Energy and Energy Policy Team 8 capturing CO2
Transcript of Energy and Energy Policy Team 8 capturing CO2
Energy and Energy Policy Team 8
capturing
CO2
Co-Authors Victor Gutwein Brittany Agostino Erik Landry Nathan Wilson Alexis Morris Woyou Zeng
Table of Contents
1. Introduction
2. Definition of terms
3. Overview of capture technology in coal power plants
3.1 Post-combustion
3.1.1 Process
3.1.2 Capture technologies
3.1.3 Post-combustion commercialized techniques
3.2 Pre-combustion process
3.3 Oxy-combustion process
4. Economics
4.1 Costs
4.1.1 Sample coal powered plants
4.2 Overall project costs and financing
5. Carbon capture policy
6. Conclusion
7. Annexes
7.1 References
1. Introduction
Coal power plants provide 42% the electric power in the United States. The U.S. has abundant
coal resources, the technology used in coal burning power plants has been in place for decades
and coal is one of the cheapest sources of electricity generation in commercial use. However,
there is a growing awareness that there are negative externalities presented by coal electricity
production that are not reflected in the price of coal, specifically that the tones of CO2 released by
coal plants are harming the environment in a variety of ways. It is for this reason that carbon
capture and sequestration (CCS) is being developed, and this paper attempts to evaluate the
feasibility of different carbon capture processes.
In the most basic terms, CCS takes the CO2 that would have been released into the atmosphere (as
a byproduct of industrial processes) and buries it under the ground in cisterns or wells –
theoretically ensuring that it is not a contributor to climate change.
CCS involves three steps, of which approximately 75-percent of the cost incurred to power plants
is the relatively uniform carbon capture (CC) process; transport and storage costs and techniques
vary greatly and will not be explored in this paper. Most of the coal burned in the U.S. is used in
electrical power plants, with the remainder being used in a wide array of industrial manufacturing
processes. This paper will further limit its focus to CC in the electricity production sector.
Within this space there are three technologies available to capture carbon from coal power plants;
two of them- post-combustion through pulverized coal with carbon capture (PC-CC) plants and
pre-combustion through integrated gasification combined cycle with carbon capture (IGCC-CC)
have been developed on a commercial scale in the U.S. and other countries. Throughout the
paper, PC will be synonymously with post-combustion and IGCC with pre-combustion. The third
technology, oxy-combustion, is currently still in the early stages of development and does not
have enough commercial data from which cost/benefit conclusions can be drawn.
These technologies have been proven to work and have shown decreasing trends of costs of
electricity (COE) However, in order for these to ever become a reality in reducing the burden of
coal generated CO2 emissions on climate change and the environment, policy measures will have
to be implemented to address the challenging economic situation – one by which the positive
externalities of reducing emissions will not be internalized by firms or consumers. The free
market will not voluntarily add CC unless power plants are forced to account for their carbon
externalities through policy measures. However, , more R&D is needed to continue reducing the
costs of adding carbon capture technology to PC or IGCC plant.
This paper will look at the current and expected costs of adding CC to coal power plants and what
the US government would need to do to make CC a real solution to America’s clean energy goals.
2. Explanation of terms and formulas
CBO Congressional Budget Office CC carbon capture
CCS carbon capture and sequestration
COE levelized cost of electricity DOE Department of Energy
EOR enhanced oil recovery
IGCC integrated gasification combined cycle
IGCC-CC integrated gasification combined cycle with carbon capture (pre-combustion)
KW Kilowatt
KWh kilowatt hour
MW Megawatt
MWh megawatt hour
PC pulverized coal (most coal plants in U.S. today)
PC-CC pulverized coal with carbon capture (post-combustion)
The Levelized Cost of Electricity (COE):
COE is a measurement calculated in order to estimate the overall cost of the electricity generated by a plant, taking into account initial capital, fuel costs and operating costs.
with
COE = levelized cost of electricity ($/MWh) CF = capacity factor
TCR = total capital requirement ($/kW) η = net plant efficiency
α = capital recovery factor r = discount rate (fraction)
FOC = Fixed O&M cost ($/kW per year) L = plant life time (years) [1].
COF = cost of fuel ($/GJ) VOC = variable O&M cost ($/MWh)
The following definitions are given by Carnegie Mellon University’s IGEC:
Total Capital Requirement (TCR): “This is the money that is placed (capitalized) on the books of the utility on the service date. The total cost includes the total plant investment plus capitalized plant startup. Escalation and allowance for funds used during construction (AFUDC) are also included. The capital cost is given on both a total and an annualized basis” [2].
Fixed O&M (FOC): “The operating and maintenance fixed costs are given as an annual total. This number includes all maintenance materials and all labor costs for each technology” [2].
