Carbon Capture and Storage: The Indispensable Technology

Keynote Remarks
by
James Slutz
Acting Assistant Secretary for Fossil Energy
U.S. Department of Energy
to the
National Association of Regulatory Utility Commissioners'
Inaugural Workshop
on the
Implications of Climate Change Policy for State Regulators

Portland, Oregon
July 23, 2008

Thank you. It is my pleasure to be here.

I want to commend the National Association of Regulatory Utility Commissioners for holding this first workshop on the implications of climate change policy for state regulators.

I also want to commend the states whose commissions and other institutions are taking an early interest in joining the effort to develop technologies that will allow us to mitigate, moderate and, over time, reverse greenhouse gas emissions.

Your involvement is welcome and timely on all counts.

Today I'd like to touch on three relevant topics:

• First, the scale, complexity and challenge of climate change;

• Second, the progress in terms of policy to address this challenge;

• And third, the critical role of technology and U.S. leadership in this global effort.

Historically the level of global emissions required to stabilize CO2 and other greenhouse gases in this century has been an open question.  

The world has not had a clear strategy or common path for mounting the kind of global effort that will be required to stabilize carbon dioxide and the other greenhouse gases in the atmosphere in this century.

And, until now, the technical capability to reduce CO2 emissions in significant amounts was mainly conjectural, especially in the production of electric power, their largest source.

Now those things are changing.

Today I want to touch on some of those changes and their implications, both domestic and international.

In the U.S. Department of Energy's Office of Fossil Energy, which I direct, we are focused on technology development.

Like NARUC, we are concerned with the adequacy, cost and reliability of America's power supply: And, like you, we are deeply concerned about rising greenhouse gas emissions. .

One of our primary responsibilities is the research, development and demonstration of technologies in cooperation with the private sector that will enable the lower-cost capture and safe, long-term storage of CO2 in power generation. It has been a growing part of our portfolio for more than a decade.

Little noted in our domestic debates on climate policy, our Regional Carbon Sequestration Partnerships are better known elsewhere.

In fact, a panel of independent experts assembled by the International Energy Agency recently found that our partnerships constitute the world's most ambitious carbon capture and storage program. They found the partnerships will significantly advance carbon capture and storage in the U.S., in Canada, and internationally. The partnerships span most of the North American land mass

The partnerships and companion efforts to lower the cost of capture technologies stand out as major efforts in the world today.

In addition, the United States has provided active leadership in other regional and international partnerships to address climate. Of particular note are our efforts in the Asia Pacific Partnership, the Asia-Pacific Economic Cooperation organization and the Carbon Sequestration Leadership Forum, which the U.S. leads.

This range of U.S. initiatives also ties in with, and supplements, other on-going international activities that are aimed at resolving the climate question and at bringing the world into a new, comprehensive international agreement to replace the Kyoto Protocol when it expires in 2012.  

Such a new agreement will – in turn – provide a basis for shaping U.S. climate legislation. It will do the same for all nations. It will put the world on a common path.

The best place to begin may be with a brief review of our domestic situation.

If you monitored the U.S. Senate's work on climate legislation this past June you understand that the political system itself is only just beginning to come to terms with the implications of climate policy for the country.

The original Senate bill called for 60 percent reductions in CO2 by 2050. Pre-debate amendment raised the ante to 70 percent. At least one member called for 85 percent.

Part of the Senate's difficulty was that no international goal for the stabilization of atmospheric carbon dioxide has yet been set. Each proposed reduction ratio seemed to represent different levels of parts per million and varying baseline years.

Current levels are about 380 parts per million.

The Intergovernmental Panel on Climate Change has posited an array of stabilization scenarios. The most commonly discussed are stabilization levels that range from 445 ppm to 590 ppm.

These levels, respectively, call for reductions ranging from 85 percent down to less that 30 percent with emissions peaking between 2015 and 2030.

To add complexity, we are not really talking about gross reductions to present emissions in achieving stabilization. We are talking about a combination of present emissions reduced and future emissions avoided from a business-as-usual baseline fixed on some to-be-determined point in the future.

