Mike Collier in Riga -

"It's cold today - good for business!" said a Scandinavian director of a heating company over steaming black coffee and apple strudel at the Baltic Economic Forum held in Riga earlier in November.

While residents of the Latvian capital hurried past in their winter coats and scarves, inside the conference centre things were much cosier. Around a hundred attendees from the Baltic and beyond gathered to chew over issues related to energy efficiency and renewables, with heavyweight contributions from E.On Ruhrgas, General Electric and Siemens, among others. But while everyone agreed there will be huge rises in the demand for energy in coming years, it was another technology entirely that might soon be of interest not only to the professionals in the conference hall but also to investors looking for fresh pastures.

Carbon Capture and Storage (CCS) is the next big thing in the climate change debate, it seems. Essentially, it is the process of capturing the harmful carbon dioxide released during the combustion of fossil fuels and storing it instead of releasing it into the atmosphere. Numerous trials are underway, particularly in Germany and Scandinavia, though the technology remains some years away from being commercially applied.

Getting down and dirty

The Latvian interest in CCS comes from the fact that the local geology is peculiarly suited to the storage of carbon - in theory at least. Latvia's sandy subsoil is already being used to store huge quantities of natural gas underground, as at the Incukalns facility just outside Riga. Such facilities could just as easily be used to sequester carbon, experts believe.

"Because of the geology we have suitable geological structures in all of Latvia," Andzela Petersone, a CCS specialist with the Latvian environment ministry told bne. "We have such potential only in Latvia, not in the other Baltic states. There is no potential in Estonia and Lithuania." The ministry is studying geological charts dating from the Soviet era to identify potential CCS sites, Petersone adds.

With the EU keen to introduce carbon trading as part of its efforts to combat climate change, Latvia could become a "carbon bank" for the continent, pumping carbon underground in return for generous cash payments from companies and other governments. For example, neighbouring Estonia has substantial oil shale reserves that it uses as an important, though highly polluting, source of energy. Einari Kissel of the Estonian Economics Ministry told bne that there are "technical possibilities" in the idea of Estonian carbon being stored beneath Latvan soil.

German company E.On Ruhrgas is among the current leaders in CCS technology, but Mario Nullmeier, head of E.On's Baltic office was circumspect about Latvia's specific storage possibilities, preferring to concentrate on general principles. "When you deal with CCS, you have to store it somewhere - you can use depleted oil and gas fields," he said.

But Nullmeier was just as keen to point out the potential problems CCS could bring with it. "The CO2 is still there so we need to question if this is a safe solution. It's the same discussion as with nuclear projects and nuclear waste. We don't know yet. No one can tell us the consequences in a hundred, 500 or 5,000 years. To say this is a safe solution one way or the other would not be the truth," Nullmeier maintained.

Bridging the gap

There is also the fact that CCS is a "bridge technology" rather than a full-scale solution to carbon emissions. Just as hybrid cars like the Toyota Prius are only filling a gap until fully electrical or hydrogen-powered cars become viable, so CCS will only exist until someone comes up with a way of removing carbon from the equation altogether.

As a result, CCS needs to be around long enough for investors to see a decent return on the big sums needed to introduce the technology. That's why E.On is concentrating much of its effort on cutting carbon emissions from existing power plants. "One point is most important - the question of how much does it cost? What is the future price?" said Nullmeier.

Petersone agreed with Nullmeier's caution, saying: "I am often taking part in working parties in Brussels and there are two groups of experts. One group says the risk is very low; another group says the technology is too new and we have no experience in long-term storage. They identify risks of leakage and migration into underground water."

However, Andris Spruds from the department of political science at Riga Stradina University said there's a better reason why CCS remains off most investors' radar despite its future potential. "Storing gas is a much sexier business than storing emissions - and much more profitable at the present moment. In the Latvian energy discourse, this is not something that has been extensively discussed. It has started to appear but the sexier businesses are still at the top of the agenda," Spruds said.

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