Energy Debate

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Energy Debate
Cooperative Research Centre for Coal in
Sustainable Development (CCSD)
Sustainable Energy Future Contribution of
Australian Coal
Dr Lila Gurba CCSD Research Manager

• Climate Change and Energy Options for Australia

Melbourne, 23rd August 2006
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The Past Coals Bad Reputation
Understanding Coal Performance
The Present The Greenhouse Threat
CO2 focus of environmental attention
International pressure to limit greenhouse gas
emissions is one of the most pressing challenges
facing fossil fuels
Environmental issues/rules will play a strategic
role in Sustainable Development
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Outline

• A current and forward look at the world of fossil
  fuels
• Fossil fuels in the IEA World Energy Outlook
• Life Cycle Assessment of Australian Electricity
  Grids
• our greedy appetite for energy
• Strategic issues for the continued use of fossil
  fuels
• Low emission technologies and the strategic value
  for coal
• Clean coal-oxymoron or brightest hope for the
  future?
• Policy dimensions
• Impact of carbon price uncertainty on investment
  in electricity generation
• RD
• Technological innovation in the energy sector
• Scientific support for decision making process

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Global Electricity Generation
In 2003, Coal-fired power plants provided 40 of
global electricity needs

• Fossil fuels presently supply about 80 of the
  worlds total primary energy sources and
• Produce over 60 of the Worlds electricity.
• All major global projections suggest that fossil
  fuels will remain a key for power generation and
  that global coal demand is expected to double by
  2030.

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Coal-fired Electricity Generation
Coal share in domestic electricity generation
Canada 19
China 79
USA51
Energy hungry China
India 68
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Coal is one of the cheapest power generation
options today the global production of
electricity is expected to more than double over
the next 30 years drawing 62 of the overall
investment in new energy infrastructure.
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Global Electricity Generation and CO2 emissions

• The electricity sector has been the main source
  of carbon dioxide worldwide for decades
• In 2003, electricity generation accounted for 40
  of global CO2 emissions, of which
• coal-fired electricity plants accounted for some
  70
• natural gas fired plants for about 20 and
• oil-fired plants for about 10

IEA
Improving coal environmental performance is
critical to the Australian Coal Industry
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Coal is important to Australia
Electricity transmission networks
Coal in Australia
Australias electricity depends on coal
Large coal resources
Australia is the worlds largest coal exporter
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Cooperative Research Centre for Coal in
Sustainable Development (CCSD)
A joint venture Government, coal producers,
generators and researchers The thrust of CCSD
research is the improvement of ENVIRONMENTAL,
ECONOMIC and SOCIAL performance (Triple Bottom
Line) from the utilisation of coal in the energy
mix Resources of nearly AUS61 million over its
seven-year period
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Life Cycle Assessment of Australian Electricity
Grids for YED 2004

• To determine the environmental impacts of power
  generation in Australian
• The basis of the study is the generation of 1MWh
  of electricity supplied
• Includes a range of key performance
  indicatorsresource energy and freshwater
  consumption as inputs, and greenhouse gas
  emissions (GGEs), NOx, SOx, particulates and
  solid waste emissions, as well as a range of
  substances sourced from the National Pollutant
  Inventory (NPI) database, as outputs.
• These assessments are undertaken at a given point
  in time and serve as a benchmark from which
  future changes in greenhouse gas emissions
  intensity may be compared.

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Australian Scenario
Sent-out electricity on a state-basis in 2004
WA 76 black coal 24-natural gas
NSW 97.5 black coal-fired plants
1.5-natural gas 1 coal seam methane
Vic 98 brown coal-fired plants 1.0-natural
gas 1.0 hydro
Qld 96.9 black coal-fired plants
1.6-natural gas 1.5 hydro
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CO2 emission from coal-based power plants for the
supply of 1MWh of electricity (average) CO2 kg /
1MWh
Qld 926 748 1220
NSW 911 870-963
WA - 974 895 1053
Victoria -1280 1217 1338
Bituminous
Sub-bituminous
Brown coal
Source LCA studies of the Australian State grids
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Road to Clean Coal Technologies
The greatest challenge to coals future expanded
use is the ability to comply with the worlds
environmental requirements.
In the long-term if the world is to stabilise
atmospheric concentrations of greenhouse gases,
major changes will be required in the way we
source and use energy.
Fossil Fuels
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Coal and Power Generation Sector
Efficiency-the first step

