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Ramon Sanchez. Harvard University March 1, 2011

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1 Ramon Sanchez. Harvard University March 1, 2011
Microalgae farming and beyond: Biologically Assisted Carbon Capture from Energy and Industrial Operations Ramon Sanchez. Harvard University March 1, 2011

2 Introduction Renewable Energy: Energy that comes from natural resources such as sunlight, wind, biomass, tides and geothermal heat, which are renewable (i.e. naturally replenished) Ramon Sanchez Harvard University Slide # 2

3 Justification for Renewable Energy
State of oil world reserves. Tipping point: 20 years (business as usual) 27 years (moderate conservation) 40 years (good conservation) Ramon Sanchez Harvard University Slide # 3

4 Justification for Renewable Energy
Energy Security is a very important issue due to changing external factors in the global economy An oil importer could achieve energy independence, energy security and comply with their goals to mitigate climate change by using renewable energies Ramon Sanchez Harvard University Slide # 4

5 Justification for Renewable Energies
The global warming effect has been associated with an increase in the concentration of anthropomorphic (“man made”) Carbon Dioxide in the atmosphere. Approximately 70 % of CO2 emissions are derived from combustion of fossil fuels for transportation and electricity generation Ramon Sanchez Harvard University Slide # 5

6 Justification for Renewable Energies
Significant reduction of pollutant emissions This reduction produces positive human health benefits, reduces damages to ecosystem diversity and delays depletion of natural resources Ramon Sanchez Harvard University Slide # 6

7 If renewable energies are so good… Why aren’t we using them more?
Energy sector evolves very slowly Sector is reluctant to change, it promotes proven technologies instead of clean innovations Energy in our society needs to be available everywhere at the same time, renewable energy projects are just scaling-up (no distribution systems) New technologies compete with current and proven fossil fuel energy sources Stock of existing fossil fuel assets still in use (it takes a few decades to phase-out incumbents) Ramon Sanchez Harvard University Slide # 7

8 If renewable energies are so good… Why aren’t we using them more?
Effects in the international prices of food Example: Effects of U.S. Energy Policy Act of 2005 Ramon Sanchez Harvard University Slide # 8

9 If renewable energies are so good… Why aren’t we using them more?
Uncertainties about reduction of greenhouse gases Example of Carbon Dioxide Debt of bio-fuels due to land use changes USA Brazil Brazil After: Brazilian Soybeans are used to feed U.S. Cattle due to high prices of Corn for ethanol. Side-effects: Rainforest deforestation, carbon dioxide debt Before bio-fuels’ subsidies: U.S. Soybeans were used to feed U.S. Cattle Ramon Sanchez Harvard University Slide # 9

10 If renewable energies are so good… Why aren’t we using them more?
COST!!! COST!!! COST!!! The hidden secret about energy is that it is highly correlated to social and economic well-being For that reason policy makers, industry, commercial users and residential users (in other words EVERYONE) like cheap energy: Production cost of a gallon of regular diesel: $1.2 - $1.5/gallon Production cost for a liter of biodiesel: $1.74/gallon from palm oil, $2.28/gallon from soybeans, $ /gallon from algae Production cost of fossil electricity: 4 to 8 cents/KWh Price of electricity with carbon capture: 10 to 17 cents/KWh Ramon Sanchez Harvard University Slide # 10

11 If renewable energies are so good… Why aren’t we using them more?
Business-as-usual cycle for energy regulation Operational Costs Legal and “Lobbying” Costs Measurement and characterization of adverse health effects Environmental Pollution Implementation of new energy Technologies Request for regulations Adverse Health Effects Legal litigations Changes in tooling and production methods Product Development of new energy technologies Research and Development of new energy technologies Creation of regulatory limits for pollutants Cost increases Low to moderate cost Cost increases The business-as-usual cycle of “command and control” regulations is very reactive Ramon Sanchez Harvard University Slide # 11

12 Risk influence in cost of money
Project 1: 500 MW Coal-fired power plant Estimated Cost: $1.5 Billion USD Technology Risk: Very Low (Proven Technology) Business Model Risk: Extremely Low Market Risk: Very Low (everyone likes cheap elect) Supply Risk: Very Low (coal mines, railroads, etc) Policy Risks: Moderate (Legislators are scared of passing climate change regulations because the industry has successfully convinced people that such legislation is a “job killing” liberal policy, so it is not likely to pass in the near future) Capital Risks: Very Low (infrastructure prices and potential revenues are very predictable) Construction Risks: Low (contractors have been building these power plants for decades) Operation Risks: Very Low Ramon Sanchez Harvard University Slide # 12

