Atlantic Council - Victor Der

Victor Der , General Manager -­ The Americas Atlantic Council – Global CCS Institute Forum 9 September 2013

Advanced Fossil Energy Technologies -­ Key Issues to Energy Access & Security and Enhancing Environmental Performance -­ Role of CCS

Fossil Fuel’s Role in Meeting Future Energy Demand

in a Carbon-­Constrained World

Fossil Energy will continue to be the dominant energy resource used globally -­ relatively affordable, geographically diverse and abundant => provides energy security

Challenge: Using fossil resources wisely across global economies – affordable & environmentally sustainable

CCS/CCUS -­ a key role in meeting the challenge WITH:

Properly structured policies, regulatory frameworks and incentives -­ sustainability and certainty for markets Continued Technology RD&D investments -­-­ cost and performance improvement Gain understanding and acceptance –market and public.

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DRIVERS FOR CCS

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TECHNOLOGY

POLICY & MARKETS

UNDERSTANDING & ACCEPTANCE

1. International developments and opportunities in these areas 2. Importance of US Leadership and Collaboration in the global development, demonstration and deployment of CCS

3. Global CCS Institute – Knowledge Sharing;; Advising;; Creating Favorable Conditions for Global CCS Implementation

CCS: A VITAL PART OF OUR LOW-­CARBON ENERGY FUTURE

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CCS TECHNOLOGY – INTERNATIONAL DEVELOPMENTS

ASSESSMENT Individual CCS components broadly understood Many CCS aspects already technically mature Safe storage displayed by CCS projects operating over the past decade Pilot & larger scale test facilities are important contributors to knowledge Confidence that remaining technical/economic challenges can be met

OPPORTUNITIES Successful demonstration of integrated operation at large scale in power and additional industrial processes is key: o Establishes positive acceptance of CCS as a ‘proven’ technology o Pass on ‘learning by doing’ cost savings o Build public trust that CO2 storage is safe. R&D to mature 2nd generation capture technologies as a ‘game-­changer’ Identification of viable storage sites to facilitate CCS deployment post 2020

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POLICY & MARKETS – INTERNATIONAL DEVELOPMENTS

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ASSESSMENT International policy discussions consistently acknowledge importance of CCS -­ continued progress at UNFCCC, CEM, CSLF and ISO, but …

Industry highlights that national climate and energy policies do not provide long term clarity to support widespread adoption of CCS projects (high capex & long lived)

CCS is often not treated equivalently to other low carbon technologies

National regulations have advanced but critical uncertainties remain (storage)

Existing CCS funding programs for demos mostly exhausted

OPPORTUNITIES Certain governments are considering approaches to re-­invigorate funding programs – need urgent support to maintain momentum for demonstrations to 2020

U.S. – Potential support mechanisms (CURC & NEORI – Rockefeller Bill)?

Continued development of low carbon future roadmaps: sustainable policy outcomes and market mechanisms which are technology neutral

Post Kyoto 2020 agreement for decision in 2015

UNDERSTANDING & ACCEPTANCE – INTERNATIONAL DEVELOPMENTS

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ASSESSMENT Stakeholder relationship management critical to project delivery

Global awareness and understanding of CCS and CCS energy context is low

CCS communication focused on risks and challenges;; not value and opportunity

Persistent views of CCS as experimental, not cost competitive and associated with fossil fuel instead of role in low carbon energy

Building trust with key stakeholders is critical for project acceptance

OPPORTUNITIES Successful global demonstration program is critical to establish public and political confidence in CCS – highlights urgency in progressing CCS demonstration projects

CCS projects are demonstrating improved sharing and use of best practice learning

Encouraging public advocacy of CCS from trusted groups like academics and environmental NGOs to raise awareness and credibility of CCS

Improve access to education materials and experts – particularly on topics like CO2 transportation and storage.

