UTILITY E-ALERT

December, 2009

Table of Contents

CO2 

 

AEP joins Effort to build More Efficient CO2 Compression System

 

American Electric Power (AEP) has committed $2 million to support the commercial development of advanced compression technology for carbon dioxide (CO2) as part of an ongoing initiative that includes the Department of Energy's National Energy Technology Lab (NETL), Ramgen Power Systems and Dresser-Rand.  The initiative is developing a supersonic shockwave compression system that will reduce the cost and energy consumption associated with compressing CO2 for storage in deep underground porous rock formations. Sequestering CO2 underground requires compressing the gas to more than 1,500 psi.  Existing compression technology represents a substantial part of the capital and operating costs for CO2 capture and storage (CCS) systems. If successful, the shockwave compression technology is projected to reduce capital costs by as much as 50 percent and operating costs by at least 15 percent.

 

In October, AEP began capturing and sequestering CO2 from 20 MW of flue gas at its Mountaineer Plant in West Virginia using a chilled ammonia technology developed by Alstom. On December 4, AEP was awarded $334 million in funding from the U.S. Department of Energy Clean Coal Power Initiative Round 3 to scale up the chilled ammonia process to 235 MW of the plant's 1,300 MW capacity. The captured CO2, approximately 1.5 million metric tons per year, will be treated and compressed, then injected into suitable geologic formations.

 

Fortum, TVO and Maersk Collaborate on Finnish CCS Project

Finnish utilities Fortum and Teollisuuden Voima (TVO) have joined forces with Maersk Oil and Maersk Tankers to combine carbon capture at the Meri Pori power plant with CO2 transportation by Maersk Tankers' vessels and geological storage in off-shore oil and gas fields by Maersk Oil. The carbon capture and storage (CCS) project at the 565 MW coal-fired plant is expected to process 50 percent of the plant's flue gas and capture 90 percent of the CO2 it contains using Siemens' proprietary post-combustion capture technology.  The project will capture approximately 1.2 million tpy of CO2, making the demonstration one of the largest post-combustion capture projects in Europe.  Since there are no suitable underground storage sites in Finland, the project will also be the first to combine shipping and cross border transportation between two EU countries for storage.

Maersk Tankers already has the blueprints to build tanker vessels for the transport of CO2.  The vessels will be semi-pressurized and semi-refrigerated, keeping the CO2 liquid.  Maersk Tankers designed the vessels based on years of experience with transportation of liquefied petrochemicals and natural gas.

 

Calera and Bechtel Announce Strategic Carbon Capture Alliance

 

Calera Corporation and Bechtel Power announced a strategic alliance to develop and construct facilities using Calera's innovative carbon capture technology. Calera captures CO2 from raw flue gas in natural water, converting it to calcium and magnesium carbonates for use in manufacturing carbon negative building materials such as sand, aggregate and cement, and also resulting in the production of fresh water.

 

Murkowski tries Again to Limit EPA Rules on Greenhouse Gases

 

Her first attempt failed, but on Monday Sen. Lisa Murkowski (R-Alaska) moved again to try to halt the Environmental Protection Agency's movement toward regulating the emission of greenhouse gases. Last week, EPA announced that greenhouse gas emissions endanger public health, and announced plans to move forward with regulations that will limit emissions by large producers of greenhouse gases. It could be years before any EPA regulations take effect, and the White House has said it would prefer that Congress write the guidelines. But if Congress doesn't act, the EPA's rules could set the standard for greenhouse gas emissions on the part of large emitters such as power plants, factories and other stationary sources of pollution.

 

On Monday, Murkowski took to the Senate floor to express her concerns about an executive branch agency writing such regulations rather than Congress.  She announced her intention to file a "disapproval resolution," a rare move that prohibits rules written by executive branch agencies from taking effect.  Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, criticized the timing of the "endangerment finding" by the EPA, which coincided with the opening day of the Copenhagen climate summit.

 

In September, Murkowski tried to prohibit EPA from regulating greenhouse gases for at least a year, to give Congress time to work on its own climate legislation, but was blocked by Senate Democrats.  The disapproval resolution will be referred to the Senate Environment and Public Works Committee. If the committee doesn't move it within 20 calendar days, it can go before the full Senate with the signatures of 30 senators.

