It is widely recognized that the most significant obstacle to the routine pursuit of CCS is successful demonstration of CO2 storage at “megascale” (storing at least a million tonnes of CO2 per year) in a variety of geological media—with emphasis on deep saline formations, which account for most of the geological storage opportunity. Demonstrations are needed both to address scientific and technical issues regarding CO2 storage at commercial scales and to ascertain, to the satisfaction of a wide range of stakeholder groups and opinion-shapers, whether CCS is viable as a “gigascale” carbon mitigation option. To address these needs, an agreement was reached at the July 2008 G8 Summit in Japan that the G8 would commit by 2010 to sponsor 20 large-scale fully integrated CCS demonstration projects worldwide with the aim of establishing the basis for broad commercial deployment of CCS after 2020. The US agreed to sponsor at least 10. But the ensuing global economic deterioration and concerns about the growing budget deficit have cast a shadow on the prospects for major near-term carbon mitigation actions such as the G8-proposed integrated CCS projects.
To address this dilemma, Williams developed a proposal for a CCS Early Action Initiative (CEAI) that exploits the CMI finding that coal/biomass polygeneration systems with CCS represent a low cost approach to electricity decarbonization. The proposed CEAI is motivated by the likelihood that, for early CCS projects, government will have to pay for a significant fraction of the incremental CCS cost, and the premise that federal funds will be scarce for purposes other than for dealing with the economic crisis.
Under the proposed CEAI the Departments of Energy and Defense would collaborate in carrying out 10 megascale integrated CCS projects based on commercial or near-commercial technologies that would involve CO2 storage in deep saline formations. Both Departments have much to offer to the proposed CEAI. A major role for DoE is essential to ensure technical success. The DoD would be a motivated partner in light of the Air Force’s goal of meeting ½ of its North American jet fuel demand from secure domestically produced synthetic fuels by 2016—a goal that could plausibly be realized under the proposed CEAI. Also the DoD is committed to alternative energy implementation in all sectors and has already established a strong track record.
Under the CEAI the federal government would provide incentives for 10 megascale integrated CCS projects, each of which would meet the criteria for DOE’s restructured FutureGen competition: (i) produce at least 300 MWe of decarbonized power; (ii) store at least 1 million tonnes of CO2 per year in deep saline formations; (iii) use domestic coal for at least ¾ of the feedstock; (iv) use at least ½ of the coal to make electricity as a product; and (v) come on line by 31 December 2015. Furthermore, under the CEAI, qualifying projects could include not only coal electricity projects but also polygeneration projects that produce, along with decarbonized electricity, synthetic fuels with GHG emission rates that are not more than for the displaced conventional fossil fuels. In order to avoid the “carbon debt” issue recently brought to light by Tim Searchinger and Dave Tilman, projects that co-process biomass feedstocks would be limited to those not grown on good cropland.
In order to minimize the cost to the government, and ultimately society, the winning CEAI projects would be those that satisfy all the above criteria at the least costs of GHG emissions avoided. One part of the incentive for winning projects is government paying over a period of 5 years for the incremental CCS cost. In addition, winning projects that provide synthetic jet fuel would be offered by the Air Force 20-year procurement contracts at purchase prices consistent with synfuel production costs under competitive market financing conditions.
Williams’ analysis in support of his CEAI proposal shows that if all winning CEAI projects were small polygeneration plants (producing ~ 300 MWe + 10,000 B/D of F-T liquids) co-processing less than 10% biomass, the estimated present value of the subsidy cost would be $5.8 billion, $4.5 billion, or $0.4 billion (equivalent to 38%, 26%, or 2% of the capital costs for these plants) if the levelized crude oil price over the 20-year subsidy period is $50, $60, or $80 a barrel. For higher levelized oil prices the subsidy would be negative, because the procurement of synthetic jet fuel would save the government money relative to having to buy jet fuel derived from crude oil.
An alternative approach to early CCS action was put forth in the Dingell/Boucher climate change discussion draft released in October 2008. That plan would offer subsidies of $90/t, $70/t, and $50/t for CO2 emissions avoided over a period of 10 years for the 1st, 2nd, and 3rd sets of 3 GWe each of decarbonized coal power plants deployed in the US. The relevant comparison to the proposed CEAI (were all winning CEAI projects to be small polygeneration plants) is the subsidy required for the first 3 GWe (equal to the plausible total electric capacity for 10 small coal/biomass polygeneration plants under the proposed CEAI)—about $10 billion, equivalent to almost 80% of the capital costs if all the deployed plants were to be IGCC-CCS plants.
Although the primary purpose of the proposed CEAI is to exploit polygeneration as an instrument for gaining early megascale CCS experience at a low cost to government, the CEAI would also help catalyze market interest in deploying coal/biomass polygeneration systems, which face significant institutional hurdles as a result of having to process two very different feedstocks (coal and biomass) and having to market two very different commodity products (electricity and synfuels).