Economic Evaluation of Leading Technology Options. for Sequestration of Carbon Dioxide. Jérémy David. Master of Science in Technology and Policy - PDF

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Economic Evaluation of Leading Technology Options for Sequestration of Carbon Dioxide by Jérémy David Diplôme d Ingénieur, Ecole Nationale Supérieure d Ingénieurs du Génie Chimique, 1999 Master of Science

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Economic Evaluation of Leading Technology Options for Sequestration of Carbon Dioxide by Jérémy David Diplôme d Ingénieur, Ecole Nationale Supérieure d Ingénieurs du Génie Chimique, 1999 Master of Science in Chemical Engineering Practice, MIT, 1999 Submitted to the Engineering Systems Division in Partial Fulfillment of the Requirements for the Degree of Master of Science in Technology and Policy at the MASSACHUSETTS INSTITUTE OF TECHNOLOGY May Massachusetts Institute of Technology All rights reserved. 1 Abstract The greatest contribution to greenhouse gas emissions is the burning of fossil fuels, which releases nearly six billion tons of carbon per year into the atmosphere. These fuels will continue to be used well into the 21st century, although there is a urgent need to manage a sustainable economic development. Since power plants are the largest point sources of CO 2 emissions, capturing the carbon dioxide at power plants and sequestering it has been suggested. This approach would be complementary to the current strategies that aim at reducing greenhouse gas emissions by improving the energy efficiency and by increasing the use of non-fossil energy resources. However, a major barrier to CO 2 capture and sequestration is its cost. This thesis presents the results of a detailed analysis of costs associated with today s technology for CO 2 separation and capture at three types of power plants: Integrated Gasification Combined Cycles (IGCC), coal-fired simple cycles (Pulverized Coal, PC), and natural gas-fired combined cycles (Natural Gas Combined Cycles, NGCC). The analysis is based on studies from the literature that are reviewed and adjusted to a common economic basis. A composite cost model is then developed, and a sensitivity analysis performed to identify the cost-drivers of the capture. Finally, the economics at the three types of power plants are predicted for a 10-year horizon, and the competitiveness of CO 2 separation technologies under a specific policy scenario are discussed. 2 Table of Contents 1 INTRODUCTION APPROACHES TO REDUCING CARBON DIOXIDE EMISSIONS IMPROVING ENERGY EFFICIENCY Electric Power Generation Sector End-Use Sectors LOWERING CARBON INTENSITY Low-Carbon Fuels Power Generation Nuclear Energy Renewable Energy SEQUESTERING CARBON CARBON DIOXIDE SINKS CARBON CYCLE ENHANCING NATURAL SINKS Terrestrial Sequestration Ocean Sequestration STORING CARBON Geological Storage Ocean Storage UTILIZING CARBON CARBON DIOXIDE CAPTURE APPROPRIATE CARBON DIOXIDE SOURCES FOR CAPTURE CAPTURE TECHNOLOGIES Physical and Chemical Absorption Adsorption Low-Temperature Distillation Membrane Systems ASSESSMENT OF CAPTURE TECHNOLOGIES: SCOPE AND METHOD APPROACHES TO CARBON SEPARATION TECHNOLOGIES ECONOMIC ANALYSIS FRAMEWORK Unadjusted Economic Analyses Adjustments to a Common Economic Basis INDIVIDUAL ECONOMIC ANALYSES INTEGRATED GASIFICATION COMBINED CYCLES (IGCC) PULVERIZED COAL POWER CYCLES (PC) NATURAL GAS COMBINED CYCLES (NGCC) COMPOSITE COST MODEL OF CO 2 CAPTURE COST MODEL STRUCTURE INPUTS DETERMINATION COSTS OBTAINED CURRENT ECONOMICS: CONCLUSIONS ELECTRICITY COST MITIGATION COST IDENTIFICATION OF COST-DRIVERS AND FUTURE ECONOMICS IDENTIFICATION OF COST-DRIVERS FUTURE ECONOMICS 9 CLIMATE CHANGE POLICY AND CARBON SEQUESTRATION THE CHALLENGES OF GLOBAL CLIMATE CHANGE POLICY FORMULATION ALTERNATIVES CO 2 SEQUESTRATION AND COSTS OF EMISSIONS UNDER A CONSTRAINT ON CO 2 EMISSIONS Problem Definition Methodology Developed Results Obtained Discussion CONCLUSIONS REFERENCES APPENDICES APPENDIX A: MECHANICS OF THE ADJUSTMENT APPENDIX B: ADJUSTED CURC STUDIES APPENDIX C: HEAT