Managing Your Energy Portfolio in a Greener World CCS Challenges and Solutions Through Focused R&D...

Managing Your Energy Portfolio in a Greener World

CCS Challenges and Solutions Through Focused R&D

José D. Figueroa, MBA, PMP

St. Petersburg, FloridaJanuary 18, 2007

U.S. Department of Energy National Energy Technology Laboratory

José D. Figueroa./ IPED Conference/ January 17-19, 2007

Outline

What is the CO2 Capture Market ?

Why Focus on CO2 Capture Program Objectives?

Possible Implications for Certain Industries ?

Where are the CO2 Emission and Sink Concentrations ?

“Capture Ready” Should it be considered?

Closing Thoughts



0

1,000

2,000

3,000

4,000

1995 2000 2005 2010 2015 2020 2025 2030

NGCCNGCC

Coal Dominates CO2 Emissions From Fossil Power GenerationAs Percent of Coal-fired Generation Grows to 59% (2030)

Scrubbed SteamScrubbed Steam

Unscrubbed SteamUnscrubbed Steam

Advanced SteamAdvanced Steam

IGCCIGCC

To

ns

(mil

lio

ns)

Oil/Gas TurbineGas Turbine

Oil/Gas CCAdvanced SC

Advanced CCOil/Gas Steam

Coal88% (2030)

Oil 2% (2030)

Natural Gas10% (2030)

75% of all coal related CO2 production from existing coal-fired power generation.


CO2 FROM GAS TURBINE CAPACITY FORECAST AEO’06

0

50

100

150

200

250

300

350

400

450

1995 2000 2005 2010 2015 2020 2025 2030

NGCCNGCC

Declining Gas Turbine kWh and CO2 After 2019

Oil/Gas TurbineOil/Gas Turbine

Gas TurbineGas Turbine

Advanced SCAdvanced SC

Combined cycle

Simple cycle

To

ns

(m

illi

on

s)

•NGCC Capacity Factor (CF) in 2013 forecasted at 40% and 32% in 2030.

•Simple Cycle CF in 2013 forecasted at 13% and 11% in 2030.

Commercialization focus not with natural gas plants.


0

100

200

300

400

500

600

700

800

900

1,000

1995 2000 2005 2010 2015 2020 2025 2030

NGCCNGCCGW

Fossil Power Generation Technology Types

Oil/Gas TurbineOil/Gas Turbine

Gas TurbineGas Turbine

Oil/Gas CCOil/Gas CC

Combined cycle

Simple cycle

Scrubbed SteamScrubbed Steam

Unscrubbed SteamUnscrubbed Steam

Advanced SteamAdvanced Steam

Coal

Oil/Gas Boilers


Who is the customer, so

that the Capture R&D Program is focused on meeting their

needs?

Total 9,877 units installed in the U.S. 337 GW of coal-fired units 422 GW of gas-fired units 64 GW of oil-fired units

423 existing coal-fired power plants Comprised of 1,089 boiler units Generate 323 GW (Phase 1&2) Emit 1,917.2 million metric tons of

CO2

Source: EIA, UDI, EPA


Power Market Sector Most Likely to Adopt CCS

0

10,000

20,000

30,000

40,000

50,000

60,000

0-100 101-200

201-300

301-400

401-500

501-600

601-700

701-800

801-900

901-1000

1001+

Size Range, MW

Tot

al C

apac

ity,

MW

Over 35 Years Old

Under 35 Years Old

Lowering age of candidate boilers to less than 30 years old excludes:

• 99 boilers

• ~64 GW of capacity

• ~407 Million tons of CO2 emissions


Maximum CO2 Percent Reduction Goals for the Phase I &II Coal Fired Power Sector

0

50

100

150

200

250

300

350

400

10% 20% 30% 40%

Energy Penalty of CO2 Capture Technology

Ex

isti

ng

Ca

pa

cit

y t

o b

e T

rea

ted

, G

W

10% Reduction Goal 20% Reduction Goal 30% Reduction Goal 40% Reduction Goal 50% Reduction Goal

60% Reduction Goal 70% Reduction Goal 80% Reduction Goal 90% Reduction Goal

Phase I & II Total Capacity

is 323 GW.