 

Only Minor Agreements Likely from Copenhagen, May Include $100 Billion Fund for Developing Countries

 

Dozens of heads of state are descending on Copenhagen for the final days of the December 7-18 conference, hoping to sign a new pact to tackle global warming.  They will find draft texts littered with incomplete provisions and exposing long-running rifts between rich and poor countries on how to split the cost of fighting climate change. Key sticking points include who should cut emissions, how deep the cuts should be, and how much funding should be provided to poor countries to help them shift to greener growth and adapt to a warmer world. Both India and China have refused to set limits on their emissions, saying it hurts their economic growth.  Developing countries have demand for at least $200 billion a year to help developing countries grow while curbing their emissions. While the overall picture is bleak, a few minor agreements are likely:

 

1.  Negotiators are close to a deal that would compensate countries for preserving forests and other natural landscapes such as peat soils and swamps.  A final draft of the compensation program, called Reducing Emissions from Deforestation and Forest Degradation (REDD), is expected to be delivered to ministers of the nearly 200 countries for final approval.

 

2.  The United States and China have been at odds over transparency and verification issues – how a country’s reported emissions and accomplishments can be verified.  China has resisted oversight, preferring to act as its own watchdog on compliance, but signaled it might be willing to reach a compromise.

 

3.  US Secretary of State Hillary Rodham Clinton helped break a deadlock on Thursday by announcing that if an agreement is reached, the United States would pledge to help raise a $100-billion fund to help developing countries combat climate change.  The EU and the head of the African group of countries expressed their support for such a fund.

 

DOE announces $1 Billion in Cost Sharing Grants for Three CCS Projects

Thirty-eight applications for funding from Round 3 of the Department of Energy's Clean Coal Power Initiative, or CCPI, were submitted in August. DOE announced cost-sharing grants for three commercial-scale carbon capture and storage (CCS) projects at coal-burning power plants this week, totaling nearly $1 billion. The Obama administration’s goal is to have 10 commercial-scale CCS projects built by 2016.  The grants announced this week are:

Projects of note that were denied funding under Round 3 include:

 

Rio Tinto Sells Stake in Abu Dhabi CCS Venture to BP

Rio Tinto, the world’s largest mining group, has pulled out of a joint venture with BP to develop a $2 billion clean energy power project in Abu Dhabi. Instead, Rio Tinto will focus its investment in carbon capture and storage (CCS) technology on a California project, also in partnership with BP. The Abu Dhabi project is a 400 MW natural gas based hydrogen generating plant, due for completion in 2013.  BP remains as the sole shareholder and plans to proceed with the project. 

Rio Tinto will focus solely on the Hydrogen Energy California (HECA) project, a 400 MW coal and petcoke fueled hydrogen power plant scheduled for completion by 2015 near Kern, California. According to securities analyst Andrew Harrington, Rio Tinto's decision has strategic value. ''The strategic logic for Rio is that they are a big thermal coal producer, not a very big oil and gas producer, so that has a better fit for them,'' Harrington said.

 

Australia Announces 4 CCS Projects on Short-List for $2 Billion in Funding

The Australian government has committed A$2.425 billion (US$2.22 billion) over nine years for the CCS Flagships program to fund two to four large scale CCS demonstration projects. The Australian Government announced this week that it will spend up to $120 million on pre-feasibility work to further assess potential projects and identified a short-list of four projects which will move forward to the assessment phase: 

 

EPA Issues Endangerment Finding for Mobile Sources; Lawmakers Reject Attempts to Stop EPA from Moving Forward

On December 7, the US Environmental Protection Agency finalized two distinct findings—an endangerment finding and a cause or contribute finding—regarding greenhouse gases under the mobile source provisions of the Clean Air Act.  EPA developed the findings in response to a 2007 Supreme Court decision in which the Court found that GHGs are air pollutants covered by the Clean Air Act (Massachusetts v. EPA). This week’s finding is limited in that it applies only to mobile sources and it only allows EPA to regulate GHGs from new motor vehicles. However, an endangerment finding for mobile sources is likely to lead to a similar finding for stationary sources such as power plants and industrial facilities. 

