Karen Frantz
GHG Monitor
2/28/2014
Tri-State Generation and Transmission Association Chief Technology Officer Jim Spiers said this week that he would be happy if the cost of capturing carbon would reach $20 a metric ton when considering what price capturing carbon needs to be for the large-scale rollout of carbon capture and storage technology, but suggested that he is not expecting that price anytime soon. Spiers made the remarks during a panel on the state of CCS technology held at the ARPA-E Summit in Washington. “I’d be delighted at $20,” he said. “As a practical matter, it’s just that traditional scale of the cost curve of technology, and we’re going to nibble around that. I’d be delighted if it hit $40 on the second generation.” But he also said that even if CCS technology advances enough to capture carbon at $40 a ton—a goal the Department of Energy’s Office of Fossil Energy is striving to meet by 2020—that would still be a 35 percent increase in the cost of his product. “We have to beat that,” he said.
The DOE Office of Fossil Energy has set the goal of $40 a metric ton by 2020 to mesh with what it believes to be the market for enhanced oil opportunities, according to Michael Matuszewski, Carbon Capture Technology Manager at the Department’s National Energy Technology Laboratory. He said that beyond the 2020 goal, NETL is hoping to make deeper reductions that will enable transformational technologies beyond the second generation so that the industry does not have to rely on revenue from CO2, but instead low-carbon power generation would be economical and able to stand on its own. But he also added later that “it’s difficult to predict” what the markets will look like a decade or more down the road. “We have reason to believe within now and 2020, if we focus in and we hone in on carbon capture metric—cost of carbon capture metric at $40 per ton of CO2 capture—it might help near-term deployment in the markets that we’re seeing today,” he said. “In 2030, if you think about it, we might exhaust EOR opportunity at that price point. And do we know enough about the markets in 2030 now to predict if we’re after the cost of capture metric or if we might have to go back and address Jim’s point that even at $40 per ton, his main product is still 35 percent more expensive than it used to be? Will that compete in 2030? And if it won’t, we might need to transition from a cost of capture to more of a cost of electricity goal, so that if a power plant isn’t to rely anymore on CO2 revenue, how does it stand on its own?”
Policy Uncertainty Still a Barrier
Aside from the high cost of capturing carbon, other barriers exist to the large-scale deployment of CCS, the panelists said. Pam Tomski, Senior Advisor of Policy and Regulatory at the Global Carbon Capture and Storage Institute, said policy uncertainty is one of those barriers. She added that although some may think that a new draft rule from the Environmental Protection Agency that would essentially mandate CCS for new-build coal-fired power plants might create certainty and pave the way for the technology to advance, she does not see that as being the case. “With low natural gas prices and looking at a coal plant with CCS—just the capture unit itself north of a billion dollars, well more than a billion dollars—it just can’t compete,” she said. “So effectively, we won’t see any new coal built in the United States, and this could stall some of the transition into the next-generation demonstration. So it really does call for policy action; regulations alone clearly aren’t going to do it. We need a carbon evaluation framework that includes regulatory certainty, policy incentives, as well as technology advancements largely through these next-generation demonstrations. And with that we can hopefully start to develop the business case for CCS with or without enhanced oil recovery.”
And Spiers said that the liability of sequestering carbon is also a huge issue that needs to be resolved. “The problem we face as producers is, who’s going to bear the liability issue long term?” he said. “That liability issue, until that’s solved, you’re going to have producers like us that are really worried about it. And the problem is, even though we’ll have partners that would get it to the point of sequestration, at the end of the day if there is a liability issue, where are the economics going to go? They’re going to come back upstream. We’re going to be the last person standing that’s going to have to bear the liability unless we find a liability solution, whether it’s the federal government or otherwise. So that’s one critical issue for us.”
EOR and Carbon Utilization for CCS Advancement
Tomski said the single largest constraint to EOR expansion in the United States is the lack of CO2, and that 80 percent of the EOR operations in the country utilize CO2 from natural reservoirs. “So really the anthropogenic CO2 captured from these units are really critically important,” she said. “And as we see the oil prices remain high, that’s a good signal for an opportunity for companies to be able to purchase the CO2. But the cost of the purchased CO2 from capture units is still higher than much of the market can bear.” She added that there is “tremendous” opportunity for additional CO2-EOR, but that some issues of infrastructure and pipeline constraints also remain.
Spiers said that although EOR is “great” for driving down the cost of CCS, he believes that it is just a bridge—although he added that more needs to be done to capture CO2 from post-combustion rather than capturing CO2 in the front-end in gasification. He also said that more should be done to advance the utilization of carbon, and that Tri-State has promoted an inducement prize, known as an X-Prize, that would encourage competitors to come together at a test center where they can focus on moving utilization forward. “What is beyond EOR?” he said. “And how do you crack that nut? That’s a difficult problem. … But frankly, if coal is going to stay in the game—and I think ultimately … natural gas is going to have to face the carbon penalty—and if you have that, what do you do with CO2? Can we find other means of utilization beyond EOR? So we’re after an inducement price to really promote that and are actively fundraising and getting pretty close to getting there.”