 |
What are the costs and benefits of carbon capture and sequestration? |
 |
| |
 |
| |
CLICK TO SEE LARGER IMAGE
|
The obvious benefit is that carbon capture and sequestration could prove to be one of the most cost-effective of the comprehensive solutions to reducing greenhouse gas (GHG) emissions while allowing continued use of the abundant fossil energy resources that dominate the global energy mix today. Ideally, we don’t want to limit our future GHG-reducing technology options to those that are either prohibitively expensive or require massive overhauls to the energy infrastructure and other infrastructures. It will require a wide range of options to effectively reduce GHG emissions, including carbon capture and sequestration. It is important to assess the costs and benefits of carbon capture and sequestration by comparing it with those other options. |
|
|
| |
The main benefit of carbon capture and sequestration is that it allows the continued use of the low-cost, abundant fossil energy sources that are also the main sources of GHGs. These fossil energy sources account for about 86 to 88 percent of U.S. and world energy consumption today, and those numbers are not expected to change much over the next 2 decades. In its 2007 Annual Energy Outlook, DOE’s Energy Information Administration (EIA) forecasts increases in all fossil energy use, including a growing market share for coal in electricity generation at the expense of natural gas—a less carbon-intensive fuel. Today, coal provides about half of our Nation’s electricity, and EIA projects that share will rise to 60 percent by 2030. |
|
|
| |
Another benefit of carbon capture and sequestration is the potential for combining geological sequestration with enhanced resource recovery. Injecting CO2 into aging oilfields can boost recovery of crude oil by reducing the oil’s viscosity and “sweeping” it toward a producing well.
CO2-enhanced oil recovery (EOR) now accounts for more than 4 percent of the Nation’s oil production. Similarly, injecting CO2 into an unmineable coal seam can help enhance recovery of coalbed methane (CBM). Unconventional natural gas resources such as CBM now account for more than 34 percent of domestic gas production, a number expected to jump to 50 percent by 2030. |
|
|
| |
An analysis by Advanced Resources International (ARI) shows that by 2020, EOR and enhanced CBM recovery could reduce CO2 emissions by 200 million tons per year (the equivalent of CO2 emissions from 100 coal-fired power plants), add 260 million barrels per year of incremental domestic oil production, increase domestic natural gas production by 1.1 trillion cubic feet per year, and reduce the U.S. trade deficit by $8.3 billion per year. ARI estimates the cumulative benefits to the Nation from carbon capture and sequestration associated with enhanced resource recovery would total $170 billion by 2020 and $4 trillion by 2050. |
|
|
| |
Market incentives for CO2 emissions reduction, such as a carbon tax, emissions offsets, and emissions credits will help bolster the demand for geologic sequestration from industrial operations. Those same market incentives will help offset the costs of carbon capture and sequestration, but those costs nevertheless will remain high with current technology. |
|
|
| |
Geologic sequestration can add significant value to a resource producer’s bottom line beyond enhanced recovery of resources. For example, Norway’s Statoil avoids a $100,000 per day carbon tax by injecting unwanted CO2 separated from a North Sea natural gas production stream into a massive sandstone formation overlying the producing zone but underlying a thick shale layer that acts as a seal. Statoil has similar plans for other CO2 geologic sequestration projects related to the capture of industrial CO2 in its operations and has voiced an interest in pursuing CO2 geologic sequestration as a commercial venture. |
|
|
| |
Estimating the costs of carbon capture and sequestration—in terms both of capital cost and the long-term cost of electricity—is a complex process. NETL undertook a comprehensive study that developed a baseline for the cost and performance of fossil energy plants. It included a detailed breakdown of the likely cost of carbon capture and sequestration for the predominant types of fossil fuel-fired power plants. Retrofitting CO2 capture to today’s power plants using existing technology is expensive. For pulverized coal plants, the cost of CO2 capture, transport, and storage in an underground formation using today’s technologies could add 70-100 percent to the cost of electricity. |
|
|
| |
