The Carbon Conundrum
August 2003
By Jennifer Alvey
Technology exists to sequester carbon-but will utilities ever buy in?
The vision: A nation filled with new, coal-fired power plants that provide inexpensive, secure power for Americans, while emitting few pollutants and sequestering the carbon dioxide produced. In other words, a power plant that not only industry and environmentalists can agree on, but one that utilities can finance and operate profitably.
The current reality: A nation filled with a rapidly aging coal-fired fleet that runs inexpensively but emits large amounts of pollutants and has no capability to sequester carbon dioxide. In other words, power plants that not only place industry and environmentalists constantly at odds, but which shareholders and investors are increasingly concerned about.
The question: What will it take to get us from today's reality to tomorrow's vision? And are we willing to do it?
There's little doubt that the problem of carbon-increasing levels of greenhouse gases, especially carbon dioxide-must be addressed. President Bush's science advisor, Dr. John Marburger, acknowledges that greenhouse gas levels have risen substantially since the beginning of the Industrial Revolution, and that the bulk of that increase in carbon dioxide levels is due to human activity.1 A rise in carbon dioxide levels also is expected to cause, if it hasn't already, global warming.
And as Secretary of Energy Spencer Abraham remarked last fall, the only way projections are going for energy demand and resulting carbon emissions is up. Only if one assumes all nations of the world-developed and developing-undertake a massive overhaul of their energy infrastructures in a relatively quick time frame, he says, would those projections decrease.
"I'm not here to offer a detailed assessment of the practicability of those assumptions, but I'm inclined to think the odds are strongly against them," he said.2
Natural gas is generally touted for its lower emission levels, and burning it in power plants certainly produces much less carbon dioxide than coal-fired generation. Yet gas supplies-and prices-are becoming increasingly problematic, making reliance on natural gas to solve the carbon problem questionable. Domestic gas reserves are projected to last, optimistically, for 60 years at current usage rates. But natural gas usage is expected to increase, while production levels in the lower 48 states have not increased in more than a decade in spite of a quadrupling of exploration.
Coal, on the other hand, has projected reserves to last the next 250 years-without paying OPEC to get it. Unless the United States wants to increase its dependence on foreign oil and gas, there's little choice but to figure out what to do about coal's less attractive features-the emissions of pollutants like NOX, SO2, mercury, and particulate matter, and of course, the production of carbon dioxide.
At the same time, the utility industry faces tough questions about just how to meet increasing energy demands over the next two decades, and beyond. The price levels for gas are making some investors nervous about new gas-fired generation. But new generation of some type is crucial. In just over 10 years, a third of the current coal fleet-nearly one-sixth of the entire generation fleet-will be more than 50 years old, with a tenth over 60 years old. By 2025, two-thirds of the coal-fired fleet will be over 50 years old.
Yet proposals for new coal-fired generation are still few and far between. Much of that hesitation comes from the environmental concerns that coal-fired generation always raises. Few investors or utilities are especially sanguine about the prospects of coal-fired plants, particularly with uncertainty over limits on carbon dioxide emissions.
While utilities don't contribute all of the human-induced CO2, the sector does produce around 37 percent of it. The other big contributor is vehicles, adding another third to the total, and then a potpourri of other sources, including the burning of natural gas for heating. "If you look at the different CO2-producing sectors and ask where could you capture this stuff from most easily, it's not going to be homes or vehicles. … The focus is going to be on the utility sector," says Scott Klara, product manager, sequestration at the National Energy Technology Laboratory (NETL). And, he notes, there are capture technologies that exist today that could be used in power plants. "In fact, in some instances [capture technologies] are used where there's a market for CO2."
A Not-Quite-New Idea
In fact, the idea of sequestering carbon dioxide isn't new-oil and gas companies have been doing it for years, under the name enhanced oil recovery (EOR). CO2 is pumped back into wells and down into the oil or gas formation, to aid the wells' productivity levels, by making it possible to pump more of the remaining oil or gas to the surface.
Until fairly recently, EOR wasn't studied as a specific means of carbon sequestration for the power industry. That changed with the Weyburn project in Saskatchewan, Canada.
The Weyburn project is primarily an oil recovery project, but various monitoring devices were installed in 2000 to assess the permanence and safety of CO2 storage within the oil formation. Weyburn gets its CO2 piped from the Dakota Gasification Co., a synthetic fuel plant nearly 20 miles away in Beulah, N.D.
Scientists are glad to have the monitoring data for CO2 sequestration at an EOR project, but even before Weyburn, there wasn't much doubt that oil and gas reservoirs were workable solutions for carbon sequestration.
"Oil and especially gas reserves have held [their contents] for millions of years," observes Klara, "so those reserves have shown great containment already." Adds Howard Herzog, principal research engineer at MIT's Carbon Sequestration Initiative, "When the Weyburn project is done and [CO2] has been sitting for a time under pressure, that will be interesting to see." Herzog says Weyburn is operating as expected. "It's confirmed what people believed" about EOR and CO2 storage, he says.