Opportunities Created by Large Scale Projects with

Advanced FE Technologies

Integrated CCUS projects like Kemper – valuable enablers for CCS along the value chain (learn by doing via demos;; drive R&D for better capture technology;; create transport infrastructure;; build skilled human capital;; increase understanding and acceptance of CCS) – Southern Co. a leader in CCS/CCUS Six of nine operating projects are CO2-­EOR and are in North America (U.S. and Canada) -­ U.S. is a global leader China a new entrant with 11 projects announced -­ CCS/CCUS-­ with emphasis on Utilization aspects of CO2 Advanced FE technology demos can offer platforms for next generation CCS to lower cost and energy of capture especially in fossil power (not just about coal) and energy intensive and process industries (cement, steel, iron, aluminum) BUT more incentives and support needed

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ACTIVE LARGE SCALE INTEGRATED PROJECTS

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Some progress, significant gaps, urgent call to action

Lessons from the Past on Energy and Environment-­

Successful Deployment of New Technologies

Technology, Policy/Regs and Market/Public Acceptance must move in concert – informing decisions with broad input;; creating drivers, opportunities and acceptance Initial costs always high: advancing the technology and creating demonstration opportunities with incentives and sustainable policies key to successful deployment Workable approach to phased-­in compliance is important to success of acceptance and market penetration Similarities and differences in compliance experience with criteria emissions and that expected for carbon emissions

Similarities: Initially high cost;; RD&D needed for commercial adoption & competitive tech => market choices;; initially faced future regulatory uncertainties– timing and emission reduction mandates “debated” Differences: lacking carbon valuation policy;; magnitude of emissions;; global nature (sustainable policy frameworks;; collaboration and capacity building especially in developing economies);; stakes are much higher

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Technology – Importance of RD&D in Deployment

Creates Shared Knowledge -­ technology performance and applications:

Cutting-­edge Capture R&D in several countries – opportunities for collaboration (e.g., TCM Mongstad International Test Facilities Network -­ several U.S. pilot test facilities-­e.g., NCCC) Capacity development in non-­OECD countries-­ e.g., CCS demo experience;; next generation technology;; policy/reg/legal frameworks and general acceptance;;

Continued funding for CCS R&D and pilot testing is vital Technology suppliers -­ key to assuring technology maturity;; change perceptions about CCS being ‘experimental’ Warranties and performance guarantees help projects. FOAK Demos like Kemper-­IGCC/CCS – provide a “learning curve” for future projects – better, faster, cheaper

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IMPROVED ENVIRONMENTAL PERFORMANCE

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1

2

3

4

5

SO2 NOX PM

1970 1997 2005 (Projected)

0

5

10

15

20

25

Coal Use for Power Generation in the U.S.

Average Emission Rate from U.S. Coal-­Fired Power Plants

QBtu/yr

Emissions

(lb/mm Btu Coal Burned)

Emissions Per Unit of Coal Burned Have Decreased Significantly

SOX AND NOX TECHNOLOGY-­ CLEANER AIR AT LOWER COSTS

Bef oreCCT

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$0

Capital Cost Per Plant

SCRBeforeCCT

SCRAf terCCT

CCTLow NOxBurn ers

Af terCCT

$75M

$40M

$10M

$100M

$200M

Savings toConsumers:$50 BILLION

Savings toConsumers:$25 BILLION

Scrubber s

For a Typical500MW Plant

NOx Cont ro l

Through 2005

Through 2005

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KEY TAKE-­AWAY: CCS HAS ESSENTIAL ROLE IN CLIMATE AND ENERGY SECURITY PORTFOLIO STRATEGY

Fossil Fuels continues to be dominant energy source in future

Technology, Policy/Markets and Acceptance must move in harmony and sustainably for successful outcomes

CCS in a clean technologies portfolio with equitable incentives and treatment allows competition – provides added pathway.

Shared Knowledge from more Demos is important to accelerating CCS progress – [GCCSI has mission to help enable]

Encourage CCS capacity building in developing economies – major future emissions due to reliance on fossil energy

Critical funding and incentives for CCS projects can leverage big benefits – potential $2T cost savings with inclusion of CCS

Need CCS to meet GHG targets – stakes are high

Networking capability Expert support to Members

Comprehensive resources Best practice guidelines and toolkits

THE GLOBAL CCS INSTITUTE – WHAT WE CAN DO

GLOBAL STATUS OF CCS: 2013, SEOUL

Annual Global CCS Institute Member event

10-­11 October, 2013 with site tours 9 October

Meeting content to be translated to Japanese

Release of annual Global Status of CCS report

Contact [email protected] for information

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