Thursday, 28 January 2010

Readiness of Carbon Capture

Recent reports from the World Future Energy Summit say that “speakers pointed to the maturation of CCS and many successful pilot facilities around the world. And they set the expectation that the industry is now ready to see production facilities built in large numbers.”

Carbon capture is not new technology. We have been capturing carbon dioxide on an industrial scale from the partial oxidation of coal, oil and gas for many decades in the chemical industry. We have been reinjecting carbon dioxide down the well to enhance oil recovery for many years. The IPCC say the same in their report on carbon capture.

To be sure the capture and storage technology have not yet been put together and used on a large power generation plant. Process selection, cost estimates and performance will no doubt improve as we gain design, construction and operational experience, but that does not mean there is any likelihood of the technology not working. What is currently lacking is not the know-how but the economic incentive to apply it, except to demonstrate the technology.

I remember when we wanted to get lead out of gasoline, everyone said they were not ready, it would be very difficult and expensive. Then along came a tax incentive of a few pence per litre and it all happened painlessly. I suspect carbon capture will be the same. When the fuel producers are obliged to place contracts for carbon capture and sequestration for a proportion of the carbon in their fuel, as I propose, I think there will be power companies from around the world competing to take their money. I hope we will be left wondering what all the fuss around cutting emissions was about.

Thursday, 14 January 2010

More on Global Warming

As anticipated the world agreed to limit global warming at Copenhagen but could not agree who should do it and who should get how much money from whom. Perhaps the politicians will be more open to new approaches now that their single-minded pursuit of cap and trade with offsets has got them nowhere.

Among people polled there is strong support for the alternative scheme detailed in my previous blog in November. In a recent Times Online live debate 85% voted that "Fossil fuel companies should be obliged to sequester an increasing fraction of the carbon content of the products they sell to avoid dangerous climate change"

This motion was proposed by Myles Allen, head of the Climate Dynamics Group at the University of Oxford. Darren Johnson who is Chair of the London Assembly and a Green Party councillor also voted in favour because energy conservation and renewables will be much more attractive if we have to pay for sequestration when using fuel. He saw the proposal as a transitional measure in the move to a renewables/efficiency led programme but I see it as a long-term way of growing our affluent industrial society without stressing the planet.

Ed Miliband, Secretary of State for Energy and Climate Change, has failed to even acknowledge my emails on the proposed scheme but Norman Baker my local Liberal Democrat MP has offered to chase him for a response and I will shortly ask him to do so.

The International Energy Agency (an intergovernmental organisation) say that stabilising the climate in 2050 would cost at least 70% more without carbon capture.

Myles Allen pointed me to a paper which shows how very slowly atmospheric carbon dioxide concentration would decline even if emissions stopped. The ocean currently absorbs 2.2 billion tonnes/year of carbon (as noted in my November blog) but as described in the paper, uptake would fall to about a quarter of that value (ie only 6% of current emissions) if atmospheric carbon dioxide concentration stopped rising today.

The arctic ocean downwelling flow corresponding to the ongoing carbon uptake of 0.54 billion tonnes/year predicted in the paper gives an ocean turnover time of 2500 years. The 0.54 billion tonnes/year also implies that only about 1.4 billion tonnes/year of carbon in dead organisms sinks far enough to contribute to the measured increase in dissolved inorganic carbon in the cold downwelled polar water that fills the ocean below about 500 metres depth. Most of the often quoted 10 billion tonnes/year of sinking solid organic matter must decompose in the shallower water and leave the dissolved carbon there.

The observed 2 ppm per year increase in atmospheric carbon dioxide concentration would explain the other three quarters of the current 2.2 billion tonnes/ year of oceanic carbon uptake if the top 350 metres of the ocean were well mixed.

The ongoing ocean carbon uptake would be higher if the atmospheric carbon dioxide concentration were higher, because more carbon would dissolve in the icy water downwelling to the deep ocean. But even if the atmospheric concentration were allowed to level out above 500 ppm (compared to today’s 388 ppm) the ocean would only continue to absorb at the rate of 10% of today’s emissions.

A reduction to that level will be difficult but not impossible to achieve without sacrificing worldwide growth or our living standards. Recovery efficiency for carbon capture will need to approach 100% but no doubt this will be possible with the right financial incentive. Overseas holidays and year-round exotic perishable produce have become a key part of our standard of living, but planes need fuel and cannot easily capture carbon. Aviation already accounts for 2% of carbon emissions and this will probably rise as incomes rise substantially in China and India. Biofuel use on such a scale may not be politically acceptable as pressure grows to feed an expanding population without increasing the area under cultivation. There will also be a residual fuel requirement for transport, heating etc. in remote locations without the possibility of a mains electricity supply.

But for sure every year that we delay cutting back on our emissions we are squandering at least ten years of our children’s meagre ration. They will not thank us for going round the same old loop over and over again ignoring the obvious option of obliging fuel producers to pay for the capture of the carbon dioxide their fuels produce.

Wednesday, 25 November 2009

Climate Agreement

There is a problem at the heart of cap and trade, how to allocate the permits to emit or the revenue from auctioning them. It is clear from the response of oil and coal price to minor excess demand just before the boom turned to crunch that we are prepared to pay almost anything to sustain our energy consumption. The rights to emit will be worth trillions of dollars and sustainable worldwide agreement on who is entitled to sell them will therefore be extremely difficult.

