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Managing Your Energy Portfolio in a Greener World CCS Challenges and Solutions Through Focused R&D José D. Figueroa, MBA, PMP St. Petersburg, Florida January.

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Presentation on theme: "Managing Your Energy Portfolio in a Greener World CCS Challenges and Solutions Through Focused R&D José D. Figueroa, MBA, PMP St. Petersburg, Florida January."— Presentation transcript:

1 Managing Your Energy Portfolio in a Greener World CCS Challenges and Solutions Through Focused R&D José D. Figueroa, MBA, PMP St. Petersburg, Florida January 18, 2007 U.S. Department of Energy National Energy Technology Laboratory

2 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Outline What is the CO 2 Capture Market ? Why Focus on CO 2 Capture Program Objectives? Possible Implications for Certain Industries ? Where are the CO 2 Emission and Sink Concentrations ? Capture Ready Should it be considered? Closing Thoughts

3 José D. Figueroa./ IPED Conference/ January 17-19, 2007 What is the CO 2 Capture Market ? NGCC Coal Dominates CO 2 Emissions From Fossil Power Generation As Percent of Coal-fired Generation Grows to 59% (2030) Scrubbed Steam Unscrubbed Steam Advanced Steam IGCC Tons (millions) Oil/Gas Turbine Gas Turbine Oil/Gas CC Advanced SC Advanced CC Oil/Gas Steam Coal 88% (2030) Oil 2% (2030) Natural Gas 10% (2030) 75% of all coal related CO 2 production from existing coal-fired power generation.

4 José D. Figueroa./ IPED Conference/ January 17-19, 2007 CO 2 FROM GAS TURBINE CAPACITY FORECAST AEO06 NGCC Capacity Factor (CF) in 2013 forecasted at 40% and 32% in Simple Cycle CF in 2013 forecasted at 13% and 11% in Commercialization focus not with natural gas plants.

5 José D. Figueroa./ IPED Conference/ January 17-19, 2007 What is the CO 2 Capture Market ? Who is the customer, so that the Capture R&D Program is focused on meeting their needs? Total 9,877 units installed in the U.S. 337 GW of coal-fired units 422 GW of gas-fired units 64 GW of oil-fired units 423 existing coal-fired power plants Comprised of 1,089 boiler units Generate 323 GW (Phase 1&2) Emit 1,917.2 million metric tons of CO 2 Source: EIA, UDI, EPA

6 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Power Market Sector Most Likely to Adopt CCS Lowering age of candidate boilers to less than 30 years old excludes: 99 boilers ~64 GW of capacity ~407 Million tons of CO 2 emissions

7 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Maximum CO 2 Percent Reduction Goals for the Phase I &II Coal Fired Power Sector Phase I & II Total Capacity is 323 GW. Target Market of 184 GW can achieve approximately 50% Reduction. Smaller and older Units in the Coal-Fired Power Generation Fleet that are unlikely to adopt CCS.

8 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Why the Need to Focus on the CO 2 Capture Program Objectives Energy Penalty due to CO 2 Capture 10%20%30%40% Target Market, GW184 Fleet CO 2 Reduction, % New Capacity Reqd, GW Additional Coal Reqd., tons x ,940179,864308,338479,637 Cost of New Capacity, MM$45,975103,444177,332275,850 Cost of CO 2 Retrofits, MM$91,950 Total New Cost, MM$137,925195,394269,282367,800 Current Energy Penalty of CO 2 BACT MEA Absorption System Need for further R&DD to minimize the cost and externalities impact due to CO 2 Capture and Storage.

9 José D. Figueroa./ IPED Conference/ January 17-19, 2007 What are the Possible Implications for Certain Industries Tied to the CO 2 Capture Market ?

10 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Coal Capacity History and Forecast AEO05 Forecast - Annual Energy Outlook 2005 Historic Data - UDI 2001 Operating Data Will the Nations Industry be Prepared and Capable of Meeting This Coal Plant Forecast? Capacity Added MWs Capacity Addition Levels Not Seen in 40 Years? Industry Growth Trend Not Seen in 50 Years? 20 Year Market Trough 1973 additions greater than total for last 15 years

11 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Additional Capacity Required to meet Increased Targets for CO 2 Emission Reduction Current U.S. Coal Fired Electric Power Generation is 337 GW. The 165 GW of Additional Capacity indicated is Needed to Return to Grid Parity with BAU CO 2 Capture under a 50% total U.S. Coal Fired Power Sector Emission Reduction Scenario.

12 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Additional Coal Requirements to meet Increased Targets for CO 2 Emission Reduction Current U.S. Coal Consumption for the Power Sector Emphasizes the Need for R&D to Drive Down the Energy Penalty Associated with Best Available CO 2 Capture Technology

13 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Market Potential for ASUs Based on Retrofit and Capacity Addition with OxyCombustion Current Annual ASU Industry Manufacturing Capabilities. Can the Industrial Gas Industry Ramp up Installation Capabilities to Meet this Market Demand?

14 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Total Cost Associated with Retrofitting the Existing Fleet with a CO 2 Capture Plant to meet Increased CO 2 Emission Reduction Targets $540 Billion or $240 Billion? You Decide whether CO 2 Capture R&D is needed to reduce the cost of implementation.