Cost of Fuel (COF): The cost of fuel is given in dollars per gigajoule, which can be found depending on the amount of energy extractable from each fuel source.
Variable O&M (VOC): “The operating and maintenance variables costs are given as an annual total. This includes all reagent, chemical, steam, and power costs associated with a technology” [2].
Capacity Factor (CF): “This is an annual average value, representing the percent of equivalent full load operation during a year. The capacity factor is used to calculate annual average emissions and materials flows”[2].
Net Plant Efficiency (η): The net plant efficiency is given by the net amount of electricity produced per unit of time in MWh divided by the total energy input per unit of time in MWh.
Discount Rate (before taxes) (r): “This is also known as the cost of money. Discount rate (before taxes) is equal to the sum of return on debt plus return on equity, and is the time value of money used in before-tax present worth arithmetic (i.e., levelization)” [2].
CO2 Mitigation Cost:
The CO2 mitigation cost is a measurement of the cost that it takes to remove a metric tonne of CO2 from the power plant through carbon capture.
MC = CO2 mitigation cost ($/t CO2)
COEcap = COE of capture plant ($/KWh)
COEref = COE of reference plant ($/KWh)
Eref = CO2 emissions references plant (t CO2/KWh)
Ecap = CO2 emissions capture plant (t CO2/KWh) [3].
3. Overview of carbon capture technologies
The term “carbon capture” refers to the removal of CO2 from various mixtures of substances.
Industrial processes (i.e. power generation) that produce massive amounts of such substances are
the main players in the carbon capture arena. There are a variety of technologies available today
that achieve that goal, and the choice of which technology is used is dependent on what industrial
process is being used, along with other factors that include, but are not limited to, pressure
conditions, temperature conditions, purity requirements, types of impurities, amount of
impurities, and concentration of CO2 [4]. Some common processes that utilize carbon capture
systems are the manufacture of hydrogen, nitrogen, and other chemicals [4]. It is also utilized in
capturing and purifying CO2 from streams of flue gases during the combustion of coal or natural
gas. Sometimes, the captured CO2 can be used in other industrial processes, such as the
carbonation of soft drinks, but more often than not, the CO2 is eventually released into the
atmosphere [4]. Essentially, the main goal of the carbon capture systems is to create a stream of
CO2 that is pure enough to then be stored, sequestered, or used for alternative purposes [4].
There are three main types of carbon capture. The first two, post-combustion and pre-combustion,
are more developed and have been used in large scale and pilot programs globally. The third type,
oxy-combustion, is still in the beginning stages of research and development, and there is limited
data available on its efficiency and costs. For that reason, this paper address oxy-combustion
briefly, but limits the scope of the economic and policy sections to an evaluation of post and pre-
combustion.
3.1.1 Post-combustion process
Post-Combustion carbon capture involves the removal of CO2 from the flue gases produced from
the burning of fossil fuels, natural gases, biomass, or other carbonaceous material [4]. Today,
most of the world’s electricity is generated in combustion-based power plants [4].
Generally, the fuel is mixed with air and burned in a chamber. Combustion is the chemical
transformation of a carbonaceous material and oxygen into heat, CO2, and H2O, which takes the
form of steam because of the heat. The steam then drives a turbine which in turn, generates
electricity.
The most common method of post-combustion carbon capture involves several steps. The first is
the aforementioned process of combustion. The second is called “scrubbing” during which the
mixture of substances is “scrubbed,” and the CO2 is removed from the mixture by chemical
absorption into a different substrate [4]. he third, is called “stripping” or regeneration [4]. The
CO2-laden substrate itself must be stripped of the CO2, meaning forced to release CO2 [4]. In
doing so, the substrate regenerates its carbon capturing capacity. Once the CO2 is released, it must
be concentrated and super-condensed to be transported elsewhere, and the regenerated substrate is
recycled back to the scrubbing stage [4].
Fig1. General schematic of the post-combustion carbon capture process. [28]
Due to impurities in the fuel source and the use of air, which consists primarily of nitrogen as
opposed to pure oxygen, a number of byproducts are created during combustion. These may
include nitrogen oxides, sulfur dioxides, and particulate matter known as fly ash [4]. These must
be separated from the CO2 if it is to be stored and used. In some cases, the impurities must be
removed from the mixtures first in order to have streams that are clean enough to have the CO2
removed from them [4].
3.1.2 Post-combustion capture technologies
There are three main types of post-combustion capture technologies. The first is solvent based, in
which the substrate that chemically absorbs the CO2 out of the gas mixture is a solvent. The
second type is similar except for that the substrate is a solid instead of a solvent. The third type is
membrane based, in which the gaseous mixture is forced through either a permeable or semi-
permeable membrane designed such that only CO2 may pass through [4].
