16 march 2016

Do we need CCS to keep using coal? Part 1

by Stephan Singer, WWF, March 14, 2016

Part 1: The plight of coal

Coal powered plants are the largest individual source of climate pollution. They’re globally responsible for almost 40 per cent of electricity generation, but they also generate more than 70 per cent of CO2 emission in that sector. Coal burning is the main culprit of about 3.5 million people dying annually from air pollution, mainly in cities.

The International Monetary Fund (IMF) calculated recently that global coal’s combined external costs and damages to health, nature, water and land (through air pollution and global warming) approximates €3 trillion annually. That’s equivalent to 4 per cent per cent of the global GDP, and it is not accounted for by anyone’s budget.

Instead, it is paid for by all citizens with their health, by ecosystems impacted by climate change, by people living on small island states and coastal areas (who fear flooding from increased sea level rise) and vulnerable communities, who are exposed to lowered food security by enhanced weather extremes. Those global post-tax subsidies for coal are about six times higher than all investments in renewables and energy efficiency combined.

Coal’s social license to operate is eroding speedily. Many conservative and large financial institutions have already agreed on divestments from coal in the last year, such as the Norwegian Sovereign Wealth Fund, the private banks and insurers AXXA and Allianz.

Simultaneously, the Stowe Global Coal Index, comprising the share prices of almost all coal-mining companies and coal-using power utilities globally, has lost about half of its value in less than two years. And recently the US-based Arch Coal, one of the largest coal mining companies, filed for bankruptcy.

Coal India, the national monopoly and world’s largest coal mining company, is historically plagued with corruption issues, ineffectiveness and various court cases; if not state owned, it would have gone bust long time ago. A few days ago, JP Morgan, one of the largest US banks, followed some peers like Citigroup to stop or curtail any financing of coal activity in OECD countries.

Decline of coal use, particularly in China and the EU in 2014 and 2015, was the key reason for the observed slight decrease in global energy-related CO2 emissions.

Can coal get clean?

But coal is still alive and kicking and far from “terminal decline”, as some say too optimistically.

Consequently, some academics and more educated fossil fuel lobbyists have begun arguing increasingly and particularly after the recent Paris climate agreement, which urges that the world must stay “well below 2 degrees” global warming and pursuing efforts to not exceed 1.5 degrees, that in order to combat climate change effectively, that Carbon Capture and Storage (CCS) is necessary.

CCS refers to the idea of capturing CO2 from the smokestack of any large industrial installation like a coal plant and transporting it via a pipeline to a deep geological layer where it is said to be safe from gassing out for thousands of years.

They argue this is necessary because coal is here to stay for many years, particularly in rapidly industrialising countries with large domestic coal resources like China and India. These countries would have a need for reliable and cheap baseload power for their economic development that renewable energy cannot deliver cost-effectively.

A further political argument is that CCS with coal or with fossil gas, if required, is much easier to implement than a rapid system shift to a much more democratic and participatory renewables-based energy system. This would give the incumbent industries a role in a future decarbonised economy.

Meanwhile, so goes the argument, completely omitting coal speedily as a century-old fuel responsible for global economic wealth involves new and “disruptive” solutions. These disruptions would create technical bottlenecks and political tensions that might cause delay in needed decarbonisation, undermine the security of supply and might simply be hard to accept for many and not only conservative decision makers.

I do not believe that this is a solid, environmentally sound and economic option for a range of reasons for a climate resilient, equitable zero-carbon world that needs to decarbonise as soon as possible, starting with coal. More on this later.

Industrial carbon

However, in the industrial sector and in combination with other energy- and carbon-saving measures, technology and material change innovations, CCS for process emissions (such as those for producing steel, cement and chemicals) could make sense.

Industrial process CO2 accounts for about 8 per cent of all global greenhouse gas emissions. Rather than phasing out steel and cement for the necessary build-up of industrial and other infrastructure, particularly in developing nations, the world needs to phase out harmful carbon pollution from these products because we have no present alternative to these materials.

We have not time to lose on our pathway to comply with a 1.5 degree Celsius global warming threshold, as aspired to in the Paris agreement in December. We need enhanced actions by everyone in all sectors and to leverage the money and policies for doing so.

Rapid scale up of CCS in the industrial sector might be unavoidable, but CCS in the power sector for coal is a harmful avenue to walk because we have plenty of alternatives such as renewables and energy efficiency.

Dr Stephan Singer is WWF International’s director for global energy policy.