15 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Where Are the CO 2 Emission Concentrations? 2005 – 2030

16 José D. Figueroa./ IPED Conference/ January 17-19, 2007 NEMS Electricity Market Module Regional Designations

17 José D. Figueroa./ IPED Conference/ January 17-19, CO 2 Forecast < 100 > 100 < 200 > 200 < 300 > 300 < 400 > 400 < 500 > 500 < 600 > 600 < 700 > 700 < 800 > 800 (million tons) Source: :EIAs Annual Energy Outlook 2006http://www.natcarb.org

18 José D. Figueroa./ IPED Conference/ January 17-19, 2007 < 100 > 100 < 200 > 200 < 300 > 300 < 400 > 400 < 500 > 500 < 600 > 600 < 700 > 700 < 800 > 800 (million tons) 2010 CO 2 Forecast Source: :EIAs Annual Energy Outlook 2006http://www.natcarb.org

19 José D. Figueroa./ IPED Conference/ January 17-19, 2007 < 100 > 100 < 200 > 200 < 300 > 300 < 400 > 400 < 500 > 500 < 600 > 600 < 700 > 700 < 800 > 800 (million tons) 2015 CO 2 Forecast Source: :EIAs Annual Energy Outlook 2006http://www.natcarb.org

20 José D. Figueroa./ IPED Conference/ January 17-19, 2007 < 100 > 100 < 200 > 200 < 300 > 300 < 400 > 400 < 500 > 500 < 600 > 600 < 700 > 700 < 800 > 800 (million tons) 2020 CO 2 Forecast Source: :EIAs Annual Energy Outlook 2006http://www.natcarb.org

21 José D. Figueroa./ IPED Conference/ January 17-19, 2007 < 100 > 100 < 200 > 200 < 300 > 300 < 400 > 400 < 500 > 500 < 600 > 600 < 700 > 700 < 800 > 800 (million tons) 2025 CO 2 Forecast Source: :EIAs Annual Energy Outlook 2006http://www.natcarb.org

22 José D. Figueroa./ IPED Conference/ January 17-19, 2007 < 100 > 100 < 200 > 200 < 300 > 300 < 400 > 400 < 500 > 500 < 600 > 600 < 700 > 700 < 800 > 800 (million tons) 2030 CO 2 Forecast Source: :EIAs Annual Energy Outlook 2006http://www.natcarb.org

23 José D. Figueroa./ IPED Conference/ January 17-19, 2007 < 100 > 100 < 200 > 200 < 300 > 300 < 400 > 400 < 500 > 500 < 600 > 600 < 700 > 700 < 800 > (million tons) Saline Oil/Gas Coal CO 2 Forecast and Sequestration Option Source: :EIAs Annual Energy Outlook 2006http://www.natcarb.org

24 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Companies Urged to Reveal Climate Risk Information 27 Institutional Investors Managing $1,000 Billion in assets: Called SEC to require listed companies to disclose the risks that global warming poses to their financial performance. Complaint concerns ambiguity of SEC rules in this area. Investors are not receiving the climate risk information from companies that is essential to their investment decision-making. California Public Employees Retirement System (Calpers) Chairman, Rob Feckner. Letter to SEC signed by: State treasurers of CA, KY, ME, NY, OR, VT. UKs F&C and Calvert in the US. International Brotherhood of Teamsters Growing interest from international investors in how social, environmental and corporate governance issues affect companies financial performance. Printed: June 15, 2006

25 José D. Figueroa./ IPED Conference/ January 17-19, 2007 CO 2 Capture Ready Approach Existing coal fired power plants could be made capture ready by: determining the requirements to meet the status of Capture Ready, perform only the necessary modifications to accept a CO 2 capture system over one or several planned outages. Benefits: This approach could minimizes the need for an extended costly outage during implementation. Reduces the potential CO 2 liability risk due to the Sarbanes-Oxley Act of 2002 Potentially increases the opportunity for market analyst ratings to be higher Due to a corporate approach to mitigating their CO 2 liability risk over others in the sector that are not.

26 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Closing Thoughts Target market consists of all Phase 1 and 2 boilers larger than 300 MW and less than 35 years old (184 GW). The existing coal fired fleet produces 67% of the U.S. power sector CO 2 emissions and 75% of all CO 2 emissions from coal based power generation, at least until CCS has implications to industries supporting the power sector which need to be recognized and further analyzed. Post Combustion power cycles whether existing or advanced power cycles will be a significant part of the power generation sector for the foreseeable future. Focusing R&D to those units likely to adopt CCS will increase the likelihood of having CO 2 control technologies commercially available if needed.

27 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Closing Thoughts Decision makers should consider Capture Ready options during the design phase of repowering and capacity addition projects to hedge themselves against potential future regulations. Climate Risk Disclosure is moving into the mainstream and is supported by stakeholders in the financial industry, on which many in Corporate America rely. State and Regional Initiatives are the first movers relative to regulations. Are your assets prepared for CO 2 mitigation? Capture Ready plants will be able to meet regulations with less cost and impact to plant operations.

28 José D. Figueroa./ IPED Conference/ January 17-19, 2007 Questions ? José D. Figueroa, M.B.A., PMP


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