The potential volume of carbon sequestration in oil and gas reservoirs is substantial. Current worldwide CO2 production is estimated at around 6.2 gigatonnes annually. The NETL estimates that oil and gas reservoirs could provide storage for nearly 1,750 gigatonnes of carbon (see Chart 2). But while carbon sequestration in oil and gas wells looks promising, one big hurdle is simply getting the CO2 from its production source to the oil field site. With the exception of Texas, most oil and gas reservoirs are not located close to power plants. It's no secret that adding miles of CO2 transportation will add substantially to the costs of sequestration.
The good news is that another type of geologic formation promises even more storage potential than oil and gas formations. Deep saline aquifers, aka deep brine formations, are projected to have enough storage capacity for 10,000 gigatonnes of carbon. Put another way, saline aquifers alone could store Europe's entire CO2 production for the next 400 years, Klara says. "Saline storage blows away oil and gas capacity." (For other sequestration possibilities, see Figure 1.)
The Sleipner project off the coast of Norway is the first to try to exploit a deep saline aquifer for carbon sequestration. The big unknown with deep saline carbon storage is just how permanent that storage is. Sleipner is also an EOR project, sitting in the North Sea atop a huge gas field. Periodic seismic shoots-seismic measurements designed to assess changes in seismic amplitudes-have shown an increasing volume in the Utsira saline formation.
But the jury is out on whether Sleipner and the Utsira formation are a successful carbon sequestration experiment. Herzog says that since the aquifer is under the seabed, it's a very difficult site to monitor closely. "It looks pretty good and isn't showing any problems," he says, "but just because it's not showing problems doesn't mean there aren't any." He points out that the project is only 7 years old-the blink of an eye, geologically speaking. Also, due to the difficulty in monitoring the site, Herzog says it is too much of a jump to say that there are no leaks at all at Sleipner.
Talk of leaks at Sleipner makes Klara a little testy. "There are more unsubstantiated claims of leakage than evidence," he says. In fact, he says, "there's absolutely no evidence" of leakage at Sleipner.
But there's also little doubt that a land-based sequestration project using a saline aquifer could quiet critics and doubters of Sleipner. That may be where FutureGen comes in.
FutureGen, Gasification, and the Future of Sequestration
In February, Energy Secretary Abraham announced FutureGen to great fanfare. Billed as the world's cleanest full-scale fossil fuel power plant, the $1 billion project, basically a large-scale testing lab, will use industry partners to design, build, and operate the first coal-fired, emissions-free power plant. In addition, FutureGen will be the first power plant designed to sequester greenhouse gases and to provide a new source of hydrogen.
The Department of Energy (DOE) solicited a Request for Information (RFI) from potential industry partners in the spring. The results of the RFI are expected to be released in mid-July, shortly after press time. While the RFI results may give more particulars, a couple of things about the project are already certain, says George Rudins, deputy assistant secretary for coal and power systems at DOE: FutureGen must be located near a geologic formation suitable for sequestration and must also be close to the grid.
The experimental plant is also widely expected to use coal gasification technology.
Coal gasification gets a lot of press, but it has yet to catch on with utilities. There is only one gasification plant operating as baseload today in the United States-Tampa Electric Co.'s Polk plant, a 250-MW integrated gasification combined-cycle plant (IGCC) that has been in operation since 1996.
Gasification plants are among the cleanest coal technology available to produce power. Yet even if a utility considers an IGCC plant, so far pulverized coal technology has won out. That was the case at Wisconsin Public Service Corp., which has proposed a 500-MW, supercritical pulverized coal plant, rather than an IGCC plant that was considered.
There's no question that IGCC plants cost more to build than a comparable pulverized coal facility. But if carbon sequestration costs are figured in, IGCC plants cost considerably less than pulverized coal. For example, Klara says that an IGCC plant that captured carbon would increase electricity costs by 30 percent. In comparison, he says, retrofitting a pulverized coal plant would increase electricity costs anywhere from 58 to 100 percent.
Gasification or Pulverized: Current Costs vs. Future Costs
It's the economics of capturing carbon that has those pushing sequestration worried, because the new coal plants being proposed are all some version of pulverized coal. Pulverized coal plants can do a decent job of meeting current environmental standards, but outfitting them to capture carbon is prohibitively expensive.
So a big part of the conundrum is cost-do you measure cost solely now, or also consider future carbon limitations? If carbon restrictions become reality-and in all likelihood they will sometime in the next 20 years, if not much sooner-it seems foolish to build large amounts of new capacity fitted with pulverized coal technology.
