annika seiler - ccs - a cost competitive approach for decarbonizing power sector in emerging...

7/31/2019 Annika Seiler - CCS - A Cost Competitive Approach for Decarbonizing Power Sector in Emerging Economies of Asia

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Annika SeilerAsian Development Bank

Manila, 7 June 2012


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Content

Why CCS is needed in emerging countries?

Unique challenges for CCS demonstration

Financing CCS Demonstration Need and role

of various support mechanismsADBs support in PRC to enhance CCS

demonstration

Levers enable CCS demonstration projects inpipeline in emerging economies

Conclusions

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Large capacity addition, especially innext 10 15 years, with highproportion of coal-based plants

Rapidly rising coal consumption haswider implications for the globalclimate change mitigation efforts

CCS is the only near commercialtechnology to decouple CO2emissions into the atmosphere fromlarge single-point sourcesof fossil fuel combustion

Shift of coalconsumption towardsAsia-Pacific Region

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Need for CCS in emerging economies

Global Coal Consumption,Mtce


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IEA (2012): 72% of 1Gt ofincremental CO2emissions globally in2011 originated from the

PRC.

Without strong supportfor investments in energyefficiency and renewableenergy over 11th FYP,

20062010, PRCs CO2emissions would haveexceeded 1.5Gt from coalcombustion in powersector and industries.

Each GW of coal fired power generation withCCS avoids more CO2 than avoided by 1GW eachof solar and wind plants combined.

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RE is not sufficient CCS is needed


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CCS is not astrategic

choice ofpolicy makers

Lack ofexperiences inplanning, constructing andoperatingpower plants

with CCS

Limitedtechnicalreadiness ofasset base

Higher additionalCAPEX, OPEX &auxiliaryconsumptions

Insufficient public

and concessionalfinancing, no fiscalor financial supportmechanism

Limitedpublicawareness

ADB (2011): key barriers toCCS are amplified in

developing countries.

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Key Issues and Barriers


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Coal-fired power plantprojects with CCS havehigher CAPEX + OPEX

Using captured CO2 forEOR could allow foradditional revenue andenhance viability ofprojects

But ..

BaseCost

24%

200

400

600

800

01/10/2010

400 MW IGCC

BaseCost

65%

01/10/2010

600 MW SC

Cost-$million

30

60

90

120

ElectricityTariff$/MWh

51

90

73

112

With CCS

Without CCS

53%

80%

Benchmark tariff for coal-fired power plantswithout CCS are applied to those with CCS

which make them financially unviable atthe existing tariff. 6

Impact of Higher Capital Cost and Energy Penalty


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Additional capitalcost and energypenalty could be

compensated

Concessionalfinancing could bringwith CCS down so

that it would requireonly a tariff mark-upof 20%.

CCS demonstration will requireinternational support in developingcountries

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Importance of Concessional Financing and Fiscaland Financial Support Measures


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with CCS power is

competitive with otherlow-carbon

technologies

The tariff should bebenchmarked againstthe levelized cost ofelectricity of a cleankWh

Electricity Tariff and Capital Cost Comparison in PRC

0.05

0.19 $/kWh

0.09 $/kWh

0.11 $/kWh

0.08 $/kWh

0

0.5

1

1.5

2

2.5

3

3.5

Wind IGCC + CCS SC+CCS Solar Std Coal

Cost($million/MW)

0

0.05

0.1

0.15

0.2

Tariff($/kWh)

Cost ($M/MW) Std Coal tariff (ct $/kWh)

Comparing a coal-fired with CCS to awithout CCS plant neglects environ-

mental impacts of coal-fired powerplants without CCS8

Comparison of levelized cost of electricity


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Feed-in tariff

Tax rebates

Operationsubsidies

CDM

Quota obligations

Green pricing

Consumersubsidies

Fiscal measures

Investment grants

Concessionalfinancing

Sovereignguarantees

Exemption onimport duties

Quota obligations

Concessional financingis essential to facilitateearly stage

demonstration projects

Capital investmentsupport measuresneed to becomplemented with anappropriate mix ofsupply side operationoriented support as wellas demand sidestimulus measures

.