A carbon tax has some of the same problems once you try to go worldwide (who gets the revenue, fuel producing nation, fuel consuming nation or worthy cause?). Furthermore there is no way of knowing what rate you need the tax to be at to get emissions down to the desired level. The price consumers need to see to persuade them to change is the same whether you manipulate it with a tax or with cap and trade.

There is a further problem with cap and trade if the permits are allocated to existing emitters rather than auctioned. Those emitting carbon dioxide have their marginal cost increased by the tradable value of the permits even though their total costs are unchanged. Basic microeconomics tells us that prices go up to equal marginal cost, and profits with them of course at the consumer’s expense.

Without other measures, legislating for new coal fired power stations to incorporate carbon capture would deliver too little too late. Carbon capture is costly to build and to operate so utilities would also be discouraged from investing in much needed new capacity and from operating it once built, the old dirty plants would cost less to run.

Insisting that all new and existing power plants capture their carbon would deliver very substantial emission reductions if adopted worldwide, but if done abruptly would probably make the lights go out and miss opportunities for evolutionary improvement in process design. Moreover carbon capture only becomes economic if power price rises relative to fuel, while the long-term aim must be to reduce low carbon electricity price relative to fuel to encourage people to switch to electricity for heating, transport etc.

There is a way of avoiding all these problems that every nation should find attractive and could agree to without protracted negotiation.

Fossil fuel producers and importers would contract for the capture and sequestration of a quantity of carbon dioxide equal to a proportion of that produced from the fuel they supply. The proportion would start at a few percent and build up. This would increase fuel price gradually, encouraging energy saving, nuclear, renewables, electric cars etc. It would also provide full, immediate funding for carbon capture and storage. Carbon tax or cap and trade schemes on the other hand only provide sufficient incentive to capture carbon when tax rate or permit price has reached a high level, which may be too late.

Energy saving, nuclear, renewables, electric cars etc. are only ways of filling the energy gap that cutting carbon dioxide emissions will create, and mankind has been effectively filling energy gaps for centuries without the aid of agreed national or global strategies, taxes or caps. Carbon capture is different. It is a way of stopping pollution and will always add cost. You can legislate to stop pollution or you can use market forces by giving credit in a cap and trade system, credit against a carbon tax or by paying directly in fuel prices as above. If carbon capture is driven in any of these ways all the other things will happen too.

The contract might permit capture to be delayed for a year if the quantity captured were increased by 10%, and for another year for another 10% etc. This would not only help with plant problems, but would also allow contracts to be placed today, providing a huge incentive to get carbon capture and storage up and running as soon as possible. It is not lack of know-how that is holding back carbon capture but the lack of an incentive to apply it widely, except as a demonstration of the technology.

To contain global warming we must soon stop carbon emissions from power generation, cement manufacture etc. and substitute electricity for fuel use in many domestic, industrial and transport applications. Taxing carbon, capping emissions or contracting for carbon capture when fuel is produced could all provide the economic incentive, but unless the world joins in they will not solve the problem.

Contracting for carbon capture is certain to reduce carbon dioxide emissions to whatever annual target is set (if the contracts are honoured) and is relatively easy for everyone to agree to because:

 It will appeal to rapidly growing and mature countries alike. There are no national caps to restrict relative growth.

 It will allow all industries in all countries to compete on a level playing field. There are no carbon tax or emission cost differentials.

 Because there is only one number to agree, the global annual target, extensive international negotiations will be unnecessary. There will be no national targets to haggle over and perhaps never meet. There will be no issue about who gets the revenue from a carbon tax or what the rate should be or who gets free allowances (or the revenue from an auction) with cap and trade.

 Enforcement is straightforward and does not rely on the co-operation of every country. The contracts would be traded and recorded centrally, mostly placed and paid for by the international energy companies. If countries were uncooperative and used their own fuel internally without contracting for carbon capture, a central monitoring organisation could impose an increased capture proportion on imports or exports of fuel for that country to compensate.

Put simply, carbon capture and storage could typically cost 50 euros per tonne of carbon dioxide emission avoided. This is equivalent to $32/barrel of oil and the contract would only be for a proportion of that. This is modest compared to price changes over the last few years.

The major complication is that it is only practical to capture carbon dioxide from large point sources like power stations. Forcing 75% capture on the global market through this scheme would drive fuel price up and electricity price down until we switched from fuel to electricity for many industrial, domestic and transport applications. Once nearly all power stations etc. had captured their emissions there would be an incentive to build new power plants simply to create more carbon dioxide to capture and to dump the electricity they generated onto the market at a low price. Fossil fuel power generation with carbon capture would collect payment for all the captured carbon but only pay back 75% in its fuel price, giving it an unfair advantage over nuclear and renewables. It would be perverse to tax carbon capture while we were trying to encourage it, but as we approached the endgame national governments could tax away the 25% of the capture contract price that was not being paid in the fuel price. The revenue could then be paid out per kilowatt-hour to subsidise power from all clean generators.

Eventually we could define the proportion of carbon to be captured, based on fossil fuel production at the time, such that global emissions were contained at the level that the oceans absorb annually. That is about 2.2 billion tonnes of carbon per year (25% of current emissions). Atmospheric carbon dioxide concentration would then stop rising, assuming zero net contribution from deforestation and other land based sources and sinks.