Category: Carbon capture & storage

Articles about carbon capture and storage

Value for money in tough times?

dchone November 19, 2010

As the United Kingdom and many other economies contemplate the need for new power generation capacity, a range of options are clearly available. Much has been made in recent years of the potential for offshore wind in the UK and some believe that this should even be the cornerstone of the UK power industry.

There are two issues that will really drive the offshore wind industry in the coming years – cost and capacity (or potential).

The capacity issue has been widely discussed and there is little doubt about the significant potential of onshore, offshore and deep offshore wind in the UK, but also recognizing the limits due to planning approval and intermittency. The cost issue is less widely discussed and in difficult economic times this is arguably where the focus should be. With the need to meet the UK’s 2020 emissions targets as a given, what is the most cost effective way of achieving this?

Today in the EU the price of CO2 hovers around €15, driven to some extent by the cost of gas vs. coal, but it is also the long term value of the allowances in future years of the ETS that is holding up the price today. This isn’t sufficient to bridge the cost gap for wind, but nevertheless both offshore and onshore wind projects proceed, driven by the various renewable energy targets in EU Member States, which in turn are fed by the EU wide 20% renewable energy by 2020 target. Without these targets the CO2 price would be higher in the EU as they are forcing a particular outcome which is not necessarily the next best option along the abatement curve. That also means the overall cost to society of meeting the 2020 emissions target is raised.

In the UK, an April 2009 government report showed that the levelised cost of offshore wind could be £144 / MWh. In looking at this further, the first question is whether wind is meeting incremental demand (i.e. you need to build new wind turbines or if not, something else like gas CCGT) or whether it is substituting existing demand (in which case you could argue that we’re paying for wind to close down gas or coal and only saving the fuel cost). It is probably incremental demand, since the UK does need new build anyway. In the case of new build in the UK, a recent analysis by the IEA puts new gas CCGT around 50 GBP / MWh and coal at 60 GBP / MWh (long run marginal cost). The IEA also give the UK’s 2007 electricity as being 0.90 t CO2 / MWh for coal and 0.38 t CO2 / MWh for gas.

Therefore, if wind is backing out new coal fired power stations, the abatement cost = (144 – 60) / 0.90 = 90 GBP / t CO2 = 140 USD / t CO2 (assuming 1 GBP = 1.5 USD). But if instead, wind is actually slowing the uptake of natural gas as the next best option along the abatement curve then the cost = (144 – 50) / 0.38 = 250 GBP / t CO2 = 370 USD / t CO2.

So at least in the short to medium term, the push for certain renewable energy sources is having an economic impact. As I illustrated in my post last week, quick uptake of natural gas is one way of meeting the 2020 targets, although on its own it is not a long term solution to managing emissions – it will have to be combined with CCS to do that.

Recently, a study by Redpoint for the Energy Networks Association Gas Futures Group, concluded;

There are credible and robust scenarios in which gas could play a major ongoing role in the United Kingdom energy mix while meeting both the 2050 carbon targets and the 2020 renewable energy targets. Managing CO2 emissions under these scenarios would require the successful development and roll-out of Carbon Capture and Storage (CCS) technology, supported by the deployment of biomethane injection into the gas distribution network, roll-out of district heating, and / or the usage of combined electricity and gas “dual fuel” systems for domestic heating.
Pathways with ongoing gas use could offer a cost-effective solution for a low-carbon transition relative to scenarios with higher levels of electrification. Our baseline assumptions indicate potential savings of almost £700bn over the 2010 to 2050 period on a Net Present Value (NPV) basis – around £20,000 per household or £10,000 per person – with consequential benefits for consumers, the economy, and the competitiveness of UK industry. Sensitivity analysis indicates that cost savings are still present under assumptions of higher commodity price trajectories and faster technology learning rates, although the difference in costs is reduced relative to the baseline.

As noted by Redpoint, these calculations of course depend on the longer term view of energy prices. If high, it makes the case for wind more compelling, particularly as the cost of new wind continues to fall as the technology matures. But basing a renewable energy strategy on the assumption of ever increasing energy prices may not be the prudent thing to do during challenging economic times.

My thanks to my colleague Martin Haigh in the Shell Energy Scenario Team for helping with this post.

Short and long term strategies

dchone November 12, 2010

I have been at the first Doha Carbon and Energy Forum this week, organized by Qatar Petroleum and the Qatar Foundation with support from ExxonMobil. The event focused on steps that could be taken in Qatar and the region to begin to address the issue of carbon emissions. Sessions on carbon capture and storage, energy efficiency and alternative energy each produced a set of proposals to take forward.