RATES AND CAPITAL COSTS APPENDIX D: CAPTURE EFFICIENCIES REPORTED IN THE LITERATURE APPENDIX E: COST MODEL, CALCULATIONS APPENDIX F: COST MODEL, INPUTS List of Tables TABLE 1.1: POWER PLANTS EFFICIENCIES (MOBIL, 1999) TABLE 2.1: COMPARISON OF GEOLOGICAL STORAGE OPTIONS (HERZOG ET AL., 1997) TABLE 2.2: COMPARISON OF OCEAN STORAGE OPTIONS (HERZOG ET AL., 1997) TABLE 4.1: APPROACHES TO CO 2 SEPARATION TABLE 4.2: COMMON ECONOMIC BASIS FOR THE STUDIES TABLE 5.1: PERFORMANCE OF IGCC CAPTURE PLANTS, STUDIES NOT ADJUSTED TABLE 5.2: PERFORMANCE OF IGCC CAPTURE PLANTS, STUDIES ADJUSTED TABLE 5.3: PERFORMANCE OF PC CAPTURE PLANTS, STUDIES NOT ADJUSTED TABLE 5.4: PERFORMANCE OF PC CAPTURE PLANTS, STUDIES ADJUSTED TABLE 5.5: PERFORMANCE OF NGCC CAPTURE PLANTS, STUDIES NOT ADJUSTED TABLE 5.6: PERFORMANCE OF NGCC CAPTURE PLANTS, STUDIES ADJUSTED TABLE 6.1: CO 2 EMISSIONS AND HEAT RATES, NUMERICAL EVIDENCE OF CORRELATION TABLE 6.2: SYMMETRY OF THE COST MODEL INPUTS TABLE 6.3: COST MODEL, INPUTS TABLE 6.4: PERFORMANCE OF CAPTURE PLANTS, FROM COST MODEL TABLE 8.1: PERFORMANCE OF CAPTURE PLANTS, IN 2000 AND 2012, FROM COST MODEL List of Figures FIGURE 1.1: US ANTHROPOGENIC CO 2 SOURCES, 1998 (IEA, 1999) FIGURE 1.2: US ENERGY CONSUMPTION BY SOURCES, 1998 (EIA, NOVEMBER 1999) FIGURE 1.3: US NET POWER GENERATION BY SOURCES, 1998 (EIA, NOVEMBER 1999) FIGURE 2.1: GLOBAL CARBON CYCLE, EARLY 1990S (DOE, 1999) FIGURE 3.1: PROCESS FLOW DIAGRAM OF A TYPICAL CHEMICAL ABSORPTION SYSTEM FIGURE 4.1: DIFFERENCE BETWEEN CO 2 AVOIDED AND CO 2 CAPTURED [1] FIGURE 4.2: DIFFERENCE BETWEEN CO 2 AVOIDED AND CO 2 CAPTURED [2] FIGURE 6.1: CO 2 EMISSIONS AND HEAT RATES, GRAPHIC EVIDENCE OF CORRELATION FIGURE 7.1: ELECTRICITY COST VS. CARBON DIOXIDE EMISSIONS FIGURE 7.2: ELECTRICITY COST AT REFERENCE AND CAPTURE PLANTS FIGURE 7.3: DIFFERENT MITIGATION COSTS FIGURE 7.4: MITIGATION COSTS USING DIFFERENT REFERENCE PLANTS FIGURE 8.1: ABSOLUTE COST OF ELECTRICITY SENSITIVITY TO THE COST MODEL INPUTS FIGURE 8.2: INCREMENTAL COST OF ELECTRICITY SENSITIVITY TO THE COST MODEL INPUTS FIGURE 8.3: MITIGATION COST SENSITIVITY TO THE COST MODEL INPUTS FIGURE 8.4: ELECTRICITY COST AT REFERENCE AND CAPTURE PLANTS IN Acknowledgments I would like to express my gratitude to Neda Vukmirovic, who analyzed some of the individual economic studies presented in this thesis, and Howard Herzog, who provided guidance and support. I would also like to thanks my friends and colleagues of the Technology and Policy Program, who contributed to make my graduate school experience so rewarding. 6 1 Introduction In 1998, human activities in the United States resulted in carbon dioxide emissions totaling about 5,480 million metric tons 1 (EIA, 1999). Nearly all of these anthropogenic emissions (98%) resulted from energy production and use, primarily the combustion of fossil fuels. Hence, significant reductions in carbon dioxide emissions can be accomplished only through changes in the energy economy. This chapter will present how energy can be more efficiently produced, distributed and used. It will begin by discussing the three approaches to reducing carbon dioxide emissions and will then elaborate on each of them. Carbon sequestration will be introduced as part of the portfolio of technology options to reduce carbon dioxide emissions. 1.1 Approaches to Reducing Carbon Dioxide Emissions The Kaya equation, popularized by Professor Yoichi Kaya from the University of Tokyo, provides a good context to discuss approaches to reducing carbon dioxide emissions. This equation expresses carbon dioxide emissions as follows: GDP E CO Net ( CO ) 2 2 = P S P GDP E (1.1) 1. In the policy debates, the quantity of carbon emitted is a common metric; however, to compare different mitigation options, it is more common to use the quantity of carbon dioxide emitted, which is 3.67 times the quantity of carbon emitted. 