1. Launching of the second European Climate Change Programme (ECCP II)
Stakeholder Conference Brussels 24th October 2005
Lars Strömberg
Vattenfall AB
Stockholm/Berlin

2. Who’s got the problem ?
Vattenfall is one of the major energy companies in Europe. We operate in Northern Europé, with a base in Scandinavia and Germany. Orr generation portfolio for electricity and heat is based on Fossil fuels, mainly coal, and nuclear. We also have a large part of our generation portfolio based on reneable energy. Hydropower dominates the electricity production in Scandinavia, but we are also probably the largest single producer wirh biofules. In swden, more than 47 TWh of biofuels are used annually in a matured competitive market.
Our generation portfolio also unfortunately makes us one of the largest emitters of CO2, all categories. On the other hand our specific emissions of carbon dioxide from our coal fired power plants are the lowest, due to the very modern and highly efficient power palnts we operate.

3. CO2 free power plant
ECCP I - experiences

4. Cost for carbon dioxide avoidance
Cost and Potential of options to reduce CO2 emissions Principal example
Picture is from 2000
Cost for carbon dioxide avoidance
[EUR/ton CO2]
Solar
Wind
100
Hydro
Biofuel
Late change coal
Reforestation
CO2 sequestration
Oil to gas 50
Coal to coal
Coal to gas
Potential
[Percent] 20 40 60 80
100
The picture will look different when different time perspectives are adopted
Lars Strömberg Vattenfall AB

5. Reductions of CO2 – What ECCP 1 gave
The ECCP 1 work identified a number of measures which could to be taken.
Without agreement among all, it was concluded that almost 30 % reduction could be reached at a cost below 50 €/ton CO2
Change from coal to gas
Introduce more efficient coal power technology
Wind power
Biofuels, especially in the heat sector
More CHP
Vattenfall is one of the major energy companies in Europe. We operate in Northern Europé, with a base in Scandinavia and Germany. Orr generation portfolio for electricity and heat is based on Fossil fuels, mainly coal, and nuclear. We also have a large part of our generation portfolio based on reneable energy. Hydropower dominates the electricity production in Scandinavia, but we are also probably the largest single producer wirh biofules. In swden, more than 47 TWh of biofuels are used annually in a matured competitive market.
Our generation portfolio also unfortunately makes us one of the largest emitters of CO2, all categories. On the other hand our specific emissions of carbon dioxide from our coal fired power plants are the lowest, due to the very modern and highly efficient power palnts we operate.

6. Cost for carbon dioxide avoidance
Cost and Potential of options to reduce CO2 emissions until Derived from ECCP Energy Supply Preliminary report.
Cost for carbon dioxide avoidance
[EUR/ton CO2]
Solar
100
Wind
Coal to Coal
CHP
Biomass heat
CO2 sequestration
Coal to gas 50
Biomass heat
Potential
[Percent] 20 40 60 80
100
Methane mines

7. Reductions of CO2 – What we have learned (2)
Now, after 4 years we have learned a few things:
We will remain to be dependant on fossil fuels for a long time
Change from coal to gas has not happened
Due to high gas prices and lack of long time confidence
Building new efficient coal - yes
Several large plants have been built and at least seven large units under way.
Wind power has severe limitations
Cost lies about 70 – 90 €/MWh
When capacity (MWs) exceeds about 10 % in an area, the system cannot take any more, need for extra transmission and reserve power
MW wind leads to that conventional power can only be reduced MW according to one study
Vattenfall is one of the major energy companies in Europe. We operate in Northern Europé, with a base in Scandinavia and Germany. Orr generation portfolio for electricity and heat is based on Fossil fuels, mainly coal, and nuclear. We also have a large part of our generation portfolio based on reneable energy. Hydropower dominates the electricity production in Scandinavia, but we are also probably the largest single producer wirh biofules. In swden, more than 47 TWh of biofuels are used annually in a matured competitive market.
Our generation portfolio also unfortunately makes us one of the largest emitters of CO2, all categories. On the other hand our specific emissions of carbon dioxide from our coal fired power plants are the lowest, due to the very modern and highly efficient power palnts we operate.