There is no doubt that the Gulf region is very aware of the issue of climate change and its implications, particularly the potential economic impact going forward as the world looks to alternative energy sources. In Qatar there is also a feeling of optimism because of the very substantial natural gas reserves there. But there is also a realization that a very well thought through strategic approach will be required to capitalize on the long term value of the resource in an increasingly carbon constrained world.

In the short to medium term natural gas offers a real opportunity for nations to quickly get to grips with emissions targets and begin to see reductions within the economy. This is showing up very clearly in the USA, where rapidly increasing shale-gas production, in combination with tougher emission standards in the coal sector (other than CO2 that is) is pushing the USA towards its 17% Copenhagen Accord target even without the benefit of federal carbon emissions legislation. A quick “back of the envelope” calculation shows that if the USA replaces 120 GW of coal fired power generating capacity (about a third of the fleet) with natural gas, in combination with the tough new laws on vehicle efficiency, it can, at least on paper, meet its 2020 target. There are a few ifs and buts here of course, with the key ones being as follows;

The background to the coal to gas switch is discussed in a previous posting, “A Focus on the USA – Coal and Natural Gas”.
On-road vehicle efficiency needs to improve by about 10 mpg at constant miles driven. In 2005 average on-road vehicle efficiency remained around 20 mpg, so that means about 30 mpg by 2020. In theory this is possible given vehicle turnover and the new mileage standards.
Other emissions across the economy need to remain the same – e.g. emissions from industry and homes.

The early evidence is that the change is already underway in the power sector, which has seen a sharp drop in CO2 intensity over the last three years.

Such a strategy pays off handsomely in the medium term and offers natural gas the position as a transition fuel to a low carbon economy. But this is not sustainable in the longer term as emission reduction targets become much tougher. This is why the USA, for example, needs emissions legislation now, not so much for the period up to 2020 which is now largely set, but for the energy mix in the decades afterwards which will be set by decisions made in the next 5-10 years.

Similarly, for a country such as Qatar with a large natural gas resource base, carbon constraints around the world offer opportunity now, but will be challenging later on. The forum in Doha recognized this and proposed an increased focus on carbon capture and storage and the role that it could play in allowing natural gas to remain a key part of the global energy mix for much of this century – in other words to be as much a destination fuel as it is a transition fuel. The development of a Gulf region CCS Technology Platform with a focus on CCS+NG demonstration plants was tabled as a potential way forward.

Cancun and Beyond: Financing the Energy Future

dchone September 27, 2010

Pick up almost any article on climate change today and it won’t be too long before your attention is turned towards the subject of financing. There are also many conferences, seminars and workshops on financing, not to mention the UN High Level Advisory Group on Climate Change Financing. The Copenhagen Accord sets the ambition of $100 billion per annum in climate financing for developing countries by 2020.

But what exactly will be the target of such financing, what will it pay for and how might it be raised? Developed country national budgets are probably not the place to start given the deep deficits and consequent desire to enact spending cuts. Rather, the action needs to be in the carbon markets.

The Reference Scenario in the IEA 2009 World Energy Outlook provides a useful starting point for this discussion. It shows that in non-OECD countries over the period 2010 to 2020 some 1000 GW of electricity generation will be constructed, of which 500 are coal, 200 are natural gas and the rest non-emitting (hydro, wind, solar, nuclear). Together with increasing energy use in transport, industry and buildings (direct consumption), total non-OECD emissions could rise by nearly 5 billion tonnes in the coming decade.

In a post shortly after Copenhagen, I showed the level of emissions actually needed in non-OECD countries to put the world on a 2 deg.C pathway, assuming developed countries were on an 80% reduction by 2050 pathway. Drawing on the data from that, it suggests that non-OECD emissions should be limited to a rise of something like 2+ GT over the period 2010 to 2020 and not the 5 GT in the IEA reference scenario. This suggests that two things have to happen;

Some 300 GW of the coal fired power stations planned for the next decade have to include CCS or be something else (e.g. wind, nuclear, CHP natural gas)
The increase in direct consumption of fuel needs to be curtailed through efficiency programmes in road transport, industry and buildings.

Arguably, much of the second bullet could be achieved through standards – for appliances, for buildings and vehicle efficiency. This doesn’t necessarily have to cost the countries in question any additional money, or at least not very much. It really requires a strong desire to tackle the issue, something that has become the norm in China today.

