By Janet Gellici
Chief Executive Officer, National Coal Council
Consensus is growing among industry, the environmental community, and international governments that future carbon dioxide (CO2) emission reduction goals cannot be met by renewable energy alone and that carbon capture, utilization, and storage (CCUS) technologies for all fossil fuels must be deployed to achieve climate objectives in the U.S. and globally. Fossil fuels—including coal, natural gas, and oil—will remain the dominant global energy source well into the future by virtue of their abundance, supply security, and affordability.
Achieving global climate objectives will require a portfolio of approaches that balance economic realities, energy security, and environmental aspirations. The most influential action the U.S. can employ to reduce CO2 emissions is to incentivize the rapid deployment of CCUS technologies. CO2 utilization can, in theory, help to reduce CCUS costs and incentivize deployment, but most CO2 use technologies face numerous and significant challenges in moving toward commercialization.
Geological CO2 utilization options have the greatest potential to advance CCUS by creating market demand for anthropogenic CO2. The use of CO2 for enhanced oil recovery (CO2-EOR), including production and storage activities in residual oil zones (ROZ), remains the CO2 use technology with the greatest potential to incentivize CCUS.
Non-geological CO2 utilization options are unlikely to significantly incentivize CCUS in the near to intermediate term because of technical, greenhouse gas (GHG) life-cycle analysis (LCA) considerations, and challenges associated with scalability. Despite these barriers, further investments in non-geologic CO2 utilization technologies may, on a case-by-case basis, hold promise for turning an uneconomic CCUS project into an economic one. A broadly deployed mix of CO2 utilization technologies may help advance CCUS deployment incrementally, providing sufficient incentive to keep CCUS technologies moving forward.
NATIONAL COAL COUNCIL MISSION
The National Coal Council (NCC) is a federally chartered advisory group to the U.S. Secretary of Energy, providing advice and recommendations on general policy matters relating to coal and the coal industry. In August 2016, the NCC completed a white paper for Energy Secretary Ernest Moniz that assessed opportunities to advance commercial markets for carbon dioxide (CO2) from coal-based power generation. This article highlights key findings and recommendations from the report, “CO2 Building Blocks: Assessing CO2 Utilization Options”.1
DRIVING THE NEED FOR CCUS
CCUS technologies provide the most impactful opportunity to capture, use, and store a significant volume of CO2 from stationary point sources. These technologies can be used to reduce CO2 emissions from electric generation as well as from key industrial sectors, such as cement production, iron and steel making, oil refining, and chemicals manufacturing. Additionally, CCUS technologies significantly reduce the costs of decarbonization.2 Not including CCUS as a key mitigation technology is projected to increase the overall costs of meeting CO2 emissions goals by 70% to 138%.3,4 Finally, the commercial deployment of CCUS preserves the economic value of fossil fuel reserves (coal and natural gas) and associated infrastructure.
Commercial markets for CO2 from fossil fuel-based power generation and CO2-emitting industrial facilities have the potential to provide a business incentive for CCUS. The extent of that economic opportunity will depend on many factors, including but not limited to expediting the development of and reducing the cost associated with CO2 capture technologies. And while commercial markets may provide significant opportunities for CO2 utilization, the global scale of CO2 emissions suggests a continued need to pursue geologic storage options with significant CO2 storage potential and initiatives such as those being undertaken by U.S. Department of Energy (DOE) through its Regional Carbon Sequestration Partnerships Program and related programs.
Fossil fuels generally, and coal specifically, are dependent upon CCUS technologies to comply with U.S. GHG emissions reduction policies. A number of U.S. regulatory policies have been adopted to reduce GHG, with geologic storage options (specifically including CO2-EOR) as preferred mitigation technologies. Included among existing and pending U.S. regulations that encourage compliance via the use of CCUS technologies are the Clean Air Act’s Prevention of Significant Deterioration (PSD) and Title V Operating Permit programs; the Environmental Protection Agency’s (EPA) Standards of Performance for GHG Emissions from New, Modified and Reconstructed Electric Utility Generating Units (111b); and the Clean Power Plan (CPP). These U.S. policies are reinforced by the 2015 Paris Agreement, which largely envisions the decarbonization of major energy systems through the use of CCUS and other technologies by the 2050 timeframe.
U.S. law currently favors geologic storage/utilization technologies; non-geologic CO2 uses must demonstrate that they are as effective as geologic storage. Additionally, the emissions reduction targets and deadlines associated with U.S. and international climate goals point toward the use of CO2 utilization technologies that are either already commercialized or near commercialization.