Solvent-based capture is the most common method used. High reactivity between the solvent and
CO2 allows high percentages of CO2 out of the flue gases even at low pressures [4]. The most
widely used solvent is an organic solvent called monomethlyamine (MEA), capturing about 85-
90-percent of the CO2 in the gaseous mixture [4]. This high reactivity, however, has downsides.
The driving force behind the grand majority of chemical reactions is the transition from a state of
higher energy to a state of lower energy. The reaction between and acid and base is one such type
of reaction. In order to regenerate, or reactivate, the solvent and release the CO2, this acid/base
reaction must be reversed. This reversal requires energy, usually in the form of heat, to drive the
solution to a higher energy state [4].
Solid-based capture utilizes many small pellets to achieve an even greater surface area for
absorption than can be achieved by solvent methods [4]. Although less heat is needed for
regeneration of the solid than for the solvent, heat management is more difficult when working
with solids.1 Also, high attrition of solid sorbents presents another cost barrier [4].
With membrane systems there is a trade-off between product purity and -percent captured [4].
This means that in order to achieve higher CO2 purity, multiple stages of membrane filtration
must be used and therefore less CO2 is able to be captured.
3.1.3 Commercialized Post-Combustion techniques
Amine-based Capture
Amine-based capture is the most commercialized form of solvent-based post-combustion carbon.
It uses a class of organic solvent known as alkanolamines [4]. The reactive “amino” group (NH2)
present in the alkanolamine is basic [4]. Therefore certain amines such as MEA react strongly
with acid gases such as CO2 [4]. As a result the percentage of CO2 is rather high, but
subsequently, regeneration of the solvent provides a significant energy barrier.
Ammonia-based Capture
Early estimates claimed that ammonia-based capture could potentially cost significantly less than
amine-based capture [4]. These claims were in part founded upon the fact that ammonia is
relatively cheap and could possibly remove other impurities such as sulfur dioxide and various
nitrous oxides, as well as CO2 [4].
It operates much like other post-combustion processes. However, ammonia (NH3) is a gas at
room temperature, which leads to various engineering barriers, primarily a phenomenon termed
“ammonia slip” [5]. Ammonia slip occurs when ammonia escapes from the solution it is in into
the stream of flue gases during scrubbing or into the clean CO2 stream during regeneration [4].
This happens due to the volatility of ammonia in solution. A significant cleaning of the flue gases
and CO2 streams is required as a result [4].
One method of reducing ammonia slip is called the chilled ammonia process in which the flue
gases and CO2 absorber are cooled to temperatures around 20 degrees Celsius [4,5]. This prevents
the hot gases from bumping the ammonia out of solution.
3.2 Pre-combustion processes
In order to remove carbon from fuel before it is burned, it must first be transformed into a form in
which this removal is possible. [4]. The Integrated Gasification Combined Cycle (IGCC) is one
such method to achieve this. In IGCC, coal is reacted with steam and oxygen at high pressures
and temperatures to result in a gaseous fuel consisting of mainly carbon monoxide and hydrogen
called synthesis gas, or syn-gas [4]. This process is called partial oxidation or gasification [4].
Particulate matter is then removed, and a two stage shift reactor reacts the carbon monoxide and
hydrogen with steam to produce carbon dioxide and hydrogen [4]. A solvent is then used to
capture the CO2, leaving a stream of hydrogen that is subsequently burned to generate electricity
[4].
Fig 2. Generalized schematic of the IGCC carbon capture process. [28]
Although the fuel conversion steps required of pre-combustion processes are much more costly
that those of traditional post-combustion processes, the actual capture steps are much more
efficient and therefore less costly [4]. This is because, whereas the post-combustion process uses
chemical reactions to separate CO2 from its mixture, pre-combustion uses physical absorption of
the CO2 into the solvent, allowing for much easier subsequent release of the CO2 [4]. Physical
absorption refers to the amount of gas that can be held in a liquid without requiring a chemical
reaction. The solvent used in pre-combustion processes utilizes changes in pressure to effectively
manage the amount of CO2 in the solution. Pressure drops are used to release the CO2 [4]. The
post-combustion must use heat to reverse the chemical absorption of the CO2 into the solvent and
is more energy intensive in that respect.