Target Market of184 GW can

achieve approximately

50% Reduction.

Smaller and older Units in the

Coal-Fired Power Generation Fleet

that are unlikely to adopt CCS.


Why the Need to Focus on the CO2 Capture Program Objectives

Energy Penalty due to CO2 Capture 10% 20% 30% 40%

Target Market, GW 184 184 184 184

Fleet CO2 Reduction, % 50.2 49.2 47.9 46.3

New Capacity Req’d, GW 25.5 57.5 98.5 153.3

Additional Coal Req’d., tons x 103 79,940 179,864 308,338 479,637

Cost of New Capacity, MM$ 45,975 103,444 177,332 275,850

Cost of CO2 Retrofits, MM$ 91,950 91,950 91,950 91,950

Total New Cost, MM$ 137,925 195,394 269,282 367,800

Current Energy Penalty of CO2 BACT MEA

Absorption System

Need for further R&DD to minimize the cost and externalities impact due to CO2 Capture and Storage.


What are the Possible Implications for Certain Industries Tied to the CO2 Capture Market ?


Coal Capacity History and Forecast AEO’05

Forecast - Annual Energy Outlook 2005 Historic Data - UDI 2001 Operating Data

Will the Nation’s Industry be Prepared and Capableof Meeting This Coal Plant Forecast?

Cap

acit

y A

dd

ed M

Ws

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,00014,00015,00016,00017,00018,00019,00020,000

1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Capacity Addition Levels Not Seen

in 40 Years?

Industry Growth Trend Not Seen in

50 Years?

20 YearMarket Trough

1973 additions greater than total for last 15 years


Additional Capacity Required to meet Increased Targets for CO2 Emission Reduction

0

50

100

150

200

250

300

350

10% 20% 30% 40%


Ad

dit

ion

al C

ap

ac

ity

, GW

10% Reduction Goal

20% Reduction Goal

30% Reduction Goal

40% Reduction Goal

50% Reduction Goal

60% Reduction Goal

70% Reduction Goal

80% Reduction Goal

90% Reduction Goal

Current U.S. Coal Fired Electric Power Generation is 337 GW.

The 165 GW of Additional Capacity indicated is Needed to Return to Grid Parity with BAU CO2 Capture under a 50% total U.S. Coal Fired Power Sector Emission Reduction

Scenario.


Additional Coal Requirements to meet Increased Targets for CO2 Emission Reduction

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

10% 20% 30% 40%


10

3 To

ns

of

Co

al 10% Reduction Goal

20% Reduction Goal

30% Reduction Goal

40% Reduction Goal

50% Reduction Goal

60% Reduction Goal

70% Reduction Goal

80% Reduction Goal

90% Reduction Goal

Current U.S. Coal Consumption for the

Power Sector

Emphasizes the Need for R&D to Drive Down the Energy Penalty Associated with Best Available

CO2 Capture Technology


Market Potential for ASUsBased on Retrofit and Capacity Addition

with OxyCombustion

0

50

100

150

200

250

300

350

10% 20% 30% 40%


# o

f A

SU

s

5% Market Share 10% Market Share 20% Market Share 30% Market Share

Current Annual ASU

Industry Manufacturing Capabilities.

Can the Industrial Gas Industry Ramp up

Installation Capabilities to Meet this

Market Demand?


Total Cost Associated with Retrofitting the Existing Fleet with a CO2 Capture Plant to meet

Increased CO2 Emission Reduction Targets

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

10% 20% 30% 40%


To

tal C

os

t $

x 1

06 10% Reduction Goal

20% Reduction Goal

30% Reduction Goal

40% Reduction Goal

50% Reduction Goal

60% Reduction Goal

70% Reduction Goal

80% Reduction Goal

90% Reduction Goal

$540 Billion or $240 Billion?

You Decide whether CO2 Capture R&D is needed to reduce

the cost of implementation.