Rep. Todd Tiahrt (R-KS) offered an amendment to an omnibus spending bill being considered by House and Senate conferees this week that would block any funding to EPA for regulations based on the endangerment finding.  Tiahrt argued that the agency should proceed cautiously, given recent questions over e-mails from climate scientists. Climate skeptics argue that the e-mails, hacked from computers at the Climatic Research Unit of the University of East Anglia in Britain, point to manipulated data and ethical lapses on the part of prominent climate scientists.

House and Senate conferees rejected Tiahrt’s amendment, 5-9.

 

Groups Petition EPA to set Ambient Concentration Standards for CO2

Two advocacy groups filed a petition this week asking the US Environmental Protection Agency to set national ambient concentration limits for carbon dioxide under the Clean Air Act.  The petition filed by the Center for Biological Diversity and 350.org seeks to have greenhouse gases designated as "criteria" air pollutants and atmospheric CO2 capped at 350 parts per million, the level many scientists say is necessary to avoid the worst impacts of global warming. Many experts, however, insist that it does not make sense for the agency to regulate greenhouse gases as criteria air pollutants. David Bookbinder, chief climate counsel at the Sierra Club, said the petition is “a pointless exercise. While 350 may be where the planet should end up, the [National Ambient Air Quality Standards] is not the mechanism for getting there."  Energy and climate bills passed by the House and pending in the Senate would both prohibit EPA from regulating greenhouse gases as criteria air pollutants.

 

Aid to Developing Countries Becomes Major Sticking Point at Copenhagen Talks

As representatives from 192 countries met at the United Nations climate summit in Copenhagen this week, aid to developing countries has emerged as a primary sticking point. Developing countries want industrialized countries to contribute billions of dollars, perhaps as much as one percent of their GDP, to limit the impact of global warming. The U.S. and the European Union have said they are willing to provide their "fair share,” suggesting a fund of around $10 billion a year from 2010 to 2012.  The arguments have served to highlight the divisions between the world's rich and poor nations, a division which could stand in the way of a new global climate deal. The United States and China, in particular, exchanged barbs on the issue. China's top delegate in Copenhagen blamed rich countries like the United States for global warming and said they had a duty to pay out billions of dollars in compensation to poorer, developing countries.  The top US negotiator Todd Stern, said, “China has $2 trillion in reserves. We don’t think China would be the first candidate for public funding.”

 

RGGI Allowance Prices Continue Slide in Sixth Auction

The US's only government-mandated carbon market continues to suffer from weak pricing for emission allowances, a condition that analysts say could persist through the program's lifetime.  Prices slid again in the Regional Greenhouse Gas Initiative's (RGGI) sixth quarterly auction, with 2009 emissions allowances trading for $2.05 per ton. In the September auction, allowances netted $2.19 per ton. In June, allowances sold for $3.23 per ton, meaning RGGI allowances have slid by more than 36 percent over the last six months. Lower industrial output in the Northeast has translated to weaker demand for energy, causing the region's coal- and gas-fired power plants to run at lower capacity and generate far less greenhouse gas emissions than officials had anticipated.  "There's way too much supply, and there is no demand," said Tim Cheung, an analyst with New Energy Finance. "You're going to have these excess allowances that will continue to carry over to future years, which is why we think that prices will remain depressed going forward."

 

Carbon Pledges, Schemes Pile up Ahead of Copenhagen


A series of announcements and pledges to lower carbon emissions have been made leading up to the United Nations December 7-18 Copenhagen talks on a broader global climate deal.  Top emitters, China, the United States and India, have all announced preliminary reduction targets in recent weeks, while New Zealand has passed the world's second formal emissions trading scheme and politicians in Australia have become embroiled in a struggle over a similar scheme.  Here is a timeline showing how countries' pledges and carbon reduction schemes stand ahead of the Copenhagen conference:

 

·         January 2005:  The European Union began what is still the world's largest greenhouse gas emission trading system (EU ETS). 