But changing the power generation mix or capturing the CO2 emissions will require the input of additional money. For example, while it is still early days for CCS, indications are that this is a ~$50 per tonne of CO2 technology. Any additional costs (vs. standard coal) for other generation technologies depend on a variety of factors such as the specific technology chosen, supply access (e.g. for natural gas) and even geography (e.g. for wind). Nevertheless, at $50 per tonne of CO2 much can be done (albeit recognising that carbon market policy will have to mature significantly for such levels to be reached). The proposed Copenhagen Accord financing is also quite substantial. With $30 billion committed for the period 2010-2012 rising to $100 billion per annum by 2020, it could be as much as $0.5 trillion in total (but for adaptation and mitigation – including forestry).

Switching 300 GW of coal (or capturing the emissions) as discussed above would likely account for a significant portion of this half trillion, but could reduce developing country energy emissions by as much as 1-1.5 GT per annum by 2020. Utilizing a “green bond” structure such as that currently proposed by IETA (International Emissions Trading Association) in combination with an active carbon market to take the flow of credits in the years following construction could deliver the necessary financing for such a shift. A very simple Discounted Cash Flow (DCF) shows that if each $1 billion invested realizes a reduction of 3 million tonnes of CO2 per annum at $50 per tonne over the subsequent 15 years, then the Internal rate of Return (IRR) is 12%.

But this means that the carbon markets in the late 2010s and through the 2020s must be capable of absorbing some 1-1.5 billion credits per annum from power sector projects in developing countries for this to work. Even more importantly, the existence and stability of these markets must be apparent to the investors by 2015 at the very latest and probably much sooner than that. It also means that the CDM, currently the only viable crediting mechanism available, needs to be substantially reformed, not only in scale such that it can tackle such a transformational change, but also in scope such that it recognizes a technology such as CCS and is more targeted at those parts of the abatement curve where this shift will take place.

The task above is very substantial and time is not on the side of it happening, but it almost certainly won’t happen if the negotiators in Cancun cannot begin to deliver in three key areas;

Building on the carbon market architecture which underpins the Kyoto Protocol as they work towards a new international agreement. This in turn drives domestic legislation to a similar solution set.
Reforming the CDM in both scale and scope, including access to technologies such as CCS.
Recognising that private financing through carbon markets and supporting finance structures have the potential to transform the energy infrastructure that will be built in the coming decades.

But it isn’t just up to those in Cancun to get this going, much also has to happen on many domestic fronts in terms of carbon market development.

Looking towards Cancun

dchone September 10, 2010

The unusual end-point to the Copenhagen climate conference last December and the rounds of UNFCCC negotiations that have followed in 2010 could lead even the most optimistic observer to the view that the international climate process is struggling. There is a growing consensus that Cancun is now a stepping stone to a potential agreement at COP 17 in South Africa in 2011 or perhaps at the Rio+20 Summit in 2012. But this feels increasingly like the state of play following the Bali Roadmap and the many meetings throughout 2008 and 2009 for the much anticipated agreement in Copenhagen. Perhaps in two years time we will all be looking towards COP 19 (2013) and COP 20 (2014) with the hope of the agreement coming then – although third time lucky is hardly a basis for solving a tough issue like climate change.

As noted in my posting in January, the national pledges made in Copenhagen, while representing a solid start, also demonstrate that reducing emissions globally to a level compatible with 2 degrees C is very challenging.

The current process is also somewhat arcane, focusing on issues such as technology transfer, climate funds, common but differentiated responsibilities and methodology templates and much less on the actual job at hand which is how best to reduce emissions. Is it time therefore to refocus the tremendous energy and persistence of the negotiators into a more pragmatic approach which might actually deliver a mitigation pathway to follow?

Changing tacks now could be very disruptive, but it is at least worth considering how else this particular problem might be addressed. One route forward would be to disassemble the issue into several component parts (remember the wedges), each of which could then be progressed, rather than seeking the all encompassing solution. Within each of the components, smaller agreements and clear milestones would define progress. Of course some chunky issues would remain, notably the financial one, but with a clearer plan of action these may become much easier to resolve.

Looking at the issue of emissions mitigation (adaptation remains another chunky part), there are really only five key components. They are (in no particular order):

Using energy more efficiently such that we consume less;
Using lower or zero carbon forms of energy;
Capturing and geologically storing CO2 emissions;
Managing the emissions of gases such as methane, HFCs and SF6;
Managing the carbon emissions impact of land use.

Breaking the problem up in this way also leads to potential solution sets and policy instruments.