Where Are the CO2 Emission Concentrations? 2005 – 2030


NEMS Electricity Market ModuleRegional Designations


2005 CO2 Forecast

< 100

> 100 < 200

> 200 < 300

> 300 < 400

> 400 < 500

> 500 < 600

> 600 < 700

> 700 < 800

> 800

(million tons)

Source: http://www.natcarb.org :EIA’s Annual Energy Outlook 2006


< 100

> 100 < 200

> 200 < 300

> 300 < 400

> 400 < 500

> 500 < 600

> 600 < 700

> 700 < 800

> 800

(million tons)

2010 CO2 Forecast



< 100

> 100 < 200

> 200 < 300

> 300 < 400

> 400 < 500

> 500 < 600

> 600 < 700

> 700 < 800

> 800

(million tons)

2015 CO2 Forecast



< 100

> 100 < 200

> 200 < 300

> 300 < 400

> 400 < 500

> 500 < 600

> 600 < 700

> 700 < 800

> 800

(million tons)

2020 CO2 Forecast



< 100

> 100 < 200

> 200 < 300

> 300 < 400

> 400 < 500

> 500 < 600

> 600 < 700

> 700 < 800

> 800

(million tons)

2025 CO2 Forecast



< 100

> 100 < 200

> 200 < 300

> 300 < 400

> 400 < 500

> 500 < 600

> 600 < 700

> 700 < 800

> 800

(million tons)

2030 CO2 Forecast



< 100

> 100 < 200

> 200 < 300

> 300 < 400

> 400 < 500

> 500 < 600

> 600 < 700

> 700 < 800

> 8002030

(million tons)

SalineOil/GasCoal

CO2 Forecast and Sequestration Option



Companies Urged to Reveal Climate Risk Information

27 Institutional Investors Managing $1,000 Billion in assets: Called SEC to require listed companies to disclose the

risks that global warming poses to their financial performance.

Complaint concerns ambiguity of SEC rules in this area.

“Investors are not receiving the climate risk information from companies that is essential to their investment decision-making.” California Public Employees’ Retirement System

(Calpers) Chairman, Rob Feckner. Letter to SEC signed by:

State treasurers of CA, KY, ME, NY, OR, VT. UK’s F&C and Calvert in the US. International Brotherhood of Teamsters

Growing interest from international investors in how social, environmental and corporate governance issues affect companies’ financial performance.

Printed: June 15, 2006


“CO2 Capture Ready” Approach

Existing coal fired power plants could be made capture ready by: determining the requirements to meet the status of

“Capture Ready”, perform only the necessary modifications to accept a CO2

capture system over one or several planned outages. Benefits:

This approach could minimizes the need for an extended costly outage during implementation.

Reduces the potential CO2 liability risk due to the Sarbanes-Oxley Act of 2002

Potentially increases the opportunity for market analyst ratings to be higher Due to a corporate approach to mitigating their CO2 liability

risk over others in the sector that are not.


Closing Thoughts

Target market consists of all Phase 1 and 2 boilers larger than 300 MW and less than 35 years old (184 GW).

The existing coal fired fleet produces 67% of the U.S. power sector CO2 emissions and 75% of all CO2 emissions from coal based power generation, at least until 2030.

CCS has implications to industries supporting the power sector which need to be recognized and further analyzed.

Post Combustion power cycles whether existing or advanced power cycles will be a significant part of the power generation sector for the foreseeable future.

Focusing R&D to those units likely to adopt CCS will increase the likelihood of having CO2 control

technologies commercially available if needed.


Closing Thoughts

Decision makers should consider Capture Ready options during the design phase of repowering and capacity addition projects to hedge themselves against potential future regulations.

Climate Risk Disclosure is moving into the mainstream and is supported by stakeholders in the financial industry, on which many in Corporate America rely.

State and Regional Initiatives are the first movers relative to regulations. Are your assets prepared for CO2 mitigation?Capture Ready plants will be able to meet regulations with less cost and impact to plant operations.


Questions ?

José D. Figueroa, M.B.A., PMP1-412-386-4966

[email protected]

Managing Your Energy Portfolio in a Greener World CCS Challenges and Solutions Through Focused R&D...

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