Carbon Dioxide Strategies

The Kyoto Protocol would have required the United States to commit to a 7 percent
reduction in carbon emissions from the 1990 level by 2010. This paper will examine
the strategies, technologies, and costs that could be tried to reduce emissions
within the power sector.

According to the Energy Information Administration (EIA), the actual emissions
from the power sector in 1990 were 507 million metric tons (mmt) of carbon,
or 1,859 mmt of CO2. The estimated 2000 emissions were 2,352.5 mmt of CO2.

Using the EIA’s projected power growth rate of 1.7 percent per year, and assuming
most new generation plants are natural gas, the estimated 2010 emissions are
712 mmt of carbon, or 2,603 mmt of CO2.

Compliance with Kyoto would require the power sector, which represents about
a third of the total U.S. carbon emissions, to limit emissions to 472 mmt of
carbon, thus yielding a reduction of 240 mmt by 2010.

It is a daunting challenge. Achieving that result would be equal to replacing
one-third of existing coal-fired plants with a zero-CO2 emission technology
such as nuclear.

We’ll look at a variety of approaches and their costs, including plant replacement
and sequestration.

New Plants

Aging coal-fired power plants could be replaced with new, cleaner plants that
emit less or no CO2, including:

• Pulverized-coal-fired plants with a supercritical steam cycle (PCSC)
• Natural-gas-fired combined cycle plants (NGCC)
• Integrated coal-gasification combined cycle plants (IGCC)
• Nuclear power plants

CO2 scrubbing can be done using post-combustion or pre-combustion technologies.
A pulverized-coal plant would require post-combustion scrubbing. Natural gas
and coal-gasification plants would require pre-combustion scrubbing.

Post-combustion of coal-fired boiler flue gas has been performed on a small
scale. In this technology, the flue gas is cooled by water spraying and then
treated in an amine scrubber, where CO2 is stripped. The CO2 collected from
the amine regenerator is compressed and liquefied for export.

Pre-combustion scrubbing can be implemented on a natural gas plant or a coal
gasification plant before the fuel is combusted in the gas turbine. In this
technology, fuel gas is converted to hydrogen and carbon dioxide through steam
reforming (natural gas only) and water shift conversion. Carbon dioxide is then
stripped out by an acid gas removal system (such as amine scrubbing), and hydrogen
is left as the fuel for gas turbine.

Slack Demand

Industrial and commercial uses of CO2 are limited compared with the amount
emitted from power plants. The total industrial use of CO2 in the United States
is less than 50 million tons per year, which is less than 1 percent of the approximately
6 billion tons emitted annually from fossil fuel combustion. The largest single
use of CO2 is for enhanced oil recovery (EOR); other uses of CO2 include carbonated
drinks, freeze drying, and food packaging, but these usage rates are minimal.

Potential industrial uses of CO2 are also small compared with man-caused emissions
of CO2. Assuming that CO2 is substituted for fossil fuel feedstock in all plastics
production in the United States (there is no suggestion that this is feasible),
less than 200 million tons of CO2 per year would be required, or about 3 percent
of the total CO2 produced in the United States.

Use of CO2 in fuel making (converting syngas to methanol, for example) has
been suggested. However, methanol or its derivative, MTBE, is not considered
suitable fuel for motor vehicles. Another potential industrial use involves
creating urea by combining ammonia with carbon dioxide. But this use, too, has
a very limited potential because the annual amount of fertilizers produced is
two orders of magnitude smaller than the amount of CO2 available annually. A
thorough review of beneficial uses of CO2 shows that its potential is very limited.

Figure 1: Economic Analysis
Notes
(1) For each technology, the plant output for cases with CO2 removal is lower
than output without CO2 removal by the amount of energy used for CO2 scrubbing.
(2) For plants without CO2 removal, the number shown is the amount of
CO2 avoided by replacing an existing subcritical plant emitting 850 kg of CO2
per megawatt. For plants with CO2 removal, the amount shown is based on 90 percent
removal on total tonnage basis, but adjusted for reduced net plant output. As
an example for the PCSC plant without CO2 removal, which emits 800 kg/mwh, the
CO2 avoided is 50 kg/mwh (850-800). However, for the same plant with 90 percent
CO2 removal, the CO2 removed is 960 kg/mwh [0.90 x 800 kg/mwh divided by 600
mw/800 mw].

Sequestration

CO2 sequestration can be accomplished either by an offset (indirect sequestration)
or by reduction in emissions from the generation facility (direct sequestration).