I have seen estimates that a combination of emissions eliminated and emissions avoided in the range of 27-to-30 gigatons a year from 2050 business-as-usual line might be required.

One way of avoiding a gigaton of CO2 would be to take 270 million cars that average only 20 miles per gallon off the road. However, the statistical abstract of the United States notes that there were only 230 million motor vehicles of all kinds registered in the United States in 2001.

I offered the automobile comparison only to highlight the complexity and scale of the problem.

For perspective: Today's global emissions are on the order of 30 gigatons.  

The utility of avoiding increased emissions over the long term places a premium on raising the efficiencies of all fossil fuel use, especially in electric generation. Every 1 percent increase in the efficiency of coal-based generation brings on decline in CO2 of 2.5 percent per kilowatt hour.

Global climate stabilization and CO2 are not problems of simple arithmetic as some would argue. They are problems involving complexity of scale and their solution will result from technology development.

While to date there is no international agreement on the goals for stabilization, there are three parallel and complementary processes at work. Each is aimed at achieving such agreement. They are the G8 Group of Nations; the related Major Economies Meeting, which brings in the developing nations for the first time; and the formal proceedings under the United Nations Framework Agreement on Climate Change. Each is aimed at achieving such agreement.

Involvement of the developing nations is the indispensable ingredient in any effort to curb worldwide CO2.

Projections of the Energy Information Administration indicate that the U.S., could quit using fossil energy altogether but rising demand from the developing nations still would cause global emissions to increase by 23 percent through 2030.

A recent EPA report determined that if the U.S. were to act alone in significantly curbing emissions, atmospheric concentrations still would grow by 80 percent and exceed 690 ppm by 2095.

And an estimate of the Electric Power Research Institute found that the developing nations alone would drive carbon levels past the 450 ppm level by 2070, even if all the industrialized nations quit using fossil energy.

Together the G8 nations and the key developing nations that join them in the Major Economies Meeting represent 80 percent of the world's CO2 emissions.

The objective of their combined discussions is to agree to terms leading to stabilization that can then be made part of the successor to Kyoto Protocol next year. It would govern the period after 2012.

The leaders of the G8 nations and the key developing nations held a series of related talks in Japan earlier this month. These meetings produced some real milestones, which include:

• The first commitment among the developed nations to a useful level of emissions reductions – 50 percent – with the other details to be settled subsequently;

• A commitment by the developed nations to slow and stop the growth in their emissions as soon as possible;

• The first involvement of developing nations in any discussion of curbing world emissions;

• And the first agreement by and among the developing nations to strive for significant reductions in the projected steep rise of business-as-usual emissions.

Developed and developing nations alike recognized the importance of efficiency gains in moderating emissions and both committed to seek such gains.

Recommendations prepared for the G8 summit by the International Energy Agency point out that 1.7 gigatons of CO2 a year can be avoided worldwide by upgrading the performance of mid-rank plants and ensuring that new plants perform at the state of the art.

These recommendations recognize that Integrated Gasification Combined Cycle generation -- or IGCC – and other advanced coal technologies – deployed now without CCS – can nevertheless contribute to the needed longer-term moderation of emissions as capital stock turns over.

The World Energy Council calls such gains the earliest, easiest and least expensive that can be made. They are available in the developed and developing world.

In the U.S. a few years ago the National Coal Council determined that plant upgrades and timely retrofit of some plants with clean coal technology, where appropriate, could avoid 200 million metric tons of CO2 a year and raise overall fleet efficiency by average eight percent.

Such improvements would expand generating capacity without having to build new plants and would increase electric supply without increasing fuel costs. Their use may not require a price on carbon, only an understanding of their importance.

Ruling on upgrades, retrofits and additions to capacity in the context of climate policy is clearly an issue of interest of regulatory commissioners.

The meetings of the G8 nations and the Major Economies in Japan produced one other area of agreement pertinent to our discussion – carbon capture and storage.