A new technology for coal-fired power plants, integrated gasification combined cycle (IGCC), has a much lower cost for CO2 capture and storage because of the process’s inherent characteristics (the CO2 is captured more easily as part of the gas stream from gasifying coal). Equipping an IGCC plant for capture and storage would add at least 30 percent to the cost of electricity using today’s technologies. |
|
|
|
NETL’s Sequestration Program is focused on sharply reducing those costs. |
|
|
|
Why should resources be invested in carbon capture and sequestration research? |
|
Over the past several years, an increasing number of scientists have concluded that modern levels of energy and materials consumption are having a destabilizing influence on the world's atmosphere. In the face of the increasing use of low cost fossil fuels, all sectors of the global economy have engaged in carbon management. The alternative to active carbon management is damage from a perpetual increase in greenhouse gas emissions. If these increases continue, annual greenhouse gas emissions are projected to more than double by 2050. |
|
|
|
How much does it cost to capture and remove CO2 from a coal or natural gas-fired power plant? |
|
It depends. Most of today’s power plants burn the fuel in air and exhaust a flue gas that is low-pressure and contains CO2 in dilute concentrations (3–12 percent by volume). Retrofitting CO2 capture to these facilities using existing technology is expensive. A new technology for coal-fired power plants, integrated gasification combined-cycle (IGCC), has a much lower cost for CO2 capture — in comparison to pulverized coal (PC) plants — because of the IGCC process’s inherent characteristics. |
|
|
| |
Providing a cost-effective carbon capture and removal solution that enables the U.S. to continue using its abundant fossil fuel resources without a significant increase in delivered energy costs is a key goal of NETL’s Carbon Sequestration Program. |
|
|
| |
A recent NETL study developed a cost and performance baseline for today’s fossil energy power plants. Such a baseline can be used to benchmark the progress of the Fossil Energy RD&D portfolio. This study establishes the baseline cost and performance for IGCC, PC, and natural gas combined-cycle (NGCC) power plants, all with and without CO2 capture and storage, and assuming that the plants use technology available today. |
|
|
| |
Twelve state-of-the-art power plant configurations were analyzed: six IGCC cases utilizing General Electric Energy, ConocoPhillips, and Shell gasifiers each with and without CO2 capture; four PC cases, two subcritical and two supercritical, each with and without CO2 capture; and two NGCC plants, each with and without CO2 capture. |
|
|
| |
This analysis considered not only the plants’ capital costs but also their levelized cost of electricity (LCOE). |
|
|
| |
The NETL study showed that, among the non-capture cases, NGCC has the lowest capital cost at $554/kW, followed by PC with an average cost of $1,562/kW and IGCC with an average cost of $1,841/kW. The average IGCC cost is 18 percent greater than the average PC cost. Among the capture cases, NGCC has the lowest capital cost, despite the fact that the capital cost of the NGCC capture case is more than double the cost of the non-capture case at $1,172/kW. Among the capture cases, the PC cases have the highest capital cost at an average of $2,883/kW. The average capital cost for IGCC CO2 capture cases is $2,496/kW, which is 13 percent less than the average of the PC cases. |
|
|
| |
The 20-year LCOE was calculated for each case, figuring in capital charge, coal levelization, natural gas levelization, and all other levelization factors. The LCOE results are shown in the attached chart with the capital cost, fixed operating cost, variable operating cost, and fuel cost shown separately. (In the capture cases, the CO2 transport, storage, and monitoring costs [TS&M] are shown separately.) |
|
|
| |
In non-capture cases, PC plants have the lowest LCOE (average 63.7 mills/kWh), followed by NGCC (68.4 mills/kWh) and IGCC (average 77.9 mills/kWh). In capture cases, NGCC plants have the lowest LCOE (97.4 mills/kWh), followed by IGCC (average 106.3 mills/kWh), and PC (average 116.8 mills/kWh). Non-capture supercritical PC has an LCOE of 63.3 mills/kWh, compared to subcritical PC at 64.0 mills/kWh, an insignificant difference. PC is the most expensive technology with CO2 capture, 10 percent higher than IGCC and nearly 20 percent higher than NGCC. |
|
|
| |
The capital cost component of LCOE is 53–62 percent in all IGCC and PC