The reason lies in the concentration of CO2 in the flue gas stream. Natural gas produces around 4 percent CO2 in the flue gas stream. Pulverized coal, in comparison, yields up to a 15 percent concentration of CO2. But coal gasification outstrips both, with a whopping 35 to 40 percent CO2 concentration in the flue gas stream. "Gasifiers are a lot closer to being 100 percent CO2" than pulverized coal, notes Herzog. And, he says, the carbon sequestration process isn't linear, meaning that it is exponentially easier and cheaper to concentrate and sequester CO2 from a 40 percent concentrated stream than a 10 percent concentrated stream.
Apart from economics, where it clearly comes out ahead, gasification must still prove its mettle in terms of plant availability. On that score, Tampa Electric says that overall, the Polk gasification plant has availability in the mid-90 percent range. The gasifier portion of the plant is available in the 80 percent range, which Black says is consistent with its design. The combined-cycle portion of the plant can run on distillate oil, as well as its usual feedstock, so that even if the gasifier is down, the combined-cycle portion of the plant can keep operating. He also adds that next-generation IGCC plants are expected to have higher availability rates, in part due to lessons learned at the Polk plant.
Yet even according to Tampa Electric's own charts, Polk has achieved 80 percent availability rates for the gasifier portion of the plant only in 2000 and 2002. In 2001, the gasifier was available only 65 percent of the time. From 1998 through 2002, the average Polk gasifier availability rate was 72 percent. While 65 percent-the lowest availability figure over Polk's last 5 years-is close to the average availability of 70 percent for coal-fired plants nationwide, that level of availability won't be enough to convince skeptics of new coal technologies.
"From a coal plant standpoint, if you have one day of unscheduled outage, that's up to $1 million in lost revenues. So if you don't prove that these emerging technologies can run day in, day out, without burps and upsets, then you're never going to get wide-scale acceptance or deployment," says NETL's Klara. "That's why a demonstration is so key."
Certainly, WSPC's decision to go with a pulverized coal technology bears Klara out. According to Jeff Jensen, the company considered IGCC but did not feel it was commercially viable. "There are no 500-MW models" of IGCC plants, Jenson notes.
According to Tampa Electric's Black, one of the problems is that no other utility wants to be next to dip its toe in the IGCC waters. As he dryly pointed out, "At this point, it seems everyone would like to see multiple successful IGCC plants in service before they move forward." It's the classic chicken-egg problem.
FutureGen, with its experimental tilt, may help solve some of the problem. But even if operational issues with IGCC are ironed out, the fact remains that no economic incentive exists for utilities to deal with carbon, aside from pressure from shareholders and the public.
As the National Coal Council says, "Power companies are not likely to pay the premium to install today's IGCC designs in the absence of clear regulatory direction on the CO2 issue."3
Black agrees. As he testified before Congress in June, "The environmental superiority of IGCC is financially unrewarded. Other coal-fired technologies may be able to meet current environmental regulations, and there is no economic benefit for the additional environmental performance of IGCC. The potential benefits of future mercury and CO2 removal are difficult to monetize."
No Funding Solace
While some look to increased federal funding to push gasification and sequestration, this year's budget does not offer much solace, despite the rhetoric from the administration.
The House Energy bill includes a $2 billion, 10-year authorization for the Clean Coal Power Initiative. While last year's CCPI proposal earmarked 80 percent of funding for demonstration of gasification systems, this year's CCPI proposal drops that earmarked amount to 60 percent. Tax credit proposals also signal the administration's de-emphasis on gasification. Though the tax credit levels are substantial, existing plants that make some improvements in pollution control, and not necessarily by addressing carbon emissions, are eligible for much of the available funds. Certainly such a tax credit structure will enable older, smaller coal-fired plants to run within stricter environmental constraints. But the tax credit structure proposed will do little to spur investment in new plants with carbon sequestration potential.
Those within the utility industry are concerned. Testifying before Congress in June, Randall Rush, power systems development facility director, Southern Co., summed up the situation. "Few things go more directly to the root of economic prosperity than secure, affordable, clean energy," he said. "If current funding trends for advanced coal-based energy systems are not reversed, the United States will take the wrong turn at the crossroad we face. Down that road lies increased energy prices, increased dependence upon overseas energy supplies, and decreased economic prosperity. The alternative is to reverse the trend in federal [R&D] spending for advanced coal technology and take the more rational road toward a secure, prosperous energy future."
Endnotes
- The President's Carbon Intensity Reduction Initiative," keynote address by Dr. John Marburger, director, Office of Science and Technology Policy, Executive Office of the President at U.S. DOE Conference on Carbon Sequestration, Alexandria, Va., May 6, 2003.
- Remarks of Energy Secretary Spencer Abraham to the National Coal Council on Nov. 21, 2002.
- National Coal Council, Coal-Related Greenhouse Gas Management Issues at 65, May 2003.
Jennifer Alvey is associate editor of Public Utilities Fortnightly. Contact her at jalvey@pur.com.
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