·         December 2005:  Seven US states agree to implement the Regional Greenhouse Gas Initiative (RGGI), the first mandatory, market-based CO2 emissions reduction program in the US.

·         January 23, 2008:  The EU commits to reduce GHG emissions 20 percent below 1990 levels by 2020, 30 percent if other countries agree.

In the past month:

·         Japan commits to reduce GHG emissions 25 percent below 1990 levels by 2020.

·         New Zealand passes an emissions trading plan.

·         The US pledges to reduce GHG emissions to roughly 17 percent below 2005 levels by 2020.

·         China pledges to reduce its carbon intensity (carbon dioxide emissions per unit of GDP) 40 to 45 percent below 2005 levels by 2020.  It says the target is voluntary and domestic, rather than an international commitment.

·         A draft text written by Copenhagen host Denmark says the world should agree to reduce emissions 50 percent below 1990 levels by 2050 as part of a UN climate pact.

·         Canada pledges to match the US commitment of 17 percent below 2005 levels by 2020.

·         Australia's parliament, for the second time, rejects a bill to set up a cap and trade scheme.  The scheme would have cut CO2 emissions 5 percent below 2000 levels by 2020, up to 25 percent if other nations agree.

·         India commits to cut its carbon intensity to 24 percent below 2005 levels by 2020.

Delegates from over 190 countries are expected to attend the talks.

 

Vattenfall Oxy-Fuel Pilot Achieves Close to 100 Percent Carbon Capture

Vattenfall said this week that its carbon capture and storage pilot plant at Schwarze Pumpe in eastern Germany has been able to capture carbon dioxide emissions with a purity level of 99.4 percent.  The carbon capture process uses oxy-fuel technology in which pulverized lignite fuel is burned with a mixture of high purity oxygen and re-circulated flue gas.  The resulting flue gas contains primarily CO2 and water vapor, along with small amounts of impurities.  This flue gas is then processed to enrich the CO2 up to the level of 99.4 percent. The pilot project, in collaboration with Alstom, has been operating for 2900 hours since September 2008 and has so far captured 1600 tonnes of CO2.  Vattenfall and Alstom continue to study the combustion behavior and material corrosion characteristics, with a view to commercializing oxy-fuel carbon capture and storage technology by 2015.  Hubertus Altmann, who is head of power plant business at Vattenfall Europe Generation, said that the next step would be to build a larger demonstration facility with two 125 MW units at Jänschwade in Germany by 2015.

 

Alberta Will Spend $500 Million for Regional Carbon Capture Pipeline

http://www.allheadlinenews.com/images/cp.gifAlberta signed a letter of intent with Enhance Energy this week and agreed to provide up to $495 million in funding over 15 years to support the world's largest pipeline system for collecting and storing carbon dioxide.  Enhance plans to begin laying pipe in 2011 and start operations in 2012 for its Alberta Carbon Trunk Line.  The pipeline has an initial capacity of 15,000 tonnes per day and was budgeted initially at $600 million, but that will be higher if the system is expanded to 40,000 tonnes per day and secondary lines are added. Initially, CO2 will come from the Agrium fertilizer plant near Fort Saskatchewan and the proposed North West Upgrader, which will turn bitumen into high-grade diesel fuel.  The 240-kilometer route was designed to get close to more than 100 mature oilfields in the Clive area for enhanced oil recovery.

 

ScottishPower, Aker Clean Carbon Achieve Efficiency Gains in Carbon Capture  

Scientists and engineers working for ScottishPower and Aker Clean Carbon at the Longannet coal-fired power plant in the UK say they have been able to reduce the energy requirement for carbon capture by one-third through a combination of process improvements and low energy amine solvents.  Aker said that they have found a chemical mix for the amine solution that is sticky enough to grab the carbon dioxide but does not need a large amount of energy to extract it. The prototype carbon capture unit at Longannet is the first of its kind to be demonstrated on a working coal-fired power station in the UK.  The pilot has been operating successfully for over 2000 hours and is expected to continue until February.  ScottishPower chief executive Nick Horler said, "What this means in real terms is that we're not just reducing energy but also reducing the cost.”

