Memorandum submitted by Air Products PLC
1. INTRODUCTION
Future energy policy in the UK must take account
of the following imprtant factors:
— The security of supply of primary
fuels and energy sources.
— The relative cost of fuels and derived
energy.
— The mix of fuels required to satisfy
the demands of industry, commerce and the private sector.
— The ability of users and fuel suppliers,
such as electricity utilities to use alternative primary fuels
such as coal, natural gas, petcoke, bitumen, renewable sources,
etc based on the flexibility of their systems.
— The constraints imposed by the requirement
to meet our Kyoto objectives for greenhouse gas emissions, particularly
CO2.
— Our requirement to limit emissions
of other atmospheric pollutants, particularly SO2, NOx and particulates,
which is focussed on the large plant directive which will compel
all existing power stations still in operation by 2012 to meet
stringent emission targets.
— The effect of the European carbon
trading system on the value of traded CO2 allowances,
which will govern the incentive for organisations to undertake
CO2-free power and fuel production.
— The need to include carbon capture
and storage in the CO2 trading regime.
— The cost of renewable energy, particularly
wind power, compared to the cost of CO2 capture and
storage from a modern fossil fuel power station, either by retrofit
of an existing station or in a newly built station.
— The necessity to introduce a tax
regime for tertiary oil recovery from CO2 injection
which will be sufficiently generous to the oil companies to ensure
that they have a powerful incentive to store CO2 in
North Sea oil fields by practising enhanced oil recovery (EOR).
— The need to finance a network of
large diameter high pressure CO2 pipes so that captured
CO2 can be transported offshore for disposal.
— The need to continue to focus on
energy efficiency. Appropriate consideration should given to the
effectiveness of price mechanisms rather than subsidising fuel
costs for sectional interests.
— The complex question of the future
for nuclear power in the UK, which involves cost comparisons,
the availability of uranium, the problem of plutonium production,
particularly from breeder reactors as a means of extending the
availability of nuclear energy for thousands of years, the current
problems of nuclear proliferation, the question of nuclear waste
disposal and spent fuel reprocessing and all the concomitant social
and political pressures.
2. STATUS OF
CARBON ABATEMENT
TECHNOLOGY
The most profound changes to our current fuel
usage scenario will be caused by the necessity to limit greenhouse
gas emissions, particularly CO2, and the cost and availability
of secure sources of fossil fuels in the future. The current philosophy
set out in the Energy White Paper calls for 20% reduction in CO2
emissions compared to 1992 by 2020 and 60% by 2050. The energy
White Paper, based on Markal modelling with assumptions for efficiency
improvements, primary fuel costs and growth rates in the future,
predicted these reductions were possible with a large growth in
renewable energy, particularly wind power, a large and continuing
achievement of efficiency gains across industry, commerce and
the private sector and a very large increase in the use of natural
gas with coal consumption being progressively reduced. The predictions
even allowed for the phase out of nuclear powered electricity
generation with no planned replacement programme.
The assumptions on which the White Paper was
based have proved to be either based on optimistic judgements
or on gross changes in the projected costs of primary fossil fuels.
2.1 Wind Power
The optimism on the projected capital cost of
wind power and its on-stream factor, its effect on the electricity
transmission system, its unpredictability and the effect on the
environment appear to have been recognised. It is a very low-intensity
electrical generation technology requiring substantial areas of
land or sea to be covered by wind farms. The cost burden of the
existing and projected installations will have to be borne by
the consumer, with whatever consequential impact on the competitiveness
of UK industry and commerce. The programme of investment in wind
energy should be reviewed and its costs, characteristics and performance
put on a competitive basis with carbon capture and storage ("CCS")
using fossil fuel electrical generation systems. The share of
future R & D for wind should be appropriate to wind's objectively
determined potential to contribute to the UK's future energy sourcing.
The subsidies currently available for wind should be made available
for CCS projects, and the lowest-cost solutions will then be naturally
identified and pursued. Wind power and other projected renewable
energy solutions certainly have their proper place in the UK energy
scenario serving markets remote from large base load power generation,
but their suitability for provision of large proportions of our
current and future power demand must be validated
2.2 Nuclear Power
It is conceivable that nuclear power will largely
replace fossil fuel sources of energy for the generation of electricity
in the far future: it is capable of providing, through electrolysis,
or thermal generation chemical cycles, the hydrogen transportation
fuel of the future; it is CO2-free in operation; we
can store enough fuel for a year's operation in an area the size
of a football pitch. The real question concerns the need to use
this technology now. There is wisdom in keeping a proportion of
our electrical generation capacity as nuclear and this will require
that we plan appropriately now, allowing us to retain expertise
in an energy system of the future. This will probably require
an examination of our philosophy of nuclear waste disposal—including
examination of global options. The complex social and political
issues outlined in the introduction are, of course, relevant to
the immediate future and will be of prime importance in any decision
to implement a new nuclear programme in the UK. On the technology
side, we need to choose reactor systems of the most advanced kind
which will offer very long life, good economics and low decommissioning
costs. Safety and public acceptability for the whole system are
of paramount importance.
