Memorandum submitted by Wormser Energy
Solutions
WORMSER ENERGY
SOLUTIONS
Wormser Energy Solutions (WES) is an international
energy technology company comprised of energy specialists from
around the world. WES focus, at present, is upon developing and
commercializing the gasification technology—Mild Airblown
Gasification Integrated Combined Cycle (MaGIC)—in the UK,
EU and internationally.
MaGIC is a third generation, coal-fuelled IGCC[90]
(Integrated Gasification Combined Cycle) technology. MaGIC delivers
efficiencies of over 50% (LHV)—the highest for any IGCC.
Because of its higher efficiency, MaGIC significantly reduces
CO2 emissions—even before Carbon Capture
and Sequestration (CCS) is taken into account; the estimated levelised
cost of electricity from the system is only 70-80% of that for
traditional Pulverised Coal (PC) or natural gas plants. The system
is fully carbon capture ready, and the higher heating value efficiency
of MaGIC can absorb the dip in efficiency brought about as a result
of CCS.
Until now, the capital cost of IGCC's has been
far too high to make them a practical alternative to coal-burning
power stations. Due to the small size of its equipment, MaGIC's
low build costs break that cost barrier, and result in a dramatically
faster payback (seven years vs. 15+ years). The technology is
designed to be retrofitted to existing coal (and gas) power stations,
or to be built as a new stand alone power station; it can also
be used with biomass and/or Municipal Solid Waste. MaGIC is currently
in the development stage in the US and the UK, and WES estimates
that a power plant could be developed by 2013.
EXECUTIVE SUMMARY
WES welcomes the opportunity to provide evidence
to the Energy and Climate Change Select Committee. Our submission
is aimed at highlighting, via our responses to the committee,
the view of a small, energy-technology development company. As
a niche technology company developing gasification technologies,
WES believes that the UK Government's recent activity, recommendations
and stimulus support are quantifiable drivers for energy investment
into the UK.
Strong, clear signals to the market regarding
the direction of policy are vital if large-scale low-carbon technologies
are to develop. In particular, we are interested in carbon reduction
and capture technologies. We believe these can play a vital role
in both reducing UK emissions to meet the Government's ambitious
targets, and reviving the economy. There is a risk for policymakers
that the full and varied opportunities from all aspects of the
CCS sector could fail to be exploited sufficiently if "research"
and "Government support" are too narrowly defined.
WES considers that support and assistance should
be given to a variety of different technologies focused not only
on the "storage" aspect of CCS, but on the mechanisms,
economics and efficiencies of the power-plant-design process for
the electricity-generating system within which the coal is used.
Additionally, the wide-spread adoption of new low-carbon technology
is facilitated by providing a profit motive to business for its
use.
What opportunities exist for the creation of a
green new deal whilst pursuing a low carbon economy? Which technologies
have the biggest potential? Has the Government done enough in
its stimulus package?
1. WES believes that a green new deal is
possible in the UK, and that the Government's commitment to this
as an area for growth is commendable—especially the recently
announced additional levels of support for CCS development in
the UK budget.
2. One of the single most effective ways
to boost GDP is to increase efficiency. Conveniently enough, increasing
efficiency is also a very straightforward way to tackle carbon
emissions. It is proper and useful for the Government to encourage
the development of new, more efficient technologies; and to support
environmental targets by requiring the most efficient new technology
be installed for new power generation.
3. The Government can and should encourage
the development of advanced technology which can change the carbon
footprint of significant, already-existing carbon-producers (such
as power stations). If this can be accomplished cheaply enough,
the economy will benefit from the efficiency gains to business—and
society will benefit from the reduction in carbon. We agree that
these technologies must provide a mechanism for the capture of
carbon, so that as storage capacity is brought online, the older
coal fired power plants are able to erase their carbon footprint
along with newly-built plants.
4. WES believes that such technologies urgently
need development and pilot plant testing. The recent stimulus
package was welcome, and hopefully should help to assist research
and development into all aspects of increasing plant efficiency
and capturing and storing carbon—including, crucially, power
plant design.
