Hydrogen Energy – Challenges and Opportunities

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Hydrogen Energy – Challenges and Opportunities

  1. 1. Hydrogen Energy – Challenges and Opportunities Lewis Castle College September 2007 Graeme Miller
  2. 2. Princeton wedges: technology options for GHG stabilization The Stabilisation Wedge Emission trajectory to achieve 500ppm Emission trajectory BAU 1 GtC Slices of the Stabilisation Wedge
  3. 3. how big is a wedge? Increased planted area and/or reduce deforestation Biosequestration in forests and soil 700 1GW plants (2x current) Nuclear displaces coal for power 1 billion H 2 carbon free cars; H 2 from fossil fuels with CO 2 capture and storage or from renewables or nuclear Carbon Free Hydrogen for transport CO 2 captured from 700 1GW coal plants; storage = 3,500x In Salah/Sleipner or CCS applied to 5% of new power growth Carbon Capture and Geological Storage 200x10 6 ha growing area (equals US agricultural land) Biofuels to replace petroleum based fuels 1000x scale up PV, 70x scale up for wind Solar PV or Wind replaces coal for power 1400GW fuelled by natural gas instead of coal Fuel switching natural gas displacing coal for power 2 billion gasoline/diesel cars achieving 60 mpg Increased energy efficiency across the economy Scale for 1GtC Reduction by 2050 Examples of Lower Carbon Slices
  4. 4. the energy sector emissions challenge <ul><li>The power sector is already the largest contributor of CO2 </li></ul><ul><li>Growth in coal-fired generation is projected to be the single largest contributor of new GHG emissions over the next fifteen years </li></ul>2020 Base Case CO 2 Emissions By Sector Source: IEA World Energy Outlook, 2004 2004 21% 41% 38% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Transport Power Heat 2020 22% 44% 34% Transport Power Heat Power capacity up 48% to 5800GW Overall Capacity Gas increases 87% Coal increases 43% Oil increases 12% Fossil Fuels Nuclear stays flat Hydro increases 29% Renewables increase 234% Low-Carbon
  5. 5. increasing suite of low carbon options are available <ul><li>Technological advances will continue to close the existing gaps </li></ul><ul><li>Pricing carbon would dramatically shift this picture </li></ul><ul><li>As the R&A industry demonstrates capability, carbon-constrained policies likely to be more acceptable to policy-makers </li></ul>Source: BP Estimates, Navigant Consulting Levelised costs of electricity generation Low/Zero carbon energy source Renewable energy source Fossil energy source Cost of Electricity Generation 9% IRR ($/MWh) 0 25 50 75 100 125 150 175 200 225 CCGT, gas $4/mmbtu Coal $40/tonne Hydrogen Power Gas Hydrogen Power Coal Nuclear Onshore Wind Offshore Wind Biomass Gasification Wave / Tidal Solar (Retail Cost)
  6. 6. <ul><li>cost of CO 2 mitigation (above today’s economics) </li></ul>CO 2 reduction options ($/te) Source: European Commission Report (Jan 2004) , DoT, DTi (2003) , BP Analysis CO 2 reduction costs ($/tCO 2 ) Power Generation (Fixed Sources) Transport (Mobile)
  7. 7. climate change – BP’s journey 1997 1998 1999 2000 BP acknowledges need for precautionary action to cut GHG emissions after exiting the Global Climate Coalition. BP predicts $1 bn revenue in its solar business in 2007 BP sets target to cut emissions from operations to 10% below 1990 levels by 2010 BP begins funding the Carbon Mitigation Initiative at Princeton University, exploring solutions to climate change BP initiates the CO2 Capture Project with other companies and governments, studying methods of capturing and storing carbon dioxide at power plants BP’s solar business moves into profit and announces plans to double production. On track to meet 1997 revenue prediction BP launches carbon dioxide capture and storage project at gas field in Algeria BP announces plans for world’s first commercial hydrogen power station. BP launches Alternative Energy 2001 2003 BP achieves its 2010 target 9 years early, having reduced GHG emissions by energy efficiency projects and cutting flaring of unwanted gas Based on work at Princeton, BP sets out range of technology options to stabilize GHG emissions over 50 years, including increases in solar, wind, gas-fired power and carbon capture and storage 2002 2004 BP announces plans to build wind farm at Nerefco, Netherlands 2005
  8. 8. the technology blocks are available today Coal GASIFIER WGS H 2 S & CO 2 Removal CO 2 Compression H 2 GT HRSG ST Power CO 2 Storage Coal Handling SRU ASU Pipeline SLAG Handling IGCC plant with CCS Gas REFORMER WGS H 2 S & CO 2 Removal CO 2 Compression H 2 GT HRSG ST Power CO 2 Storage AIR Pipeline NGCC plant with CCS