2.3 Fossil Fuel Power
We are currently producing about 75% of our
total electrical demand and all of the fuel for our transportation
systems and space heating from fossil fuels: coal, oil and natural
gas. All of this fossil fuel consumption generates CO2
which is discharged into the atmosphere. Anthropogenic CO2
emissions worldwide are now recognised as being the prime cause
of global warming. The huge volume of research into the aspects
of climate change reinforces this view.
Inevitably, fossil fuels will continue to provide
a primary source of energy for mankind for the foreseeable future.
If we are to have a sustainable future we must implement profound
structural and technological changes in the way we use fossil
fuels to largely eliminate the emission of greenhouse gases, particularly
CO2, to the atmosphere. This can be done in a positive
manner by capturing CO2 at the point at which the primary
fossil fuel is burned and conveying the CO2 to a storage
site where it can be permanently stored with complete integrity
for the future. This process of carbon capture and storage (CCS),
with all of its complexities, is applicable to both electrical
generation and to the production of hydrogen as the transport
fuel of the future.
Power stations burning fossil fuels are massive
point emissions sources of CO2. In 2003 Drax power
station emitted about 21 million tonnes, roughly 3% of the total
UK CO2 emission. The major UK power stations are obvious
first choices for CO2 capture. We must consider the
problem of retrofitting existing power stations such as Drax with
CO2 capture systems as well as the problem of building
new fossil fuelled power stations with CO2 capture.
The major effect of CO2 capture is to reduce the efficiency
of electrical power generation and impose a large increment of
capital cost. This results in a large increase in the cost of
electricity. We must also take into account the price of different
fossil fuels. We could reduce our CO2 emissions drastically
by generating all our fossil fuel electrical energy from natural
gas, which has about one third of the CO2 emission
per kWh of electricity compared to coal. Unfortunately, natural
gas prices have been rising sharply and they are likely to be
very much higher than coal in the future.
The question of fuel diversity and security
of fuel supplies is also relevant. It is hard to conceive of a
viable future in which the UK does other than generate a substantial
proportion of its electrical power from coal. We should retain
our existing coal fired power stations, modifying them for clean
operation with CO2 capture and upgrading their systems
to improve basic efficiency and minimise the cost of implementing
CCS. "New builds" for electrical generation must look
carefully at the alternative systems available and compare total
lifetime system costs for available fuels and technologies. This
analysis will be possible only if there are stable values for
CO2 credits and if the cost of CO2 storage
is fixed for the life of the investment. Predicting future fuel
costs when making decisions on new capacity is very difficult
given the volatility of the future primary energy markets, particularly
if demand continues to grow at the current pace and new fossil
fuel sources become scarcer and more expensive to exploit. The
question of fuel diversity may become paramount in choosing the
fuel for new capacity.
The use of hydrogen as a future transportation
fuel will enable fossil fuels to be efficiently converted to hydrogen
in large centrally located plants with capture of carbon dioxide.
The generation of hydrogen from fossil fuels is a well established
technology which is capable, now, of meeting all possible future
requirements. Research will concentrate on improvements in equipment
and efficiency to reduce hydrogen generation costs. The main research
efforts will concentrate on the hydrogen engine technology, using
fuel cells and electrical drive systems, and advanced internal
combustion engines. Very high efficiencies are possible. Currently,
the UK is not contributing significantly to this new research
area, which requires very good collaboration between industry
and academia. We propose that Government strives to set this objective
as one of the primary goals for our future UK research efforts.
There are also challenges in the requirements for an efficient
hydrogen supply system, using pipelines, delivery as liquid hydrogen
or as high pressure compressed gas. There is also the need for
further development of storage systems in the vehicle. Again,
collaborative programmes are required.
2.4 CO2 Storage
The UK is very fortunate in having the North
Sea oil and gas fields as ideal storage sites for CO2.