Indirect sequestration can be done by removing CO2 from the atmosphere by terrestrial
uptake (e.g., sequestering CO2 in soil, forests, and other vegetation) or by
ocean uptake (e.g., ocean fertilization). Direct sequestration requires separation
and capture of CO2 emissions from the generation facility, transportation, and
long-term storage in geological formations or in the ocean.

Carbon dioxide can be compressed and/or liquefied as necessary for export.
For long-distance hauling, it is desirable to liquefy the gas to make it a cold
liquid. CO2 can be transported at low pressure in insulated tank trucks at -30°C.

Artificial photosynthesis is another approach for CO2 fixation under ambient
conditions. Microalgae systems present the best biological technology for the
direct capture and utilization of CO2 emitted by power plants. These microscopic
plants would be grown in large, open ponds, wherein power plant flue gas or
pure CO2 would be introduced as small bubbles.

The estimated mitigation cost for this type of process can be as high as $100
per metric ton of CO2 recycled. A pond of about 50 to 100 square kilometers
(12,250 to 24,500 acres) would be needed for a 500 megawatt power plant. The
biomass would be harvested as a fossil fuel replacement. Considerable opportunities
exist for improving these systems.

The estimated cost of afforestation — using forests to absorb the gas
— is in the range of $3 to $10 per metric ton of CO2. This cost does not
include land or forest management.

Isolation

Direct CO2 sequestration technologies include:

• Injection into oil and gas reservoirs
• Injection into deep, unmineable coal seams
• Injection into saline aquifers
• Injection of liquid CO2 into the deep ocean

Geological formations such as oil and gas fields, coal beds, and saline aquifers
are likely to provide the first large-scale opportunity for CO2 sequestration.
During 1998, oil field operations pumped about 43 million tons of CO2 into about
70 wells for oil recovery. Many additional candidates exist for EOR. CO2 disposal
in depleted oil and gas reservoirs is possible today, but the ability to dispose
of the extremely large quantities that may be required is uncertain.

A much greater opportunity for storing large volumes of CO2 injection lies
in geologic formations. Confined saline aquifers, rock caverns, and salt domes
have the potential to sequester millions and possibly billions of tons of CO2,
but many technical, safety, liability, economic, and environmental issues remain
unresolved.

Disposal of CO2 in deep, unmineable coal beds may offer the advantage of displacing
methane from the coal beds for enhanced coal bed methane recovery. A pilot program
of CO2-assisted coal bed methane production has been in operation since 1996.
Four million cubic feet per day of pipeline-fed CO2 from a natural source is
injected daily. Full field development of the process could boost recovery of
in-place methane by 75 percent.

Sequestration in deep saline formations or in oil and gas reservoirs can be
achieved by a combination of three mechanisms: displacement of the natural fluids
by CO2, dissolution of CO2 into the fluids, and chemical reaction of CO2 with
minerals present in the formation to form stable compounds like carbonates.

Deep aquifers may be the best long-term underground storage option. Such aquifers
are generally saline and are separated hydraulically from more shallow aquifers
and surface water supplies used for drinking water. The spatial match between
storage locations and CO2 sources is better for deep aquifers than for gas and
oil reservoirs. A study has estimated that 65 percent of CO2 captured from U.S.
power plants can be injected into deep aquifers without the need for long pipelines.

The ocean holds an estimated 40,000 gigatons of carbon (compared with 750 gigatons
in the atmosphere) and is considered to be a potential sink for very large-scale
CO2 sequestration. Two basic methods are used for ocean sequestration: direct
injection of CO2 into the deep ocean; and indirect sequestration in which the
net natural CO2 uptake is increased via the use of micronutrients in areas of
the ocean where CO2 could be absorbed by an increase in plankton growth.

For ocean sequestration to be effective, the CO2 must be injected below the
thermocline, the layer of ocean between approximately 100 and 1,000 meters,
in which temperatures decrease dramatically with depth. The thermocline is a
stable stratification due to the large temperature and density gradients, thus
inhibiting vertical mixing and slowing the leakage of CO2. The water beneath
the thermocline may take centuries to mix with surface waters, and CO2 below
the boundary will be effectively trapped. CO2 could be dissolved at moderate
depths (1,000 to 2,000 meters) to form a dilute solution or could be injected
below 3,000 meters (the depth at which CO2 becomes negatively buoyant) to form
a CO2 lake.

