Environmental Economics

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Environmental Economics
June 11 Pollution Control CCS

• Daiju Narita, Ph.D.

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Class Plan

• Introduction
• Why CCS is getting attention?
• How CCS works
• Potential issues

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1. Introduction

• The climate change problem (review)
• - Change in earths climatic patterns due to
  increases of greenhouse gas concentrations in the
  atmosphere
• Expected to cause significant negative effects on
  the water and energy systems, human health,
  ecosystems, etc.
• A number of factors are involved in the increase
  of atmospheric greenhouse gases, but the most
  important is human consumption of fossil fuel
  emitting carbon dioxide (CO2)

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CO2 emissions from fossil fuel use is the most
important component of global greenhouse gas
emissions
Source IPCC Fourth Assessment Report (2007)
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There are very clear indications that CO2
concentrations in the atmosphere are continuously
rising
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Climate change as a stock pollution problem

• Stock
• Greenhouse gases in the atmospheric system
• Damages of pollution
• Impacts on water and energy systems, etc.
• Benefits of pollution
• Availability of commercial energy, etc.
• Decay rate
• Very slow, at least for carbon dioxide
• Defensive expenditure
• Various means, one of which is CCS

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• From the climatic standpoint, some radical
  departure from the current CO2 trend (reducing
  emissions) may be necessary within this century
• What does this imply?

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2. Why CCS is getting attention?

• Recent major events relevant to CCS
• - IPCCs Special Report on CCS (2005)
• - Several commercial projects
• - Debates within the EU (proposal issued,
  January, 2008)
• - Discussion of CCS as a part of the CDM (clean
  development) scheme in the Kyoto Protocol system

In order to understand the potential significance
of CCS in climate policy, we first need to review
what challenges we have in global energy use
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• The Global Energy Challenge
• - Growing demand due to population growth and
  rising living standards
• - At the moment, fossil fuel is the most
  plentiful and affordable energy source
• - However, the use of fossil fuel accompanies
  CO2 emissions

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The world population is expected to grow, quite
likely up to 9 billion by 2050
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Large difference in energy consumption level
across countries energy use and affluence are
correlated
Figure taken from Lackner and Sachs (2005)
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2005 per capita primary energy consumption (based
on the EIA database)
Europe (average) 5 kW Africa (average) 0.5 kW
There is no reason that such a gap should stay
the same we should expect todays low-income
countries increase their energy consumption
However, if the world consumption of fossil fuel
grows even at 2/year, it will double in 35 years!
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Recent rapid increase in oil price Is oil
running out?
Taken from http//www.oilnergy.com/1obrent.htmsin
ce88
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Difficulty in oil resource estimate

• The definition of proven reserves
• Additional discoveries of fields
• Development of new extraction technologies is
  also important (e.g., exploitation of
  non-conventional oil resources, such as tar
  sands)
• Not all information is publicly available
  (especially for Saudi Arabia, the biggest
  producer)

In short, no one exactly knows whether oil is
running out or not
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However, it is unlikely that we will see the
exhaustion of fossil fuel in the near future

• Coal is plenty (over 5,000 GtC worldwide), even
  in comparison with high global consumption of
  fossil fuel
• Fischer-Tropsch process
• - Coal-to-liquid conversion
• - Well-established
• - But inefficient in terms of CO2 emissions

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These are already available at reasonable prices,
but the size of resource is small relative to the
global energy needs

• Wind
• Biomass
• Geothermal

The size of these energy sources is theoretically
larger than the likely future energy demands, but
at the moment, there are still challenges in
feasibility, cost, safety, etc.

• Solar
• Nuclear (especially fusion)

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• In sum
• There are some reasons fossil fuel will remain an
  important energy source, and its consumption is
  still likely to increase globally
• However, the weakness of fossil fuel as resource
  is CO2 emissions and subsequent climate change
  we need to decouple our energy problem and carbon
  problem
• Is there any way that we use fossil fuel while
  not emitting CO2? CCS

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CCS would be an item to fill the gap
Stabilization wedges by Pacala and Socolow (2004)
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3. How CCS works

• What is CCS (carbon (dioxide) capture and
  storage, or carbon capture and sequestration)?
• - Capture
• - Transport
• - Storage

