Clean Coal proving expensive

High gas prices have meant that coal has been enjoying a revival in recent years. In America 150 new coal-fired power stations are on the drawing board. In China, two new 500 megawatt coal-fired power plants are starting up every week, and each year the country’s coal-fired power generating capacity increases by the equivalent of the entire British grid. So anything that offers the prospect of cleaning it up is attracting a great deal of interest.

Standard pulverised-coal generation can be made a bit cleaner by burning the fuel at higher temperatures. "Ultrasupercritical" generation can cut CO2 emissions by a fifth. But if demand goes on increasing, that is not enough. Hence the interest in CCS.

CCS is being done in three places: at Sleipner; at In Salah in Algeria, where the CO2 removed from gas produced by a joint venture of BP, Statoil and Sonatrach, Algeria’s state-owned energy company, is stored in the desert; and at the Weyburn oilfield in Saskatchewan, Canada, where the CO2 produced by a coal gasification plant in North Dakota is piped across the border and used to increase the pressure in a partly depleted oil field. This process, known as enhanced oil recovery, is in use in 70 oilfields around the world but at Weyburn, unusually, some of the CO2 remains underground.

Most of the operations involved in CCS are familiar. First, the CO2 must be separated from other gases. At Sleipner, for instance, the CO2 content of the gas that emerges from the oil field is 9 per cent. That has to be reduced to 2 per cent, which is done by passing the gas through amines (nitrogen-based chemicals). Second, the CO2 is moved along in pipelines. That is commonly done in enhanced oil recovery, as is the third stage – injecting it into the ground.

The fourth stage is the least familiar. When CO2 is being used for enhanced oil recovery, it returns to the surface (except at Weyburn). For sequestration, however, the CO2 must be stored underground, probably in depleted oil and gas fields or in porous briny rock. Statoil has been doing this for a decade at Sleipner and there is no sign of the stuff bubbling up again. Scientists say that within decades or centuries it will dissolve, and within centuries or millennia it will react with elements in the rock and form new minerals. But this part of the process needs more study.

The challenge is to put all those technologies together and deploy them at a reasonable cost, and on a scale that can make some impact on emissions.

That will take some doing. If 60 per cent of the 1.5 billion tonnes of CO2 that America produces every year from coal-fired power stations were liquefied for storage, it would take up the same amount of space as all the oil the country consumes in a year.

Coal-fired power stations are the likeliest candidates for CCS because they are dirty and numerous. But there is a difficulty with pulverised coal plants: they spew out a huge volume of flue gas, of which CO2# is only a small part. Separating it from other gases is expensive. The main alternative is to turn coal into gas before using it to generate electricity. The resulting CO2 and hydrogen are then separated, the hydrogen used to generate electricity and the CO2 stored. A few such integrated gasification combined-cycle (IGCC) plants have been built.

Now that power utilities are beginning to accept that they will have to do something about carbon, the big question is what. GE has bought Chevron’s IGCC technology. The cost of generating electricity from it, according to GE’s Steve Bolze, is 20-25 per cent more than a pulverised coal plant but Bolze believes that, once the cost of separating carbon is taken into account as well, IGCC may be cheaper.

Philippe Joubert, president of power systems at Alstom, which in March announced a joint venture with American Electric Power, America’s biggest coal-fired generator, rejects the idea that IGCC is cheaper, even with CCS.

"This is clearly not true. We should know. We are in IGCC as well as pulverised coal. It’s clearly 10 per cent more expensive. All serious academics realise that it is more expensive."

A study by MIT published in March tends to side with Bolze. Generating electricity from an IGCC plant with carbon capture, it maintains, is 35 per cent more expensive than pulverised coal without CCS; but pulverised coal with CCS is 60 per cent more expensive than pulverised coal without.

Plans for IGCC plants are proliferating. In America, at least, that says more about subsidies than about faith in the technology’s future. President George Bush announced a $US2 billion ($2.4 billion) clean-coal initiative in 2002 and the 2005 Energy Policy Act, notorious for its "pork" content, included $US1.6 billion worth of subsidies for coal gasification.

According to the International Energy Agency, some 15 power plants with CCS are being planned and another seven CCS projects are on the drawing board. Most make economic sense either because of direct subsidy or because of their particular economic circumstances. Statoil and Shell are planning to sequester CO2 from a Statoil power plant on the Norwegian mainland under Shell’s Draugen platform.

The investment is justified by Norway’s carbon tax, about €50 per tonne.

BP is planning a petroleum-coke-fuelled power plant in California, where electricity is particularly expensive and the petroleum coke for the power plant comes as a by-product of oil refining; the project is a joint venture with Edison International, an electricity company.

One big company that is making a sizeable punt on CCS is Vattenfall, which is building a 30 megawatt plant in Germany.

"I’m totally convinced," says Lars Josefsson, Vattenfall’s chief executive, "that the issue of carbon sequestration will change the way we do business in the long term. I believe the companies that realise that soonest will be the winners."

If CCS is to take off, the rules on CO2 storage need sorting out. The 1996 London protocol on dumping waste at sea was amended earlier this year to allow CCS at sea. But rules on land need attending to, for promoters of CCS worry that it will become as contentious as nuclear waste.

And, as always, there is the problem of cost. At present, academics reckon that it would take a carbon price of about $US30 to make sequestration economical – below the peak that Europe’s emissions trading scheme hit briefly in 2006, and way above the $US10 safety valve in the only carbon bill in Washington, DC, to mention a figure. But the cost may come down, because that is generally what happens as technologies are commercialised.

Despite the tricky economics, the sheer abundance of coal is an argument for pursuing CCS. And if it can be made to work, it has a certain poetic circularity: the carbon extracted from the earth as fossil fuel shall return unto the earth whence it came.

Copyright, The Economist Newspaper Ltd, London, May 31, 2007.

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