8. Reductions of CO2 – What we have learned (3)
Biofuels are used, especially in the heat sector.
All district heat and CHP is using biofuel in Sweden today (140 TWh fuel)
To maintain competitiveness for bio fuels, it is necessary to keep CO2 tax in parallel with the trading system, at a level of 75 €/ton of CO2
Biofuel usage has reached its limit in Sweden. 45 % of the fuel is imported from Russia, Baltic states and Canada !
CHP is built wherever possible
Few opportunities left
Vattenfall is one of the major energy companies in Europe. We operate in Northern Europé, with a base in Scandinavia and Germany. Orr generation portfolio for electricity and heat is based on Fossil fuels, mainly coal, and nuclear. We also have a large part of our generation portfolio based on reneable energy. Hydropower dominates the electricity production in Scandinavia, but we are also probably the largest single producer wirh biofules. In swden, more than 47 TWh of biofuels are used annually in a matured competitive market.
Our generation portfolio also unfortunately makes us one of the largest emitters of CO2, all categories. On the other hand our specific emissions of carbon dioxide from our coal fired power plants are the lowest, due to the very modern and highly efficient power palnts we operate.

9. Reductions of CO2 – What we have learned (3)
Carbon Capture and Storage CCS has gained much recognition and development is going fast.
Many countries have recognized CCS as a powerful tool and have introduced it in their plans to fulfill their environmental goals
The USA, UK, Australia, France, Germany among many others
CCS does cost 20 – 25 €/ton CO2
ECCP 1 assumed 50 €/ton of CO2
Storage capacity exceeds the remaining fossil fuel reserves
Storage in geological formations is available all over the world, all over Europe, off-shore and on-shore
CCS will not be available in a large scale until 2015 –2020
ECCP 1 assumed before 2010
CCS can probably reach half of the mitigation necessary to reach our long term goals of 60 – 80 % of reduction until 2050
Vattenfall is one of the major energy companies in Europe. We operate in Northern Europé, with a base in Scandinavia and Germany. Orr generation portfolio for electricity and heat is based on Fossil fuels, mainly coal, and nuclear. We also have a large part of our generation portfolio based on reneable energy. Hydropower dominates the electricity production in Scandinavia, but we are also probably the largest single producer wirh biofules. In swden, more than 47 TWh of biofuels are used annually in a matured competitive market.
Our generation portfolio also unfortunately makes us one of the largest emitters of CO2, all categories. On the other hand our specific emissions of carbon dioxide from our coal fired power plants are the lowest, due to the very modern and highly efficient power palnts we operate.

10. Emission Trading
Emission Trading sets the commercial framework for new technology in Europe

11. European CO2 trading system Sept. 2005
Vattenfall has to analyze the price development and make some estimation for our strategic discussions. We have come to the conclusions that it might be a reasonable compromise between all factors influencing the price that:
In 2010 we think the price for emission rights will be 10 EUR/ton of CO2 and in 2015 it will be about 20 EUR/ton
This is the target to be met by new technology iif they should be introduced at that time commercially. If not we will choose some other existing solution to the reduction demend

12. Allocations in the European trading system
In total units is included in the trading system. In the National allocation plans Mton/year or 6300 Mtons for three years have been distributed. This is the roof set for emissions. 
The deficit is calculated to 180 Mton for 3 years. The power industry has a deficit of 360 Mton. Other sectors have an overallocation.
Vattenfall has to analyze the price development and make some estimation for our strategic discussions. We have come to the conclusions that it might be a reasonable compromise between all factors influencing the price that:
In 2010 we think the price for emission rights will be 10 EUR/ton of CO2 and in 2015 it will be about 20 EUR/ton
This is the target to be met by new technology iif they should be introduced at that time commercially. If not we will choose some other existing solution to the reduction demend

13. Marginal cost vs. Reduction of CO2 emissions in EUR/ton CO2
Source: ECOFYS Economic evaluation of sectorial reduction objectives for climate change
The price in Sept 2005 is about 24 €/ton CO2 ???
This picture shows the cost for CO2 abatement as calculated in the European Climate Change Program. On the vertical axis the marginal cost for abatement is shown, and on the horizontal, the reduced volume. The volume 1.4 billion ton corresponds to the total emissions from the EU-15 countries energy sector, e.g. electricity and domestic and industrial heat. The estimated costs in the EPPC was 20 EUR/ton for a 230 million ton reduction in This is the agreed burden within the Kyoto agreement for Europe’s energy sector.
With more countries coming in and some additional JI’s and CDM’s one can argue for a somewhat lower cost to reach our reductions in 2012.