3.3 Oxy-combustion processes
The essential difference between post-combustion and oxy-combustion process is that oxy-
combustion uses pure oxygen to burn coal as opposed to air [4]. This eliminates the large amount
of nitrogen by-products that have to be removed [4]. Only the fly ash, which is relatively easy to
filter out, remains. No expensive carbon extraction technologies are needed, and theoretically, all
of the CO2 can be “captured” [4]. However, acquiring oxygen pure enough to use in this process
presents itself as the main cost barrier of this method. An Air Separation Unit (ASU) is required,
and because oxy-combustion requires approximately three times as much oxygen than during
regular combustion, generating the oxygen becomes expensive [4]. Also, the additional gas
treatment used to remove impurities decreases carbon capture to about 90-percent [4].
Fig 3. Generalized schematic of oxy-combustion carbon capture process. [28]
4.1 Economics – Costs
Costs of IGCC vs Cost of PC
IGCC capital and operating costs tend to be higher than PC costs on average, as well as higher
than Natural Gas plants. IGCC plants are on average 20-percent more expensive to build than
standard coal plants in the short run [6]. However, if IGCC is used to sell off the carbon that is
captured, estimates place the savings from IGCC plants at 20-percent over the long run [6]. In
addition, studies find that carbon needs to sell at $50-75 per ton to validate the increased IGCC
cost [7].
Fixed Costs and Total Plant Costs
The fixed costs associated with an IGCC or PC power plant include land, equipment, and
transportation, and construction costs. A plant must include process and support facilities, a
structure for water intake, a wastewater treatment plant, a transformer and back-up energy
supplies [8]. In addition, construction of a plan includes direct field material costs, design and
implementation costs, labor costs, cost of financing, contractor’s profit, construction
management, legal costs and subcontractor costs. The cost of implementation for an IGCC plant
is higher due to higher inherent risk in a less commonly built power plant, and the engineering,
design and procurement costs are far higher since so few IGCC plants exist in the world. The
initial capital cost to implement both IGCC and PC plants remains high, and the Department of
Energy continues to contribute sizeable grants, often as much as half of the plant cost, in order to
facilitate construction of the projects.
Variable Costs
Variable costs include coal and gas prices, the cost of energy, cost of labor to continue operations
at the power plant, and waste disposal cost. Both PC and IGCC produce waste from the carbon
capture process that needs to be disposed of. In addition, the sequestered carbon poses an
additional cost if another corporation does not use it for different purposes (such as extracting oil
or carbonating beverages). The cost of natural gas and coal has a large effect on the long-term
profitability of PC and IGCC plants.
Coal Industry and Efficiency losses
The electricity industry earns approximately $368.9 billion in annual sales and busbar electricity
prices are expected to raise 1 cent over the next two years [9]. Coal is a relatively cheap way of
producing electricity and sources approximately 46-percent of the nation’s electricity [10]. The
coal industry makes approximately $43.1 billion by selling a significant portion of its production
to coal-fired power plants [29] . In 2010, the Energy Information Administration (EIA) recorded
that a total of 954.5 million short tons of coal was sold to plants that use either pulverized coal
process or coal gasification cyclone process at an average price of $44.64/ton [9] The efficiency
rates of plants that use either PC or IGCC are the same.
According to the Department of Energy, implementing carbon capture technology will result in a
30-percent net loss in efficiency and an increase of 1.5-3 cent/kwh to the busbar price of
electricity [3].
External Costs of Not Implementing Carbon Capture
The Clean Air Task Force has quantified the annual deaths and health problems caused by carbon
emissions from factories that do not implement carbon capture. PM2.5 is an air particle that is 2.5
microns in diameter and small enough to enter the bloodstream, as well as a direct cause of power
plant pollutants [11]. PM2.5 is linked to bronchitis, asthma and several cardiac problems including
congestive heart failure. The Clean Air Task Force estimates that PM2.5 causes 53 deaths a year
and 997 other health related problems [11]. These external costs are not factored into current
financial projections, and the industry is unlikely to internalize them unless carbon emissions
become a commodity with value (i.e. through taxation or cap-and-trade program
4.1.1. Sample Plants
A handful of PC and IGCC plants with carbon capture technology have been implemented in the
United States, and there are several test projects that are currently under development. Figure 1
lists several of these plants as well as their total output and initial costs. In some of the power
plants, the CO2 is used to make dry ice and carbonated beverages or to extract oil from nearby
mines. The size of the projects varies widely, but most of the projects are not within the optimal
functional power plant level. The median size of U.S. coal-burning fired plants is approximately
650 MW, and a full scale implementation of a carbon capture project is defined as having a
capacity of 250 MW and CO2 capture rate of 1-2 million tons per year for a coal fired plant [4].
Several of the plants have been shut down due to the economic climate and ambiguity of climate
regulation. A few of the listed plants are discussed in greater depth to illustrate the political and
economic barriers carbon capture plants face.
