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March 16, 2010

Updates on Alternative Energy Sources, Part 4: Carbon Capture and Storage

This is the fourth in a series of posts on alternative energy sources that uses as a starting point an article by Michael Totty ["The Long Road to an Alternative-Energy Future," Wall Street Journal, 22 February 2010]. This post discusses carbon capture and storage ["The Long Road: Carbon Capture and Storage," Wall Street Journal, 22 February 2010]. Totty writes:

"THE TECHNOLOGY: Carbon-capture technology pulls carbon dioxide from the smokestacks of coal and other fossil-fuel plants, pressurizes the gas and pumps it underground for permanent storage.

CURRENT STATUS: A handful of small-scale carbon-capture and storage pilot and demonstration projects are under way in the U.S. and elsewhere. In a test to capture CO2 from an operating power plant, American Electric Power Co. is running a pilot at its Mountaineer plant in West Virginia, collecting about 1.5% of the plant's CO2 emissions and storing them under the site. Other sites in Europe, Africa and Australia are investigating underground storage, but the Mountaineer project is the first to integrate capture and storage."

To read more about the Mountaineer power plant, see "Refitted to Bury Emissions, Plant Draws Attention," by Matthew L. Wald, New York Times, 21 September 2009]. Over the past couple of years I have written a number of posts on this subject (see, for example, The Search for Clean Coal, Coal, Cash, and Climate Change, The Conundrum of "Clean Coal", and Carbon Capture and Storage). As you can tell from the titles of those posts, carbon capture and storage is most often connected with coal-fired power plants. During the last presidential election, many of the candidates touted "clean coal" technologies as one of the more promising ways to move forward environmentally. Totty indicates that widespread implementation of such technologies is still a long way off. He writes:

"WHY IT'S GOING TO TAKE SO LONG: Technically, carbon capture has been shown effective in small, less expensive pilot projects. In capturing larger emissions streams, operators have to fine-tune the equipment and see how it works in different weather conditions and using different grades of coal. In the most-advanced test, at AEP's Mountaineer plant, this stage is expected to take at least a year. Once that is done, the next stage is building and operating a commercial-scale demonstration plant. AEP recently received $334 million in federal stimulus funds for its planned 235-megawatt demonstration plant. Designing the facility can overlap with the current pilot, but construction of the plant is expected to take several years; the goal is to have it online by fall of 2015. It would then have to be operated for several years to test its reliability and efficiency. AEP expects that power-plant builders could begin offering commercial versions of the technology by 2020. Ultimately, commercial adoption also will depend on whether Congress decides to impose a price on carbon and what that price is. Carbon capture is expensive—it could double the price of electricity from some existing coal plants, and cuts plant efficiency by about 30%. Most experts agree that it is going to take a carbon price of at least $50 a ton to make carbon capture economically feasible."

The longest pole in the tent, as Totty notes, is probably establishing a "carbon price." The emergence of a legislated cap and trade system in the U.S. that would help establish such a price is unlikely in the near future. "Cap-and-trade as we know it is dead," Senator Lindsey Graham (R-SC) told Tom Friedman, "but the issue of cleaning up the air and energy independence should not die — and you will never have energy independence without pricing carbon" ["How the G.O.P. Goes Green," New York Times, 27 February 2010]. How you establish a carbon price without a cap and trade system remains to be seen. Even though legislation is dead, regulation is not and coal-fired power plants are facing tougher regulations ["Coal Plants Face Tight Pollution Regulations," by Mark Peters, Wall Street Journal, 10 February 2010]. Peters reports:

"A crackdown on air emissions first proposed by the administration of George W. Bush, coupled with sluggish power prices, could make dozens of older coal-fired plants lacking pollution-control equipment uneconomic to run. ... Air-quality regulations are expected to hit generators that sell power at market prices the hardest, as they can't rely on regulated rates to pass on directly the costs of adding pollution controls or building new and cleaner plants. ... Much of the focus in the last year has been on the emissions of heat-trapping gases such as carbon dioxide linked to climate change. Coal-fired plants have been at the center of the debate because of they are large emitters of CO2. But global talks in Copenhagen in December produced no binding agreement on CO2 limits, and federal legislation remains stalled in the U.S. Senate. ... The new rules are several years old, dating to the Clean Air Interstate Rule issued by the Bush administration. The regulations proposed a 28-state cap-and-trade system across the eastern half of the U.S. for sulfur dioxide and nitrogen oxides. But the courts rejected the program, leaving the revisions up to the EPA under the administration of President Barack Obama. ... Besides the pending air regulations, coal-fired plants are expected to face tougher regulations on mercury emissions and the handling of coal ash left over from the combustion process."

As Totty observes above, carbon capture and storage continues to receive a lot of attention by both proponents and opponents. Some large utility companies are warming up to the idea of carbon capture and storage ["Big Utility Turns Bullish on Carbon Capture," by Rebecca Smith, Wall Street Journal, 9 December 2009]. Smith reports:

"The head of American Electric Power Co., the biggest emitter of carbon dioxide in the U.S., said advances in technology would allow the company to eliminate the emissions from its coal-fired power plants by 2025. Mike Morris, chief executive of Ohio-based AEP, said his company's early experience with a carbon capture and storage project at its Mountaineer power plant in West Virginia had exceeded expectations. As a result, he believes AEP will be able to retire 25% of its coal-burning power plants and install advanced carbon-capture equipment on the remaining 75%. That optimism represents a significant change for an influential executive who in the past has been skeptical about the industry's ability to capture and store carbon dioxide, a leading greenhouse gas, in a cost-effective manner. 'This still is an extremely expensive undertaking, but the answer is near at hand,' said Mr. Morris. ... Mr. Morris says it now looks like it will be possible to cover all the costs of carbon capture and storage by roughly doubling the cost of electricity from plants like Mountaineer, to 8 cents a kilowatt hour from 4 cents, before subtracting for subsidies that may be available. He believes that still will be cheaper than electricity from the next generation of nuclear plants. As such, it could be more affordable to keep retrofitted coal-fired plants operating than to replace them."

Smith reports that AEP is basing its financial forecasts "on the assumption that Congress will set emission limits and approve subsidies to help pay for the technology." But she notes that "such climate-change legislation still faces hurdles, and the changes would mean higher electricity costs for consumers." She also points out that technical challenges remain. She continues:

"The coal industry and the Obama administration insist that carbon capture and storage technology is an essential component of finding a way for the U.S. to significantly cut its greenhouse-gas emissions. The U.S. relies on coal for roughly half its electricity. Critics say the technology currently available is neither affordable nor reliable."

One reason that politicians are pushing so-called clean coal technology is because the United States has a lot of coal -- enough coal to fire power plants for hundreds of years. With energy security remaining an important political topic, politicians simply can't ignore all of the coal that rests under American soil. At the same time, they can't ignore the potential health and environment consequences of air pollution. ["Coal-rich US puts faith in CO2 storage" by Sheila McNulty, Financial Times, 3 November 2009]. McNulty reports:

"The government estimates there are several hundred years’ worth of coal to be recovered in the US – the Saudi Arabia of coal, with 27 per cent of the world’s known coal reserves. It would take a massive effort to replace coal production. Peabody Energy, which ... is the world’s largest private sector coal company, says replacing coal would be a gargantuan task. It would require 2,400 times more solar generation, 40 times more wind power, 250 new nuclear plants, almost double the US production of natural gas, 500 hydro plants the size of the Hoover Dam or halving electricity consumption. Even then, the US would have to find a way to meet new demand, given growth forecasts. ... Yet coal-fired electricity is responsible for enormous carbon dioxide emissions. Coal is the most carbon-intensive of all fossil fuels and the most widely used to generate electricity in the US. Generating electricity is the country’s largest source of CO2 emissions – 41 per cent of the total. The Environmental Protection Agency estimates the average US coal plant biggest source of electricity in the US – emits 4.6m metric tons of CO2 each year. That is almost double that of a natural gas-fired plant. There are 600 coal-fired electricity plants in the US. Coal produces a little over a quarter of the world’s energy and almost 40 per cent of its greenhouse gas emissions, according to Blackout, by Richard Heinberg, senior fellow of the Post Carbon Institute in California."