5. More efficient power plant designs, such
as IGCC's have previously been constrained by very high capital
costs. Although Government once recognized the potential of this
technology (for example, when it funded the British Coal Topping
Cycle development work through the then DTI), this work was never
completed, and capital costs remain prohibitive. As a result,
internationally, most new coal plants built are still a form of
pulverized coal plant—a technology which has remained static
(with small modifications) from the 1950s.
6. WES' recent design developments in IGCC's
have broken through the economic barriers. WES has made gasification
of coal a key technology, with the potential not just for cleaner
coal, but also for use with biomass and municipal solid waste.
7. In order for a Green New Deal to become
a reality in support of a low-carbon economy, solid economics
have to be at the root of its design. Retrofitting existing, depreciated
assets with advanced carbon-efficient and capturing technology—at
a project cost that actually makes money for the generators—is
the kind of win: win solution the UK needs to remain competitive
and responsible in a carbon constrained world.
How realistic are the Committee on Climate Change's
projections for the use of different types of new technologies?
What is needed to achieve the development and deployment of them?
8. WES believes that technology developments
in energy generation should be supported—from early stage
development though to pilot plant—in order to harness the
widest range of possible options for the UK economy. Challenging
existing industry norms is a key part of the development of CCS
technology if it is to come online within the Governments anticipated
timeframes.
9. The capital cost barriers-to-entry in
the energy marketplace can be significant; and all too often promising
ideas can languish at the fringes of the industry. Emerging technology
and new ideas should be actively encouraged by Government. The
Government can bring large and small companies together—enabling
innovative ideas from small and nimble companies to get a rapid
jump-start in development with large industry partners.
10. In particular, the opportunities for
gasification are considerable, and can be applied to municipal
solid waste and biomass, as well as with coal. At present, the
UK relies on a fleet of ageing coal and nuclear power stations.
Although the retrofit of more-efficient equipment is becoming
common in homes, we still have dated generating equipment in the
power stations which supply those homes. Primarily due to the
Large Combustion Plant Directive, a number of these fully-depreciated
coal stations are scheduled to be fully shut down in the next
six years. This represents a potential loss of 15% of the UK's
existing power generation capacity. Increasingly, the UK also
relies on natural gas power stations.
11. The addition of IGCC technologies to
the existing fleet of coal power stations would not only reduce
emissions, but could enable the same power stations to generate
more electricity than they currently generate—without adding
more CO2 to the atmosphere. Adding generating
capacity by adding WES technology to an existing power station
generates less net CO2 than adding the new power
via a new Natural Gas station. In addition, retrofitting to the
existing PC fleet helps with protecting assets of national strategic
interest, assets which would otherwise on closure become liabilities.
Retrofitting to an existing PC station takes significantly less
time and cost than dismantling and rebuilding a new station from
scratch.
What are the most important drivers, nationally
and internationally, for a low carbon economy in the UK? To what
extent do the outcomes of the international negotiations at Copenhagen
matter?
12. Demonstrating responsible international
citizenship and providing world wide leadership in this critical
arena are key drivers of a low-carbon-economy. Nationally, security
of supply, emissions reduction and price stability, are amongst
the most significant challenges for the UK.
13. The outcome of Copenhagen matters considerably
for low carbon and energy businesses, especially smaller scale
technology companies such as our own. Global agreement (including
all major economies) to binding emissions limits is a huge signal
to business. It encourages business to invest for the long term
in innovative new technology which can reduce emissions. Emissions
limits also "level the playing field" across developed
countries for the cost of doing business.
14. It is not enough for the UK to simply
clean up its own carbon. Each technology investment should be
evaluated with an eye towards its potential multiplier effect
in other high-carbon societies worldwide. This 'multiplier' criterion
encourages two desirable secondary outcomes for each pound spent
in development: it creates an export opportunity and lowers the
carbon footprint of any country using it.
15. Regulatory measures are enormously helpful
in driving a low carbon economy, and cap and trade schemes—when
developed alongside strict emissions limits—can create real
pressure to reduce carbon and increase efficiencies. The WES business
strategy is focused on the UK and EU for this particular reason.