Current PC Plants
R.E. Burger Plant is a coal-fired plant operated by FirstEnergy near Shadyside, Ohio. After a
decree from the U.S. Justice Department and the U.S. EPA to reduce emissions, Ohio Edison
planned to install scrubbers on all of their coal-fired units in Ohio by 2011. This project was
estimated to cost $1.5 billion. They planned on retrofitting two units to burn biomass instead of
coal, which would have cost $200 million [12]. In 2010, FirstEnergy decided to close the two
plants rather than convert due to cost. FirstEnergy planned on retrofitting at its other Ohio
location, Sammis Plant in a $1.8 billion retrofitting project, but announced that it would be
reducing operations indefinitely at the plans due to reduced demand for electricity and a stagnant
economy [13].
American Electric Power Mountaineer Plant is a coal fired plant in West Virginia that was
going to undergo a two-stage, ten year project with the Department of Energy worth $668 million
that would use post combustion to capture carbon and sequester it in Mount Simon Sandstone
[14]. AEP Mountaineer project uses a pulverized coal boiler to combust high-sulphur, bituminous
coal. The post-combustion with capture method used is the chilled ammonia process. The project
began in 2009 and operated in an initial test phase of 30MW. Between 2009 and 2010, 15,000
tons of CO2 were stored at a 90-percent capture rate. Phase 2, which was supposed to begin in
2012, has been postponed indefinitely due to the “continued weak economy” and “uncertainty of
US climate policy” [14].
Future PC Plants
Tenaska Trailblazer Energy Center is a project in Sweetwater, TX undertaken by Tenaska
energy that is planned to begin operation in 2014. Tenaska TrailerBlazer will also use pulverized
coal boilers, except with low-sulphur, bituminous coal. The carbon capture will be amine based,
run by Fluor Corporation’s Economine FG Plussm-technology. The Energy Center plans to
operate on pulverized coal and capture 90-percent of carbon emissions. The project is expected to
cost $3 billion with a net output of 600MW, which would produce enough energy to support
600,000 Texas homes [15]. The sequestered CO2 would be used in Permian Basin oilfields,
recovering 10 million barrels of oil per year. The use of the excess carbon would not only offset
energy costs, it would foster local economic activity through construction jobs and increased
property prices.
NRG Energy WA Parish Plant is a power plant in Houston, TX that is expected to retrofit its
existing power plant with post combustion technologies to capture CO2 and use it to increase oil
production at nearby plants. . Amine capture will be used. It is estimated to capture nearly 1.4
billion tons of CO2 per year. The plant is expected to operate at 240 MW and capture 90-percent
of carbon emissions. The project was raised from its 60 MW estimation to 240 MW due to the
desire for increased production at nearby oil fields [16].
Current IGCC Plants
Polk Power Station in Tampa, Florida is one of only two IGCC plants that have been
successfully carried out in the United States. The cost of the IGCC plant was $303 million for a
250 MW power plant. The total cost averages out to $1,213/kW, and this includes the cost of
operating the unit and experimental work on cleanup [17]. Polk Power Station has been in
operation for over 29,000 hours to produce over 8.6 million MWh of electricity. Plants to
implement another 630 MW IGCC plant on the facility were canceled due to political constraints
[18].
Wabash River Power Station in West Terre Haute, Indiana is one of only two completed IGCC
plants in the United States, and the plant currently sits idle due to unpaid electric bills. The
installation cost was $1,590/kW on the Based on a design capacity of 262 MWh plant [19]. In
addition to that $416 million cost, the owners of the plant invested $14 million in the first two
years to improve performance. Due to a corporate acquisition and splitting of assets, the plant was
placed under new ownership and left to sit idle after 1999 [19].
Table 1 above is a compilation of PC and IGCC plants in the United States that have started operations or have slated operations to begin as late as 2015. The listed cost was determined from Department of Energy reports, but the expected cost could rise as projects near completion. Although the cost of projects vary widely, the statistics give a clearer image of the cost relative to capacity than projected estimates.
The two graphs below plot the cost of a plant relative to its capacity, and although there is a small sample size and a variety of
variables that impact each plant, it generally shows that higher plant costs correspond with higher plant capacity.
Fig 4 Fig 5
Figures 4 and 5 plot the cost of a plant relative to its capacity, and although there is a small
sample size and a variety of variables that impact each plant, it generally shows that higher plant
costs correspond with higher plant capacity. This finding is not surprising, as cost increases with
the scale of the plant.