13 Risk influence in cost of money
Project 2: 500 MW Coal-fired power plant with CCS Energy Intensive: You reduce electricity output to the grid by 18 to 23 % (less product) Capital Costs Increase by 60 % Operation Costs Increase by 20 to 40 % Average Costs of Electricity Increase 80 to 100 % Long Term Health Effects of Chemicals used in Carbon Capture are unknown Storage Potential is Uncertain, special geological formations are needed under power plant (not all existing power plants meet these conditions) Underground Capture Period is Uncertain, constant monitoring and risk assessment is needed Ramon Sanchez Harvard University Slide # 13

14 Risk influence in cost of money
Project 2: 500 MW Coal-fired power plant with CCS Estimated Cost: $1.8 to 2.5 Billion USD Technology Risk: Moderate to high (do you achieve carbon sequestration underground?) Business Model Risk: High (paid with carbon credits?) Market Risk: High (expensive electricity) Supply Risk: High (Who services carbon capture?) Policy Risks: Moderate (What are the occupational hazards of this new technology?) Capital Risks: High (costs for carbon sequestration underground is uncertain) Construction Risks: Moderate (new facilities, similar to oil industry, but still different) Operation Risks: High (nobody has operated a large scale carbon sequestration operation) Ramon Sanchez Harvard University Slide # 14

15 Risk influence in cost of money
You are a private lender (i.e. “Banker”) and I come to you to get funding for two projects: Project 1: 500 MW Coal-fired power plant (low risk, predictable revenues) Project 2: 500 MW Coal-fired power plant with Carbon Capture and Storage (moderate to high risk and less revenues) What interest rate would you give me for each loan? Ramon Sanchez Harvard University Slide # 15

16 How do we close the gap? + =
We analyze current technologies and try to find a solution, this is where Microalgae and other Micro-organisms could play a big role in large scale Carbon Capture Operations Biological systems might reduce the cost of Carbon Capture while eliminating toxic emissions from thermoelectric power plants + = Ramon Sanchez Harvard University Slide # 16

17 What is microalgae? Photosynthetic Microalgae
Micro-organisms that float in water and perform photosynthesis More efficient converters of solar energy (3 times more efficiency than land plants) Very simple cellular structure They don’t require: Freshwater Farmland (so they don’t compete with food) VS Ramon Sanchez Harvard University Slide # 17

18 Microalgae Biodiesel Production
Micro-algae Production Process Species Selection Algae culture Inoculation +CO2 and nutrients Mixing Harvesting Oil Extraction Soap and cosmetics Glycerin recovery Bio-diesel fuel Ramon Sanchez Harvard University Slide # 18 Transesterification 18

19 Basic Biodiesel Production Process
Extract oils from biomass and use the following process: (Sodium Hydroxide) Ramon Sanchez Harvard University Slide # 19

20 Production yields, environmental features and areas of opportunity
Production Yields: between 28,000 and 34,500 liters of biodiesel per hectare per year ( 2925 to 3600 gallons/acre.year) Carbon intensity is 63 to 86 % lower than regular diesel An hectare of microalgae averts 300 tons of CO2 from being emitted Environmental impacts of algae biodiesel production are 76 % lower than petroleum diesel Areas of opportunity: Cost reduction, you need $28,400 to build an acre of microalgae pond, your operating costs are $18,624 per acre per year. You use approximately pounds of urea (nitrogen fertilizer) per acre per year for your operation. Ramon Sanchez Harvard University Slide # 20

21 Enhanced Photosynthesis: Nitrogen Fixing Cyano-Bacteria
These organisms are extremely efficient in performing photosynthesis (as good or better than microalgae). They are responsible for creating a rich-oxygen atmosphere in this planet a few billion years ago They fix nitrogen from the atmosphere, so they are able to grow as long as there is a source of nutrients Ramon Sanchez Harvard University Slide # 21

22 Enhanced Photosynthesis: Nitrogen Fixing Cyano-Bacteria
They are also called “blue-green” algae, they are very effective in creating biomass. Some Cyano-Bacteria species have been Genetically Modified to improve photosynthesis efficiency and “secrete” hydrocarbons, so there is no need to process biomass to extract oil. Ramon Sanchez Harvard University Slide # 22