One doesn’t have to look far to find a government grappling with the concept of energy efficiency, in fact pretty much every government on the planet has embraced the idea. Coordination of objectives, standardization and some application of targets could be a powerful enabler to accelerate action in this area. For example, it might well be much simpler for the United States and China to agree on a common approach to lighting and the switchover of technologies (e.g. incandescent to LED) than an acceptable set of targets for emission reduction in their economies. With a timetable agreed, other markets would doubtless follow and issues such as financing and technology transfer would become much more tangible. Say for example a smaller developing country agrees to adopt the same lighting timeline as China but wants to do a certain amount of the manufacturing locally. With a national timetable in place therefore underpinning demand, a major lighting technology provider would see a powerful incentive to build a facility in that country (technology transfer), even more so if an international loan guarantee or grant was on offer (financing).

Looking further down the list, the emissions of other greenhouse gases could be tackled more in the style of the Montreal Protocol. Certainly for HFCs, SF6 and similar gases a timetable approach is practical. This is more problematic for methane and N2O, particularly given the link with land use and agriculture, but at least in industrial instances a defined pathway could be set out. This has happened already to address the pre-1990s practice of venting methane at crude oil production facilities and similar changes have taken place in the chemicals industry to sharply reduce emissions of gases such as N2O.

Land use is increasingly being addressed as a separate issue anyway, simply look at the REDD+ discussions to see that taking place. Issues such as agricultural methane emissions could be included within this category.

That then leaves energy substitution and the application of carbon capture and storage as areas to be tackled. These can both be very effectively driven by a price of carbon, typically delivered directly through a cap and trade approach (notably in the power generation and large industrial sectors) or indirectly via a project mechanism linked to a cap and trade system. Focusing the project mechanism on substitution and CCS also makes it a much more effective instrument and largely addresses issues such as arbitrage (delivering credits into the market at vastly lower cost than the prevailing market price) and competitiveness (improving a competitors energy efficiency by paying it to do so) that hinder the existing structure of the CDM.

A word about CCS as well – some might argue that this is “just another technology” and therefore shouldn’t have any special mention. After all, why not mention wind or nuclear in the same section. The difference is that CCS is the only technology available to remove CO2 (carbon) from the atmosphere on a large scale in a short time and put it back where it was found. If you think about it, this is really what the whole climate change issue boils down to. Have a read of Jim Hansen’s latest book and you will see why – it is very likely that we have, collectively, already emitted too much. CCS can be applied directly at a coal fired power station to remove emissions before they occur or perhaps in a biomass power station which then gives an indirect draw down of emissions already in the atmosphere. Although not feasible today, CCS may eventually even be employed in the direct removal of CO2 from the atmosphere, but the thermodynamics of such a process don’t look very good at the moment.

Even if tools such as cap-and-trade aren’t in vogue, governments could still agree on measures that incentivize low carbon energy and trigger investment in CCS (e.g. an emissions performance standard).

All of this isn’t to imply that somehow the international discussion becomes easy, but it does at least offer the opportunity for segmented progress. A meeting such as Cancun may have little chance of a comprehensive global agreement, but there would doubtless be a great feeling of satisfaction and real progress if the negotiators left with, say, an international agreement on lighting and SF6 emissions in place and a pledge by three or four major economies to each sequester at least 50 million tonnes of CO2 by 2020.

A Focus on the USA – Carbon Capture and Storage

dchone March 24, 2010

In my recent posting looking at the changes that could deliver a 17% reduction in US emissions by 2020 (compared to 2005), I introduced 20 GW of carbon dioxide capture and storage (CCS). Notionally this is in the power sector and in my simple model it appeared in the coal fired sector. The issue that faces both the USA and many other countries around the world is how much CCS, how fast and in what form.

A good starting point for this is the CCS Technology Roadmap recently published by the International Energy Agency (IEA). The roadmap makes the case for the global deployment of CCS and spells out the necessary pace of deployment such that CCS can deliver not only on its potential by 2050 but its necessity in contributing to a global emissions pathway which equates to a long term atmospheric concentration of CO2 of 450 ppm. The take-away headline from the IEA Roadmap is that “CCS delivers one-fifth of the lowest cost GHG reduction solution in 2050.”

The IEA roadmap breaks down the deployment by region and highlights the need for 29 projects in North America by 2020, leading to a very substantial deployment in 2050 where some 590 projects are foreseen. The projects include 11 GW (77 Mt CO2 per annum) in the power sector and a further 12 projects in the industrial and upstream oil and gas sectors, with the latter storing 44 Mt CO2 per annum. This gives a total 2020 storage in North America of some 120 million tonnes per annum, which could equate to 100-110 Mt/a in the USA. This is a less than the 20 GW in my simple model, but equally I have assumed delivery of the 17% on the basis of domestic action. Offsets may well play a role (that’s a subject for another post).

