By Ramanan Krishnamoorti, Chief Energy Officer and Interim Vice Chancellor for Research and Technology Transfer, University of Houston
There has been a lot of excitement around the recent startup of commercial scale carbon capture and sequestration operations by NRG Energy at the W.A. Parish coal-fired power plant near Houston. The reason is clear: the technology offers the promise of “clean” coal, with little or no CO2 emission, and the potential to revive the coal-based power generation industry, which has declined nationally from about 44% of electric power generation in 2009 to 31% today.
Moreover, effectively sequestering and using the CO2 to enhance oil recovery operations in declining oil and gas fields bolsters the case, both from an environmental perspective and an economic perspective.
This raises the question of why I was less than enthusiastic about the scale out and advancement of this technology in a recent Houston Public Media interview.
Let’s start with economics.
Capital expenses required for the technology, the energy required to power the CO2 capture system and the current price of crude oil that would be recovered through the enhanced oil recovery process, mean that operating costs for a coal-fired generating plant coupled with carbon capture technology are 30% to 35% higher than the operating costs for a coal-fired plant alone This is consistent with extensive life cycle analysis studies of carbon capture and sequestration reported by Sathre, R. 2011.
NRG executives, I should note, disagree and say the technology is essentially cost-neutral when oil is $50 a barrel, as profits from the additional oil harvested with the use of the sequestered carbon cover both capital and operating expenses. Moreover, they estimate that with scale up and improvements in technology, the W. A. Parish plant operates its carbon capture and sequestration with a parasitic energy load of 21% or lower and not the broad industry standard of 30% to 35%.
Their bigger argument in support of the project is that investing in this technology now will pay off globally down the road. Even if the decline of coal in the United States isn’t reversed, due to concerns about climate change and because cleaner-burning natural gas is cheaper, this thinking suggests that new markets for the capture technology may open in China and India, where new coal units continue to come online. They also see it as an important step toward developing other low-carbon technologies, including the use of this carbon capture at natural-gas fired power plants.
I respect that argument, and NRG’s investment. Their project at the W.A. Parish plant has moved us further along the learning curve for this and future technologies that would allow for a more sustainable use of hydrocarbon fuels.
But I question whether the project and technology is economically scalable to other locations – especially coal-fired plants that aren’t near an existing oil or gas field in the U. S. and in the absence of substantial economic incentives for the use of such capture technologies. And there are other concerns:
The physical footprint.
The technology will significantly strain the need for physical space associated with the power generation unit, and if scaled up to accommodate the average 1 to 4 gigawatt coal-based power plant, I believe it would be a significant impediment. In an era where most communities globally operate with a “not in my neighborhood” philosophy, the physical size of current technology will pose a serious barrier to adoption on a wide scale, especially in new construction of coal-fired power plants.
The price of oil.
Using the captured CO2 to improve oil production, and storing it geologically in oil formations, is the critical piece in making carbon capture and sequestration technology economically viable, whether it involves coal or natural gas.
The proximity between power plant and oilfield will matter – sending the CO2 by pipeline to a field 100 miles away is far different than sending it to an oilfield 1,000 miles away. NRG and its partner in the Parish plant, JX Nippon, are sending the CO2 about 90 miles away, to a field in South Texas.
But the price for which a producer can sell the additional oil harvested by the CO2 injection is a more fundamental issue for the technology’s viability. With oil hovering around $50 per barrel and the expected improved production of four barrels per ton of captured CO2, the economics of the combined process is not promising.
Should the price of oil increase to between $80 and $100 per barrel, or if a considerable carbon tax is incorporated and natural gas prices stay near their current prices, this technology might, in fact, be economically viable in spite of the high capital costs.
Competing technologies, especially solar, solar thermal and wind.
Renewables are becoming increasingly cost competitive with coal and natural gas; the unsubsidized levelized cost of wind energy has dropped by 66% since 2009, and the unsubsidized levelized cost of photovoltaic solar has dropped by 85% over the same time period. New power generation from utility scale solar and wind are now cost comparable to that from combined cycle natural gas.
There are legitimate questions about how soon these intermittent energy sources can be incorporated into the grid without improvements in affordable grid-scale storage technology. Storage technologies are still being developed and are likely to increase the cost of using renewables, although how much is an open question.
Undoubtedly, however, the share of renewables on the nation’s power grid will grow, along with the deployment of other novel technologies that can render natural gas power generation nearly carbon neutral. One example is using the patented Allam cycle to drive generation turbines with high pressure, high temperature CO2 and then capturing the carbon, a less expensive and possibly less complicated process.
These competing technologies are likely to be adopted much more rapidly than the current technology based on coal, even if the lessons learned from NRG’s Parish plant serve to guide research into other sequestration technologies.
Renewables, backed by newer competing technologies, and the low price of natural gas-based power generation in the United States, will be a significant challenge to the continued nationwide deployment of this clean coal technology deployed in Texas.