CCS is not new to the key developing nations.

Most of them are members of the international Carbon Sequestration Leadership Forum. The Forum brings together the developed and developing nations responsible for most of the world's anthropogenic CO2. It joins 21 nations, plus the European Commission, in a voluntary effort to establish safe, long-term carbon management on a worldwide basis. 

Formed by the U.S. five years ago, its main function is the sharing of information among the key nations in the CO2 equation. It seeks to ensure that technology and know-how are distributed widely, to minimize duplication and to leverage the gains of research, development and demonstration.

In the Major Economies Meeting the developing nations specifically recognized the importance of CCS and they agreed to accelerate efforts to build their internal capacities to engage in mitigation.

In turn, the G8 nations agreed to establish 20 large-scale CCS demonstrations within three years with the declared intent of beginning commercial deployment by 2020.

Under DOE's current R&D plans, seven such large-scale demonstrations are in preparation today and we will be undertaking three more. We are substantially supporting this commitment.

The United States, which produces 22 percent of the world's carbon dioxide, will provide leadership for 50 percent of this worldwide effort to demonstrate CCS, which is a key technology for eliminating emissions in power generation and heavy industrial activity – the largest sources.

The Regional Partnerships themselves will move to the forefront of the worldwide effort.

Let's take a look at the partnerships.

Since 1997 the Office of Fossil Energy has invested almost $500 million in its Carbon Sequestration Program, which includes the development of capture technology and the rapidly expanding activities of the Regional Partnerships.

Over the course of the Bush administration annual appropriations have grown from $19 million to $119 million. The current budget request is $149 million.

Recent increases reflect the commitment of both the Administration and Congress to the development of CCS technologies.

The Partnerships encompass 42 states and four Canadian provinces. Their membership is comprised of more than 350 unique entities – among them electric power and other energy producers, related enterprises, universities and academics, state geological surveys and public interest groups.

The IEA report on the partnerships I mentioned earlier also found the breadth of membership and the commitment of so many governmental and other entities to be a special strength.

The partnerships are now entering their Deployment Phase, or Phase Three. 

There are seven partnerships because their boundaries were delineated by pertinent geologic features. Since geology does not follow state boundaries, several states are members of more than one partnership.

The Regional Partnerships have identified 3,500 gigatons of potential geologic storage, most of it in deep saline reservoirs. They also have identified North American emissions of 3.8 gigatons of CO2 subject to capture from power plants and the other stationary sources. The ratio of emissions to storage capacity is more than 900 years.

Each partnership has conducted multiple small-scale, field-validation tests to assess promising reservoirs.

Next year they will begin eight large-scale CO2 injections into their most promising reservoirs. One partnership, the Plains CO2 Reduction Partnership, will conduct two tests – one in North Dakota and one in British Columbia. There will be seven tests involving deep saline reservoirs and one of storage linked with enhanced oil recovery.

Injection projects will range from 250,000 tons a year to one million tons per year.

In total, 16 million tons will be injected and monitored by the partnerships over the course of Phase Three. Among the sources of CO2 will be ethanol production, natural gas processing and eventually, in two cases, coal-based power generation.

Two partnerships have announced plans to use new capture technologies in their demonstrations.

Each large-scale test of the Deployment Phase is intended to lay the foundation for future commercial demonstrations by validating the region's principal reservoir and by validating that sequestration can be commercially applied across the many different geologies of the U.S. and Canada.

Of equal importance, the partnerships also are developing the formal procedures and scientific principles necessary to establish a regulatory and statutory basis that will ensure successful, safe and permanent long-term storage.

This work will do much to establish the future commercial industry of carbon management.

Regulatory officials will become involved as development progresses and commercialization takes hold.

Early involvement could make for a smoother transition to commercial deployment.  

For this reason I was pleased to learn of the activities of NARUC's Subcommittee on Clean Coal and Carbon Sequestration.

Yesterday Subcommittee Chairman David Zeigner, of the Indiana Commission, and I agreed to support development of a NARUC-DOE partnership on carbon capture and storage – to work together on the interface of policy and technology.