Do we need CCS to keep using coal? Part 2

By Stephan Singer, WWF, March 15, 2016

This is part two of a three-part essay on CCS by Dr Stephan Singer.

Part 2 – Coal, CCS and the power sector

As mentioned in part 1, while there may be a case for carbon capture and storage in the industrial sector, in the power sector, it does not contribute to solving many other environmental problems that coincide with coal usage.

In drier countries and regions of the world, freshwater supply is increasingly constrained and scarce. Coal with CCS needs significantly more water for cooling than a conventional coal plant. The International Energy Agency (IEA) has shown that the power sector is now responsible for about one quarter – and rising – of freshwater use. Freshwater is direly needed for other purposes such as human demand, agricultural irrigation for food security and securing biodiversity in rivers.

Further, conventional air pollution from coal is generally only slightly reduced by CCS and would require additional investments for “clean” coal. By comparison, wind, solar and geothermal energy in closed circles do not need any freshwater supply in the operational phases nor do they generate any hazardous air pollution and any toxic or solid waste (like fly ash from coal).

There are also electricity system inertia that advise us to not rely on coal with or without CCS in a decarbonised economy. Independent of whether this happens sooner or later, the fact remains that most countries are increasing the output of weather-dependent renewables such as solar and wind. To balance that growing variability and maintain system reliability for a safe power supply, other power sources like coal or gas need to be increasingly ramped up and down over the day to follow the consumers demand curve.

While fossil gas turbines might comply with these needs within few minutes, nuclear and coal as classical baseload supply sources can’t hardly do so without major losses in efficiency. Their technologies are not made for a world with growing dispatch-based renewable electricity on demand.

The consequence for coal power is that this energy penalty grows CO2 emissions per kWh, because the plant is not operating permanently in an ideal and permanent high boiler temperature zone. If the plant is equipped with CCS technology, its CO2 capture efficiency is likely to be reduced significantly as well, and the claim of a “low-carbon” technology becomes questionable. This is also true for a gas plant as well, if ramped up and down regularly.

There are fundamental system conflicts in power supply – one can’t have coal, nuclear and a large fleet of wind and solar to secure grid stability for the consumer.

Lastly, there are many uncertainties associated with safe and reliable CO2 storage in respective geological formation and the need for century-long monitoring. We know from calculations by the UK-based Hadley centre and others that stored CO2 can’t exceed a leakage rate of more than 0.01 per cent annually to be environmentally effective for its purpose. That sounds very low, but at least 40 per cent of CO2 remains in the atmosphere for more than 1000 years.

There are therefore good reasons why WWF demands that coal for power production must be terminated by 2035 at the latest in OECD and Russia, and that after 2030 there is a rapid decline of coal in all remaining mainly developing countries.

Some stakeholders argue that this position should be valid only for “unabated” coal – but we say that all coal needs to go eventually, with or without CCS, to not undermine our call for 100 per cent renewables by 2050.


Do we need CCS to keep using coal? Part 3

This is the final part of a three-part essay by Dr Stephan Singer.

Part 3: The economic cost of CCS

by Stephan Singer, WWF, March 16, 2016

Despite 15 years of advocacy by the fossil fuel industry incumbents, 10 years after a lengthy Special Report by the Intergovernmental Panel on Climate Change (IPCC) highlighting the many technical opportunities and economic benefits of “low-carbon” CCS, there are still only thirteen CCS projects worldwide, using CO2 for commercial use of enhanced oil exploration and recvovery (EOR) and in the power sector. Overall CCS projects store about 27 mio tons CO2 per year.

That isn’t a lot, and it accounts for less than 0.1 per cent of all energy-related CO2 emissions. But worse, according to the International Energy Agency (IEA), only eight projects, with an estimated emission reduction of about 6 mio tons CO2, have undergone an independent monitoring review which is less than 0.02 per cent of the CO2 emitted by all fossil fuel products.

Though the global fossil fuel-sponsored CCS Institute expects another 30 or so CCS projects to become operational in the next few years, the estimated CO2 captured and stored of all these projects would equal about 70 mio t CO2 annually.

This is far less than what the IEA suggests is needed for a viable CCS future in a decarbonised energy sector. The IEA proposed that CCS in the power sector should be able to avoid up to 1 billion tons of CO2 per year by 2030. The verified 6 mio tons of stored CO2 today are about 0.6 per cent of that amount. That is a rather miserable record for a large and rich fossil fuel producing industry that had at least a decade to showcase the effectiveness of that technology.