The first choice for disposal of CO2 offshore would
be to use the CO2 for tertiary oil recovery. A recently
announced plan for CO2 enhanced oil recovery in the
Miller field envisages a recovery of an extra 40 million barrels
of oil over a 20 year period by injecting about 1.25 million tonnes/year
of CO2 into the field. This equates to about 1.6 barrels
of oil per tonne of CO2 injected. Recent statements
from oil industry sources suggest that current investment plans
are based on an oil price of about $40/barrel in evaluations—a
price which should ensure a positive value for high pressure pure
CO2 delivered to an offshore oil field. To ensure that
this technique is widely used, the Government should consider
review of the tax treatment for oil produced by tertiary means
using CO2 enhanced oil recovery techniques. There are
four major benefits to the UK from CO2 EOR: firstly,
the life of North Sea oil fields is extended; secondly, it ensures
we have a very positive and continuing saving in our import bill;
thirdly, even with concessions, the Treasury will secure a large
amount of future tax; and fourthly, the very large cost of decommissioning
old oil platforms in the North Sea, part of which must be paid
for by the Government, will be deferred for a considerable period.
The Government should consider supporting the
construction of a CO2 pipeline grid connecting large
power stations in the UK to the North Sea oil fields.
The technology required for pipeline transportation
of CO2 and its injection into oil fields for EOR is
well understood and has been practised in the US for decades.
Currently, about 50 million tonnes/year of CO2 is injected
for EOR. It would appear that many of the North Sea oil fields
could produce additional oil using CO2 EOR. The capacity
of the North Sea reservoirs is sufficient to store all fossil
fuel derived CO2 for over 100 years and there are also
saline aquifiers which could be used for storage. Of great significance
to the use of CO2 EOR in the North Sea are the recent
developments in directional drilling techniques, which will greatly
facilitate the injection of CO2 into the ideal location
in a field and the rapid build-up in production of additional
oil which will result.
3. THE IPCC REPORT
ON CCS
The Directorate of the International Programme
on Climate Control, together with a group of authors who are world
experts in their various fields, has produced a major report on
Carbon Dioxide Capture and Storage, which will be launched at
the forthcoming Montreal Conference on Climate Control. This report
gives a complete and up-to-date summary of the current status
of the technology, the legal position and projected economics
of carbon dioxide capture and storage based on an analysis of
all available published data in the world. It is the document
which the Committee should use when they consider current technology
and economics. It also contains valuable projections of the likely
direction for future technology developments.
This report can be used to assess the technical
viability of CCS as a carbon abatement technology for the UK.
The summaries which have been produced as part of the report should
be particularly useful to the Committee members.
4. THE VIABILITY
OF CCS AS
A CARBON
ABATEMENT TECHNOLOGY
FOR THE
UK
4.1 The Current State of R & D and the
Deployment of CCS Technologies
CO2 capture from fossil fuels uses
one of the following technologies.
Post combustion CO2 capture
The waste gases from fossil fuel combustion
are treated to remove CO2 before being discharged to
atmosphere. The best means for CO2 separation is the
use of an amine scrubbing fluid, which reacts with the CO2.
The CO2 is separated from the amine using a steam heated
regeneration step and the amine is recirculated back to the scrubbing
tower. Equipment sizes are very large and the steam consumption
for regeneration is also large, affecting power station efficiency.
In addition, the amines are prone to attack by other impurities
in the flue gas, such as SO2 and NOx, producing solid salts which
must be removed and treated. This technique is well established
for CO2 removal in hydrogen production systems and
has been used on power station flue gases on a small scale.
Scale-up studies and costing have been carried
out. The technique could be deployed now on a large power station
using existing technology. Research has been on-going for decades
to obtain better amine formulations and improve equipment design
and performance. Breakthroughs in technology are unlikely, but
some future cost reductions are possible.
Precombustion CO2 Capture
The fossil fuel is converted to hydrogen and
carbon dioxide in a high pressure reaction with oxygen or with
steam and oxygen or with steam plus external heating. Catalysts
are used to enhance reaction rates. The CO2 is separated
from the gas mixture using liquid phase scrubbing with a chemical
absorbent such as an amine or a physical absorbent such as cold
methanol. Other methods of CO2 separation used include
a solid adsorbent in a multi-bed cyclic process or, less commonly,
by using membranes.
The process of large scale hydrogen manufacture
from fossil fuels is the most highly developed method available
for CO2 capture. It has been practised on a very large
scale for decades, producing hydrogen for ammonia and methanol
and for hydrotreating in the petroleum refining industry. Future
research will involve new catalysts, new reactor designs, improved
CO2 separation systems and better process integration.
The system can be used for any primary fossil fuel or for waste
fuels such as petroleum coke or bitumen, or for biomass.
The largest natural gas based systems are currently
being commissioned for conversion of natural gas to synthesis
gas (hydrogen plus carbon monoxide) which is then converted to
liquid transportation fuel using the Fischer-Tropsch process.