Meanwhile, if you have not been in touch with the Regional Partnership, or partnerships, that include your state, I invite you to make contact as soon as possible.

CCS has come to be seen as indispensable in dealing with the inseparable concerns about energy and climate.

Not long ago the director of the International Energy Agency Tanaka-san said CCS will be the most important technology in reducing CO2 emissions.

And the former chairman of Shell called it the one technology we cannot do without.

Let's take a brief look at the first C in CCS – at the capture effort.

And – as we do – let's keep in mind that any requirement to reduce carbon emissions carbon emissions on the order of 50 percent will fall not just on coal in power generation. It will affect all fossil fuels in all applications, natural gas included.

Capture is the expensive part of capture and storage. It represents about three-quarters of the cost of CCS. Present capture technologies carry high costs in parasitic energy demand and capital.

The objective of the Office of Fossil Energy's research is to lower all costs of capture. The purpose is to keep the cost of electricity affordable.

Our National Energy Technology Laboratory has work in progress on a range of capture technologies – pre-combustion, post-combustion and oxygen combustion, the exhaust stream of which is almost pure CO2.

We are developing ways to make existing means of capture more efficient and less expensive. And we are developing new capture technologies that are in themselves more efficient and less expensive.

We are developing technologies for new construction and for retrofit.

About 40 percent of our existing coal-based capacity – perhaps 145,000 megawatts – may be suitable for retrofit.

Meanwhile, other independently developed capture technologies are in early testing in the U.S., Europe and Australia.

So, where do we stand?  

We are creating step by step the art and science of carbon management – building a carbon management industry from scratch.

Marshalling the resources for such a system and bringing it into operation is not unlike building a new power plant: It takes a lot of planning and site preparation before construction can begin.

But now the foundations are in place. And a structure is rising.

Now International negotiations are underway that should provide a rational basis for national legislation.

Now we are testing and demonstrating technologies to provide CO2 reductions and energy and growth where once our primary option was simply to reduce energy use to the detriment of economic activity.

Now all nations are moving toward common ground where once we were faced with a strategy that would have required only the industrialized nations to reduce emissions – a strategy that would have had a very limited effect in even slowing global emissions.

The President provided domestic and international leadership in bringing these developments to maturity over the past seven years – did so even while being criticized by some for inaction on the climate question.

No nation or group of nations has done as much to advance the climate-technology equation as the United States.

But we still have much work to do in the next few years

This means doing the best we can with what we have now.

Nobody knows better than the nation's regulatory utility commissioners how badly the U.S. needs generating capacity. We need coal and nuclear. We need conservation and higher efficiencies and renewables and natural gas.

We will need new power from all sources, none excepted.

We know that if deployed now the advanced coal technologies such as supercritical generation, ultra-supercritical generation and IGCC – with their higher efficiencies – can deliver significant benefits in emissions avoided over the long run.

Remember that both the IEA and the World Energy Council see in higher efficiencies the earliest, easiest and least expensive gains available.

I think we passed an important milestone in this regard this week when Duke Energy held a ceremony to unofficially mark the start of construction on its new IGCC plant at Edwardsport, Indiana.  

The largest IGCC in the country at 630 megawatts, the Duke plant will replace 160 megawatts of very old coal-fired capacity. Operating at much higher efficiency and capacity factors, it will produce 45 percent less CO2 per kilowatt hour yet deliver 10 times more power. It also will cut regulated pollutants on the order of 75 percent.

We know that in the U.S. plant upgrades and retrofits can deliver more energy and approximately 200 million tons in CO2 emissions avoided – an amount equal to about 10 percent of the all emissions from our coal-based power in 2005.

Should such upgrades be encouraged? How might they be encouraged? Is this a matter of interest to NARUC?

As we move toward more comprehensive climate -change legislation, there are constructive things we can do working together.

We at DOE are excited by he prospect of working together with NARUC on our challenging and exciting energy future.

Thank you for your invitation and your attention.