Subsea pipelines to 1,000-meter depths are expected to cost on the order of
$1.2 million per kilometer or more. As indicated by the material presented previously,
considerable research and development would be needed to find cost-effective
ways to sequestrate CO2, or it will become a technology barrier for implementing
CO2 removal technologies.

Direct CO2 sequestration cost estimates vary from as low as $5 to higher than
$50 per metric ton because of limited industry operating experience. Cost varies
with the volume to be disposed of, distance to the sequestration point, and
sequestration technology.

CO2 sequestration in deep wells appears to be a feasible technology. The cost
of transportation and injection is estimated at $10 per metric ton. However,
if some other disposal method is used, such as fixing the CO2 in carbonate material
for disposal, the cost of sequestration is estimated at $30 per metric ton.
For this paper, a sequestration cost of $20 per metric ton has been assumed.

Economics

Table 1 shows assumed values of the major technical parameters (plant size,
heat rate, capital cost, and capacity factor) for the new plants under consideration,
both without and with CO2 removal and sequestration. The major financial assumptions
are:

• Plant economic life is 30 years
• Discount rate is 10 percent
• Equity share is 30 percent
• Debt tenor is 18 years
• Interest on debt is 8 percent
• General inflation is 2.5 percent per year
• Return on equity (after tax) is 16 percent
• First-year COE is stated in 2002 dollars
• Fuel cost is $1.19/GJ ($1.25/million Btu) for coal, $3.80/GJ ($4.0/million
Btu) for gas, and $0.47/GJ ($0.50/million Btu) for nuclear

Other plant data such as construction duration and plant operations and maintenance
cost is per industry norms. Note that many of these variables are site, fuel,
ambient conditions, customer, and dispatch specific, so the assumed number can
vary 10 to 15 percent or more.

As stated earlier, nuclear — from a CO2 emissions reduction viewpoint
— is ideal. Public acceptance, however, continues to be a barrier for nuclear.

Kyoto Protocol versus Bush Initiative

The United States has the lowest electricity rates among the developed countries,
predominantly due to inexpensive fossil-fuel-based generation. Because of the
strong link (which may be loosening if not already broken) between economic
growth and electricity demand (and hence greenhouse gas emissions), a rapid
reduction in emissions would be costly and would threaten U.S. economic growth.

Consequently, in February 2002 U.S. President George W. Bush announced a new
initiative, which would reduce the greenhouse gas (GHG) intensity — defined
as metric tons of carbon (mtc) emissions per million dollars of gross domestic
product — by 18 percent in the next 10 years.

In 2002, the GHG intensity stands at 183 million mtc. Based on the current
GDP of $10 trillion, total emissions are 1,830 mtc. Using the projected GDP
growth of 2.9 percent per year, the GDP in 2010 would be $12.55 trillion. With
the Bush initiative of 1.8 percent average reduction in GHG intensity, the target
GHG intensity in 2010 would be 157.4 mtc (prorated from 151 mtc in 2012). This
equals total emissions of 1,975 million mtc in year 2010.

Since the power sector accounts for one-third of total emissions, the power
sector CO2 reduction goal by 2010 is 48 million mtc. This goal is 20 percent
of the 240 million mtc reduction under the Kyoto protocol.

Another salient difference of the Bush initiative is that stabilization and,
ultimately, reversal of GHG emissions are anticipated to occur in 25 to 30 years
as opposed to 12 to 15 years under Kyoto.

As expected, the increase in COE is much lower under the Bush initiative than
under the Kyoto Protocol. This is because the bulk of existing coal-fired generation
(which is responsible for lower COE in the United States) is still maintained.

Conclusions

• Strictly from a capacity addition viewpoint with the assumed price for
coal as $1.19/GJ ($1.25/MMBtu) and gas as $3.8/GJ ($4/MMBtu); coal is competitive
with gas (a natural gas plant). For a coal gasification plant and nuclear to
be competitive, the gas price must increase beyond $4.4/GJ ($4.6/MMBtu).

• Removal and direct sequestration of CO2 are very expensive, especially
for a pulverized coal plant technology. Considerable R&D is needed to develop
cost-effective technologies. Until then, indirect sequestration is a more pragmatic
approach for the United States.

• If CO2 removal and sequestration become a priority, nuclear and other
CO2 neutral technologies become attractive options.

• The Bush initiative, while less burdensome for the U.S. economy, will
take about 15 years longer than the Kyoto Protocol to stabilize and eventually
reverse the GHG emissions trend.