They are not investing in CCS because they do not believe in the economic viability of the technology. So why then should governments do that? The fossil fuel industry keeps on demanding public subsidies for CCS, not because they are cash-stripped newcomers or entrepreneurial actors on the energy market. No, it is because it is expensive.

That is why the coal industry argues that governments should remain “technology-neutral” and give CCS the same support as renewables received in last 10 years. This, in principal, might be a solid argument for a functioning energy market but is bogus in practice.

Firstly, support for renewables has resulted in large manufacturing cost reductions of 60 per cent to 80 per cent for wind and solar since around 2010. And secondly, the coal industry had received many times more “subsidies” in the form of non-accounted-for externalities such as air pollution and global warming. If the affected industry believes that coal CCS contributes to a zero-carbon economy, it’s up to them to finance that and foremost pay back the burden they posed illegitimately on our global commons.

But they don’t and won’t – at least not in the scale potentially required.

The present economics of CCS with coal is disastrous and will likely destroy this silver lining for the industry to become “carbon-free” and part of decarbonisation. Based on a recent IEA report (Energy and Climate Change, June 2015), the 2014 CCS retrofit of the “Alaska” coal plant in Canada costed around $US 6,000 per kilowatt capacity. This does not include the original capacity investments, nor CO2 operational, transport and storage costs.

According to the IPCC those might add 30 per cent of all plant costs. Similarly, according to the same IEA source, the first CCS-equipped new coal plant in the US, the “Kemper Project”, is estimated to cost $US 9,500 per kilowatt. The IEA further assumes that “strong deployment of CCS” from now on will bring costs down to $US 4,000 per kilowatt by 2040. By 2040! And both institutions, the IEA and the IPCC, are usually supportive of CCS.

Those coal CCS costs must be compared to today’s cost of renewables in US and elsewhere. In South India, another coal-rich country where the coal industry is considering “clean coal”, the new utility scale solar plant in Cochin is suggested to cost $US 800 per kilowatt capacity. In the US, present utility solar and onshore wind power cost about $US 1,500 per kilowatt as the US-based Lazard consultancy showed a year ago (Levelised Costs of Energy, version 8.0).

The International Renewable Energy Agency (IRENA) showed in 2014 that in increasingly more regions of the world, solar and wind power costs of electricity over lifetime of projects are already in the middle to the lower end of the average fossil fuel electricity costs. In developing countries like South Africa and Morocco, real costs per electricity generation for today’s solar and particularly wind power plants are considerably cheaper than those for conventional coal. With CCS the difference would be much larger.

Even when taking account of the ‘variability’ of weather-dependent renewables, lower electricity load factors and assuming a major investment for electricity storage in future to accommodate large shares of variable power in any given economy, the generation cost per kilowatt-hour over a lifetime is considerably lower today in new renewables plants than those associated with coal CCS in 2040.

In addition, from an economic point of view, there is growing evidence that in a carbon-constrained society, particularly after Paris, it is cheaper to close coal plants well ahead of retirement age and replace the power needs with clean renewables rather than retrofitting the plant for its remaining 15 to 25 years or so with CCS equipment.

There are many smarter ways to burn money than investing in “clean coal” and coal CCS.

The World Coal Institute suggests repeatedly that the $US 2 trillion spend on renewables in the last decade were government-sponsored “subsidies” and biased to only a small set of technologies and coal should receive the same support. Wrong. Those were not “subsidies” but investments by all actors, utilities, developers and consumers alike.

Wind and solar dramatically reduced production costs by between 60 per cent to 80 per cent in the last six years – which we cannot say about coal, with or without CCS. For the last 15 years, we have instead heard about how “wonderful” and cheap coal CCS might become. But nothing happened. Rather, the coal industry was busy fighting climate change science, funding sceptics and otherwise begging for public CCS financing while also opposing mandatory CCS for their operations what some “friends” of the coal industry proposed.

But they keep on burning bridges.

In a rare moment of enlightment, Brian Ricketts, secretary-general of Eurocoal said in a memo to his members and the media after the approval of the Paris Agreement that the coal industry will be “….hated and vilified in the same way that slave-traders were once hated and vilified”. Well, if so, then I have no arguments anymore.

So in sum, CCS for coal power is not an economically viable nor environmentally-friendly option for steeply reducing carbon pollution and should not be part of any planning in the future.

Dr Stephan Singer is WWF International’s director for global energy policy.

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