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Thursday, October 9, 2014

The cruel economics of CCS

The world’s first commercial scale CCS-equipped power plant has been switched on in Canada. The Boundary Dam power plant was retrofitted with CCS equipment that will capture 90% of its CO2 emissions and either sell them for enhanced oil recovery or store them permanently underground.

There are 22 CCS projects worldwide that are either operational or under construction, according to the Global CCS Institute. Is Boundary Dam the start of something big? It had better be.  CCS is essential to preserving a habitable climate.

This Reuters story looks closer at the Boundary Dam project – and the cruel economics of carbon capture. Refurbishing and retrofitting the plant with CCS equipment cost about three times as much as a similar-sized plant without CCS. About 18% of the cost was subsidized by the Canadian government, and CO2 sales for EOR will help. But CCS systems also impose an “energy penalty:”

Separating CO2 from the other gases in the plant’s exhaust stream (mainly nitrogen and water vapor), compressing it, transporting it by pipeline and injecting it deep underground under high pressure all need a substantial amount of work and consume a significant amount of the heat and electrical output from the power plant…
The penalty must be paid by burning more fuel or reducing the net amount of electricity supplied. At Boundary Dam, the utility opted for 20 percent lower output. But:
Even a 20-30 percent energy penalty is enormous and would radically affect the operations of coal-fired power plants in North America and the rest of the world if all power plants were retrofitted with CCS systems.
Retrofitting all coal-fired plants in the United States would ncrease coal consumption by 400-600 million tonnes per year, or cut their net electrical output by 75-100 gigawatts, more than the peak demand of California, according to…Harvard and MIT researchers.
The bottom line:
CCS will only be competitive if the energy penalty is offset by carbon taxes, carbon prices, or other policy measures to level the playing field by pushing up the cost of electricity from other fossil fuel plants.
The economics of CCS are cruel, and point to the need for CCUS and for the development of carbon networks like the one first proposed in my days of state service in Pennsylvania. But the consequences of abandoning this essential climate stabilization tool will be far crueler.

Wednesday, October 8, 2014

Shifting to low-carbon electricity is feasible, will improve public health

A new study from researchers at Norwegian University of Science and Technology finds that a low-carbon electricity future is feasible and will also significantly reduce air pollution, while continuing with business as usual will increase it.

What's different about this study is that it looked at the raw material requirements of shifting to renewable and low-carbon technologies - requirements that can be significantly higher per unit of energy than for conventional power, and the processing and manufacturing of which generates its own pollution.

Integrated life-cycle assessment of electricity-supply scenarios confirms global environmental benefit of low-carbon technologies was published in Proceedings of the National Academy of Sciences

The study looked at five key technologies: concentrating solar power, photovoltaics, wind power, hydropower, and gas- and coal-fired power plants with carbon capture and storage (CCS). It assessed technology implementation and material requirements to 2050, taking the environmental impacts of production of those technologies into account.

The researchers did the study because so little is known about the environmental costs of a widespread global shift to renewable energy technologies such as wind and solar power, and what the effect of this shift might have on material requirements.
Low carbon technologies can demand much more use of raw materials per unit of power generation than conventional fossil fuel plants, the researchers noted. For example, photovoltaic systems need 11-40 times more copper than fossil fuel production, while wind power plants need 6-14 times more iron than fossil fuel production.
"Energy production-related climate change mitigation targets are achievable, given a slight increase in the demand for iron or cement, as two examples, and will reduce the current emission rates of air pollutants," [lead author Thomas] Gibon said.

Tuesday, October 7, 2014

Reduce methane emissions, create jobs

A new report commissioned by Environmental Defense Fund shows that tackling methane emissions from oil and gas production will create high-quality jobs in a growing domestic manufacturing and service sector.
The Emerging U.S. Methane Mitigation Industry identifies 76 companies nationwide - with over 500 different U.S. locations across 46 states - that manufacture, sell, and support methane control technologies.  More than half of the companies in this industry, according to the report, are small businesses.
The report says that methane control companies have 36 locations in Pennsylvania: 

There's no excuse for failing to minimize methane emissions from oil and gas production, as EDF has already demonstrated.  Creating a robust manufacturing and service sector in the process is an added bonus.

Monday, October 6, 2014

NY AG wins increased disclosure of fracking risks to investors from 2 producers

I've blogged previously about efforts being made by investors to get the oil and gas industry to report on the financial risks posed by their operations and the steps companies are taking to reduce them. Those investors aren't alone.

Last week, New York state Attorney General Eric T. Schneiderman announced agreements with two natural gas development companies - both of which operate in Pennsylvania - that, according to Schneiderman's office, "will ensure the public disclosure of information on the financial risks that hydraulic fracturing poses to their investors." 

In June 2011, the OAG subpoenaed a number of natural gas producers seeking information under New York State's securities law regarding their disclosure practices related to hydraulic fracturing. Under the agreements, Anadarko Petroleum Corp. and EOG Resources, Inc. have committed to disclose (again quoting the OAG press release):
  • financial risks posed by the environmental impacts associated with fracking -- such as effects on drinking water aquifers, as well as those arising from chemical use and handling, water use and wastewater handling and disposal, and air emissions – and detailed discussions of the companies’ efforts to minimize these environmental impacts;
  • financial risks posed by present and probable future regulation and legislation related to fracking, such as state or federal moratoriums, local bans or restrictive ordinances, or requirements for disclosure of chemicals used in fracking fluids; and
  • company strategies and actions for reducing, offsetting, limiting, or otherwise managing the financial effects of regulation, litigation, or environmental impacts related to fracking.
There is an investor need and a business case for not only disclosing these (and other) risks, but embedding them into both company decisionmaking on technology/practice selection and regulatory development.  I've discussed both frequently in this blog and around the country, including last year at Widener Law School and recently at Princeton's Woodrow Wilson School.

These are important agreements. The rest of the industry should follow suit.