  9. 9. Thus capturing and Storing the Carbon requires significant investment above conventional power plant <ul><li>Capital costs. CCS adds a substantial amount of processing equipment upstream of the power generation block, approximately doubling the capital cost of plant </li></ul><ul><ul><li>Reforming or gasification </li></ul></ul><ul><ul><li>Air Separation in the case of coal in IGCC </li></ul></ul><ul><ul><li>Water gas shift </li></ul></ul><ul><ul><li>Acid Gas removal (CO 2 separation) </li></ul></ul><ul><ul><li>CO 2 compression </li></ul></ul><ul><ul><li>Pipeline and injection </li></ul></ul><ul><li>Operating costs. The increased plant complexity increases the manpower required to operate and maintain the plant, with consequent increase in operating and maintenance costs </li></ul><ul><li>Fuel costs. The extra processing units have a substantial net requirement for power, thereby reducing the net export power from the plant and consequently the overall thermal efficiency of the plant </li></ul>
  10. 10. Actual project costs appear to be significantly above some publicly quoted estimates <ul><li>Notes: </li></ul><ul><li>All estimates are against plant using same fuel without CCS. Costs per tonne would be likely to be higher (potentially more than double) if a coal plant with CCS were compared with CCGT without capture. The cost of abatement would depend on the gas price. </li></ul><ul><li>Estimates exclude the value of EOR and other products e.g. steam sales. BP estimate allows $10/tCO 2 for transport and storage. </li></ul><ul><li>Statoil based on publicly quoted cost of €61/tCO 2 , assumed to be per tonne captured. </li></ul>Source: Published data and BP estimates. c. 70-110 BP 96 Statoil Project estimates 40 McKinsey/Vattenfall (for 2030) 23 - 80 for IGCC 35 - 80 for PC IPCC Generic estimates Estimate (cost per tonne of CO 2 abated) ($2007) Source
  11. 11. This is consistent with the pattern that has been observed for other technologies <ul><li>Initial costs of FGD were higher (by a factor of at least 2 to 3) than earlier estimates </li></ul><ul><li>Costs of projects reduced towards originally estimated levels over a period of decades. </li></ul><ul><li>Similar patterns to that shown for FGD are found for, SCR, CCGT and LNG plant </li></ul>Source: IEA
  12. 12. Such a trend for CCS would imply that a substantial premium over the carbon price will be required for some years $/tCO 2 Years Carbon price Cost of CCS Cost of CCS can be supported by carbon price alone from some time over the period 2020 to 2040? Current required premium over carbon price
  13. 13. But….. The sums required are not large compared with benchmarks Note: data is indicative only
  14. 14. DF1 – Peterhead, Scotland
  15. 15. technology elements Steam Shift Conversion CO 2 Capture CCGT CH 4 H 2 +CO H 2 +CO 2 CO 2 H 2 Air H 2 O Catalytic Reformer Steam + H 2 0 All technology proven at this scale around the world Uses proven reforming technology to manufacture syngas from CH 4 (BP Trinidad) Uses proven shift reaction to generate H 2 and CO 2 Uses proven amine capture technology to capture and remove CO 2 (BP Algeria) Hydrogen fired CCGT proven and warranted by vendors Duplex steel well completions of Miller proven capable of handling Co2 Proven Technology
  16. 16. comparison with other UK power ‘ UK Average’ Source: &quot;Note on the UK Government’s Proposed Approach to allocation of EU ETS allowances to the Electricity Generating Industry (Incumbents) for Phase II&quot;, DTI March 2006.
  17. 17. DF1 project specific benefits <ul><li>Delivers as much power as the UK’s current wind farms generate </li></ul><ul><li>Generates 475 MW of base load low carbon power and will not require redundant systems in reserve </li></ul><ul><li>Stores 1.8 million tonnes of CO2 pa in the first UK re-use of a reservoir for CCS </li></ul><ul><li>50-60 mmbbls Enhanced Oil Recovery (EOR) </li></ul><ul><li>Creates 1000 direct engineering and construction jobs over the next 4 years and 150+ permanent skilled jobs </li></ul>
  18. 18. DF2 – Carson, California
  19. 19. DF2 Significance <ul><li>Will generate 500MW of clean electricity. Will generate enough clean electricity to power 325,000 Southern California homes. </li></ul><ul><li>Will capture 4 million tonnes per annum of CO2 – equivalent to removing 800,000 cars from the roads. </li></ul><ul><li>Will be the world’s largest hydrogen fired power generation facility in the world. </li></ul><ul><li>Use of petcoke potentially enabling clean coal technology and major change in US security of energy supply. </li></ul>
  20. 20. DF3 – Kwinana, Western Australia