23 Production yields, environmental features and areas of opportunity
Production Yields: between 33,000 and 65,000* liters of biodiesel per hectare per year ( 3450 to 6750 gallons/acre.year) Carbon intensity is at least 75 % lower than regular diesel An hectare of cyano-bacteria averts between 280 and 400 tons of CO2 from being emitted Environmental impacts of cyano-bacteria biodiesel production are at least 65 % lower than petroleum diesel*, low fertilizer use Areas of opportunity: Cost definition beyond demonstration, no cost available at large scale. Genetic modification might increase costs due to stringent environmental controls or might create high legislative risks, difficulties to separate fuel from water Ramon Sanchez Harvard University Slide # 23

24 Enhanced Photosynthesis: Nitrogen Fixing Cyano-Bacteria
Scenario: A superior strain of blue-green (i.e. genetically modified) algae escapes the cyano-bacteria farm Optimistic outcome: It produces a mild “algae bloom” and then the ecosystem takes care of it (zooplankton and small fish have a feast) Pessimistic outcome: It overwhelms all other algae species, uses atmospheric nitrogen to grow, creates uncontrollable eutrophication and secretes “fuel” in natural water bodies killing everything in it Ramon Sanchez Harvard University Slide # 24

25 Cost and Risk Management
Proactive approach to change the cycle of energy regulation Operational Costs Legal and “Lobbying” Costs Measurement and characterization of adverse health effects Environmental Pollution Implementation of new energy Technologies Request for regulations Adverse Health Effects Simulated scenarios ??? Legal litigations Changes in tooling and production methods Product Development of new energy technologies Research and Development of new energy technologies Creation of regulatory limits for pollutants Cost increases Low to moderate cost Cost increases How about being a little proactive using public health to reduce risks? Ramon Sanchez Harvard University Slide # 25

26 Enhanced Photosynthesis: Nitrogen Fixing Cyano-Bacteria
After checking different scenarios and risks in your operation, you might actually approach an adequate solution which reduces potential financial burdens Plasma Incinerator for biological waste Ramon Sanchez Harvard University Slide # 26

27 Another potential solution for both microalgae and cyano-bacteria: Photo Bio-Reactors
Controlling temperature in a PBR submerged in water increases production costs by only 25 % compared to open ponds, but production yields are increased by 100 % in microalgae, and environmental risks are drastically reduced for cyano-bacteria. The problem here is water evaporation in the desert (we can use saltwater aquifers, but they are not that common) Ramon Sanchez Harvard University Slide # 27 27

28 Photo Bio-Reactor Operation
We placed a PBR in a pond and cover it with water, we found a lot of the potential problems for the system after scaling it up in the desert. This new knowledge gave us an idea Ramon Sanchez Harvard University Slide # 28 28

29 Use constant ocean temperature and decreasing light penetration in oceans to control both factors in a PBR You place a PBR in open ocean, water temperature is almost constant in the first 20 to 50 meters of depth (so temperature is controlled) and light decreases with depth, so you sink the array when solar irradiation is too high and bring it back to the surface when solar irradiation is low, this is a good way to maximize production yields) Ramon Sanchez Harvard University Slide # 29 29

30 Economic and social impacts of micro-algae farming
Ramon Sanchez Harvard University Slide # 30

31 Current State of the Art in Photosynthetic Systems
We are working right now in the Mexican North West were we can find deserts next to oceans (Sonora, Baja California, etc), so we can implement this technique without going off-shore and without using freshwater. This is the state of the art to scale up PBRs for photosynthetic species, it costs a little bit more than open ponds, but costs are going down with scale. Production yields are double of what we get in ponds Ramon Sanchez Harvard University Slide # 31 31

32 Offshore array tested on dry land first
However, we keep working on having a fully functional large scale operation in the ocean. Why? Less impacts to biodiversity if inter- oceanic nutrient poor waters are used for micro-algae farming (check the following slides): Red and orange colors are areas where water temperature allows production of algae species for fuel. Yellow and green areas show areas where water temperature allows production of algae species for Omega 3 fatty acids and food Considering our current population growth, increasing demand for energy, decreasing fisheries and growing demand for protein to feed cattle due to the sharp increase in meat consumption in emerging economies, we might need to farm in the oceans by the end of the century, we have to be ready for that Ramon Sanchez Harvard University Slide # 32

33 Economic and social impacts of micro-algae farming
However: What do we do in cold areas with limited or low solar irradiation? Ramon Sanchez Harvard University Slide # 33