As a corollary to figures 2 and 3, the average dollar per megawatt cost for PC plants was roughly
$8.92 million dollars per megawatt, but that was highly skewed by the American Electric Power
Mountaineer plant. When removing that data point, the average cost was $4.47 million per
megawatt for PC plants. For IGCC plants, the average cost was $2.30 million per megawatt in a
plant. The capital costs are normally much higher to construct an IGCC plant as opposed to a PC
plant, due to the amount of research and recent innovation of the project. A potential variable that
could have skewed the data was that some of the PC plants may have been retrofits of existing
plants rather than the complete building of a new power plant. In addition, many of the PC plants
have already been constructed versus the slated plans for IGCC plants. Estimated costs are often
lower than the additional costs that add up during the construction period.
0
200
400
600
800
$0 $1,500,000,000 $3,000,000,000
Cost vs Capacity for IGCC
0
200
400
600
800
$0 $2,000,000,000 $4,000,000,000
Cost vs Capacity for PC
4.2 Overall costs and project financing
Carbon capture is a relatively new technology, and it has not yet been widely implemented in commercial
coal power plants. For the most part this is due to the costs of carbon capture, which are decreasing as
technology increases efficiency and reduces costs. It is important for implementation to see what the
expected COE will be as the technology develops over time and how much more the technology will cost
compared to the same power plant without carbon capture. In 2009 these projections were made by a team
from Utrecht University and Carnegie Mellon University, but with data from only as recent as 2001. In
this paper, actual data from 2005 and 2012 were found and compared to see if the technology was
progressing according to these projections.
First Projection: Cost of Electricity
Based on the actual data from 2012, we can say with greater than 95-percent certainty that the cost of
electricity is statistically significant from the projections made by Utrecht and Carnegie Melon
Universities. The COE for both IGCC and PC with carbon capture was significantly lower than the
projections made in the earlier report (see Fig. 6 and 7), which suggests that the technology costs are
decreasing faster than projected. Instead of 6.9 cents/KWh for PC-CC and 6.1 cents/KWh for IGCC-CC
in 2012, the actual numbers were 6.3 cents/KWh for PC-CC and 5.1 cents/KWh for IGCC-CC; far
cheaper than the projections.
One possible reason for this would be a marked decrease in fuel costs, an important variable in the COE
calculation. However, looking at Graph C, fuel prices have actually greatly increased since both 2009
when the projections were published and the early 2000s when the most recent data for the projections
occurred. In 2001 the price/ton of coal was around $50/ton whereas in 2012 it was more than three times
that amount.
Fig 6 Fig 7
Fig. 8 Fig. 9
Fig 8 Source: Commodity Price Index. Commodity Price Index Monthly Price - December 2012.
Second Projection: Technology Costs with and without Carbon Capture
It is beneficial if the COE is decreasing for carbon capture technologies, but if it is decreasing at
comparable rates then the same technology without carbon capture, the cost to remove carbon will stay
the same. In our findings, the Utrecht/Carnegie projections found that the difference between both IGCC
and PC with and without carbon capture would decrease; the actual data in 2005 and 2012 showed it
decreasing at an even faster rate (see Fig. 8). The IGCC difference is only 1 cent/KWh in 2012 and the PC
difference is only 2.1 cents/KWh; in other words, it takes an extra penny for every KWh when you add
carbon capture onto an IGCC power plant and an extra 2.1 cents for every KWh when carbon capture is
added onto a PC plant.
.03
.04
.05
.06
.07
.08
$ / K
Wh
2000 2010 2020 2030 2040 2050Year
PC with CC Cost of Electricity (Predicted)
PC with CC Cost of Electricity (Actual)
PC without CC Cost of Electricity (Predicted)
PC without CC Cost of Electricity (Actual)
With and Without CC TechnologyCost of Electricity for PC
.03
.04
.05
.06
.07
.08
$ / K
Wh
2000 2010 2020 2030 2040 2050Year
IGCC with CC Cost of Electricity (Predicted)
IGCC with CC Cost of Electricity (Actual)
IGCC without CC Cost of Electricity (Predicted)
IGCC without CC Cost of Electricity (Actual)
With and Without CC TechnologyCost of Electricity for IGCC
Third Projection: CO2 Mitigation Cost
The purpose of carbon capture is to remove CO2 from the atmosphere, so a key metric to look at when
deciding whether carbon capture is worth implementing is the added cost to remove CO2, called the CO2
Mitigation Cost and measured in $/metric tonne. The formula looks simple but takes into account the
various costs associated with adding carbon capture beyond the increase in $/KWh. Capturing carbon
takes energy, and that energy reduces the plant’s capacity to anywhere from 78-90-percent of the non-
capture plant. This requires more coal to produce the same amount of KWh, but not all of that coal will be
carbon-free as only 90-percent of the carbon is removed during the capture process.