7 where: Net(CO 2 ) P GDP/P = net carbon dioxide emissions = population = per capita Gross Domestic Product (aggregate measure of the standard of living) E/GDP = energy consumption per unit of GDP (aggregate measure of the energy intensity of the economy) CO 2 /E = amount of CO 2 emitted per unit of energy consumed (aggregate measure of the carbon intensity) S = induced sequestration of carbon dioxide Continued growth implies that the population, P, and the standard of living, GDP/P, continue to rise. Therefore, one or more of the remaining three terms in the Kaya equation must change for the economy to grow while carbon emissions decrease. These remaining terms are: The energy intensity of the economy; The carbon intensity; The amount of carbon removed through induced sequestration. These three terms embody distinct technology routes to reducing greenhouse gases (GHG) emissions. By increasing the efficiency of primary energy conversion and end use, fewer units of primary fossil energy are required to provide the same energy service. By substituting lower-carbon or carbon-free energy sources to the current energy sources, the carbon intensity of the energy economy can be reduced. Finally, carbon sequestration can be developed to reduce CO 2 emissions while at the same time enabling the continued use of 8 fossil fuels. It represents a third, complementary approach to efficiency improvements and evolution toward low-carbon fuels. 1.2 Improving Energy Efficiency Improvements in the efficiency of using energy can take place at any stage of the fuel cycle from production to end-use. Improvements in energy efficiency can produce direct environmental benefits in a number of ways, not only reducing GHG emissions but also delaying the need to develop new fuel resources. Recent Evolution of Energy Efficiency Following the energy price spikes in the 1970s and early 1980s, energy intensity went through a 2.8% annual decline in the US from the mid-1970s until the mid-1980s. In the next decade, energy intensity decreased only by 0.6% annually, as energy prices dropped and then remained stable Electric Power Generation Sector Table 1.1 shows the efficiencies of different types of power plants. Today, simple cycle plants account for most of the global electricity generation. However, more efficient technologies are needed to have a major impact on emissions. Amongst them are highefficiency fossil fuel-based technologies that increase power generation cycle efficiency by combining two or more advanced energy conversion cycles. As capital stock is retired as it 9 breaks down or begins to operate inefficiently, these advanced energy conversion cycles will become the technology of choice. Technology Simple Cycle Plant, Fueled by Advanced Natural Gas-Fired Coal Combined Cycle Efficiency 33% 58% Table 1.1: Power Plants Efficiencies (Mobil, 1999) End-Use Sectors As shown in Figure 1.1, fossil fuels are used in all energy sectors. Commercial: 16% Transportation: 33% Residential: 19% Industrial: 32% Figure 1.1: US Anthropogenic CO Sources, 1998 (IEA, 1999) Electric utility emissions are distributed across sectors. In 1998, the 3 major end-use sectors (transportation, industry, and residential and commercial buildings) emitted approximately equivalent levels of carbon in the US. 10 However, the sources of this carbon vary widely. For instance, 80% of the carbon emissions attributable to the energy used in buildings comes from electricity, whereas 99% of the energy used for transportation comes directly from consumption of petroleum products. Each sector has its own unique set of CO 2 reduction opportunities. The energy consumed per vehicle-mile traveled, the energy required per unit of industrial output, and the energy used per square foot of home or office space can all be reduced. Technology that increases energy efficiency is the key to reducing the amount of energy consumed per unit of economic output, or energy intensity of our economy. 