cases. It represents only 18 percent of LCOE in the NGCC non-capture case and 28
percent in the CO2 capture case. |
|
|
| |
The fuel component of LCOE is 21–25 percent for the IGCC cases and the PC CO2 capture cases. For the PC non-capture cases, the fuel component is 30–32 percent. The fuel component is 78 percent of the total in the NGCC non-capture case and 63 percent in the CO2 capture case. As an example, at a coal cost of $1.80/MMBtu, the LCOE of PC equals NGCC at a natural gas price of $6.15/MMBtu. The LCOE of IGCC at a coal price of $1.35/MMBtu is greater than PC at a coal price of $2.25/MMBtu, due to the higher capital cost of IGCC and its relative insensitivity to fuel price. |
|
|
| |
Even at the lowest likely coal cost, the LCOE of NGCC is less than IGCC and PC at the baseline natural gas price of $6.75/MMBtu. For the coal-based technologies at the baseline coal cost of $1.80/MMBtu to be equal to NGCC, the cost of natural gas would have to be $7.73/MMBtu (IGCC) or $8.87/MMBtu (PC). Alternatively, for the LCOE of coal-based technologies to be equal to NGCC at the high-end coal cost of $2.25/MMBtu, natural gas prices would have to be $8.35/MMBtu for IGCC and $9.65/MMBtu for PC. |
|
|
| |
Technologies with high capital cost (PC and IGCC with CO2 capture) show a greater increase in LCOE with decreased capacity. Conversely, NGCC with no CO2 capture is relatively flat because its LCOE is dominated by fuel charges that decline as the capacity factor decreases. The NETL study concluded that:
- At a capacity factor below 72 percent, NGCC has the lowest LCOE in the non-capture cases.
- The LCOE of NGCC with CO2 capture is the lowest of the capture technologies in the baseline study, and the advantage increases as the capacity factor decreases.
- The relatively low capital cost component of NGCC accounts for the increased cost differential with a decreased capacity factor.
- In non-capture cases, NGCC at 40 percent capacity factor has the same LCOE as the average of the three IGCC cases at 72 percent capacity factor, further illustrating the relatively small impact of capacity factor on NGCC LCOE.
|
|
|
| |
However, when the disposition of the captured CO2 is factored in, the picture changes dramatically. The LCOE with CO2 removal includes the costs of capture and compression as well as TS&M costs. The cost of CO2 capture in this sense was calculated in two ways, the removal cost and the CO2 avoided cost. The study concluded that:
- The total cost of CO2 avoided is $39/ton (average IGCC), $68/ton (average PC), and $83/ton (NGCC).
- CO2 removal costs plus avoided costs for IGCC plants are less than NGCC plants because the baseline CO2 emissions for NGCC plants are 46 percent less than they are for IGCC plants. Consequently, the normalized removal cost for NGCC plants is divided by a smaller amount of CO2.
- CO2 removal and CO2 avoided costs for IGCC plants are substantially less than they are for PC and NGCC because the IGCC CO2 removal is accomplished prior to combustion and at elevated pressure using physical absorption.
|
|
|
| |
Ongoing Carbon Capture research is working to reduce costs and meet the goal of developing, by 2012, fossil fuel conversion systems that offer 90 percent CO2 capture with 99 percent storage permanence at less than a 10 increase in the cost of energy services. |
|
|
|
What is NETL doing to reduce the cost of carbon capture and sequestration? |
|
NETL is undertaking a wide range of RD&D in its Sequestration Program to develop new technologies to lower the cost of carbon capture and sequestration to affordable levels. The carbon sequestration RD&D goals at NETL work towards the Program goal of developing by 2012 fossil fuel conversion systems that offer 90 percent CO2 capture with 99 percent storage permanence at less than a 10 percent increase in the cost of energy services.
It is believed that a 10 percent cost of electricity increase would significantly reduce the impact to the economy for the implementation of these technologies (over current costs). This level will also enable fossil fuel systems with CO2 capture and sequestration to compete with other power generation options to reduce the GHG intensity of energy supply, including wind, biomass, and nuclear power. For the electricity supply sector, the 10 percent COE increase target is based on plant gate cost from a newly constructed power plant with capital recovery. Additional baseline information can be found here.
Details related to the current status of technologies being developed to meet these goals can be found under the FAQs:
|
About NETL
E&P Technologies