How important is it to the UK economy that it
becomes a leading developer and exporter of low carbon technologies?
What Government policy needs to be in place to do this?
16. It is vital for the UK economy and for
future growth that the UK becomes a developer and "hub"
for low carbon technologies. In coal gasification, the area of
technology development in which WES specialises, the UK was previously
a world leader due to work begun in the 1970s. Given the large
reserves of coal available world wide, there is significant potential
for any country which develops low-carbon coal technologies.
17. The Central Electricity Generating Board
(CEGB) and The British Coal Corporation invested heavily in research
and development in developing gasification-based and other advanced-combustion-based
power generation technologies. The CEGB and British Coal had a
key role in the development of pressurised fluidised bed combustion
("PFBC") technology, with much of the preliminary development
work undertaken using the PFBC facilities at Grimethorpe in Yorkshire.
18. We believe that this development was
halted due to a wide number of factors, including the "dash
for gas". However, as an example it illustrates that the
UK has a rich heritage and skill base in carbon technologies from
which to draw.
19. Mandating CCS by 2020 is a very
clear steer to the market; however business-focused, practical
research into the whole area of CCS—including power plant
design and efficiencies—is absolutely vital. Such research
should be prioritised, supported and encouraged by all the various
government bodies.
20. The economics and specifications of
Carbon Capture Readiness (CCR) are a key component of developing
this growth area. The cost of certifying a potential site as CCR
are large, and potentially time consuming. Whilst WES recognises
that this is vital, and will hasten the development of CCS, consideration
should also be given to analysing the economics of CCS to the
market and ultimately to society. The effect of these cost pressures
should not prevent development of such a technology. They do,
however, illustrate how the costs and efficiencies of the building
blocks of the CCS 'picture' are vital in developing a realistic
view of CCS and its deployment.
21. Developing UK capacity is difficult,
and the people with the necessary skills in chemical, mechanical
and process engineering need to be nurtured and developed from
an early stage via support for those Universities and organizations
that are conducting high level work in this area.
Are we seeing impacts of a downturn on demand
and investment in low carbon technologies? If so, how can this
be addressed given the need to meet long term targets? What obstacles
to investment are there?
22. The downturn in the export market is
making business more cost-conscious than ever. This places pressure
on carbon-restrictions due to the increased costs-to-business
they impose. Therefore, it is even more critical that the cost
of reducing carbon make business sense, not just environmental
sense. Dual purpose investments, which lower carbon while increasing
profit, are the least likely to suffer during the downturn. In
fact economic downturns are often when wise companies invest,
so that they are prepared when the economy rebounds.
23. Undoubtedly the economic situation is
affecting access to credit for large capital projects, and funding
for businesses of all types. Additionally, investment has often
been slow in new energy technologies due to a lack of regulatory
signals; although recent EU action in areas such as the Large
Combustion Plant Directive—which stimulated investment in
Flue Gas Desulphisation technologies through clear mandatory actions—has
had a real effect.
24. WES believes that the work done previously
by the CEGB and British coal in the area of coal gasification
demonstrates that large scale Government support for research
is absolutely vital if new technologies are to develop in the
current climate.
25. The EU ETS in phase 3 should stimulate
more investment in carbon reducing technology due to increased
auctioning of permits. It is important that Government and the
EU encourage and maintain a regime in which CO2 emissions
pricing, in and after Phase III, is stabilized and volatility
reduced.
What is the potential role for public procurement
and policies such as the 2016 zero carbon homes target in
driving investment, development and job creation?
26. WES believes that public procurement
can play a strong supportive role for low carbon technologies,
especially in investment in new technologies such as waste to
energy and biomass power generation. Public procurement provides
visible early-adopters for new low-carbon technologies, and signals
strong support for emerging technologies. In an industry such
as power generation, public projects can be the foundation of
innovation—paving the way for industry to follow.
May 2009
90 The system is a hybrid; at its heart is a carbonizer,
where pyrolysis and gasification occur, producing not only syngas
for use in a gas turbine, but also char for combustion in a boiler. Back
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