• High

Energy Efficiency
High
CO2 Emission
The higher the thermal efficiency-the lower the
CO2 emission
Efficiency improvements reduce emissions of all
pollutants by decreasing the amount of coal
needed to generate a unit of electricity.
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CO2 emissions and coal use for electricity
produced at different efficiencies
Coal use g/KWh
CO2 emission g/kWh
Thermal Efficiency
Source IEA CCC/19
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Energy Efficiency Fossil Fuels

• Efficiency First
• The thermal efficiency of individual operational
  power plants ranges from 25 to 45
• This wide range can be attributed to
• Steam conditions
• Coal quality (Energy Content)
• Cooling water temperature
• And the installation of emission mitigation
  equipment
• Design of steam turbine and steam cycle

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Energy Conversion Fossil Fuels

• To achieve the higher efficiency in electricity
  production
• Higher temperature
• Higher pressure
• Improvement in steam cycle

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Power Plant efficiency as a function of the cycle
temperature
Theoretical maximum
Source IEA
Key point Higher process temperatures are the
key to higher electricity production efficiencies
Limited by the availability of high temp.
corrosion tolerant materials
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Fossil Fuels Efficiency Improvement

• Supercritical
• Ultra-supercritical

Development in PF technology for Australian black
coal-fired power plants Dr Chris Spero CS Energy
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Coal based Australian power stations
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Higher efficiency plants reduce electricity
production cost through lower fuel consumption,
reduce CO2 emissions per KWh of energy generated,
and result in lower capital and operating costs
for all environmental equipment.
Energy Conversion
Brown coal
Brown coal
Brown coal
Brown coal
Sub-bituminous
Sub-bituminous

• Efficiency

Bituminous
We look here at efficiency improvement
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Technology Control of CO2 Emissions

• Progressive
• Efficiency improvement
• Ultra supercritical (combustion)
• IGCC (gasification)
• Step Change Carbon Capture and Storage
• Oxy-fuel
• Post Combustion Capture
• Pre-combustion Capture

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CO2 capture

• Post-combustion decarbonisation
• Proven at industrial scale
• Needs to be scaled up for deployment at power
  plants
• Pre-combustion decarbonisation
• Proven in synthesis gas production
• IGCC pre-combustion cycle not demonstrated
• Oxy-fuel combustion
• Currently at developmental stage

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CCS Demonstration Activity

• CO2 capture demonstrations planned
• FutureGen (IGCC)
• HypoGen (IGCC)
• DF1 (BP Miller/Peterhead), Scotland (Partial
  Oxydation)
• Stanwell, Australia (IGCC)
• Callide, Australia (oxy coal)
• Cottbus, Germany (oxy coal)
• Storage
• demonstrated at 1 million tCO2/year scale
  (Sleipner, Weyburn, In Salah)

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• Is there sufficient global CO2 storage capacity?

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Geological Storage Options
Note CO2 Storage capacity at cost of 20 US per
tonne of CO2
With permission Dr Kelly Thambimuthu
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CO2 Storage Demonstration Projects
4 New CO2-EOR Pilots in Canada
50 Acid Gas Injection in North America
Snohvit
Sleipner
Penn West
K-12B
RECOPOL
Alberta ECBM
Weyburn
CO2SINK
Hokkaido
Teapot Dome
Mountaineer
Sibilla
Rangely
West Pearl Queen
Qinshui Basin
Nagaoka
Burlington
In Salah
Frio
70 CO2-EOR projects in U.S.A.
Key ECBM projects EOR projects Gas
production field Saline Aquifer
Gorgon
Cerro Fortunoso
With permission Dr Kelly Thambimuthu Chairman,
IEA Greenhouse Gas Programme
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CO2 capture