CO2-EOR represents the most immediate, most mature, and highest value opportunity to utilize the greatest volumes of anthropogenic CO2 to meet U.S. and global climate objectives (see Table 1).
GEOLOGIC CO2 UTILIZATION MARKET POTENTIAL
A 2011 report from the Global CCS Institute5 estimated current global demand for CO2 at about 80 million tons per year (MTPY) and suggested potential future demand could grow by an order of magnitude, reaching nearly 300 MTPY for each of a handful of technologies—most notably CO2-EOR—and more modest growth for an additional group of technologies. The potential global demand for CO2 for EOR was confirmed in 2015 in an International Energy Agency (IEA) study indicating that, by 2050, conventional CO2-EOR could lead to storage of 60,000 MTPY of CO2 and, through the application of advanced technologies, so-called EOR+ could increase to 240,000–360,000 MTPY of CO2.6
In the U.S., CO2-EOR offers major potential for utilizing and storing CO2 in a diversity of geological settings.
- CO2 floods in the main pay zone (MPZ) of discovered oil fields (onshore lower-48 states, Alaska, and offshore Gulf of Mexico) offer a technical potential for utilizing and storing 38,320–52,240 MMmt of CO2.
- Although the economically viable potential from the MPZ (at an oil price of $85 per barrel and with CO2 costs linked to oil prices) is more limited, the CO2 utilization and storage volumes are still significant at 10,740–23,580 MMmt plus 28–81 billion barrels of economically viable oil recovery.
- CO2 floods in the residual oil z (ROZ) resources assessed to date could provide an additional 25,300 MMmt of technically viable CO2 utilization and storage, and significant volumes of associated oil recovery.
Other geologic utilization markets—including tight oil/shale gas formations, enhanced coal bed methane (ECBM), and enhanced water recovery (EWR)—also hold current and future promise as incentives for CCUS deployment. Key knowledge gaps and technical barriers remain in the pursuit of commercial deployment of these technologies. Progress has been and is being made with these emerging technologies but additional research is required to advance to the next stages of technological maturity.
NON-GEOLOGIC CO2 UTILIZATION MARKET POTENTIAL
Outside of CO2-EOR and other geologic CO2 use markets, research is underway on two general paths for non-geologic CO2 utilization: breaking down the CO2 molecule by cleaving C=O bond(s) and incorporating the entire CO2 molecule into other chemical structures. The latter path holds relatively more promise as it requires less energy and tends to “fix” the CO2 in a manner akin to geologic storage. Utilizing CO2 in non-geologic applications faces hurdles, including yet-to-be resolved issues associated with thermodynamics and kinetics involved in the successful reduction of CO2 to carbon products and inadequate support for demonstration projects leading to commercialization. Still, these technologies are worthy of continuing evaluation, and many hold long-term potential in specific applications.
Non-geologic utilization opportunities that tend to “fix” CO2 include (1) inorganic carbonates and bicarbonates; (2) plastics and polymers; (3) organic and specialty chemicals; and (4) agricultural fertilizers. Various technical and economic challenges face these commercially immature technologies, suggesting they are unlikely to incentivize CCUS deployment in the immediate future. They may, however, have an advantage over other non-geologic markets, such as fuels, which require cleaving of the CO2 bond through chemical and biological processes.
Transportation fuels do represent a significant market opportunity. They are, however, unlikely to incentivize CCUS in the immediate future for a variety of technical and economic reasons, including: (1) transportation fuels are ultimately combusted and thus release CO2 to the atmosphere and (2) current U.S. policy favors geologic-based utilization pathways for Clean Air Act (CAA) compliance. Although the case could be made that some CO2-derived transportation fuels have lower GHG emissions than fossil-based fuels on a GHG LCA basis, non-fossil-based transportation fuels still face significant market competition and displacement hurdles.
CO2 UTILIZATION CHALLENGES
Market forces alone are unlikely to incentivize CCUS as CO2 utilization faces numerous hurdles.
- Cost of capture. The current major user of CO2, the EOR industry, typically cannot offer a “price” for CO2 that overcomes the cost of capture for a coal-based utility. This conclusion applies even in the face of existing economic incentives, such as the current Section 45Q CCUS tax incentive.
- Insufficient scope of the market/supply considerations. Only CO2-EOR holds promise for incentivizing CCUS at any reasonable scale for compliance purposes for coal-based utilities.