Plants are being constructed in Qatar and Nigeria using remote
gas deposits. This size of plant could produce hydrogen for large
(300MW plus) power stations. The hydrogen would be available as
a carbon free fuel for use in a such gas turbine combined cycle
electricity generation systems or it could be used as a transportation
fuel.
Coal gasification with CO2 removal
producing pure hydrogen has been demonstrated on a large scale
and can be implemented now for new power stations. H2 from coal
as a transport fuel would also break the monopoly position of
oil.
Oxyfuel Combustion
As its name implies, this technique involves
the combustion of a fossil fuel with pure oxygen. The combustion
temperature is moderated by either recycling flue gas or by adding
a diluent such as steam or water to the gases in the burner. Current
studies on oxyfuel systems mostly relate to coal fired pulverised
fuel power stations. The technology is ideal for conversion of
existing coal fired power stations to CO2 capture.
It competes with the amine based post combustion capture option.
At Air Products we have devoted significant efforts to study this
technology. We believe it will have very significant cost and
operating advantages compared to amine based flue gas scrubbing.
This should become apparent with current studies commissioned
by the DTI on retrofitting UK power stations such as Ratcliffe
and Drax and by the DTI and the Canadian Clean Power Consortium
on a new build 400MW coal fired station in Canada. Both these
studies will include both oxyfuel and amine based systems for
comparison. The oxyfuel system has not been demonstrated at any
real scale except in lab scale tests. These have concentrated
mainly on burner performance. The oxygen production, although
very large, uses proven technology at the scale required for a
500MW boiler. The burner design would require testing on existing
test rigs at large scale (such as the Mitsui-Babcock testing facility
at Renfrew).
We believe it is entirely feasible, using current
technology to retrofit a 500MW boiler such as one of the Ratcliffe
boilers. The grouping of Mitsui-Babcock, Alstom, E.On and Air
Products would be capable of executing a retrofit contract which
would include: a Mitsui-Babcock advanced supercritical steam boiler
rebuild; a modified steam turbine system designed for the new
supercritical steam conditions and supplied by Alstom; a new cryogenic
oxygen plant and a combined CO2 compressor and CO2
purification system supplied by Air Products. The combination
of a boiler/steam turbine upgrade plus the oxyfuel conversion
would ensure CO2 capture and delivery to a pipeline
system at high pressure with only a very small reduction in overall
station efficiency.
There is a need for further R & D on oxy-fuel
systems, particularly covering the effects of CO2 rich
gas streams containing increased levels of SO2 on corrosion, the
problems of sulphur dioxide and nitrogen oxide removal and burner
design. Future developments in oxygen production using high temperature
ceramic membranes will significantly reduce CO2 capture
costs and make oxyfuel a clear winner for low cost CO2
capture from coal fired power stations. This technique of oxygen
production is in the pilot plant stage in the US in a programme
led by Air Products. There may be opportunities for demonstration
in Europe in the future. A 30MW oxyfuel boiler demonstration is
currently being constructed by Vattenfall in Germany and another
30MW test is planned in Australia. A 500 MW boiler conversion
in the UK would produce about 3.5 million tonnes/year of CO2
and would need to be linked to a CO2 EOR project in
the North Sea.
There is significant scope for further efficiency
improvements and capital cost reduction using oxyfuel systems
in coal-fired pulverised fuel ("PF") power stations.
Air Products has been developing technology which aims to raises
the overall efficiency of the system with CO2 capture
to above 40% compared to the Ratcliffe current efficiency of about
38% without CO2 capture. These developments mean that
the oxyfuel system is capable of giving about the same overall
cost of electricity generation as the IGCC system now and that
further developments will continue to ensure its competitive position
in the future. It could be a system with huge export potential,
particularly to China, which is installing a very large amount
of coal fired electrical generation capacity, based on conventional
PF coal fired power stations.
There is one other area of oxyfuel technology
which must be mentioned as a route to low cost, high efficiency
power production with CO2 capture. It is the direct
combustion of a gaseous fuel with pure oxygen and preheated water
at very high pressures to supply ultra high temperature, high
pressure steam plus CO2 directly from a compact burner
with no requirement for a boiler. The steam/CO2 mixture
would be expanded in turbines producing electrical power with
pure CO2 produced from the steam condenser. Efficiencies
of over 50% are possible, with low capital cost. This is another
area which could be developed in the UK.
4.2 Deployment of CO2 Capture Technologies
The three major CO2 capture technologies
could all be deployed now in a large scale demonstration using
current technology. R & D should be planned for cost reduction
and other improvements in the construction of follow-on facilities.
