abu dhabi and california projects; the commercial aspects
TRANSCRIPT
Abu Dhabi and California Projects; the Commercial Aspects of Making it Work and What is Needed fromand What is Needed from Governments
Preston Chiaroesto C a oChairman, World Coal Institute
29 May 2008
We need to deploy CCS technology
Cumulative globally sequestered CO2
Cumulative global need to sequester CO2
Princeton wedges:Princeton wedges:technology options for GHG stabilization
The Stabilisation Wedge 1 GtC Slices of the Stabilisation Wedge
Emission trajectory BAU
Emission trajectory to achieve 500ppm
How big is a wedge?Examples of Lower Carbon Slices Scale for 1GtC Reduction by 2050
Increased energy efficiency across the economy 2 billion gasoline/diesel cars achieving 60 mpggy y y g g pg
Fuel switching natural gas displacing coal for power 1400GW fuelled by natural gas instead of coal
Solar PV or Wind replaces coal for power 1000x scale up PV, 70x scale up for wind
Biofuels to replace petroleum based fuels 200x106 ha growing area (equals US agricultural land)
Carbon Capture and Geological Storage CO2 captured from 700 1GW coal plants; storage = 3,500x In Salah/Sleipner or CCS applied to 5% of new power growthp pp p g
Carbon Free Hydrogen for transport 1 billion H2 carbon free cars; H2 from fossil fuels with CO2capture and storage or from renewables or nuclear
Nuclear displaces coal for power 700 1GW plants (2x current)
Bio-sequestration in forests and soil Increased planted area and/or reduce deforestation
The energy sector emissions challenge
CO emissions by sectorThe power sector is already the largest contributor of CO2
CO2 emissions by sector
2004
41%45%
2020
44% contributor of CO2
Growth in coal-fired generation is projected to be the single largest
21%
41%38%
25%30%35%40%45%
22%
34%
the single largest contributor of new GHG emissions over the next
a s5%
10%15%20%
fifteen years
CCS is a key solution for this industry
0%Transport Power Heat Transport Power Heat
industrySource: IEA World Energy Outlook, 2004
Comparison of CO2 emissionsCO2 emissions from fossil–fuel power generationg / kWh net electricity generation
CO2 capturedCO2 released to atmosphere
800
900
1,000
855
600
700
800
876
705
855
488300
400
500
390 355
95 54
100
200
Existing coal fleet(UK example)
Modern coal(Ultra–supercritical)
Existing gas fleet(typical example)
Modern gas(CCGT, F–class)
Coal with pre-combustion CCS
(90% capture)
Gas with pre-combustion CCS
(90% capture)
Source: DTI (March 2006); Foster Wheeler; Hydrogen Energy analysis
540
cos o c c CCS sThe cost of electricity with CCS is competitive
5
4
CC
GT
= 1)
2
3
Rel
ativ
e C
ost (
C
1
R
0CCGT SCPC CCGT +
CCSIGCC + CCS Nuclear Onshore
WindOffshore
WindSolar
Thermal
We are entering a vital period if CCS is to take offCCS is to take off…
so what are we doing
What is Hydrogen Energy?What is Hydrogen Energy?
A company jointly owned by BP and Rio Tinto
established to supply low carbon hydrogen fuel to the power sector
using fossil fuels and carbon capture and storagestorage
Hydrogen Energy - what does it do?
H2
Fuel
CO2
Hydrogen Power Abu Dhabi
Hydrogen Power Abu Dhabi project
Relocating and leveraging Peterhead learnings
HP Abu Dhabi
Geography - Middle East
Fuel – natural gas
Size 500 MW power productionSize – 500 MW power production
Technology – gas reforming/combined cycle turbines
Sequestration – oil field with EOR benefit
HE focused on power and CO2 salesHE focused on power and CO2 sales
Strong political commitment
Project scopeHydrogenation & P R f iHydrogenation &Desulphurisation
Pre-Reforming
Auto-ThermalReforming
A i Ab b
Air (pre-heated in HRSG)
HPHPSS
SteamShift Reactors
Hydrogen
NG Feed Compressio Regen
Amine Absorber
CO2NG Pre-treatment
Process
Cond
Natural GasSulphur Removal
n
Fuel (H2 + Nitrogen)
Syngas ProductionCO2
Removal
HRSG DESALINATION PLANTAir HRSG
Fuel (H2 + Nitrogen)
BFW
Water for in-house plant use
Steam Turbine
Generator
Combustor~ GTCompr.