As I have mentioned in many previous posts, CCS isn’t a single technology but rather a family of technologies combined in a particular way, with all those technologies in operation at scale today in many parts of the world, but not in large scale CCS applications. Although there is doubtless room for improved technologies, CCS isn’t in need of more fundamental R&D, it is in need of demonstration in a number of large scale projects. Early demonstration projects will almost certainly command a higher price tag per project than those that come later. Economies of scale won’t figure early on as each new project will also have to establish new infrastructure, including storage sites, pipelines, monitoring agencies and so on. This means that early projects will need incentives, such as discussed below.

The question that now arises is “What policy framework that will deliver such a development?”. In that regard it is useful to at least look at the various elements that are now in place in the EU, although it should be noted that deployment is not underway just yet.

A CCS demonstration programme for the EU was announced, comprising 10-12 major projects across the EU, ideally testing a variety of technologies and geologies. A timeline for investment decisions is defined through to 2015.
CCS is now recognized as a mitigation option within the EU-ETS, thereby incentivising long-term deployment via the CO2 price.
An EU legal framework is in place to allow CO2 to be stored underground. The process of turning this into national law at member state level will take longer but is underway.
A measurement and reporting framework for CO2 storage has been agreed by EU member states.
An incentive to start the investment programme has been developed. A set aside of 300 million EU allowances for award to early CCS projects (and novel renewables) for CO2 stored provides effective government support for the early higher cost demonstration phase of the technology. This incentive is targeted specifically at the 10-12 project demonstration programme.

Many of the ideas in the EU package of measures have come from the USA. They figure in proposed legislation such as the Waxman-Markey ACES Bill, which also recognizes the demonstration phase of this technology and seeks to support it.

But key to all of this is the CO2 price, delivered through an emissions trading system. CCS fundamentally needs a driver such as this as there is no business reason to pursue the technology without it. However, other drivers might include a “Best Available Control Technology” (BACT) approach or an Emissions Performance Standard (EPS) for power plants, but none offer the flexibility contained within an approach supported by tradable allowances. Importantly, whilst cash-in-hand to develop a CCS project may be attractive, the operation of the facility requires ongoing resources which must be financed as well, therefore the need for an underpinning mechanism.

Almost irrespective of the policy approach adopted, getting a new large scale industry up and running, even with just a few projects covering a few of the technology options, will be a considerable challenge. Despite a full range of measures now coming into place in the EU delays persist and the recent weakening of the CO2 price through the recession has almost certainly delayed the process further.

Delivering on the early goals of the IEA Roadmap in the USA is by no means a given and will require continued effort by both the private and public sectors over the coming decade.

We all love technology, but not so sure about science!

dchone February 4, 2010

With the arrival of the Apple iPad last week, it was clear that the world is in the middle of a technology boom and it was even clearer that we all love it. Whilst some couldn’t help comment on certain missing features (the web cam, the USB connector and so on), nobody was condemning the entire idea of portable communication devices to the dustbin – quite the contrary, I can almost guarantee that there will be a line around the block on the day Apple release this latest product for sale. We just love technology.

Technology such as the iPad is built on the back of fundamental scientific research in many fields, from theoretical physics to materials science – even particle mechanics and other esoteric sciences creep into the picture. Years of research in universities, private laboratories and government agencies, leading to literally thousands of scientific papers have led the way to the products that we speculate about, eagerly await announcements of and then buy in the million.

But somewhere along the line we seem to have lost our appetite for science, in fact some even look on it with disdain. In developed countries, far less students today engage in science or science based subjects in schools and universities than twenty or thirty years ago. Yet those same people crave the products that a science based education system can ultimately deliver.

On a newscast I was watching last week an excited correspondent was telling us about the iPad. Not two minutes later the same person was salivating at the prospect of “the whole global warming story collapsing like a house of cards because of the bogus science”. But the approach to this science is no different to that behind the iPad, the scientists no less diligent, the papers they produce no less reviewed, yet because we either don’t want to know about or can’t accept the findings we choose to attack the science and the scientists – not with any intellectual rigour or scientific discipline, but with slander and sometimes even abuse. I doubt the correspondent had even the remotest idea as to the years of research in atmospheric chemistry that have led to the concern about the rising levels of carbon dioxide or the detailed measurements done in laboratories for the past century on the behaviour of carbon dioxide and infra red radiation. But he loved the iPad!!

Even if we can get past the atmospheric chemistry that supports the thinking on climate change, we then run into difficulty with the solution set. Many people don’t like nuclear, yet have little or even no knowledge of the supporting science. Geological sequestration of carbon dioxide is struggling to gain public acceptance, despite the many studies done and even field tests that support its inherent safety. We simply choose not to believe that it can be right.

But we still love the iPad!