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Financing CCS Demonstration - Role of varioussupport mechanisms

Capital investment oriented

Operation oriented

Supplyside

Demandside


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ADB submitted a reportto CSLF on financingCCS in emerging

economiesKey recommendation -set up $5 billion CCSdedicated fund fordeveloping countries to

supportstorage characterization

FEED studies

incremental CapEx andOpEx.

.

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Financing CCS in Developing Countries ADBReport (TA 7278-REG)


11/17Realized demonstration projects

Levers to enable CCS Demonstration Projects inPipeline in Emerging Economies

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Government Commitment, incl.policy targets, regulatory, fiscal,

and financial support measures

Awareness and support from civil

society

Higher upfront development costs, capital

investment cost, and auxiliary consumption

Concessional financing and adequate

business models for early stage


Demonstration projects in

identification stage


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Pre-combustiontechnology:

Financial and technical assistance toChina Huaneng Group to study thetechnology, build and operate anIntegrated Gasification Combined Cycle

power plant with a carbon capture,utilization and storage plant

Post-combustion

technology:

Capacitystrengthening ofDatang

International toassess, pilot-test,and apply post-combustionmethod in gas-firedpower plant and toestablish CCS-

ready criteria powerplants

Oxyfuel-combustiontechnology:

Assisting Dongfang BoilerCo. to assess feasibility andestablish technical standardsfor a 100MW demonstrationcoal-fired power plant

.

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ADB approach to support CCS in PRC (1/3)Upstream analysis and pilot testing of available technologies for energycompanies and dissemination of lessons learnt:


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Policy&r

egulatory

framework:ADB is working

with the NationalDevelopment andReformCommission toformulate acomprehensiveroadmap, policy,and regulations toenable CCS

demonstration anddeployment

BusinessModels: ADB in

consultation with

major oil, gas, coalmining, and powerindustries seeks toidentify andfacilitate jointventures for early

stagedemonstrationprojects

Kn

owledgetransfer: ADB organizes

internationalconferences or sitevisits for PRCstakeholders tofacilitateknowledge sharing

and exchange ongood practices inCCS development

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ADB approach to support CCS in PRC (2/3)Establishing an Enabling Environment for CCS Demonstration:


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ADB is administering an dedicated multi-donor trust fundestablished with an initial contribution from the Global CCSInstitute of A$21 million for capacity development and financing of


Dedicated fund:

Co-financing of Tianjin Integrated Gasification Combined Cyclepower plant $135 million loan and $5 million grant

Assessing $10 million grant assistance to carbon capture,

utilization and storage small-scale demonstration plant

Financing of demonstration projects:

CCS partnership with the CCI, stakeholder in the CSLF, Member -Global CCS Institute

Participation in Action Group to identify and establish a CCS

financing mechanism in developing countries

International Networking:

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ADB approach to support CCS in PRC (3/3)Mobilizing funding and financing of demonstration projects :


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CCS technologiesface uniquechallenges

Compelling reasonsto fast track CCSdemonstration indeveloping countries

MDBs have a criticalrole to play incapacity developmentand creating enablingenvironment

Unlike other low-carbon technologies, there isweak policy support for CCS technologies.

Surging demand for fossil fuel butunsatisfactory progress on CCS in developingcountries demands early CCS demonstrationto benefit from locking-in low carbondevelopment

Without a targeted CCS Fund to substantiallymitigate higher CAPEX and operationalsupply-sde support to compensate higherOPEX, the CCS demonstration

at-scale will be difficult15

Conclusions


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Compelling reasons tofast track CCSdemonstration in

developing countries

MDBs like ADB areready to support PRC

and other developingcountries

PRC has a critical role to play in CCSdemonstration and deployment

China is swing country for determining the

speed of CCS demonstration and deployment

Pilot CCS activities have laid the groundworkfor near-term CCS demonstrations (by 2015)if right funding and policy supports areavailable in time

Conclusions


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For further information and comments please contact:

Ashok Bhargava, Director East Asia Energy Division (EAEN)[email protected]

Annika Seiler, Finance Specialist (Energy) [email protected]

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