• Is there sufficient global CO2 storage capacity?
• With Co2 capture and storage, will this be a
  bridge to our energy future?
• Increase in electricity costs
• Efficiency loss due to CO2 capture
• Also requires the development of more energy
  efficient CO2 capture technologies

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Cost of CO2 capture, 2005
IAF Report
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Cooperative Research Centre for Coal in
Sustainable Development (CCSD)

• Techno-economic Assessment of Power Generation
  Options for Australia
• Project supported by funding from
• the Australian GovernmentsInnovation Access
  Program Industry
• Louis Wibberley Aaron CottrellDoug Palfreyman
  Peter ScaifePhil Brown
• www.ccsd.biz

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Power Generation Options for Australia

• New pulverized fuel (pf)
• plant should be the highest efficiency possible
  (with capture, the benefits of higher efficiency
  are doubled), and with provisions to facilitate
  future retrofit with either post combustion
  capture or oxygen-combustion.
• Integrated gasification combined cycle (IGCC) is
  likely to remain significantly more expensive
  than advanced pf, even with CO2 capture, for
  electricity generation. However, this conclusion
  does not value the ability to produce hydrogen
  for other purposes such as the production of
  liquid fuels (also improves flexibility). These
  options are therefore likely to be the biggest
  driver for the increased adoption of the
  technology.

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Power Generation Options for Australia

• Post combustion capture
• is likely to be the preferred technology over
  oxygen fired pf (oxy-pf) for carbon capture, due
  to its flexibility, ease of retrofit, and
  possibility of staged implementation. These
  attributes should promote the early introduction
  of the technology which, in turn, increases the
  learning effects. Until this occurs, for new
  build plants, both oxy-pf and post combustion
  capture should have similar costs.
• For Victoria, efficient production of power from
  lignites is highly dependent on integrated drying
  and use of advanced supercritical plant, or
  integrated drying gasification combined cycle
  (IDGCC) technology under development by HRL.

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• Solar thermal appears to be the most promising
  technology for large scale, baseload electricity
  generation from renewable energy. The technology
  is unique in that efficient energy storage as
  heat (a cheaper option than storing electricity)
  reduces the cost of electricity. Australia has
  one of the most promising solar resources in the
  world for this technology.
• Australia is in a unique position with regards to
  nuclear power the largest, low cost uranium
  resources, largest thorium resources, worlds
  best immobilisation technology, stable geological
  environments, and is a large exporter of uranium.
  New generation nuclear technology combines step
  change improvements in burnout rate, inherent
  safety, and capital costs, and scale for economic
  operation.

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Climate Change Corals Collaborative Approach
Research Drivers
Coral Reefs
Too hot for some
Cooperative Research Centre for Coal in
Sustainable Development
NewScientist
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Solar and CoalTransition Pathway
Solar for Energy Generation
Solar for CO2 Capture
Added infrastructure to boil water
Added infrastructure to capture CO2
Existing infrastructure (Liddell PS) 40MWe from
sun
Existing infrastructure
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Partnership- Co-firing Biomass

• The major issues at the 10 levels
• Handling
• Milling
• Combustion
• Fly-ash utilisation

Coal-fired power plant

• Research Drivers
• to comply with the Govt. mandate to increase by
  2 the renewable energy usage by 2010 (energy
  basis) MRET

Cooperative Research Centre for Coal in
Sustainable Development
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• What is the most cost-effective mix of options
• What are the key technologies
• How much can different technologies in a
  portfolio deliver?
• What are the technology development barriers
• By when can they deliver?
• What policy efforts will be required to make them
  deliver?

