AAPG ANNUAL CONFERENCE AND EXHIBITION
Making the Next Giant Leap in Geosciences
April 10-13, 2011, Houston, Texas, USA
Economic and Regulatory Considerations for Clean Coal
(1) Center for Energy Economics, Bureau of Economic Geology, Houston, TX.
Any scenario on emissions reduction invariably includes CO2 capture and storage (CCS) in coal-fired plants. There are about 50 CCS projects globally that can store 200,000 tons of CO2 per day; however, only a dozen are operational, storing about 20,000 tons. About 100 projects are in various stages of planning. One recent study estimated potential emission reductions from CCS at 23 GtCO2 by 2030, roughly half of emissions worldwide in 2004. But, CCS projects are expensive. Estimates for early projects are $100-$300 per ton of CO2 avoided (existing projects reportedly cost $400 per ton). The most expensive is capture equipment. A recent NETL report estimated capture costs for retrofitted coal plants at $17-145 per ton. Operational costs are also large. The “energy penalty” could reduce efficiency of power plants by as much as 40%. Pipeline transportation and storage costs are typically much less than the capture costs but dependent on distances and topography between sources and sinks, and geology of the sinks. Overall, operational costs of CCS projects could be as much as $15 per ton. Offshore CCS projects cost 30-50% more than comparable onshore projects. These high costs can be mitigated by some revenue streams. First, pure CO2 and byproducts of the capture process could be marketed. Second, CO2 can be used in enhanced oil recovery (EOR) projects. The U.S. oil industry has injected over 600 million tons of CO2, and currently produces about 250,000 barrels of oil per day via EOR. In general, CO2-EOR projects onshore are considered to break even at $60-80/barrel for $100-200 per ton of CO2. A recent study by BEG researchers mostly confirmed these figures for the Texas Gulf Coast. Offshore projects require 20-30% higher prices. Third, avoidance of carbon taxes or the sale of emission permits, if such regulation exists, will add value. Still, CCS projects will likely require public funds to be viable. In the proposed budget of the U.S. for 2011 about $500 million is dedicated to advanced coal climate change technologies, including CCS. If CCS is part of a mandate, a major unknown is cost of measurement, monitoring and verification. Also, public opposition can hamper CCS projects. Uncertainty over subsurface ownership rights and liability in case of escaping emissions influence this opposition. Our treatment of the myriad issues and analysis is set within the context of CO2 “road-mapping” and potential value chain considerations for full cycle development.