14. Capture and storage of CO2

15. The CO2 free Power Plant principle
The principle of capture and storage of the CO2 under ground
The CO2 can be captured either from the flue gases, or is the carbon captured from the fuel before the combustion process.
The CO2 is cleaned and compressed. Then it is pumped as a liquid down into a porous rock formation for permanent storage.
Vattenfall has since some years started a project we call “The CO2 free Power Plant”. It is based on capturing the carbon dioxide from a coal fired plant, transport it to suitable storage site and pump it down in a supercritical state to a rock formation similar to those containing gas and oil and store the CO2 there permanently. We are aiming at a commercial solution at about 2015

16. CO2 free power plant
Storage and transport

17. Storage of CO2 in a Saline Aquifer under the North Sea
CO2-injection into the saline aquifer Utsira.
(Source:STATOIL)
Since autumn 1996 Statoil injects 1 Mton CO2/year into the saline aquifer Utsira.
The CO2 is separated from natural gas produced from the Sleipner field. The CO2 separation (from around 10% down to 2,5%) makes this natural gas possible to sell to customers. The separated CO2 is injected into the saline aquifer Utsira beneath the seabed at Sleipner instead of being vented into the atmosphere.
Possible storage reservoirs for CO2 from combustion of fossil fuels - i.a. future coal and natural gas fired power plants - exist
beneath the North Sea and the Baltic Sea
at many places in Europe
mainly consisting of
depleted natural gas and oil fields
deep lying saline aquifers
The potential capacity for storage of CO2 under the Northwest of Europe is estimated to be up to 800 Gton CO2 - however a very uncertain figure, improved mapping of possible storage sites is ongoing as EC financed projects
The Sleipner field. Oil and gas production facilities. (Source: STATOIL )

18. Storage Capacity, saline aquifers
There exists more storage capacity within Eorope (and in the world) than the remaining fossil fuels
Source:
Franz May,
Peter Gerling,
Paul Krull
Bundesanstalt für Geowissenschaften und Rohstoffe, Hannover
This figure (honestly stolen from the German Geological Institute, BGR) shows a saline aquifer under northern Germany. The cities of Berlin and Hamburg where Vattenfall has offices in Germany, can be identified in the map. This aquifer continues in under Denmark, and Sweden and under the Baltic sea.
The storage potential under German ground has been estimated up to 46 billion tons of CO2. This is to be compared with the total emissions from the energy sector of about 250 million tons, e.g. corresponding to 160 years
The Utsira formation under the Norwegian part of the North Sea has enough storage capacity for all Europe’s CO2 emission for 600 years.
Such storage sites are distributed all over the world. In total, it is estimated that there exist more storage capacity than there are fossil fuels left in the world.

19. CO2 Transport and storage Schweinrich structure
Two pipeline transport routes are possible
Both routes can be designed to follow existing pipeline corridors >90%
Structure can contain 1,4 billion ton of CO2, equivalent to about emissions from 6000 MW their whole lifetime
Berlin

20. Reservoir simulation – 40 year model
Due to buoyancy, the CO2 strive against the top of the formation
The CO2 spreads in the whole reservoir
Conclusion: It is possible to inject 400 Mt CO2
Injection at flanks

21. Geological structure modelling. Schweinrich
10 years
200 years
500 years
2000 years
5000 years
10000 years

22. CO2 free power plant
Capture

23. Post-combustion capture
This technology is already commercially available in large scale (500 MW). It is at present the most expensive

24. Pre-combustion capture
This technology needs development. Might be competitive. The gasifier exists in demo plants.
The turbine is in the lab stage.
Produces Hydrogen as an intermediary product