1.3 Lowering Carbon Intensity Fossil energy dominates the world s energy supplies and is likely to do so for the foreseeable future. As shown in Figure 1.2, fossil energy provided 87% of the US energy in Other: 1% Nuclear: 8% Hydro: 4% Coal: 23% Oil: 40% Natural Gas: 24% Figure 1.2: US Energy Consumption by Sources, 1998 (EIA, November 1999) 11 In 1998, coal supplied 51% of electricity, while natural gas made only a small contribution to US electricity needs (15%). This is shown in Figure 1.3. Recent Evolution of Carbon Intensity Throughout the 1980s, carbon intensity remained largely unchanged. In the late 1980s, two trends affected the carbon output of electricity generators and thereby the carbon intensity of the entire economy: independent power producers began to take an increasing share of the electricity market (their generation mix is mainly gas-fired, a low-carbon intensive fuel) and electric utilities began to rely less on petroleum while increasing the operating capability of their nuclear power facilities. Between 1991 and 1995, the carbon intensity fell. However, after 1995, the trend was reversed as petroleum and coal generation began to grow again. Biomass: 2% Hydro: 9% Solar, Wind, Geothermal: 1% Nuclear: 19% Coal: 51% Oil: 3% Natural Gas: 15% Figure 1.3: US Net Power Generation by Sources, 1998 (EIA, November 1999) 12 Clean energy technologies can decrease the amount of carbon produced per unit of energy, i.e. the carbon intensity. To lower the carbon intensity of the energy economy, changes in fuel mix are needed Low-Carbon Fuels Power Generation Because of the desire to reduce CO 2 emissions per unit of energy produced, fossil fuels containing a low carbon to hydrogen ratio need to be developed. Therefore, any major clean fossil fuel-based energy plan must center on enhanced production of natural gas. It is predicted that the contribution of natural gas to US electricity needs will rise to 20% by 2015 (DOE, 1997). Moreover, advanced technologies that rely on the commercialization of other low-carbon fuels (synthesis gas, hydrogen) for fuel cells and gas turbines must be supported Nuclear Energy Electricity generation using nuclear power results in very small emissions of GHG, so nuclear power is an important tool in reducing CO 2 emissions. Today, in the US, nuclear power plants generate nearly 20% of the US electrical capacity. This nuclear generating capacity has avoided so far the emissions of about 500 million metric tons of carbon dioxide per year compared with generating this electrical capacity by burning fossil fuels (DOE, 1997). However, public acceptance of nuclear power is poor in the United States, and it is forecasted that the US nuclear power generation capacity will be diminishing in the future Renewable Energy The energy from sunlight, wind, rivers and oceans, the hot interior of the earth (geothermal energy), and biomass (agricultural and industrial wastes, municipal solid waste, and energy 13 crops) can be used to produce electricity, fuels, and heat. All regions of the United States have these renewable resources. They currently account for about 12% of the electricity produced in the United States (see Figure 1.3) and have avoided so far the emissions of about 300 million metric tons of carbon dioxide per year compared with generating this electrical capacity by burning fossil fuels (DOE, 1997). However, the renewable installed capacity is mostly from hydropower and traditional biomass sources (agricultural and industrial wastes); solar, wind, and geothermal technologies are cost-effective today only in small and niche markets. Renewable technologies are well along a path of decreasing cost, making their expanded commercialization prospects realistic for early in the next century. Consequently, renewable energy pathways hold significant potential for reducing GHG emissions in the next century by displacing fossil fuel-generated electricity or petroleum transportation fuels. 