- Nearly all non-geologic CO2 utilization technologies are not yet commercialized. Even if some of the nascent utilization technologies being explored worldwide hold potential for use at scale, they face a decades-long slog along the technology development path and typical technology deployment “valley of death” investment hurdles. These time frames suggest that, on their current trajectory, many utilization technologies will not be commercially available in time to influence CCUS deployment in the context of 2050 climate goals.
- Geographic/infrastructure considerations. Unless the utilization technology is deployed beside every coal-based facility, the captured CO2 must be transported to industrial facilities making use of CO2. This issue remains a challenge even for EOR, let alone nascent technologies that are not yet commercial.
- Legal & regulatory considerations. Under current law, CO2-EOR owners and operators must (1) conduct their injections under Class II of the Underground Injection Control (UIC) Program and (2) opt into Subpart RR of the Greenhouse Gas Reporting Program, which includes a federally approved monitoring, reporting, and verification (MRV) requirement, if they wish to demonstrate regulatory compliance under the CPP or the section 111(b) rule for long-term storage of CO2. Companies conducting non-EOR geologic storage must (1) conduct their injections under Class VI of the Underground Injection Control (UIC) Program and (2) report under Subpart RR. Each of these compliance pathways is potentially problematic.
- CO2-EOR storage. Some in the U.S. CO2-EOR industry take the position that the MRV requirement is inconsistent with oil and gas law. They have noted, for example, that an EOR operator may not be authorized to conduct storage operations under existing mineral leases. On the other hand, EPA recently approved the first MRV plan for a CO2-EOR operation. There is not uniform agreement within the U.S. CO2-EOR industry on these and related issues. The International Organization for Standardization (ISO), through the efforts of Working Group 6 under Technical Committee 265, is separately endeavoring to address these and related issues as part of the ongoing efforts to prepare the world’s first technical standard governing CO2 storage in association with EOR operations.
- Non-EOR storage. The current Class VI permit process creates a disincentive and an unnecessary hurdle. For example, the Archer Daniels Midland (ADM) Decatur CO2 storage project, which was part of the Regional Carbon Sequestration Partnerships Development Phase III program and partly funded by DOE, submitted its application for Class VI well permits in July and September of 2011, but the permits were not granted until April 2014.7 Similarly, North Dakota has envisaged and made progress toward a CO2 storage program. After a lengthy process with EPA to shape its submission, the state finally made an application for Class VI primacy regulatory authority in June 2013, which has not been granted by the EPA more than three years later, in essence delaying vital work on CCUS that is necessary to advance the technology.8
Thermodynamics & Kinetics of CO2
The CO2 molecule is particularly stable and has a Gibbs energy of formation of -394.4 kJ/mol, which must be overcome.
Thus, breaking the C=O bond(s) and forming C-H or C-C bond(s), or producing elemental carbon, is possible. However, such molecules are at a much higher energy state, meaning that a tremendous amount of energy must be used. Converting CO2 to fuels or other high energy state molecules requires more energy input than could ever be derived from the end products.
CO2 can also be incorporated into various chemicals as a C1 building block. This is not thermodynamically challenged because the entirety of the CO2 molecule is used and thus the C=O bonds are not broken. For this application, the principal challenge is the scale of available reactants and market for products, both of which are dwarfed by global CO2 emissions.
PRIORITIZING CO2 UTILIZATION INVESTMENTS
In its “CO2 Building Blocks” report for Energy Secretary Moniz, the National Coal Council recommended that research investments in CO2 utilization technologies should be prioritized first according to the ability of the CO2 utilization technology to:
- Make use of CO2 at scale.
- Make use of CO2 at scale in the 2020–2030 time frame.
- Be commercially demonstrated prior to 2020 or as soon as possible thereafter.
- Be deployed onsite at fossil fuel-based power plants and CO2-emitting industrial facilities.
- Have realistic market potential, taking into account displacement considerations.
- Be as effective as geologic technologies.
- Provide non-trivial economic returns.
- Favorably score under existing and forthcoming GHG LCA.
The Council further noted that monetary, regulatory, and policy investments in the following CO2 utilization and storage technologies, in descending order, are most likely to incentivize the deployment of CCUS technologies:
- Current CO2-EOR technology. It is imperative that the government clarify the existing regulatory structure, provide support for infrastructure, such as pipeline networks, and offer financial incentives for carbon capture deployment so that the promise of this existing commercial technology is fully realized.
- “Next generation” CO2-EOR technologies. Advances to existing CO2-EOR technologies would enable ROZ resources to be efficiently recovered.
