tinoco, G.P.J. Verbong, B.C.C. Zwaan, van der

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Abstract

The construction of large pipeline infrastructures for CH4, CO2and H2transportation usually constitutes a major and time-consuming undertaking, because of safety and environmental issues, legal and (geo)political siting arguments, technically un-trivial installation processes, and/or high investment cost requirements. In this paper we focus on the latter and present an overview of both the total costs and cost components of the transmission of these three gases via pipelines. Possible intricacies and external factors that strongly influence these costs, like the choice of location and terrain, are also included in our analysis. Our cost breakdown estimates are based on transportation data for CH4, which we adjust for CO2and H2in order to account for the specific additional characteristics of these two gases. Our main finding is that the economics of CH4, CO2and H2transportation through pipelines are volatile. In particular for CH4and CO2the overall trend seems that pipeline construction costs have not decreased over recent decades or, at least, that possible reductions in overall costs have been outshadowed by the variability in the costs of key inputs. We speculate on the reasons why we observe limited learning-by-doing effects and expect that negligible construction cost reductions for future CH4and CO2pipeline projects will materialize. Cost data of individual pipeline projects may strongly deviate from the global average because of national or regional effects, such as related to varying costs of labor and fluctuating market prices of components like steel. We conclude that only in an optimistic scenario we may observe learning effects for H2pipeline construction activity in the future, but there are currently insufficient data to fully support the limited evidence for this claim, so that the uncertainty of this prediction for now remains large.
Original languageEnglish
Pages (from-to)1614-1623
Number of pages10
JournalInternational Journal of Greenhouse Gas Control
Volume5
Issue number6
DOIs
Publication statusPublished - 2011

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