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Electricity Down-under

• According to recent projections (ABARE, 2005),
  gross generation of electricity in Australia is
  expected to increase by an average 2.1 per cent a
  year over the long term
• from 237 TWh in 2003-04 to 409 TWh by 2029-30
• Additional generating capacity will be required
  to meet expected demand

There currently exists a high level of
uncertainty around electricity generation
technology investment decisions
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Portfolio Options and Risk Assessment

• What type of electricity generation technology to
  invest
• When to invest in it, if at all

There currently exists a high level of
uncertainty around electricity generation
technology investment decisions
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Economic Drivers on CCS

• Investment in electricity generation assets is
  uncertain
• Assets with long operating life
• Very large capital expenditure
• Uncertainty in price of electricity
• Uncertainty in timing and magnitude of
  introduction of financial penalty on carbon
  emissions
• Technology specific uncertainties related to new
  electricity generation technologies
• Community attitudes to any kind of industrial
  development that may impact upon their local
  environment
• We use Real Options to analyse this situation

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Real Options Modelling Results

• Impact of Carbon Price uncertainty
• on investment in selected electricity generation
  options

CCSD project 4.1 Portfolio Options and Risk
Assessment Peter Coombes (Delta Electricity)
Paul Graham (CSIRO)
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Portfolio Options and Risk Assessment

• The Real Options (RO) analysis is well suited to
  investment in electricity generation assets
• It is able to determine the optimal time to begin
  the investment
• Selects the optimal investments in this order
• It takes the perspective of an individual
  generator ( investor) evaluating

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Real Options

• Key Factor
• The effect of carbon price uncertainty on the
  uptake of a subset of electricity generation
  technologies

Carbon Price
Technology Option
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Real Options

• The study assesses strategic value for different
  power generation options

Technology
Carbon Tax
NGCC SCPF IGCC SCPF- PoC- (new)
(bolt-on) IGCC-PrC (new) (bolt-on)
15/t CO2e 30/t CO2e 45/t CO2e
CCSD Report, 2005 Preliminary Ranking of
selected electricity generation options under
carbon price uncertainty L. Reedman, P.Graham,
P. Coombes, D. Vincent. CSIRO Delta
Electricity
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Case A No Uncertainty Carbon Tax Introduced
post 2014
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Case B Carbon Tax Introduced sometime between
now and 2014
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• The preliminary results of the study indicate
  that future investment in electricity generation
  assets in Australia are highly sensitive to
  whether or not carbon penalties will be imposed

Future Technology Option
Carbon Penalty
CCSD Report, 2005 Preliminary Ranking of
selected electricity generation options under
carbon price uncertainty L. Reedman, P.Graham,
P. Coombes, D. Vincent. CSIRO Delta
Electricity
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Choice of Technology Options is driven by
technical, environmental and economic factors.
Economics are critical for deployment of new
technologies
Economy

• Environmental risk
• Emission
• PM, NOx, SOx,
• CO2
• waste disposal
• water usage

Energy Option
Environment
Technology

• Output Criteria are
• Minimised climate change impact
• Satisfaction of energy demand at reasonable
  financial cost

EFFICIENCY
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In Conclusion

• All energy sources will be needed to meet our
  future demand and deliver energy sustainability. 
• No single source of energy should be excluded
  from our available options.
• RD to support Emerging technologies

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In Conclusion

• What is the most cost-effective mix of options
• What are the key technologies
• How much can different technologies in a
  portfolio deliver?
• What are the technology development barriers
• By when can they deliver?
• What policy efforts will be required to make them
  deliver?

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Cooperative Research Centre for Coal in
Sustainable Development

• www.ccsd.biz

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Cooperative Research Centre for Coal in
Sustainable Development
Generators
Producers
Research
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Policy Initiatives

• The National Mandatory Renewable Energy Target
  (MRET)
• The New South Wales (state) Greenhouse Gas
  Abatement Scheme (GGAS)
• Queensland (state) 13 Gas Scheme (QGS)

Cooperative Research Centre for Coal in
Sustainable Development
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Solar Thermal

• Utilizing the suns energy is sensible
• No primary resource costs
• Abundant (35 x 35km area for ALL Australia)
• Australia ideal for solar utilisation
• No GHG emissions.