  21. 21. some observations <ul><li>The world needs to move fast to address the climate change problem </li></ul><ul><li>CCS will be an important part of the solution </li></ul><ul><li>But costs are currently high relative to carbon prices, and likely to remain so </li></ul><ul><li>Hundreds of billions of dollars of additional incentives may be required before CCS is commercial on the basis of the carbon price alone (as for other clean generation technologies) </li></ul><ul><li>Some implications for the business </li></ul><ul><ul><li>This is going to be a major industry with many, many opportunities </li></ul></ul><ul><ul><li>Governments and regulatory bodies are the customers for these projects: we need to give the customers what they want </li></ul></ul><ul><ul><li>“ Follow the money”: choice of projects will be largely determined by where there is a supportive policy and regulatory framework </li></ul></ul><ul><ul><li>Cap and trade is only a small part of the story for at least the next ten years </li></ul></ul>
  22. 22. Background Context
  23. 23. UK CO 2 Sources <ul><li>Total UK emissions c. 560 million tonnes (Mt) CO 2 </li></ul><ul><li>Emissions from industrial point sources = 283 Mt CO 2 </li></ul><ul><li>Of the 20 largest emitters, 17 are power plant, 3 are integrated steel plant and 1 is a refinery /petrochemicals plant </li></ul><ul><li>Emissions from 20 largest power stations = 132 Mt CO 2 </li></ul><ul><ul><li>If emissions from these could be reduced by 85-90%, UK emissions would be reduced by 18-20% </li></ul></ul>
  24. 24. UK Storage sites <ul><li>Oil fields </li></ul><ul><li>Gas fields </li></ul><ul><li>Gas/condensate fields </li></ul><ul><li>Saline-water-bearing reservoir rocks (saline aquifers) </li></ul><ul><li>Coal seams </li></ul>
  25. 25. US CO2 Markets EXISTING MARKETS Permian Basin Louisiana/Mississippi Canadian Wyoming
  26. 26. DF1 EOR Monitoring – CO 2 Model <ul><li>Storage model to provide assurance of long term storage integrity after site closure </li></ul><ul><li>CO 2 storage model </li></ul><ul><ul><li>Covers full volume of potential migration </li></ul></ul><ul><ul><li>Important physico-chemical processes for CO 2 over thousands of years </li></ul></ul><ul><ul><li>CO 2 location, saturation, pressure, temperature from calibrated reservoir model </li></ul></ul><ul><li>Kms of impervious rock impede vertical water flow (<5 cm per 1000 yrs) </li></ul>rock types Water flow vectors very few Cells with >50m/My Upwards Water Flow Mol Fraction CO 2 in 2100 Lo Hi Miller outline at surface 4 km
  27. 27. potential market for CCS 2005 to 2030 U.K. Source: IEA, DTI, BAH analysis World Retrofit New Capacity Replacement
  28. 28. climate change problem - discussed for a long time 0-25 1980s-date Increasingly wide range of observational and modelling evidence c.30 Late 1970s Detailed computer models showing resolution at regional level 50 1957 Beginning of measurements of CO 2 concentration in Hawaii 67 c.1940 First estimates of warming due to fossil fuel burning – objections remained 111 1896 Estimate that doubling of CO 2 concentrations would lead to temperature rise of 5-6C (Arrhenius) - but serious objections from other scientist 150 c.1860 Measurement of radiative absorption of CO 2 and water vapour, suggestion that ice ages due to changing greenhouse gas concentrations (Tyndall) 180 1827 Warming effect of gases in the atmosphere first recognised (Fourier) Years ago Date Event
  29. 29. Many people have commented on the issue over the years <ul><li>&quot;We would then have some right to indulge in the pleasant belief that our descendants, albeit after many generations, might live under a milder sky and in less barren surroundings than is our lot at present.&quot; Arrhenius (1896) </li></ul><ul><li>“ Human beings are now carrying out a large scale geophysical experiment&quot; Revelle and Seuss (1957) </li></ul><ul><li>“ scenarios suggests that warming would bring drier conditions to most of the US, across Europe and over the great grain growing regions of the USSR … And yet, no serious effort is being made to curtail the destruction of our dwindling reserves of tropical forest … or to require fossil-fuel power station to scrub carbon from the gases they release.” New Scientist magazine (1980) </li></ul><ul><li>“ We will work to cut down the use of fossil fuels, a cause of … the greenhouse effect … No generation has a freehold on this earth. All we have is a life tenancy—with a full repairing lease”. Margaret Thatcher (1988) </li></ul>
  30. 30. A policy response has emerged slowly over the last 20 years 2 2005 EU ETS begins 4 2003 EU ETS Directive enters into force 10 1997 Kyoto Protocol agreed 15 1992 UNFCCC (Rio convention) c.15 1990-1995 EU discusses carbon/energy tax equivalent to $10/bbl oil 19 1988 IPCC established (First Assessment Report published two years later) c.20-25 Mid-Late 1980s Increasing expressions of concern by politicians of wide ranging political views Years ago Date Event
  31. 31. carbon emissions per year 1950 2000 2050 0 14 7 Billion of Tonnes of Carbon Emitted per Year Historical emissions Stabilization Triangle Flat path At Least Tripling CO 2 Avoid Doubling CO 2

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