Gas Turbine
~ST
Turbine Generator
Vacuum condensatePower Production
Hydrogen Energy California project
• Adjacent to Occidental Elk Hills Field and CO2 injection point and EOR revenuerevenue
• Area provides proximity to feedstocks and intrastate transmission
BAKERSFIELDELK HILLS
and intrastate transmission
• Low population density
• Utilize local area petcoke supply and/orrailed coal for feedstock
Hydrogen Energy California Hydrogen Energy California project
Size – 400MW power production
Geography – US West Coast
Fuel – Pet coke/bituminous coalHE California
Technology – coal gasification
CO2 Capture – 4 million tonnes/yrtonnes/yr
Sequestration – oil field with EOR benefit
HE interest is focused on H2 sales
Strong political environmentStrong political environment
Project scopeProject scopePower Block
Air
AIR SEPARATIONAIR
HYDROGENTURBINE
GENERATOR
HEAT RECOVERYSTEAM GENERATOR
SCR/CO CATALYST
STEAM TURBINE
GENERATOR
ELECTRICPOWER
N2STEAM
Separation
260 MW net380 MW Gross
75 MW
O2
Petcoke &
Coal
CARBON DIOXIDE
Gasifier KitH2
GASIFIERWATER
DIOXIDE CAPTURESULFUR
REMOVAL
SHIFT REACTORS AND GAS
COOLING
H2CO2H2S
H2CO CO2H2OH2S CO2
TRANSPORTCO2
SEQUESTRATION
CO2COMPRESSION
FLUXANT
CO2
25 MW
SULFURCONVERSION
LIQUID SULFUR
H2S S
GasifierSolids
CA political environment is rightCA political environment is rightPolitical support California environmental policies
• California Energy Action Plan I and II• AB 32: Global Warming Solutions Act• SB 1368: GHG Emissions Performance Standard • California Loading Order• California Policies Supportive of Carbon Capture and Storage• AB 1925: Carbon Capture and Sequestration Legislation
Power demand350 Limited options in California
200
250
300
GW
H Utilities need 5500 MW of additional
100
150
200
1980 1985 1990 1995 2000 2005 2010 2015
capacity (16% of load) by 2014
Without CCS
Hydrogen Energy project evolution
Sink
Mat re Mat re
Lower risk
Higher risk
Lower Cost
Higher Cost
1st
Mature hydrocarbons with
proven demandfor CO2 for EOR
Mature hydrocarbons with potential
for EORDepleted
hydrocarbonsSaline
formations
1stAbu
DhabiGas
Liquid fuels
Lower risk
2ndCaliforniaFuel Pet coke
Bituminous3rd
Kwinana
(Cancelled)
Sub–bituminous
LigniteHigher
risk Ligniterisk
However power projects with CCS need support to develop
Support already provided to renewables
Comparable costs for electricity
Over time, experience gained from building and operating the first plants of thi t d t h lW
h
with
out
ure
and
gen
ener
gy
CC
S, n
ucle
ar
this type, and technology advances will help to bring the cost of hydrogen energy and CCS (and
$/M
W
foss
il fu
els
wca
rbon
cap
tust
orag
e hydr
ogan
d C
rene
wab
les
renewables) down
Sources: BP Estimates, Navigant Consulting, Deloitte and Touche LLP
Eventually carbon price will support CCS
$/tCO
Industrial scale demonstration projects Wide-scale deploymentCO2
Time Carbon price supports CCS
Others’ views on costs
International Energy Agency
Others’ views on costs
International Energy Agency
US$16 trillion will be needed to meet global energy demand next 30 years
US$1 5 trillion of that for coal fired power US$1.5 trillion of that for coal-fired power generation
Princeton University (Sokolow) / Columbia University (Sachs Lackner)(Sachs, Lackner)
Carbon emission charges of about US$100/tC (i.e. about US$30/tCO2) would enable commercialisation of CCS and all other commercialisation of CCS and all other necessary technologies
Shell / RWE 2
Early projects likely to require a level of support equivalent to $100 – 150 / tonne CO
In the near term —In the near term —A range of support mechanisms are availableare availableType of mechanism Examples
Mandated requirements for new plant to be low
• EU suggestion that all new plant be low carbon from 2020 (EU ETS would cover emissions from existing as for new plant to be low
carbon2020 (EU ETS would cover emissions from existing as well as new plant)
• Portfolio standards in US
Carbon pricing • Tradable allowances• Taxes• Hybrids of taxes and tradable allowances • Potentially supported by other financial instruments
Industrial policy support • Capital Grants• Tax breaks• Government or public utility equity• Government or public utility equity
Support for new technologies, especially renewables
• Reserved market (may be implemented with tradable certificates)
• Premium price set by regulator (e.g. feed-in tariffs) • Premium price set by auction, tender or negotiation
Sources: Deloitte and Touche LLP
The support mechanisms can be The support mechanisms can be funded in different ways
Customers
• electricity prices are higher due to the carbon price• additional costs from quantity obligations (e.g. Renewable Portfolio Standards or
Green Certificate Schemes)• the cost of premium priced contracts (e.g. feed in tariffs) passed through
Tax payers• general or earmarked taxation may fund support as grants, premium price
payments or tax breaks (capital or per MWh support)
• separate tax or levy on the retail price or wires business charges
Tax payers
l t d b f ll ti f ll b i t d b f
• government or publicly owned utilities may provide cheap capital (debt or equity)
Shareholders• surplus created by free allocation of allowances can be appropriated by means of
auctions, windfall taxes or price floor arrangements and channelled to clean generation
Sources: Deloitte and Touche LLP
Pointers to widespread policy Pointers to widespread policy support
US joins international
climate change
ff tstan
ces
only
elop
ed w
orld
‘Son of Kyoto’
replacement C t t hiefforts
tiona
l circ
ums
cros
s th
e de
ve
ptreaty 2012-
2015Catastrophi
c events resulting
from global warmingEU-wide or
US f d l
wor
k in
exc
ept
are
feas
ible
ac
Successful Individual government
US federal policy
support
Proj
ects
w
Proj
ects
aearly projects up and running
governments support individual projects
Summary
Contribution to tackling climate change from CCS can be considerable
Early industrial scale commercial projects ready to be developedto be developed
Government and policy incentives needed to enable construction and operation of these early plants
Long term instruments such as a higher carbon price should eventually be sufficient to support widespread deployment of CCS