When comparing real results (see Fig. 10) for 2005 and 2012 with the 2009 predictions, the mitigation
cost for IGCC-CC follows expectations at $18/tonne of CO2 removed in 2012, in line for $12/tonne in
2050. For PC-CC, actual numbers are also within expectations with $32/tonne in 2012 which is in line for
$22/tonne in 2050. IGCC-CC is, and will remain, the cheaper method to remove CO2 from coal electricity
production despite its higher initial capital costs than PC-CC.
Fig 10
5 Carbon capture policy
Despite the potential of carbon capture to mitigate climate change effects, there are significant policy and
economic issues that will have to be addressed if widespread adoption of the technology is to be achieved.
Unlike investment renewable energy, which ultimately produces electricity that can be sold to consumers,
money spent on carbon capture research does not create financial gain – meaning that with carbon
capture, the positive externalities are almost entirely unaccounted for in the financial model.
As such, the policy architecture and selection of policy instruments will play a crucial role in deciding
whether carbon capture is to play a significant role in global climate mitigation strategies.
Carbon Capture in America
Carbon capture programs in America are, to a large degree, still in their infancy. As such, the current
policy approach is one of diversified R&D exploration. Multiple technologies are currently being piloted
on several different types of power generation facilities with the goal of driving down costs and
identifying the most efficient approaches.
Few are large programs, and their overall impact on reducing the amount of CO2 in the atmosphere is
insignificant. Plants where carbon capture technology is being implemented are generally small – some
only have a half a MW capacity (though newer projects are beginning trials on plants that are upward of
600 MW).
This cautious and exploratory approach is a necessary initial step according to the International Energy
Agency (IEA):
Initially, incentive policy will focus on trials of CCS at a commercial scale, seeking information and cost
reductions to make it possible to deploy CCS at reasonable scale and cost. The policy goal at this point is
not to make emissions reductions for their own sake, but rather to advance CCS technology and establish
commercial arrangements between capture, networks and storage. Practical examples of such policies
are the various demonstration programmes launched in the European Union (EU), North America and
Australia [20].
The report goes on to say that this early stage of carbon capture technology policy will necessarily be
followed by two additional stages, wherein the policy aims (and the instruments that will use to achieve
them) will shift to encourage increasingly widespread adoption.
The appropriate policy for CCS evolves as the technology matures. The policy moves from technology
specific support, which explicitly targets the development of CCS as a commercial activity, to technology
neutral support, which allows deployment of CCS when it is most cost effective among other abatement
opportunities [20].
However, to move through the stages, two primary hurdles must be cleared. There must there be an
unwavering, firm commitment to investing in the technology on the part of both governments and
investors. And, perhaps even more importantly, the “price” the international community and individual
governments place on carbon must increase dramatically.
Fig 11
Fig 11 Source: International Energy Agency. A Policy Strategy for Carbon Capture and Storage; January
2012.
Failing to clear either hurdle will hamstring efforts to achieve the kind of widespread adoption that would
have a discernable effect on the amount of CO2 released into the atmosphere.
The Facts on the Ground
Investment in energy R&D represents the smallest portion of all major technology-dependent sectors in
the United States. According to American Energy Innovation Council’s “A Business Plan for America’s
Energy Future”, only 0.3-percent of R&D spending as a share of sales is dedicated to energy related
research -- lagging far behind the 18.7-percent devoted to pharmaceuticals and the 11.5-percent to
aerospace and defense [21].
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Only a fraction of this fractional percent is currently devoted to R&D in carbon capture. The IEA and
other carbon capture policy experts insist that more will be necessary if capture is to move beyond the
current pilot stage.
The Climate Bill of 2009-10 would have paved the way for additional investment (by some estimates, up
to $200 billion) and study of carbon capture, but Republican opposition led to the death of the bill when
Democrats couldn’t muster the 60 votes they needed in the Senate to avoid a filibuster.
“With the demise of these bills, the prospects of wide-scale deployment also went away,” said a dejected
George Peridas, a scientist with the Natural Resources Defense Council’s Climate Center [22].
The news from the Congressional Budget Office is not good either. In a report issued in June of 2012 they
stated that:
CBO’s analysis suggests that unless the federal government adopts policies that encourage or require
utilities to generate electricity with fewer greenhouse gas emissions, the projected high cost of using CCS
technology means that DOE’s current program is unlikely to do much to support widespread use of the
technology [23].
It continues:
Since 2005, lawmakers have provided the Department of Energy (DOE) with about $6.9 billion to further
develop CCS technology, demonstrate its commercial feasibility, and reduce the cost of electricity
generated by CCS-equipped plants. But unless DOE’s funding is substantially increased or other policies
are adopted to encourage utilities to invest in CCS, federal support is likely to play only a minor role in
deployment of the technology [23].