Copenhagen – Show me the money . . .

dchone December 15, 2009

With the second week of Copenhagen now upon us and the days rapidly counting down to the conclusion of the summit, the true meaning of climate change politics is showing its hand – money. At issue are two things; how much should developed countries effectively compensate developing countries for past emissions by helping them adapt to the changing climate and how much should developed countries pay developing countries to get them to reduce future emissions. The first of these I find impossible to make any judgement on at all, in part because I struggle to understand just what such money might be spent on (save for the expatriation of residents of some island states now literally disappearing) and then how it might be divided so that the world gets meaningful benefit that is actually related to the issue at hand.

But the second issue is not quite as difficult, so I will venture an opinion on it. A view on this comes from considering the abatement curve (a chart of cost and volume for emission reduction activities, see below) for the potential emission reduction opportunities in developing countries.

The left side of the chart (A) shows a range of projects that give positive returns over time. They are largely energy efficiency plays in one form or another and are things we should be doing anyway at current energy prices, but we shy away from them for all sorts of reasons ranging from capital allocation to plain laziness. Such projects exist in every country (well perhaps not Denmark which seems to thrive on finding energy efficiency opportunities) and are found in every sector. They range from home insulation to excellence in operation of industrial facilities.

The right hand side of the abatement curve (C) features projects that really need a carbon price to deliver positive returns over time. The best example is carbon dioxide capture and storage (CCS), which can never be revenue positive without a carbon market. A number of renewable energy technologies will continue to need the additional revenue that a carbon market can deliver, at least for some years, as might advanced biofuels with their low carbon footprint and more distant technologies such as hydrogen.

Coming back to the issue at hand, money, the abatement curve offers a mechanism for judging just what type of help should be given to the rapidly developing economies (for the poorest countries help is desperately needed simply to provide energy in the first place, which is yet again another issue and arguably not one for a climate change conference). Energy efficiency projects should not really be funded by the developed economies given that they are attractive projects to do anyway. So the emphasis here needs to be on accelerating the uptake of such actions through loans, foreign investment and domestic policy initiatives.

But projects requiring a carbon price are different. A carbon price is an artificial construct, which effectively delivers actions that the economy would not otherwise take. This does impose a cost on the economy and it is this cost that could be borne for a period of time by the developed countries for developing country projects. With per capita incomes often a fraction of those in developed economies it is a big ask to expect a developing economy to do this itself. But as incomes rise there should also be an expectation that developing countries eventually implement their own carbon price policies.

Looking at a technology such as CCS, this would mean developed country cap-and-trade systems accepting credits from CCS projects in developing countries as well as providing some up-front capital for the early projects (depending on the cost of abatement and the prevailing cost of carbon). The story would be similar for some renewables. Possibly the simplest way to steer this is to focus the money flow to developing countries on the electricity sector only, with the aim of accelerating decarbonisation. This has a number of benefits; results are likely to be very tangible for questioning voters in developed economies (e.g. xx coal fired power stations in South Africa had CCS fitted this year), major project opportunities result for technology companies and it has limited impact on competitiveness concerns emanating from developed countries – i.e. there is little appetite to fund projects in developing economies which simply enhance their industrial competitiveness. All of this means that future offset mechanisms should be targeted on the electricity sector and not across all emission activities within a developing economy.

Finally, there is the major issue of forestry / deforestation (B). This will also require assistance from developed economies in that it is really about land and land has a value. Dictating how land should be used changes its value, so some compensation will be necessary in that area. This can come both through government-to-government deals and via the private sector using carbon markets.

As the debate in Copenhagen continues, there is some sense of this structure. Developing country NAMA (Nationally Appropriate Mitigation Actions) are broadly seen as A, although the AWG-LCA draft text does link the transfer of money with their implementation. The REDD discussion is of course B. Finally, there is the discussion about the carbon market mechanisms, but important technologies like CCS and Nuclear are hotly contested as being suitable, yet these are the two big low carbon electricity base-load technologies. A distinct focus on electricity in developing countries is also lacking.

So much remains to be done in just four days.

A glass half full . . .

dchone November 20, 2009

Following on from my previous post, I spoke at the opening lunch of Singapore Energy Week on the same subject – a trillion tonne carbon budget. The core of the story went something like this.

The starting point is a trillion tonne “glass”, now just over half full with industrial revolution carbon (data from IEA and CDIAC), coming both from fossil fuels and deforestation (in reality it is probably worse than this as my simple analysis did not include the other greenhouse gases). The world is filling the “glass” at an increasingly rapid rate and it is now over half full.