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Carbon Dioxide Capture and Storage (CCS)
Capture
Storage
Transport
Underground
Plant Types
Separation Methods
Depleted or Half-Depleted Oil and Gas Wells
Power Plants
Chemical Absorption
Pipelines
Conventional Coal
Physical Absorption
Conventional Gas
Saline Aquifers
Adsorption (Chemical/ Physical)
Ships
IGCC
Coal Seams
Membrane
Oxy-Fuel
Subsea Injection
Cryogenics
Natural Gas Purification
Chemical-Reaction Based Methods
Ocean
Mineral Carbonation
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• At present, most methods are to applied to
  stationary emission sources (such as power
  plants)
• Capture technologies are analogues of gas
  separation methods for other industrial
  processes, but there is still room for research
  in order for them to be applied for CCS (e.g.,
  cost reduction)
• Transport technologies are well-established
• As for storage, underground injection is most
  investigated with some commercial-scale
  demonstration, although other approaches have
  their own strengths (and weaknesses), too

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Schematic diagram of an underground storage CCS
system
CO2 transport (pipelines or ships)
Injection of CO2
Emission source (e.g., power plants)
Cap rock

CO2 storage location (saline aquifer)
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Storage capacity and costs (according to IPCC,
2005)
It is likely that the storage capacity of CCS is
more than 2,000 GtCO2 (545 GtC)
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• As a reference, the current price of CO2 in the
  European Emission Trading Market is 25-30
  (35-45)
• With CCS, power generation cost might be up 50
  or more (without any financial incentives)
• Capture cost is the dominant component of the
  cost of CCS
• Enhanced oil recovery (EOR) could offset part of
  the operational cost by extra oil production

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Source Stern (2006)
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CO2 Injection and Storage Activities
50 Acid Gas injection sites in North America
4 New CO2-EOR Pilots in Canada
Snohvit
Sleipner
Zama
K-12B
Penn West
RECOPOL
Alberta ECBM
CO2 SINK
Weyburn
Hokkaido
Sibilla
Mountaineer
Teapot Dome
Qinshui Basin
Nagaoka
Rangely
West Pearl Queen
Burlington
Frio
In Salah
Carson
70 CO2-EOR projects in U.S.A.
Key
Gorgon
Depleted Oil Field
Kwinana
ECBM projects
Cerro Fortunoso
Otway Basin
EOR projects
Gas production Fields
Saline aquifier
Source IEA GHG CO2 Capture and Storage website
(http//co2captureandstorage.info/)
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4. Potential issues

• There are some potential issues regarding the
  application of CCS
• Some question high costs of CCS, but what matters
  is relative to what with a comprehensive
  cap-and-trade or carbon tax, CCS could be a
  reasonable choice
• Rather, the real issues would deal with safety,
  permanence of storage, legal aspects, how to
  position it in a broad context of climate policy,
  and institutions.

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• Is it safe?
• While CO2 is not highly toxic, there are
  possible risks regarding CO2 storage. In terms of
  underground storage, the potential risks include
  
• - Sudden release of gas (explosion)
• - Suffocation due to leaked CO2 to the land
  surface
• - Groundwater contamination (dissolution of
  heavy metals)
• Also, for ocean storage, there might be some
  unknown ecological impacts

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• Permanence of storage
• Can we securely contain CO2 in a geological
  structure for thousands of years?
• - Field experiences gives positive evidence on
  this point, but data are limited (only for about
  10 years)
• - Geologists consensus view so far the general
  answer is yes, but what really matters is the
  site selection (truism?)

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• Legal issues (liabilities, regulation)
• - Who will take care of potential hazard or
  leakage of CO2 from the site in a distant future?
• - Who is responsible for the monitoring of the
  sites?

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• If CCS has any limit in opportunities, how to
  balance the use of CCS with other climate change
  mitigation options?
• - Allocation of resource in research and
  development, including that of new techniques of
  CCS
• - Long-term investment strategy (lifetime of
  power plants are usually long, like 40-50 years)
• - Some of them could be combined, such as
  biomass with CCS

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• Other potential issues institutions
• Given CCS can be operative, who should finance
  the installation of technology (quite expensive)
  in low-income countries?
• How to establish effective regulatory systems on
  CCS with broad public acceptance, especially in
  countries where the power of environmental
  authority is currently weak or non-existent?