- Other geologic storage technologies that provide economic return. ECBM and CO2 injections into ROZs provide market demand for CO2 under certain general oil and gas market conditions. They also fit within the current U.S. legal framework that gives preference to geologic storage over non-geologic uses of CO2. Not all geologic formations (ECBM, for example) have access to protocols and/or methodologies to document storage.
- Saline storage. Saline storage remains EPA’s gold standard for CO2 storage and may be required to provide a backstop for CO2 utilization projects. The hurdles facing saline storage are primarily economic and regulatory, which current DOE policy recognizes, i.e., the new CarbonSAFE program. The fact remains, however, that the federal government needs to put more resources into these projects and reduce the regulatory impediments currently facing them.
- Non-geologic storage technologies that provide economic return and that are effective as geologic storage. The current U.S. legal framework prefers geologic storage over other CO2 uses. However, non-geologic technologies that keep the CO2 out of the atmosphere may be credited for the purposes of federal programs with appropriate evidence of atmospheric benefit.
- Non-geologic storage technologies that provide economic return yet are not as effective as geologic storage if appropriate EPA research waivers may be obtained. On a case-by-case basis, a CO2 utilization technology may exist or emerge that provides an economic return to a fossil fuel-based power plant or a CO2-emitting industrial facility. The technology nonetheless could be helpful in lowering the cost of capture. Appropriate legal recognition would be needed, however, for purposes of compliance with emission reduction obligations.
Achieving stabilization of GHG concentrations in the atmosphere requires the deployment of CCUS technologies worldwide. Consensus grows among industry, the environmental community, and international governments that future CO2 emission reduction goals cannot be met by renewables alone and that advancing CCUS is not just about coal.
CO2 utilization technologies can serve as building blocks in advancing a foundation on which to achieve global climate goals. A broadly deployed mix of CO2 utilization technologies, including geologic and non-geologic, may help to advance CCUS incrementally and may, even if they do not offer full-scale carbon management solutions, provide sufficient incentive to keep CCUS technologies moving forward. CO2-EOR offers the most immediate, most commercially mature, and highest value opportunity to utilize the greatest volumes of anthropogenic CO2. Monetary, regulatory, and policy investments that prioritize geologic CO2 use technologies first while continuing to support non-geologic applications on a longer-term basis provide the greatest promise of achieving global climate goals.
- National Coal Council. (2016, August). CO2 building blocks: Assessing CO2 utilization options, www.nationalcoalcouncil.org/studies/2016/NCC-CO2-Building-Block-FINAL-Report.pdf
- Intergovernmental Panel on Climate Change (IPCC) Working Group III. (2014). Climate change 2014: Mitigation of climate change 60. Fig. TS-13, report.mitigation2014.org/report/ipcc_wg3_ar5_full.pdf
- National Coal Council. (2015, January). Fossil forward: Bringing scale and speed to CCS deployment, www.nationalcoalcouncil.org/studies/2015/Fossil-Forward-Revitalizing-CCS-NCC-Approved-Study.pdf
- International Energy Agency. (2015). World energy outlook 2015 New Policies Scenario, www.iea.org/publications/freepublications/publication/WEO2015SpecialReportonEnergyandClimateChange.pdf
- Global CCS Institute & Parsons Brinckerhoff. (2011, March). Accelerating the uptake of CCS: Industrial use of captured carbon dioxide, hub.globalccsinstitute.com/sites/default/files/publications/14026/accelerating-uptake-ccs-industrial-use-captured-carbon-dioxide.pdf
- International Energy Agency. (2015). Storing CO2 through enhanced oil recovery: Combining EOR with CO2 storage (EOR+) for profit, www.iea.org/publications/insights/insightpublications/Storing_CO2_through_Enhanced_Oil_Recovery.pdf
- Massachusetts Institute of Technology. (2016). Illinois Industrial Carbon Capture and Storage (IL-CCS) fact sheet: Carbon dioxide capture and storage project. Carbon Capture & Sequestration Technologies program, sequestration.mit.edu/tools/projects/illinois_industrial_ccs.html
- Connors, K. C. (2013). Presentation by North Dakota Oil and Gas Division: IOGCC task force report, www.netl.doe.gov/File%20Library/events/2013/carbon%20storage/8-20-Kevin-Connors-DOE-CCS-R-D-Meeting-08212013.pdf
The content in Cornerstone does not necessarily reflect the views of the World Coal Association or its members.
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