25. O2/CO2 combustion is the preferred option at present
At present the most competitive and preferred technology for coal.
It needs development, pilot and demo plants to get design data
This figure illustrates the CO2/O2 combustion process, where the nitrogen in the combustion air is exchanged with CO2. Then the combustion gases contains only water, contaminants and carbon dioxide. Condensing the water vapor, clean out the contaminants and the rest is CO2. Both the gasifiesr and this process needs an air separation unit, which can be bought commercially, but consumes energy.
Here the boiler ,the turbine and all other parts of the power plant looks almost similar and functions similar to a conventional plant. For Vattenfall this means that we can build on the very effective supercritical pulverized fuel large coal plants we have developed. The IGCC is a further technology step, not proven very reliable and commercially competitive today. However this technology has some other interesting features, as i.e. it produces hydrogen as an intermediary fuel.
Final technology choice is not yet made.
Both this CO2/O2 process and the gasification process, are at present the most promising options and are extensively studied by us and many others.
The cost for the capture of course stems from the extra investments needed, for extra equipment, but this is maybe not the critical part always. The separation of CO2 uses energy. A lot of energy, and this is the big challenge. If we build a plant without CO2 capture it will give say an output of 900 MW as one of the blocks in Lippendorf. If we build the same unit with CO2 capture it will give only a bit more than 700 MW.
This is what mostly drives the cost for capture.

26. Total generation cost of electricity with CO2 penalty

27. Generation cost with and without CO2 capture

28. Electricity generation costsPF CC
PF oxyfuel
CC CO2 capt.

29. Generation costs incl. CO2 costs (20 €/ton)PF CC
PF oxyfuel
CC CO2 capt.

30. Avoidance costs of CO2 Avoidance costs PF with CO2 capture
Gas CC with CO2 capt

31. Cost for carbon dioxide avoidance
Cost and Potential of options to reduce CO2 emissions Principal example
Cost for carbon dioxide avoidance
[EUR/ton CO2]
New Picture 2005 including recent knowledge
Solar
Wind
100
Biofuel El
Hydro
New efficient coal
Savings
Biofuel Heat
Oil to gas 50
CO2 Capture and Storage
Coal to gas
Potential
[Percent] 20 40 60 80
100
Lars Strömberg Vattenfall AB

32. Conclusions from analysis - Reduction of CO2
Carbon capture and storage from Coal fired Power plants can be done at a cost close to 20 €/ton CO2
Capture at about 15 €/ton of CO2
Storage at lower than 2 €/ton CO2
Transport depending on distance and volume, but 5 €/ton of CO2 for large plants on shore
More than enough storage capacity on shore and off shore is at hand in saline aquifers
Technology choice is not yet made. Oxyfuel is preferred technology in Vattenfall at present
The commercial choice stands between Gasfired CC without CCS, taking the penalty of CO2 emission, and Coal fired plants with CCS
Lars Strömberg
Vattenfall AB
Corporate Strategies

33. Taking responsibilty
Lord Oxburgh, former chairman of Shell Transport and Trading:
"CCS is absolutely essential if the world is serious about limiting greenhouse gas emissions“
The new report from the Intergovernmental Panel on Climate Change (IPCC) concludes:
“CCS could achieve more than half of the emissions reductions necessary to mitigate climate change up to 2100”
Vattenfall agrees with this. We also believe CCS is needed to fulfill our climate goals
Vattenfall is one of the major energy companies in Europe. We operate in Northern Europé, with a base in Scandinavia and Germany. Orr generation portfolio for electricity and heat is based on Fossil fuels, mainly coal, and nuclear. We also have a large part of our generation portfolio based on reneable energy. Hydropower dominates the electricity production in Scandinavia, but we are also probably the largest single producer wirh biofules. In swden, more than 47 TWh of biofuels are used annually in a matured competitive market.
Our generation portfolio also unfortunately makes us one of the largest emitters of CO2, all categories. On the other hand our specific emissions of carbon dioxide from our coal fired power plants are the lowest, due to the very modern and highly efficient power palnts we operate.