1.4 Sequestering Carbon Carbon sequestration is another technological route to reducing carbon emissions. It can be defined as the capture and secure storage of carbon that would otherwise be emitted to or remain in the atmosphere. One approach is to remove carbon from the atmosphere. Carbon dioxide can be captured and sequestered by enhancing the ability of terrestrial or ocean ecosystems to absorb it naturally and store it in a stable form. A second approach is to keep carbon emissions produced by human activities from reaching the atmosphere by capturing them at the source and diverting them to secure storage. For example, CO 2 could be separated from power plant flue gases, from effluents of industrial processes (e.g. oil refineries and iron, steel, and cement production plants), or during production of 14 decarbonized fuels (such as hydrogen produced from natural gas or coal). The captured CO 2 could be concentrated into a liquid or gas stream that could be transported and injected into the deep ocean or underground geological formations such as oil and gas reservoirs, coal seams, and deep aquifers. Other processes that are biological or chemical may convert captured CO 2 directly into stable products. The Intergovernmental Panel on Climate Change has forecasted that, under business as usual conditions, global emissions of carbon dioxide could more than triple over the coming century, from 7.4 billion tons of carbon per year in 1997 to approximately 26 billion tons per year by The panel also warned that concentrations of carbon dioxide in the earth s atmosphere could double by the middle of the 21st century and continue to build up even faster in later years, potentially creating a variety of serious environmental consequences. It is clear that the eventual path to stabilization of atmospheric CO 2 concentrations would require the use of a portfolio of GHG reduction technologies that aim at improving energy efficiency, lowering carbon intensity and sequestering carbon. Carbon sequestration technology is the only option that can provide long-term greenhouse gases mitigation and still allow for continued use of the abundant fossil energy resources and large existing fossil infrastructure. Hence, it is an option that must be explored fully. Chapter two will focus on pathways to store CO 2 in stable and environmentally benign manners. Chapter three will address the availability of separation and capture technologies at point sources of CO 2. The following two chapters will then present the separation approaches analyzed, and the economic analyses performed. Chapter six will propose a composite cost model, and chapter seven will analyze the results obtained. The cost-drivers of CO 2 separation will be identified and the economics of the capture in 2012 predicted in 15 chapter eight. Finally, chapter nine will identify the most cost-efficient strategies to reduce CO 2 emissions while maintaining the same overall generation capacity. 16 2 Carbon Dioxide Sinks This chapter discusses the reduction of net carbon emissions by increasing the absorption of CO 2 from the atmosphere and the necessary storage options for CO 2 captured directly at emissions sources. Technological options, ranging from chemical or biological stimulation of the absorption of CO 2 from the atmosphere, to storage of CO 2 in geologic formations or in the ocean are presented. Capturing CO 2 at point sources involve technologies that will be explored in chapter three. 2.1 Carbon Cycle Understanding the fluxes and reservoirs of carbon is tied to the successful implementation of carbon sequestration options. Human activities during the first half of the 1990s have contributed to annual emissions of approximately 7.4 billion tons of carbon (GtC) into the atmosphere. Most of these emissions were from fossil fuel combustion, around 6 GtC, and the rest from changing land-use patterns. The net result of these CO 2 emissions is shown in Figure 2.1. During the first part of the 1990s, there was an annual net emissions increment to the atmosphere of 3.5 GtC. Storage of carbon in terrestrial systems due to photosynthesis and plant growth was 1.7 GtC per year. Oceans took up another 2.2 GtC per year. Carbon fluxes between the atmosphere and ocean/terrestrial reservoirs are quite large, while net carbon exchange is over an order of magnitude smaller. For example, terrestrial ecosystems photosynthetically fixed 61.7 GtC per year, offset by 60 GtC per year due
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