Faced with those two realties (i.e., cheap and available coal and enormous potential for pollution), politicians and industry executives alike are counting on carbon capture and storage to help them address both. McNulty continues:

"It is the biggest obstacle to the reduction of global warming. If no action is taken, says the US Energy Information Administration, the country will emit about 7,550m tons of CO2 a year by 2030, increasing 2005 levels by more than 14 per cent. [Victor Der, principal deputy assistant secretary for fossil energy in the Obama administration] says coal is so cheap and plentiful that its usage will grow globally. That is why the US believes the world must learn to capture and store carbon if it is to cut emissions significantly. 'I’m optimistic that this will become part of the tools we use to address climate change,' he says. Barack Obama, president, from the coal-mining state of Illinois, backs continued coal use. He has said if the US can put a man on the moon, it can find a way to capture and store carbon."

Totty claims that widespread implementation of carbon capture and storage is a long ways down the road. He's probably correct and he's not alone in his assessment; but that doesn't stop proponents from claiming it much closer. McNulty explains:

"The National Energy Technology Laboratory, owned and operated by the Department of Energy, predicts that by 2012 it will have a portfolio of safe, cost-effective, commercial-scale capture, storage and mitigation technologies ready for the market. Others are not as confident. Joseph Coote, global energy and chemicals practice leader at Arthur D Little, the consultancy, says: 'There is a confluence of challenges here and there isn’t a lot of money. It just has the look and feel of a solid decade, with funds behind it, to perfect this. Right now there is so much uncertainty.' Steven Chu, the energy secretary, has said the administration wants technology for coal-fired power stations to capture and store their CO2 ready for commercial deployment within a decade. The US, he says, could have 10-12 commercial demonstration projects operational by 2016, ready for wider deployment by 2019. ... There is no guarantee the technology will become commercially available at an economic price, providing for widespread adoption. Stephen Doig, vice-president of the energy and resources team at the Rocky Mountain Institute, which carries out energy policy research, says: 'We’re pinning our hopes on ... an unproven technology.' Howard Herzog, principal research engineer at the MIT Energy Initiative, is also cautious: 'It can be done. But it’s a challenge.' ... Mr Der says putting carbon capture technology on existing coal plants would push up operating costs by 80 per cent. Much of that will have to be passed on to consumers, who would want assurances it is safe to have large amounts of carbon stored locally. Paul Forrester, a partner at Mayer Brown, the law firm, says: 'If you push 20 years’ worth of CO2 in the ground and it leaks out, you’re back 30 years. We need it to stay there for ever.'"

That discussion sums up most of the issues on both sides. There is a lot riding on carbon capture and storage. Fiona Harvey boldly asserts, "The future of coal-fired power plants lies in their ability to capture the CO2 they produce and pipe it underground for long-term storage" ["Carbon capture crucial for future of coal-fired power," Financial Times, 19 January 2010]. Ming Sung, the Chief Representative for Asia Pacific of the Clean Air Task Force, notes that the two countries that should be most interested in perfecting carbon capture and storage are the globe's two largest polluters, China and the U.S. ["US and China must take lead in ‘clean’ coal revolution," Financial Times, 19 January 2010]. He writes:

"In the absence of a binding international agreement, other ways need to be found to accelerate research and development and to demonstrate commercial clean energy technologies. Fortunately, despite the political stalemate, important progress is being made. A number of energy companies in the US and China are working together to achieve advances in commercial low-carbon energy systems. The fact that corporate leadership is coming from these two nations is perhaps ironic, given that they are the largest emitters of CO2 and both are highly dependent on coal for electricity. But they are also two of the largest and most dynamic economies in the world and both have highly innovative energy sectors. ... About 50 per cent of electricity in the US – and about 80 per cent in China – still comes from coal. Most Chinese coal plants are new and will operate for decades; future power plants will continue to be fuelled by coal because there is no sufficient alternative, given the growth of the Chinese economy. Faced with the reality that coal will be with us for a long time, it becomes clear that cleaner, lower-carbon, coal-based energy technologies will play a central role in solving the global climate challenge. Those technologies include CCS (carbon capture and sequestration) and two main CCS-enabling technologies: coal gasification that makes clean gas from coal and strips out the CO2 before burning the gas to make electricity, and post-combustion capture, which strips CO2 out of the exhaust gas left after coal is burned. Joint US-Chinese efforts to research and develop clean coal technologies are necessary and important. However, we can ill afford to wait another 10 years for these research and development efforts. Critical clean coal technologies should be demonstrated commercially immediately and scaled up as soon as possible. Global collaboration is crucial to success."

One company is looking to use carbon capture and storage techniques to help coax more oil out of the ground ["Using Smokestack Gases to Pump Oil," by Ann Davis, Wall Street Journal, 8 February 2010]. As one might imagine, the scheme is not without controversy. Davis reports:

"Carbon dioxide pouring from smokestacks hardly has a reputation as a valuable commodity. But one company has launched a series of projects to see if it can use the refuse of the industrial economy to breathe new life into tired oil fields. How well Denbury Resources Inc.'s projects go will be closely watched not just by environmentalists but other oil producers. For decades, companies have pumped naturally-occurring carbon dioxide from geological basins into existing oil wells. The gas acts like a solvent for the oil, removing it from rock formations. Denbury is a regional oil and natural-gas producer based in Plano, Texas, whose primary source of carbon dioxide is a basin near Jackson, Miss. It is hoping to add to that finite supply by using carbon dioxide recovered from industrial plants. Next month, it is slated to acquire Encore Acquisition Co., an oil company in the Rocky Mountain region that is considering using similar industrial sources of carbon dioxide to recover oil. By mid-2011, Denbury plans to treat and ship its first batch of industrial emissions from a Dow Chemical Co. factory in Plaquemine, La., to its oil fields in Texas via a pipeline network it is building. Although the U.S. government recently announced funding for a host of other 'industrial carbon capture' projects, the Dow project is unique because it appears to be economically viable without government aid."

That's a claim you don't hear very often nowadays. Davis goes on to discuss the issues raised by critics of the project:

"Reusing industrial pollution for oil production has its critics, because the carbon dioxide isn't permanently eliminated. It returns to the air in the form of car exhaust from the oil retrieved. But backers point out that it can boost domestic oil supply, and Denbury says it uses a technology that puts more carbon dioxide in the ground than it takes out. 'Our message is that this has two benefits. One is the benefit of more domestic energy,' says Tracy Evans, Denbury's president and chief operating officer. The second, he says, is sticking at least some greenhouse gases in the ground 'permanently, in the process.' Still, a key hurdle to broadening this solution to other industries is cost."

Denbury would probably confront less resistance to his project if the carbon dioxide were coming from coal-fired power plants. Davis reports, however, that "Coal plants and oil refineries, which are a far bigger source of greenhouse-gas emissions, spit out much higher levels of mercury, sulfur and nitrogen. Currently, it is prohibitively expensive to scrub refinery and coal-plant emissions and compress them for shipment so that oil producers can use them." Denbury can treat and transport Dow's carbon dioxide for between $10 to $20 a ton while it would cost the company roughly $50 to $80 a ton for refinery and coal-plant emissions. Davis concludes:

"Because of these high hurdles, the U.S. Department of Energy recently pledged hundreds of millions of dollars and is promising billions more to help pay for carbon-capture projects at some existing plants and other proposed ones that would convert coal to natural gas. It is funding research into membranes that can withstand high temperatures of a power plant and trap the gas's dirty contaminants. A large Southern Co. coal-fired plant north of Mobile, Ala., for example, has received a $295 million federal-aid pledge to study ways to pipe its smokestack emissions underground. Southern is also studying selling the carbon-dioxide emissions from the plant to Denbury. 'We think this is a really unique opportunity,' says a Southern representative. ... But even if all the industrial carbon dioxide in the U.S. could be cleaned up more cheaply, it's not a complete solution. Kinder Morgan Energy Partners LP executive Tim Bradley cites a study that found there is only enough space in working oil reservoirs to absorb about 4% of such emissions. Putting the gas into already-depleted oil and gas fields may expand this somewhat. 'It's not a panacea, but it certainly gets us partway down the road,' Mr. Bradley says."

Bradley finally raises the issue that is an elephant in the room that nobody seems to want to discuss -- storage space ["How to resolve the green paradox," by Hans-Werner Sinn, Financial Times, 27 August 2009]. Sinn, who is president of Germany's Ifo Institute for Economic Research, reports:

"Burying carbon is easier said than done. The process of capturing CO 2 from a chimney and turning it into a liquid consumes a third of the energy generated by burning the fuel in the first place. On top of that, the amount of storage volume required would be gigantic, as each carbon atom is joined by two oxygen atoms upon combustion - and they all need to be stored. Carbon captured from anthracite coal would occupy five times as much space underground as the coal itself; in the case of crude oil, three times the volume would be needed. According to estimates by the Intergovernmental Panel on Climate Change, the earth's depleted coal mines, oil and gas deposits, and natural caves will offer room for barely a 10th of the CO 2 that would be generated by all the recoverable carbon resources."

There's the real rub with carbon capture and storage. Even if all of the technological kinks can be worked out and the system perfected, there simply won't be room underground for 90 percent of the gasses that could be captured for storage. What if you didn't have to store all that carbon dioxide underground and could turn it into a useful above ground product? New York Times' op-ed columnist reports that a solution like that may be on the horizon ["Dreaming the Possible Dream," 7 March 2010]. Friedman writes:

"Vinod Khosla, ... the co-founder of Sun, set out several years ago to fund energy start-ups. His favorite baby right now is a company called Calera, which was begun with the Stanford Professor Brent Constantz, who was studying how corals use CO2 to produce their calcium carbonate bones. If you combine CO2 with seawater, or any kind of briny water, you produce CaCO3, calcium carbonate. That is not only the stuff of corals. It is also the same white, pasty goop that appears on your shower head from hard (calcium-rich) water. At its demonstration plant near Santa Cruz, Calif., Calera has developed a process that takes CO2 emissions from a coal- or gas-fired power plant and sprays seawater into it and naturally converts most of the CO2 into calcium carbonate, which is then spray-dried into cement or shaped into little pellets that can be used as concrete aggregates for building walls or highways — instead of letting the CO2 emissions go into the atmosphere and produce climate change. If this can scale, it would eliminate the need for expensive carbon-sequestration facilities planned to be built alongside coal-fired power plants — and it might actually make the heretofore specious notion of 'clean coal' a possibility. In announcing in December an alliance to build more Calera plants, Ian Copeland, president of Bechtel Renewables and New Technology — a tough-minded engineering company — said: 'The fundamental chemistry and physics of the Calera process are based on sound scientific principles and its core technology and equipment can be integrated with base power plants very effectively.' A source says the huge Peabody coal company will announce an investment in Calera next week. 'If this works,' said Khosla, 'coal-fired power would become more than 100 percent clean. Not only would it not emit any CO2, but by producing clean water and cement as a byproduct it would also be taking all of the CO2 that goes into making those products out of the atmosphere.'"

Of all the carbon capture and storage schemes discussed above, the Calera process sounds the most promising. The fact that Khosla begins his last quote with the words "if this works" indicates that scaling the process is not a sure thing. The bottom line is that a lot more research needs to be done about what to do with so-called greenhouse gas emissions. Carbon capture and storage appears, at best, to provide a delaying strategy while other techniques, like those proposed by Calera, are developed.

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