Thursday, May 31, 2007

Global Warming and the Future of Coal

The Center for American Progress is doing some very interesting policy work on climate change issues. Today they released a very important report: Global Warming and the Future of Coal
The Path to Carbon Capture and Storage
(PDF). A useful summary can be found here. Here are some highlights from the summary:

Ever-rising industrial and consumer demand for more power in tandem with cheap and abundant coal reserves across the globe are expected to result in the construction of new coal-fired power plants producing 1,400 gigawatts of electricity by 2030, according to the International Energy Agency. In the absence of emission controls, these new plants will increase worldwide annual emissions of carbon dioxide by approximately 7.6 billion metric tons by 2030. These emissions would equal roughly 50 percent of all fossil fuel emissions over the past 250 years.

. . .

In China and other developing countries experiencing strong economic growth, demand for power is surging dramatically, with low-cost coal the fuel of choice for new power plants. Emissions in these countries are now rising faster than in developed economies in North America and Europe: China will soon overtake the United States as the world’s number one greenhouse gas emitter. With the power sector expanding rapidly, China and India will fall further behind in controlling greenhouse gas emissions unless new coal plants adopt emission controls. Lack of progress in these countries would doom to failure global efforts to combat global warming.

. . .

Fortunately, there is a potential pathway that would allow continued use of coal as an energy source without magnifying the risk of global warming. Technology currently exists to capture CO2 emissions from coal-fired plants before they are released into the environment and to sequester that CO2 in underground geologic formations. Energy companies boast extensive experience sequestering CO2 by injecting it into oil fields to enhance oil recovery. Although additional testing is needed, experts are optimistic this practice can be replicated in saline aquifers and other geologic formations that are likely to constitute the main storage reservoirs for CO2 emitted from power plants.

However, these so-called carbon capture and storage, or CCS systems, require modifications to existing power plant technologies. Today the prevailing coal-based generation technology in the United States is pulverized coal, with high-temperature (supercritical and ultrasupercritical) designs available to improve efficiency. It is possible to capture CO2 emissions at these pulverized coal units, but the CO2 capture technology currently has performance and cost drawbacks.
But there’s a new coal-based power generation technology, Integrated Gasification Combined Cycle, or IGCC, which allows CCS systems in new plants to more efficiently capture and store CO2 because the CO2 can be removed before combustion. Motivated by this advantage, some power plant developers have announced plans to use IGCC technology but very few have committed to installing and operating CCS systems.

The great challenge is ensuring that widespread deployment of CCS systems at new IGCC and pulverized coal plants occurs on a timely basis. Despite growing recognition of the promise of carbon capture and storage, we are so far failing in that effort. The consequences of delay will be far-reaching—a new generation of coal plants could well be built without CO2 emission controls.

experts today are projecting that only a small percentage of new coal-fired plants built during the next 25 years will use IGCC technology. IGCC plants currently cost about 20 percent to 25 percent more to build than conventional state-of- the-art coal plants using supercritical pulverized coal, or SCPC, technology. What’s more, because experience with IGCC technology is limited, IGCC plants are still perceived to have reliability and efficiency drawbacks.

More importantly, IGCC plants are not likely to capture and sequester their CO2 emissions in the current regulatory environment since add-on capture technology will reduce efficiency and lower electricity output. This will increase the cost of producing electricity by 25 percent to 40 percent over plants without CCS capability.
These barriers can be partially overcome by tax credits and other financial incentives and by performance guarantees from IGCC technology vendors. Even with these measures, however, it is unlikely that IGCC plants will replace conventional coal plants in large numbers or that those plants which are built will capture and store CO2. There are two reasons for this.

First, even cost-competitive new technologies are usually not adopted rapidly, particularly in a conservative industry such as the utility sector, where the new technology is different from the conventional technology. This is the case with IGCC plants, which are indeed more like chemical plants than traditional coal-fired plants.
Second, there is now no business motivation to bear the cost of CCS systems when selecting new generation technologies even though the cost of electricity from IGCC plants is in fact lower than from SCPC plants once CCS costs are taken into account. This is because plant owners are not required to control greenhouse gas emissions and CCS systems are unnecessary for the production of power. The upshot: IGCC units (with and even without CCS capability) will lack a competitive edge over SCPC units unless all plant developers are responsible for costeffectively abating their CO2 emissions. No such requirement exists today.

Read it all. The Report then offers a series of recommendations that are designed to expedite the move toward carbon-capture coal technology--front and center is a carbon tax that will create an incentive to use this technology.

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