++++++++++++++ ++++++++++++++ naruc february 19, 2008 accelerating deployment of ccs pew center on...
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NARUCFebruary 19, 2008
Accelerating Deployment of CCS
Pew Center On Global Climate Change Coal Initiative
Judi Greenwald, Director of Innovative Solutions
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The Pew Center’s Coal Initiative
Addressing emissions from coal-fueled power plants
I. U.S. Policy Optionsa) Standardsb) Trust fund
II. U.S. Technology SolutionsIII. State-level OpportunitiesIV. Options for China and India
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OverviewI. The need for CCS II. Options to accelerate use of CCSIII. A program that covers incremental
costsA. Program components B. Alternative scales and objectivesC. First order cost estimates
IV. A trust fund to manage the programA. U.S. trust fundsB. Lessons learnedC. Design Features
V. Considerations for PUCsVI. Introduction of States Coal Paper
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The Need for CCS1. 30% of U.S. and 80% of U.S.
electricity sector CO2 emissions come from coal
2. These emissions must be significantly reduced to address climate change
3. CCS is the only suite of technologies that currently has promise to enable coal to be a major electricity-sector energy source while meeting climate objectives.
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Current Barriers to CCS Deployment• High expected costs (~30-70% increase
in plant-level cost of electricity)• Large losses in net electricity output• Lack of experience with technologies,
particularly at-scale, integrated use in the utility sector
• Regulatory uncertainty regarding stored CO2, including liability
• Current lack of regulatory drivers to reduce CO2 emissions
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How CCS Might be Accelerated
Stringent enough cap on CO2
Mandate on generators or retailers (standards)
Tax creditsState & regional policies; PUC
actionsProgram that pays incremental
costs of CCSCombined options
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Program Goals: Address Barriers
• Establish real-world costs and viability:– Alternative electric generation technologies
(PC, IGCC, new & retrofit)– Different coal types– Different geologic settings
• Reduce costs & energy penalties in most efficient manner
• Provide information for design of regulatory systems, including liability mechanisms
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Program Description• Covers incremental costs of CCS
(installation; O & M for 5 years; reimburse revenue lost due to reduced generation)
• Sufficient funds for:~10 plants (500 MW) + 5 other large-point
sources~30 plants (500 MW) + 10 other sources
• Funds come from: – Fees on electricity generated – Proceeds from allowances– Other
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Selected Pros and Cons of Options• Size:
a) Smaller is less expensive; b) Larger can significantly reduce costs
through carefully staged capacity-doubling
• Source of fundsa) Per KWh coal-fueled generation – could
increase role of coal communityb) Other electricity generators – lower feesc) Allowance allocations/auction revenues –
tied to climate policy; magnitude and timing of funds less certain; no fee
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How Much Would it Cost?
• Project costs will vary by: technology, coal type, location, EOR opportunity, and whether retrofit or new build
• Average per 500 MW unit– High: $950 million– Low: $730 million
• Total Program– Smaller program: $8-10 billion– Larger program: $24 - $30 billion
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Scale of Fees if per kWh on Coal
Based on current generation from coal:• Smaller program: $0.0004 to $0.0005 per
kWh• Larger program: $0.0011 to $0.0014 per
kWhCosts (and fees) decline as:• As coal-fueled generation increase• Costs of CCS decline Costs (and fees) could be reduced by:• Requiring cost-sharing• Supporting fewer projects per year
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Trust Fund Basics
A mechanism that ensures that funds are disbursed only for the purposes established for the fund
In the case of federally established trust funds, legislation determines:
• whether funds go into Treasury and through annual appropriations
• the entity that manages the fund
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Some Successful U.S. Trust Funds• Highway Trust fund – installed new
infrastructure across U.S. • Propane Education and Research
Council – fees enabled by federal legislation; up and running in 2 years
• Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources – managed by private stakeholder group under DOE oversight.
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U.S. Experience: Key Lessons
• Can raise, and provide assurance on uses of, very large sums of money
• Establish clear objectives; terminate program when objectives reached
• Ensure reliability of fund disbursement (avoid appropriations & tax-credits)
• Use independent or quasi-independent entity to manage funds
• Self-financed programs survive
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Well-designed Trust Fund Advantages• Very rapid start-up possible• Operates outside of federal
appropriations• Uses private-sector project selection
and management standards• Transparency: stakeholder + experts
control with federal oversight• Efficient selection of projects to achieve
goals• Could be applied to allowance option
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Considerations for PUCs
Urgency of deploying CCS
Need to gain experience
Need to reduce costs in time to avoid a move away from coal
Climate legislation is on the way
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State-level options for CCS acceleration
• Cap and trade
• Generator performance standards
• Retailer standards
• Feebates
• Combined approaches
• PUC treatment of climate change risk and CCS cost
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The Potential Role for States
• Need a national program, but…• States have interests in mitigating climate
change, and in the future of coal• States will face decisions about specific CCS
projects• States have relevant authorities they can
exercise• Favorable state policies combined with federal
policies would advance CCS more effectively than either alone
• A proactive approach by states to drive CCS can reduce costs, speed technological and regulatory developments and public acceptance, and inform and pave the way for future national policy.
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For Further Information
See papers at www.pewclimate.org/white_papers/coal_initiative
1. A Program to Accelerate the Deployment of CO2 Capture and Storage: Rationale, Objectives, and Costs. 2007. Vello Kuuskraa
2. A Trust Fund Approach to Financing a CCS Deployment Program. 2008. Naomi Pena and Edward Rubin.
3. State Options for Low-Carbon Coal Policy Rich Cowart and Shanna Vale, Regulatory Assistance Project; Joshua Bushinsky and Pat Hogan, Pew Center on Global Climate Change