34. CO2 free power plant
Back up

35. The Climate Change problem is for real
EU ministers have agreed on, that we have to reduce the emissions to maintain a reasonable CO2 concentration in atmosphere
15 – 30 % until 2030
60 – 80 % until 2050
A radical solution is necessary. We cannot wait
Vattenfall is one of the major energy companies in Europe. We operate in Northern Europé, with a base in Scandinavia and Germany. Orr generation portfolio for electricity and heat is based on Fossil fuels, mainly coal, and nuclear. We also have a large part of our generation portfolio based on reneable energy. Hydropower dominates the electricity production in Scandinavia, but we are also probably the largest single producer wirh biofules. In swden, more than 47 TWh of biofuels are used annually in a matured competitive market.
Our generation portfolio also unfortunately makes us one of the largest emitters of CO2, all categories. On the other hand our specific emissions of carbon dioxide from our coal fired power plants are the lowest, due to the very modern and highly efficient power palnts we operate.

36. CO2 storage cost
Storage at Schweinrich of 10 Mton CO2 per year over 40 years:
Fictive cost calculations using tool developed in EU-funded GESTCO project:

37. CO2 transport cost:
Transport to Schweinrich from Schwarze Pumpe power plant:
Distance 320 km
10 Mton CO2 per year over 40 years:

38. CO2 free power plant
Pilot Plant

39. Construction area

40. Boxberg IV Why Oxy-fuel technology ?
We work with all three (four) technologies, but:
Oxyfuel technology is the technology giving lowest costs at present
It is suitable for coal and have relatively little development work left
We can build on our good experience with present PF technology

41. Analysis of some technology options
CO2 free power plant
Analysis of some technology options

42. CO2 Free Power Plant: Technology Choice
The ultimate technology choice is not clear yet. Several technologies will probably be applied to different commercial situations.
Post combustion capture.
At present the most expensive option but commercially available in large size.
Can be applied to existing plants.
Needs no demo. Optimization of existing options needed.
Pre combustion capture.
The most complicated technology. IGCC demos have not been successful
Produces hydrogen as integrated intermediate fuel for the power process, from coal or gas.
Development need for the gas turbine run on hydrogen – Lab tests + pilot + demo
CO2/O2 (oxy-fuel) capture
The most preferred option at present
Technology straight forward and builds on the modern supercritical coal fired boilers
Tests in technical scale positive. Needs pilot plant and demo plant
Chemical Looping technology is the most interesting long term option.
Lab experiments very encouraging.

43. Options for reduction of CO2
Specific data for the plants PF CC
PF oxyfuel
CC with capture
Specific Investment costs €/kWe
1000
550
1425
938
Additional investment mio €
140
100
Power output MW
900
500
720
405
Energy penalty MW
180 95
Efficiency % 45 60
36,5 49
Lars Strömberg
Vattenfall AB
Corporate Strategies

44. Options for reduction of CO2
Common data used for the four plants:
Coal Price
50 $/ton ~ 5,7 €/MWh
Gas price
13 €/MWh
Depreciation time
25 years
Interest rate
10%

45. The Problem Fossil fuels are needed
Analysis show that fossil fuels will remain as major energy source in 2030 ( 85 %)
The top priority is to introduce renewable energy sources in the energy system
All analysis show that renewable energy sources will play a large role, but not large enough and soon enough
In several countries nuclear power is decommissioned
No renewable energy source not known today can play a significant role in 25 years from now, i.e. 2030
Emissions from fossil fuels must be reduced
Vattenfall is one of the major energy companies in Europe. We operate in Northern Europé, with a base in Scandinavia and Germany. Orr generation portfolio for electricity and heat is based on Fossil fuels, mainly coal, and nuclear. We also have a large part of our generation portfolio based on reneable energy. Hydropower dominates the electricity production in Scandinavia, but we are also probably the largest single producer wirh biofules. In swden, more than 47 TWh of biofuels are used annually in a matured competitive market.
Our generation portfolio also unfortunately makes us one of the largest emitters of CO2, all categories. On the other hand our specific emissions of carbon dioxide from our coal fired power plants are the lowest, due to the very modern and highly efficient power palnts we operate.

46. Schwarze Pumpe power plant
So in total, we think we also in future will build something similar as our plant in Schwarze Pumpe, but with CO2 capture and storage. We also think it might be competitive under the emission trading system.