34 How do we deal with algae farming in cold weathers?
Ramon Sanchez Harvard University Slide # 34

35 How do we deal with algae farming in cold weathers?
Use heterotrophic algae: These algae species don’t require light so they can grow indoors, they only need a stable source of organic carbon like agro-industrial waste, food waste and/or transformation of CO2 from a power plant into acetic acid to feed the algae. Heterotrophic algae have higher yields than photosynthetic organisms!!! Ramon Sanchez Harvard University Slide # 35

36 Business opportunities for those that know their (green) tech
Massachusetts Heterotrophic Algae Species (Indoors, Cold Water Algae). Heterotrophic Algae Species found 50 Nm East of Gloucester at a depth of 80 ft, it feeds on dissolved carbon from power plants Source of CO2: Salem (Dominion) Power Plant, expected to close in 2015 due to environmental regulations for SO2 emissions. Current: Produces 2.6 Billion KWh/year, 2,443,725 Tons of CO2/year, No toxic emissions control, it produces health damages for 692 Million dollars/year. Annual Revenues: Between $104 and 234 Million Dollars/yr (no info on cost structure) Future: Produces 5.17 Billion KWh/year, 488,745 Tons of CO2/year, 90 % toxic pollution reduction and 252 Million gallons of algae biodiesel, no problems to comply with environmental regulations, health damages are reduced by 90 % Annual Revenues: Between $206 and $414 Million Dollars/yr for electricity, $67 Million dollars for biofuel sales $1.2/gallon), $29 to $45 Million Dollars for Organic Fertilizer sales and $14.4 Million Dollars for Carbon Credits ($2/Ton CO2)

37 Risk Reduction in the cost of Money
Which project is more likely to get a loan? Project 1: 500 MW Coal-fired power plant (BAU) Project 2: Buy and retrofit an old 900 MW Coal-fired power plant with Carbon Capture and Biological Storage using heterotrophic algae. You have to be extremely good in developing the technological part of your project to be able to show how green tech enables business opportunities, and we haven’t talk about health benefits yet… Ramon Sanchez Harvard University Slide # 37

38 Biodiesel pays for CCS Algae biodiesel increase capital costs, but makes CCS independent of site conditions (geology) and “pays” for the Carbon Capture and Storage Operation, Electricity Costs go up only by % and you produce fuel to clean this mess caused by mobile emissions Mexico City’s Metropolitan Area Population: 20 Million and 4 Million Cars (and they have to breath this air) Ramon Sanchez Harvard University Slide # 38

39 Benefit/Cost Analysis of Bio-diesel Introduction: Emissions Estimation
Number of vehicles and proportions Vehicle Kilometers Traveled Regular Diesel Emissions (g/Km) Ramon Sanchez Harvard University Slide # 39

40 Benefit-Cost Analysis of Bio-diesel Introduction in Mexico City
Ramon Sanchez Harvard University Slide # 40

41 Benefit-Cost Analysis of Bio-diesel Introduction in Mexico City
Benefits Costs Ramon Sanchez Harvard University Slide # 41

42 Benefit-Cost Analysis of Bio-diesel Introduction in Mexico City
Ramon Sanchez Harvard University Slide # 42

43 Benefit-Cost Analysis of Bio-diesel Introduction in Mexico City
However… Remember this? Ramon Sanchez Harvard University Slide # 43

44 Benefit-Cost Analysis of Bio-diesel Introduction in Mexico City
Effects of capturing CO2 from thermoelectric power plants near Mexico City to produce algae Pollutant Dailiy Emissions Difference (Tons/day) Differences in PM Concentration (µg/m3) Premature deaths prevented (lives saved/year) Economic benefits of mortality Prevention PM2.5 -0.79 -7 E-04 µg/m3 0.13 $0.14 Million USD/year Secondary PM2.5 from SO2 µg/m3 1120 $1270 Million USD/year Secondary PM2.5 from NOx -17.05 -0.03 µg/m3 6.16 $6.65 Million USD/year Ramon Sanchez Harvard University Slide # 44

45 Benefit-Cost Analysis of Bio-diesel Introduction in Mexico City
Effects of capturing CO2 from thermoelectric power plants near Mexico City to produce algae 1126 Lives Saved and $1.27 Billion Dollars of Additional Health Benefits per year due to Carbon Capture from power plants, for a total of $1.62 Billion Dollar per year if algae biodiesel is produced and used in Mexico City, enough to pay for Carbon Capture and Biofuel Production even without considering revenues from biodiesel sales!!!! Pollutant Dailiy Emissions Difference (Tons/day) Differences in PM Concentration (µg/m3) Premature deaths prevented (lives saved/year) Economic benefits of mortality Prevention PM2.5 -0.79 -7 E-04 µg/m3 0.13 $0.14 Million USD/year Secondary PM2.5 from SO2 µg/m3 1120 $1270 Million USD/year Secondary PM2.5 from NOx -17.05 -0.03 µg/m3 6.16 $6.65 Million USD/year Ramon Sanchez Harvard University Slide # 45

