"Where there's muck there's money," as my grandmother used to say. And the business of dealing with excess anthropogenic carbon dioxide, only designated muck in very recent times, is now beginning to attract some very serious interest from investors. Climate Change Capital, described as a "boutique investment bank" dedicated to "clean energy and a low carbon economy" announced in September that it has created the world's largest private sector carbon fund, raising $830 million in only three months and aiming for more than $1 billion. Also impressive is the recent announcement by Blue Source (which describes itself as the "leading player in the US greenhouse gas market") that, together with private equity fund First Reserve, it is looking to invest $500 million in infrastructure projects that reduce GHG emissions, including schemes that "capture and sequester carbon dioxide emissions from the flue stack in power generation" - and that's in a country not known for its support of the Kyoto protocol.
Similarly bullish about the business opportunities created by climate change worries in general and the perceived need for decarbonisation in particular is a recent report commissioned from independent consultancy Vivid Economics by Shell Springboard, a programme funded by oil company Shell that provides "no strings attached" financial awards to small and medium sized companies (SMEs) and encourages them "to see climate change as not only a major environmental challenge but a substantial business opportunity."
The report, The business opportunities for SMEs in tackling the causes of climate change, published in October, estimates the market size by the rather simple (some might say simplistic) expedient of taking an estimate of the cost of cutting carbon dioxide emissions by one tonne and multiplying it by the number of tonnes of carbon dioxide emissions reduction that would be needed to achieve stabilisation of global temperatures. Assuming that "the world does act" to make these cuts, the report estimates that "the annual expenditure on carbon emissions reduction will grow by between US$10 and 100 billion per year for the next 45 years and total $1 trillion over the first five years." The report's authors say their "central estimate is that this market would have to grow by $70 billion a year for the next few decades, if greenhouse gas concentrations are to be stabilised." The report suggests that in the UK alone, "the challenge of tackling climate change could create a market of up to £30 billion...over the next ten years."
With numbers like these being bandied about it is no wonder that Alstom has recently created a new post, "Director CO2 Product" or that Schlumberger has formed a Carbon Services division, while Shell has an "Executive VP, Renewables, Hydrogen and CO2."
But in the power generation arena there is still no consensus as to the best way to get from where we are now to the low carbon era, which is not surprising as grappling with the implications of power generation in a carbon constrained world is a relatively new preoccupation.
The sharply contrasting strategies being followed by two Australian coal-based power generation companies, CS Energy and Stanwell – both owned by the government of Queensland but run as commercial entities – illustrate some of the issues.
There may, as yet, be no "carbon signals" in the Australian electricity market to incentivise reduced CO2 emissions. But there is general recognition that deep cuts in such emissions will be needed in the future. And while Australia, like the USA, may have declined to ratify the Kyoto protocol, development of "cleaner fossil energy," including carbon dioxide capture and storage, is a priority of the Asia Pacific Partnership on Clean Development and Climate (AP6), to which Australia belongs (along with the USA, Japan, China, India and South Korea).
Gas generation (notably using coal seam methane) and renewables are being encouraged, and even nuclear power is back on the agenda in Australia (with a review underway by a prime ministerial taskforce, due to report by the end of the year on uranium mining and the potential "longer term contribution" of nuclear energy). However, for the time being at least, coal remains king in Australia (see pp 16-19 for an update on the latest addition to the fleet) and seems unlikely to be deposed in the foreseeable future, with no signs of an Ontario style rejection of coal generation any time soon.
Coal provides Australia with indigenously sourced low cost generation and accounts for over 80% of the baseload power. It is also the country's biggest export commodity. So there is more than a little interest in ensuring that a long term future can be sustained for coal in the power generation sector and increasing acceptance that this will almost certainly entail carbon capture in some form followed by geosequestration.
It is against this background that both CS Energy and Stanwell are planning major demonstration projects for which they are currently seeking funding, but CS Energy is pursuing the oxyfuel route while Stanwell favours gasification.
CS Energy wants to backfit carbon capture to a 30 MWe coal unit at its 1965-vintage Callide A plant and store the carbon dioxide deep underground in the Denison Trough. The boiler would be modified to burn coal in a mixture of oxygen and recycled flue gas, producing a CO2 stream suitable for capture, transport and disposal underground (very similar to what Vattenfall is doing at 30 MWt scale in Schwarze Pumpe). Partners in CS Energy's proposed project include Japanese companies JCoal, JPower and IHI, as well as Schlumberger. The hope is to have the retrofitted plant operating by 2008 and geosequestration underway in 2010.
Stanwell, meanwhile, says it is hoping to complete the FEED study on its proposed 50 MWe sent -out Zerogen IGCC-with-CO2-capture-and-sequestration demo plant next year. To be located at the existing Stanwell power station, this would employ Shell gasification technology and a GE gas turbine, with CO2 disposal also in the Denison Trough, in the vicinity of Springsure/Emerald,where two test wells have already been drilled. Shell is providing technical support and has an option to take an equity position in the project.
For future new-build, IGCC does indeed look like a good way of lowering the cost of carbon capture (as confirmed by a recent EPA report, see pp 21-24) but the oxyfuel concept that CS Energy hopes to demonstrate has the important characteristic that it is potentially backfittable to existing plants, or at least those fortunate enough to have somewhere to put the resulting CO2. Being able to do something for the existing coal fleet is is of crucial importance.
Decarbonising power generation will require a range of capture options to be developed depending on the circumstances. But the rewards for those able to offer effective technologies will be considerable.
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