In short, the CBO’s current position is that the money that has been spent so far on carbon capture has
been ineffective at driving down the cost of the technology, and that to see real gains, the DOE would
have to “double-down” at a time when funds are scarce and the political climate is charged.
Further confounding the issue is the obvious lack of appetite lawmakers – Republican and Democrat alike
– have for placing a price on carbon. This creates significant problems for policy makers who advocate
continued carbon capture R&D.
Moving Forward with Limited Government Funding
Peridas, and others who want to see wider scale adoption of carbon capture, are now turning their hopes
to the financial benefits of enhanced oil recovery (EOR) to bridge some of the gap in funding.
If governments want to incentivize the capture of the CO2 at industrial facilities, there’s a cost gap that
still remains to be bridged. EOR will provide for some of that. Our calculations are showing that for a
modest amount of incentives from the federal government, it can more than get its money back over a 10-
year time period. This is because of the tax revenues from the additional oil that gets produced, even
under conservative assumptions. So for a pretty modest incentive over that time period and they will more
than recover the costs—it’s actually a revenue earner for the government.
The trouble is that Congressional Budget Office and the Joint Committee on Taxation don't score
legislation that way because that's how their scoring rules are set up [24].
The cost modeling presented in this paper (Fig. 6 and 7) also provides some hope that, contrary to the
CBO’s report, the cost producing electricity when carbon capture technologies are factored in may be
falling faster than anticipated. It may be too early to determine if the findings are a more than an outlier,
but if it does continue to trend downward at a similar rate, carbon capture technology will be both cheaper
than anticipated in financial terms and relative to similar plants without carbon capture technology. Such
results should encourage both greater attention and funding at a critical moment.
Policy Tools
Should the financial hurdles be cleared, policy makers in the US will have a number of possible policy
tools at their disposal.
A cap-and-trade initiative could be instituted to cap the allowable CO2 emissions from specific sectors.
Firms producing more than the permitted amount would be allowed to purchase credits from firms who
produced less. Carbon capture would be a permitted form of CO2 reduction in those sectors, allowing
firms to use it as a strategy to obtain credits that could be sold.
More aggressively, a tax on carbon that requires firms to pay for their emissions could also be used to
encourage firms to pursue capture as a way to mitigate tax liability.
Ultimately, either approach is likely to result in higher energy prices for consumers, however. Though
painful, the real question is whether such increased costs will be greater than other climate mitigation
technologies. In America, an abundance of coal (Fig 12) will always be a tempting source of energy
production (particularly if natural gas prices increase). A commitment to climate change mitigation will
mean that the CO2 emissions of coal will need to be addressed.
Fig. 12
Fig 12 Source: International Energy Agency. A Policy Strategy for Carbon Capture and Storage;
January 2012.
To do so in the most cost effective manner, over time, the focus of the US carbon capture policy should
be on IGCC technology – put simply, as old plants are decommissioned and new plants are constructed,
CCS technology should be built in. Post combustion, while attractive from the perspective of lower
capital costs, will not yield the same long term financial benefit of IGCC (see figure 12). The upfront
capital costs will be high, but positive signs in the actual data point to a more rapid decrease in costs than
originally anticipated. Seizing on the opportunity now will yield benefit for decades to come.
Fig 13
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As difficult as it may be to enact policy change that would drive widespread adoption of IGCC capture
technology in America, it is currently the clearest path to addressing how the US can utilize its coal
resources with minimal climate impact. To get there, though, legislators and policy makers must dig
deeper into the limited R&D funds to provide carbon capture a real chance to get off the ground.
Ultimately, cap and trade or a carbon tax will need to play a role, but if the technology languishes from a
shortage of R&D funding, costs will not continue to fall and the prospect of carbon capture and
sequestration will never get off the ground.
Conclusion
Carbon capture and sequestration has demonstrated scientifically that it has enormous potential to play a
role in mitigating the effects of climate change. The critical barriers to widespread enactment and
adoption are not technological; they are economic and political.
Today in America, it is difficult to envision members of Congress, the various public sector agencies, and
the White House coming together on a plan that would set a cost of carbon (through a tax or cap-and-
trade) and increase funding for carbon capture R&D. However, creative thinking about the actual cost of
such funding, once the benefits of enhanced oil recovery have been factored in, and the rapidly falling
price of COE generation in plants with CC technology could conceivably make such an agreement
possible.
America has a vast supply of coal; a tempting source of cheap energy that will last for generations to
come. However, to offset the damage to the environment and prevent the need for expensive climate
change mitigation efforts later, action should be taken now to promote IGCC carbon capture technology
and adoption.
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