46 Benefit-Cost Analysis of Bio-diesel Introduction in Mexico City
Additional Benefits Reduction of 6 million tons CO2/year from power plant operations (Microalgae production only) Reduction of 920,000 tons of CO2/year from introducing B20 fuel blend (from Microalgae) Reduction of 2.4 million tons of CO2/year from introducing B100 in buses only (from Microalgae) You can trade all these emissions reductions!!! Ramon Sanchez Harvard University Slide # 46

47 What do we do as environmental professionals?
Option 1: Business-As-Usual Reactive Approach (The world without microalgae, cyanobacteria and other solutions) We wait until technology is used, we measure health effects, we propose command-and-control regulation to reduce pollution and spend the next 20 years trying to make it happen in Congress or in the courtrooms, or… Option 2: Proactive Approach for Risk Reduction. We understand the role of risk in implementing clean energy, we estimate health effects of current technologies and create scenarios for potential health effects for future technologies to create solutions, then we collaborate with energy suppliers in implementing them in less than a decade… Ramon Sanchez Harvard University Slide # 47

48 Conclusions There are different options when implementing a renewable energy production project Biological systems help to pay for Carbon Capture from a power plant Health effects are a good way to establish objective benefits of renewable energy projects in the short term to promote change, but this tool should not be abused. It is better to state the problem and propose a solution that reduces project risks in order to generate enough social, economic and political will to implement sustainability projects. Ramon Sanchez Harvard University Slide # 48

49 Questions?? Ramon Sanchez Harvard University Slide # 49

50 Additional Material Ramon Sanchez Harvard University Slide # 50

51 Types of Risk in Renewable Energy Projects
Technology Risk (Does it work? Is it reliable?) Business Model Risks (How do I make money from it?) Market Risks (Who is going to buy my product?) Supply Risks (Where do I get input materials/services to operate?) Policy Risks (Is the government going to change the rules for my operation?) Capital Risks (Where do I get money to finance infrastructure for clean energy?) Construction Risks (Is it going to be completed on-time and on-budget as planned?) Operation Risks (Can I run the operation efficiently as planned?) Ramon Sanchez Harvard University Slide # 51

52 Risk Reduction in Renewable Energy Projects
These are real results when asking for a loan, both with an International Development Bank: Project 1: 500 MW Coal-fired power plant (Interest Rate 5 %, Grace Period 12 years) Project 2: 500 MW Coal-fired power plant with Carbon Capture and Storage using Microalgae to produce biodiesel, Protein Meal and Glycerin (Interest Rate 3.71 %, Grace Period 12 years) So, the public health benefits are used to access cheap financing and enable introduction of clean technologies Ramon Sanchez Harvard University Slide # 52

53 Basics of Micro-algae farming
Continuous mixing of algae with CO2 and nutrients in a production pond Culture algae Inoculation of algae in ponds Harvesting of algae using filtration systems Ramon Sanchez Harvard University Slide # 53 Micro-algae production ponds

54 Microalgae Potential Yields
Fats Biodiesel & Hydrogen Carbohydrates Ethanol Proteins and anti-oxidants Food Supplements and Medicines Example of estimated production with Nannochloropsis Oculata 36% fat, 30 % Proteins, 14 % carbohydrates, 20 % fiber 34500 Liters Biodiesel/Ha-year, Liters of Ethanol/Ha-year, Liters Hydrogen/Ha-year Ramon Sanchez Harvard University Slide # 54

55 Photo Bio-reactor Microalgae Farming
- Close-Loop Photo bioreactor (PBR) is more efficient because there is less parasitic contamination, besides nutrients and carbon dioxide are easier to control, so you roughly duplicate production yields (approximately 18,000 gallons of algae biodiesel per hectare per year) The main problem is controlling light and temperature PBRs heat up in sunny days and algae gets overexposed to sunlight so production yields go down if this is not controlled. Production costs increase to compensate for that, so it is very expensive to have large scale operations using PBRs Ramon Sanchez Harvard University Slide # 55 55

56 Economic and social impacts of micro-algae farming
Ramon Sanchez Harvard University Slide # 56

57 Economic and social impacts of micro-algae farming
Ramon Sanchez Harvard University Slide # 57


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