CO2 capture does not require any R & D period before
its first large scale implementation. The first plants require
good project planning based on careful preliminary design and
evaluation in order to control overall project costs and performance.
4.3 Costs
The likely costs of CO2 capture and
storage have been carefully analysed based on published information
and they are presented in the IPCC report on CO2 capture
and storage, which is currently in the hands of the Government
and will be published in December 2005 following the Montreal
conference.
4.4. Geophysical Feasibility
We are not qualified to comment on this area
which is dealt with at length in the IPCC report.
4.5 Other Obstacles or Constraints
There must be sufficient incentives for the
investments which must be made to introduce CCS for fossil fuelled
energy systems. The incentives will be required to be assured
for the life of the investments.
We would urge that CCS and nuclear be competitively
evaluated on exactly the same basis as renewable energy in terms
of life-cycle carbon abatement potential and overall cost of electricity
produced. It would be a distortion if there were to be economically
and environmentally unjustifiable subsidies for renewables which
have no inherent moral superiority over, for example, fossil-fuel-based
systems.
There is clearly a necessity to inform the general
public of the issues involved. Pressure groups clearly have their
place but their views should be balanced by dissemination of information,
and informed opinion, based on objective evaluation of the economic,
scientific and engineering realities pertinent to the debate.
5. THE GOVERNMENT'S
ROLE IN
FUNDING CCS R & D WITH
INCENTIVES FOR
TECHNOLOGY TRANSFER
AND INDUSTRIAL
R & D
The role of the UK Government in funding issues
should be seen in the context of funding provided by the European
Union. We must be aware of the fact that CCS technology and implementation
is a global issue and that although the UK has some special characteristics,
these are minor in the context of overall development of the technology.
The major source of potential funding for the UK programme could
be made available under the EU FP-7 programme. To attract this
funding, it is necessary for all interested UK bodies, industrial
technology and equipment suppliers, power companies, oil companies,
natural gas suppliers, motor companies, universities and any other
institutions or organisations to link with groups in other EU
countries to form the necessary project or research focused interest
which can be the basis for an application for funding under FP-7.
This process of building a group focused on a relevant topic is
the only way in which funds can be readily obtained from the EU.
The opportunity also exists now to influence the level of overall
funding which will be allocated to CCS topics in FP-7 and also
to influence the guidelines setting out the objectives of FP-7
in the CCS area.
Our links with programmes on CCS in the US and
Australia, in particular, through international organisations
and treaties may allow us to participate in a minor role in important
research. Of particular interest, in this context is the US FUTUREGEN
programme on high efficiency power generation, using coal fuelled
oxygen based gasification with a combined cycle gas turbine system.
The CO2 will be removed and used for enhanced oil recovery.
This programme targets a completed demonstration plant by 2012.
It might be considered ill-judged to to duplicate this work by
funding IGCC coal-based power stations in the UK. We could gain
much by joining the FUTUREGEN programme as a partial funder of
the work in return for the research and design data. We, the UK,
could also provide some of the technology and possibly even some
of the equipment—and we might also obtain some of the associated
research contracts. We should consider carefully before supporting
the building of expensive IGCC systems in the UK based currently
known technology.
Our strength lies in our knowledge of oxyfuel
and amine based technology for CO2 capture applied
to PF coal fired power stations. We also have good indigenous
technology in hydrogen production on a very large scale. These,
together with our ability to demonstrate CCS as a complete system
with valuable benefits from CO2-based EOR, should form
the basis for our research contribution. The Government role could
be to co-ordinate our efforts in these three areas and help set
up the combined industrial/commercial/academic groups needed to
secure large scale EU funding. One important programme might be
a full scale demonstration of CCS with CO2-based EOR
based on a retrofit programme on a 500MW set at Ratcliffe power
station, for example. This would probably cost about $750 million.
This is the level of funding required to implement just one of
the new technologies under consideration. Given the right incentives,
industry and the power companies will provide funds but launching
new technology like this requires a grant of probably 50% of the
cost for the first installation. If the UK were to take a lead
in large scale CCS demonstration there is a good chance that funding
could be obtained from the US and possibly also China. Only by
globalising our common efforts in this way will we achieve rapid
progress, worldwide, in implementing CCS technology.
I would also like to draw to the Committee's
attention the formation of a new major activity soon to be launched
by the Imperial College of Science and Technology, London, called
"The Future Energy Lab". Imperial College is, in my
opinion, our major UK technological Institute. It can act as a
very powerful focus for future research and development in the
CCS area. It would have the ability to co-ordinate R & D in
this area in the UK and act in an overall management role with
participation from UK industry, commerce and other Universities,
etc. It also has established links with overseas institutions
particularly in the US.
30 September 2005
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