If the world continues to fill the “glass” through to 2100, with emissions growing at 1% per annum (as an example – but energy related CO2 emissions have increased at 2% p.a. over the last 40 years – but have dropped by some 3% in the last 12-18 months) then we end up with some two trillion tonnes of carbon emitted since 1750, well above the trillion tonne level that equates to a 50% chance of hitting 2 degrees C – in other words, “two glasses completely full” and a world quite a bit warmer than 2 degrees C.

In reality, the current global hydrocarbon reserve picture does not fully support such a simple proposition. Using the oil, oil-sands, gas and coal reserves data in the BP Statistical Review of World Energy 2009 and assuming that all those reserves are consumed, together with assumptions on the growth in cement manufacture and continued land use change, the carbon situation looks more like this – two “glasses”, each not quite full.

I then turned attention to solutions with a focus on the largest overall contributor, coal. Today there is some 1000 GW of coal fired power generation, producing about 8 billion tonnes of CO2 per annum. According to the International Energy Agency, emissions are growing at 6% p.a. The chart below shows growth is accelerating rapidly in China, but also in the rest of the world outside North America.

If we assume that emissions from coal fired power stations double by 2050, then plateau for the remainder of the century, then this alone fills the trillion tonne “glass” from where the world is today. Coal reserves can more than support such a move although it will be a challenging level of production.

One approach is to look to carbon capture and storage (CCS) for a solution. CCS represents a safe and sustainable approach for dealing with CO2 emissions and is based on a family of technologies all in use today. Although large scale end-to-end demonstration needs to happen urgently, deployment need not be some distant dream. As a thought experiment, what if we started building all new coal fired power stations with CCS and either retrofitted with CCS or replaced all existing coal fired power stations by 2050. The global carbon story through to 2100 would change radically and look something like this – a “glass and a bit”, so still not there, but a huge improvement.

This is a pretty heroic assumption, but nevertheless points toward a solution, or at least part of it. In reality we have to do much more, but the focus need only be in five areas. They are;

More efficient use of the energy sources that are available;
Increased use of renewable and nuclear sources for the provision of energy;
Carbon dioxide capture and geological storage in tandem with the use of fossil fuel sources for the provision of energy [or with the chemical conversion of fossil derived materials for the provision of various manufactured products];
Containment, destruction and reduced usage of greenhouse gases other than carbon dioxide;
Reducing emissions through land use, land use change and forestry, including reducing emissions from deforestation and degradation.

I concluded with some discussion on the policy measures necessary to do all this, which I have discussed in many previous postings.

A bit of concrete thinking

dchone August 31, 2009

During my second year at University I worked for two months in a cement plant as part of the “practical experience” element of my chemical engineering studies. This was about 30 years ago and in those days nobody talked about CO2 – I don’t recall any mention of the CO2 footprint of cement or the overall impact of the industry on the environment (nor, for that matter, when I worked for the local electricity generator – mainly coal – a year later).

Today, CO2 emissions have a very high profile in the cement industry. The CO2 intensity of cement manufacture is one of the main issues being addressed by the Cement Sustainability Initiative (CSI) formed under the auspices of the WBCSD. Of course there are good reasons why this is necessary – the manufacture of a tonne of cement can deliver up to three quarters of a tonne of CO2 released into the atmosphere. This comes from two sources;

The chemical reaction that converts limestone into cement, which results in ~0.42 tonnes of CO2 per tonne of cement produced;
The energy required in the cement plant to drive the conversion, which varies significantly depending on efficiency and fuel types, but for a modern cement plant 0.3 tonnes of CO2 per tonne of cement is probably a fair number. Some are better but equally some are worse, although the CSI is doing much in this area.

I think that the issue with cement is not so much the impact it is having today (although with global production of some 2.7 billion tonnes total emissions are about 4%) but the impact this industry will have over the rest of this century. A simple analysis shows that the industry must also deliver on some very substantial reductions in the relatively near future.

Cement (and the concrete it is used to make) is quite literally the backbone of our civilization. It is hard to imagine the cities we have built existing without cement. But with production growing rapidly as new cities spring up across the developing world, a very substantial emissions impact is in store for us.

Current estimates show cement production reaching over 5 billion tonnes per annum by 2030. Let’s also assume that after that it continues to grow, but plateaus between 7 and 8 billion tonnes per annum in the second half of the century. That will mean a total cumulative cement production between now and the end of the century of more than half a trillion tonnes.

In a previous posting I discussed the issue of cumulative CO2 emissions as the better measure of what must be managed, rather than emissions in any given year. The researchers who presented this concept made the point that to stay under 2⁰ C we should limit total carbon emissions to 1 trillion tonnes, or 3.7 trillion tonnes of CO2 – of which we have now used half. So we have 1.8 trillion tonnes of CO2 emissions left at the very maximum (there were various confidence level reasons why they thought we should actually aim for less than this, but I will work with the upper limit).

