Investing in the ‘new generation’ of coal – Part Two

By Paula Wallace

While much emphasis is being given to emissions trading, research is suggesting that putting a price on carbon is not a sufficient mechanism for the timely deployment of new technology.
To meet proposed reductions in greenhouse gas (GHG) emissions we need to reduce our demand for electricity and roll out low emission technologies for electricity generation on a massive scale.
One such technology that offers potential, among others, is carbon capture and storage (CCS). While it has its critics, the Australian Government is investing in the technology, to get it working on a commercial scale and find ways to reduce its costs.
But it’s still not known which of the low emission technologies in development around the world will prove to be viable, if any, in the short time available to prevent further damaging climate change and at what cost?

The recent Australian Government Treasury report on emissions trading modelling and low carbon technologies has been supported by a recently released study by the Australian Academy of Technological Sciences and Engineering (ATSE).
ATSE undertook a scoping study which looked at stationery energy generation and which addressed this issue of accelerating low emissions technologies. It found that a critical step is a commitment to invest around $6 billion by 2020 on research, development and deployment, and further increased deployment expenditure after that.
It says that without accelerated development and commercialisation of new power generation technologies, the projected political targets for reduction of GHG will not be met.
This sum could be reduced considerably through higher energy efficiency (or lower demand through a CPRS) and correspondingly lower energy growth trajectories.
In fact, the first recommendation of the ATSE report is to -“pursue relentless application of cost-effective energy efficiency and conservation strategies so that stationary energy demand growth is less than one per cent a year, over a sustained period” – as the US State of California has been able to achieve.
Some of these cost-effective efficiency measures include air conditioning and air heating efficiency and lighting in both commercial and residential buildings, residential water-heating systems, electrical appliances, electric drive systems in industry and fuel economy for motor vehicles.
According to ATSE, there are considerable savings in new carbon mitigation technology investment that can be achieved by reducing electrical energy growth in Australia to less than one per cent. “These savings are potentially of the order of many tens of billions of dollars,” its report said.
Taking an example, ATSE’s report shows that for a typical energy growth scenario of 1.4 per cent per annum and a portfolio of new technologies installed, around $250 billion in new technology investment would be required by 2050. However, the investment cost is dependent on the portfolio of technologies adopted, especially the higher cost and lower capacity-factor technologies such as wind and solar.
In addition to the investment costs, the work has also illustrated the magnitude of the task ahead. For example, the above hypothetical portfolio in 2050 includes wind energy at 50 times the current level, solar PV application six times higher than a 2 kW panel on five million house roofs in Australia, and Carbon Capture and Storage (CCS) facilities requiring well in excess of 100 Mt/yr of CO2 sequestration.
Many of the technologies reviewed have significant technical and commercialisation issues. Some have high investment cost in terms of amount of CO2 replaced, while others have low probability that commercially viable commercialisation can be achieved in the near future, since considerable technological uncertainties remain. In addition, there are major issues related to public perception and Government policy (e.g. nuclear energy), technical and environmental uncertainty regarding carbon dioxide storage sites (e.g. CCS), high investment cost to replace carbon (e.g. CCS, solar energy and geothermal generation) or other environmental issues (e.g. associated with extensive application of biomass, wind and wave generation).
ATSE suggests that CCS for coal-fired electricity generation should be a high priority. Its report said:
“A large base-load supply is necessary and this cannot be supplied entirely by renewable technologies.
“Without CCS, targets will not be reached without large application of gas firing (which reduces CO2 emissions by around 50 per cent relative to coal) or the use of nuclear energy.”
It’s clear from the ATSE report that when it comes to commercial development of CCS it’s not just a question of money. And it has been recognised that the introduction of emissions trading, or placing a ‘price’ on carbon, is not sufficient in itself for technology deployment in the desired time frames.
Tony Maher, general president, CFMEU, Mining and Energy Division was also on the recent NSW Minerals Council discussion panel. In regard to CCS he said, “Its future is not dependent on the carbon price, its future is dependent on leadership and leadership from Government and industry will make it happen.”
The CFMEU is backing the new GCCSI where Maher spoke at the launch, stating the Institute’s work could help safeguard Australian mining jobs into the future.
“Carbon storage initiatives could protect thousands of Australian mining jobs while reducing the risk of dangerous climate change,” he said.
“It’s a question of the level of political leadership, the level of funding from both the public sector and private sector and that’s why I’ve been campaigning for the private sector to put their money where their mouth is.”
He said the commitment so far had been a good start but “I’ll make you a bet they’ll pay more and you’ll be glad they did.”
David Brockway said, “There’s also the issue of carbon intensity…the technologies we are talking about…they all require a lot more energy to operate. So, you need to burn 25 to 30 per cent more coal.
This additional energy, known as the energy penalty, occurs when adding carbon capture to existing power stations.
However, the CO2CRC claims that its new research could reduce the cost of capturing CO2 from power stations which accounts for about 80 per cent of the total cost of CCS.
The CO2CRC team, which included researchers from Monash University, used process integration studies to identify minimum energy targets. They considered the heat and cooling requirements of the power plant and capture plant holistically, rather than individually, and found that initial energy penalty estimates could be significantly reduced.
The technique is applicable to both retrofitted and new carbon capture plants. While there is still engineering work to be done on capital and operating implications of this research, it offers an encouraging finding to generators.
In regard to storing the CO2, Dr Brockway said, “I think we probably do have the reservoirs to sequester it but in reality we don’t know where they are.”
Even if we did know their location there is still “an enormous amount of
work” to be done to take the risk out of investing in carbon sequestration said Dr Brockway.
“There are other technologies that are further out on the horizon that could offer a step change reduction in greenhouse intensity…whether they’ll be viable only time will tell,” he said.

To read the first part of this report click here.