THE RELEVANCE OF CCS AS A CLIMATE POLICY INSTRUMENT IN VIETNAM

Presented by: Nhan T. Nguyen *

(co-authors: Minh Ha-Duong and Didier Bonijoly)

* Centre International de Recherche sur l’Environnement et le Développement (CIRED/EHESS)

*Van Xuan Center of Research in Economics, Management, and Environment (VCREME)

The 30th USAEE/IAEE North American Conference

Washington DC, 12 October 2011

CONTENTS

Promising storage capacity estimates

1

E IRP simulation: Expansion of coal, next 30 years

2

Potential of CCS at Power Plants in 2040

3

4

2

Introduction

5 Concluding remarks

PRESENT SITUATION

3

2000-2009:7.3yr-1 GDP growth

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Services

Industry

Agriculture

331,212 km2,3200 km coastline 87 million population, 2009

Power generation (2000-2009) grew faster

Capacity

(2009)

Generation

(2009)

Average growth rate

Total generation Thermal generation

18.9 GW 85 TWh 15% 19%

TRENDS

4

Demand growth: 13.5%-16.6%, next decade

Baseline scenario: coal generation share: 32% (2015) to 68% (2040)

Source: Institute of Energy (2008), NLDC (2010)

Power generation sources by 2015

Hydro

Coal

Oil, Gas

Wind, Solar,

Geothermal Nuclear

Biomass

Primary fuel supplies for electricity sector

PROMISING GEOLOGICAL STORAGE OPPORTUNITIES

Most promising fields: Enhanced Oil Recovery (EOR): Cuu

Long river basin Enhanced Coal Bed Methane Recovery

(ECBM): Quang Ninh coal basin Storing CO2 into depleted oil fields: in

Cuu Long, Song Hong, and the North end

5Figure: 5 major basins in Vietnam identified for storage opportunities

Specification requirement:

• Sediment formations deeper than 1 km

• They should be 20 kilometers away from major faults or known oil fields

• No more than 100 kilometers away from a CO2 source of > 2.5 MtCO2/yr

Largest storage capacity: 20 to 60 Gt of CO2

Utsira reservoir

INTEGRATED RESOURCE PLANNING (IRP)

7

IRP ModelExternality cost

CCS constraints

Fuels constraints

Optimal expansion plan

Probabilistic estimation of system

Supply-side& CCS Data

Carbon values

Plant Emission Factors

CO2, SO2 and NOx Emissions

Total planningCost

Structure of technologies& Fuels mix

Electricity prices(LRAC &AIC)

Demand-sideData

Load curve & load demand

Price elasticityof demand

Source: Shrestha and Nguyen, 2003

The analytical flowchart of the IRP model

CARBON PRICES SCENARIOS

8

US$/tCO2 2010 2040

Low (LCV) 5 20

Moderate (MCV) 5 35

High (HCV) 5 50

Very high (VHCV) 5 60

9

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

0

50

100

150GW

Coal based power capacityGas based power capacityOthers

Source: the IRP simulation results

EXPANSION OF COAL GENERATION, NEXT 30 YEARS

Domestic coal consumption

Imported coal consumption

0

200

400

600

800

1000

1200

1400

1600 1499

981

Cumulative coal consumption, 2010-2040 (million tons)

Greater dependence on large-scale coal for future expansion, 2010-

2040

Cumulative electricity generation, 2010-2040: 14,106TWh

Coal 49%

Gas 19%

Others33%

BASELINE WITHOUT CCS: EMISSIONS FROM POWER GENERATION

10

Cumulative emissions

(2010-2040)

CO2 7.2 Gt

SO2 15.3 Mt

NOx 8.0 Mt

Source: the IRP simulation results

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

0

100

200

300

400

500

600

Annual CO2 emission from power sector (million tons)

The Electricity and Heat sector would emit 300 MtCO2/yr (2010-2040) 3 tCO2/yr/capita. This level is not sustainable.

COSTS OF CCS IN THE IRP SIMULATION FOR VIETNAM

Integrating CCS into the IRP model

Power generation plants with more than 2.5 Mton of CO2 emissions per year

opportunity to be selected for carbon capture and storage

deployment

11

Sub PC-

CCS

Sub PC-

CCS ready

Super PC-

CCS

Super PC-

CCS ready

IGCC-

CCS

NGCC-

CCS

2025

Reference plant TCR (US$/kW) 1184 1184 1328 1328 1581 684

Capture plant TCR (US$/kW) 1940 1834 2293 2184 2050 1100

Cost of CO2capture (US$/tCO2) 42.1 39.2 43.8 40.8 28 39.3

Cost of CO2 avoided (US$/tCO2) 45.4 42.5 47.1 44.1 31.3 41.9

2040

Reference plant TCR (US$/kW) 1100 1100 1200 1200 1390 671

Capture plant TCR (US$/kW) 1800 1702 1860 1771 1880 991

Cost of CO2 captured (US$/tCO2) 37.2 34.5 31.2 28.7 23.8 36.1

Cost of CO2 avoided (US$/tCO2) 40.0 37.3 33.9 31.5 26.5 38.6

Costs of capture based power plants

Source: the IRP simulation results

IRP RESULTS: CCS AS A ABATEMENT OPTION

No CCS plants selected in Low Carbon Value scenario (LCV) 12Source: the IRP simulation results

35

50

60

0 20 40 60 80 100 120 140 160 180

2.1

3.6

52.6

153.8

154.3

163.4

Total generation capacity

GW

Ca

rbo

n p

rice

in

20

40

(U

S$

/tC

O2

)

CCS enters after 2030 at ≥25US$/tCO2: but few

40-60US$/tCO2: 32% capacity, 20% abatement

NOT CHEAPER THAN RENEWABLES BUT CCS+EOR COULD BE COST-EFFECTIVE ABATEMENT

13

renewables (6-10 US$/tCO2) cheaper than CCS (≥ 25 US$/tCO2) in IRP model

CCS + enhanced oil recovery (EOR) net benefits 10-16 US$/tCO2 based oil price 2003 (IPCC, 2005) Proposal at White Tiger

Oil Field in Vietnam:

CO2 capture from (NGCC) plants, transport pipeline, storage in offshore/onshore fields, enhanced oil recovery

CONCLUDING REMARKS

Vietnam has a promising carbon emissions storage

capacity

CCS not cost-effective if carbon price below 25

US$/tCO2 by 2030. But become a key abatement

option (20%) if the price increases 40-60 US$/tCO2

from 2030 to 2040

Without EOR, CCS is not cheaper than renewables

Need for new policy

14