Society has now recognised that the oil, gas and coal industries must develop technologies such as carbon dioxide capture and storage (CCS) in response to this. But the fossil fuel industry won’t be on its own. Industries like cement are going to have to respond as well, and energy efficiency is not going to get them there.

The half trillion tonnes of cement could lead to total CO2 emissions this century of some 400 billion tonnes, or about 22% of the available emissions space. Even the chemical process emissions on their own would use up some 13% of the total (assuming a zero emission alternative fuel is used – e.g. bio derived).

So it seems to me that the cement industry and probably some other industries as well are also going to have to develop CCS solutions. One of the issues faced by this industry could be cost. Whilst sequestering all the CO2 emissions associated with a barrel of oil might amount to a third or less of the cost of that barrel (assuming $60 per tonne for CCS in the long term and 0.3 tonnes of CO2 per barrel and oil at current prices), in the case of cement which costs something like $60 per tonne, the implication is an 80% price rise.

This presents the industry with quite a challenge.

Tough measures deliver in Scandinavia

dchone August 17, 2009

It may be vacation time, but I find I am not far away from the world of climate policy – in fact a trip with my son up to Norway by ship gives an excellent perspective on policy measures that are delivering real results.

We started out in Copenhagen, with the main convention centre near the airport already sporting a Vestas wind turbine out the front, presumably in readiness for COP 15 in just a few months time. This turned out to be the first of many that can be seen around Copenhagen and in the near vicinity. Although Denmark still relies on both coal and natural gas for electricity generation, it now also generates more than 6000 GWhrs per annum from 5212 wind turbines (2007), making up nearly 20 % of domestic electricity supply.

Wind, coal and gas are all used in Denmark

A spectacular array of turbines can be seen in Copenhagen harbour and the main shipping channel serving the city. Oddly, the actual number of wind turbines in Denmark is expected to decline in the near term as older small units (< 500 MW) are decommissioned and new large units are built (now up to 4+ GW).

Copenhagen harbour

This transformation in the energy mix comes through the application of a focussed policy agenda which supports wind energy through a fixed tariff approach. In the process Denmark has built a significant wind industry, employing nearly 30,000 people and delivering export earnings of €5.7 billion per annum.

On to Norway and our ship pretty much sailed along the edge of the Utsira formation, a 400 km long saline aquifer which stretches along the western coast past Bergen. A recent study has estimated that this one formation could be used to store about 40 Gt of CO2, or nearly all the global fossil CO2 emissions for nearly 18 months. Other formations with similar capacity exist in the British sector of the North Sea.

Norway has led the way in carbon dioxide capture and storage (CCS) and some 8 million tonnes of CO2 has been successfully sequestered within the Utsira formation by Statoil Hydro. The CO2 comes from the Sleipner natural gas field where it is removed from the natural gas by amine treatment. Importantly, 12 years of storage experience now exists in this location and there has been no trace of any leakage despite extensive monitoring. The CO2 sits in the formation about 1000 metres below the sea bed, protected by some 800 metres of cap rock. Today, the north-south extension of the Utsira / Sleipner carbon dioxide plume is about three kilometres long. Over time the CO2 will dissolve in the formation water and sink to the reservoir bottom.

Oil, gas (and now CO2) rigs can be seen in the Norwegian North Sea

Getting back to the policy aspect of this, this pioneering CCS project has been underpinned by a long standing CO2 price in the Norwegian offshore sector, delivered by a ~$50 per tonne CO2 tax. Similarly, the EU-ETS and other nascent trading systems are beginning to deliver a CO2 price into the broader developed country markets.

The experience in Scandinavia supports a number of points:

That big changes can be made in the energy system over a number of years, provided policy is focussed, long term and that the government stays with it.
That CCS is a viable technology that can be delivered on commercial terms provided a suitable CO2 price exists in the market.
That CCS is a safe technology, backup up by experience and monitoring for over 10 years.

Both Norway and Britain have their eyes on a large-scale CO2 storage industry. One of the Norwegian maritime schools has even proposed a design for a multi-purpose vessel which could be used for backhaul transport of CO2 to suitable storage locations. In such a service, CO2 transport costs from other Northern European ports to the North Sea could be less than €10 per tonne.

Replicating the achievements of Denmark and Norway is now a priority for many countries. But results will take time and successive governments will need to persist with and build on the foundations put down by their predecessors. On this issue at least, bipartisan politics will need to be the name of the game in the years to come.

Our ship in Geiranger Fjiord at the norther end of the Utsira formation