 

Linde and Algenol Partner to Produce Biofuel from CO2 and Algae

The Linde Group and the US-based Algenol Biofuels LLC have agreed to collaborate to develop the optimum management of CO2 and O2 for Algenol's algae and photobioreactor technology.  Algenol's proprietary process uses CO2, salt water and algae for the production of third-generation (3G) biofuels. The technology developed by Algenol offers many benefits. The production facilities do not need to be built on land required for food or feed production; the process does not consume fresh water or involve costly steps for processing or harvesting and storing biomass; the algae consumes CO2 from fossil fuel sources (such as combustion flue gases from coal-fired power plants); and the process is almost entirely powered by the sun.

Linde has a wealth of experience in the cost-efficient supply of CO2 for climate- and eco-friendly CO2 recycling applications.  For example, at the OCAP (Organic CO2 for Assimilation by Plants) project in the Netherlands, Linde supplies over 500 greenhouses with CO2 transported by pipeline from a refinery. Linde also works with leading energy groups to develop, plan and build pilot facilities for capturing and storing CO2 from power plant processes.

 

Idaho sets CO2 Standard in Permit; Could be Precedent for Future BACT Reviews

The Idaho Department of Environmental Quality (DEQ) set a national precedent Monday when it issued a permit requiring a proposed fertilizer plant to cut carbon dioxide emissions by 58 percent of what a comparable facility now emits.  Southeast Idaho Energy's facility would turn coal into gas that would produce nitrogen fertilizer and sulfur.  The Idaho DEQ had issued a permit in February, but it was challenged by the Sierra Club and the Conservation League. As a result of the challenge, the company agreed to capture carbon dioxide during the "gasification" process and ship it to Wyoming for enhanced oil recovery.  The technology to do all of this already exists, said John Burk, a Southeast Idaho Energy spokesman. The challenge the company faces, he said, is economically transporting the carbon dioxide from the plant to the oil fields. The company is looking at shipping by rail and perhaps building a pipeline. The US Environmental Protection Agency is in the middle of rulemaking to regulate carbon dioxide as a pollutant.  Once finalized, a rule could require BACT reviews for CO2 emissions and Southeast Idaho Energy's permit provisions could set a precedent for future BACT reviews.

 

California Issues Draft Cap and Trade Proposal

The California Air Resources Board (CARB) released draft rules for its landmark greenhouse gas cap-and-trade plan this week.  The draft proposes a system that would apply only to large industrial sources and electricity generators (about 600 stationary sources in all) starting in 2012.  Other sectors, including transportation fuels and commercial uses of natural gas, would be subject to regulation starting in 2015. Mary Nichols, CARB Chair, said the system would cover about 85 percent of the state's greenhouse gas emissions, but achieve only about 20 percent of AB 32's stated goal, which is to reduce emissions to 1990 levels by 2020.  Programs that would make up for the rest of the cuts include the state's automobile emissions standards, low-carbon fuels and renewable energy policies. The proposal leaves open a number of crucial matters, including the distribution of emissions allowances.  Whether allowances are allocated or auctioned is important to emitters because that decision will largely determine the cost of compliance.  The ruling on allowances will not be made until next year, after a special committee issues a set of recommendations to the air board. 

 

White House Adviser Rejects Idea of Limited Climate Package

This week the concept of legislation to set limits only on greenhouse gas emissions from the electricity sector re-surfaced,  but White House climate change adviser Carol Browner rejected that approach, saying that the administration is seeking "an economy-wide approach" to reining in carbon dioxide emissions. The U.S. House of Representatives in June narrowly passed a climate bill which would apply to a broad range of facilities including power plants, oil refineries and manufacturing facilities such as steel, glass and cement plants. Similar legislation has been approved by a Senate environment committee, but there is not broad enough support in the full Senate for the measure. A compromise bill might be attempted early next year.


Senator Richard Lugar (R., IN) promoted limiting a cap and trade program to the power sector as means to reach a compromise on a limited climate bill.  Power plants account for about 40 percent of manmade US carbon dioxide emissions. According to Rep. Lugar, tackling the utility sector alone would allow the US to take a first step toward mandatory reductions in emissions while sidestepping political challenges of lining up votes in the Senate for an economy-wide measure.