Hydrogen Energy – Challenges and Opportunities

Hydrogen Energy – Challenges and Opportunities

Lewis Castle College

September 2007Graeme Miller

The Stabilisation Wedge

Emission trajectory to achieve 500ppm

Emission trajectory BAU

Princeton wedges:technology options for GHG stabilization

1 GtC Slices of the Stabilisation Wedge

how big is a wedge?Examples of Lower Carbon Slices Scale for 1GtC Reduction by 2050

Increased energy efficiency across the economy

2 billion gasoline/diesel cars achieving 60 mpg

Fuel switching natural gas displacing coal for power

1400GW fuelled by natural gas instead of coal

Solar PV or Wind replaces coal for power

1000x scale up PV, 70x scale up for wind

Biofuels to replace petroleum based fuels

200x106 ha growing area (equals US agricultural land)

Carbon Capture and Geological Storage

CO2 captured from 700 1GW coal plants; storage = 3,500x In Salah/Sleipner or CCS applied to 5% of new power growth

Carbon Free Hydrogen for transport 1 billion H2 carbon free cars; H2 from fossil fuels with CO2 capture and storage or from renewables or nuclear

Nuclear displaces coal for power 700 1GW plants (2x current)

Biosequestration in forests and soil Increased planted area and/or reduce deforestation

2020 Base Case

the energy sector emissions challenge The power sector is already the largest contributor of CO2

Growth in coal-fired generation is projected to be the single largest contributor of new GHG emissions over the next fifteen years

CO2 Emissions By Sector

Source: IEA World Energy Outlook, 2004

2004

21%

41%38%

0%5%

10%15%20%25%30%35%40%45%

TransportPower Heat

2020

22%

44%

34%

TransportPower Heat

Power capacity up 48% to 5800GW

Overall Capacity

Gas increases 87% Coal increases 43% Oil increases 12%

Fossil Fuels

Nuclear stays flat

Hydro increases 29%

Renewables increase 234%

Low-Carbon

increasing suite of low carbon options are available Technological

advances will continue to close the existing gaps

Pricing carbon would dramatically shift this picture

As the R&A industry demonstrates capability, carbon-constrained policies likely to be more acceptable to policy-makers

Source: BP Estimates, Navigant Consulting

Levelised costs of electricity generation

Low/Zero carbon energy source

Renewable energy source

Fossil energy source

Cost

of

Ele

ctr

icit

y G

en

era

tion

9%

IR

R

($/M

Wh

)

0

25

50

75

100

125

150

175

200

225

CC

GT,

gas

$4

/mm

btu

Coal

$4

0/t

on

ne

Hyd

rog

en

Pow

er

Gas

Hyd

rog

en

Pow

er

Coal

Nu

cle

ar

On

sh

ore

W

ind

Off

sh

ore

W

ind

Bio

mass

Gasifi

cati

on

Wave /

Tid

al

Sola

r (R

eta

ilC

ost)

cost of CO2 mitigation (above today’s economics)

CO2 reduction options ($/te)

Source: European Commission Report (Jan 2004) , DoT, DTi (2003) , BP Analysis

CO

2 r

educt

ion c

ost

s ($

/tC

O2)

Power Generation

(Fixed Sources)

Transport

(Mobile)

0

200

400

600

800

1000

1200

1400

1600

OnshoreWind

Hydrogenfor Power

(C&S)

Nuclear OffshoreWind

Wave Solar PV HybridVehicles

Biofuels Hydrogenfor Tpt.

climate change – BP’s journey

19

97

19

98

19

99

20

00

BP acknowledges need for precautionary action to cut GHG emissions after exiting the Global Climate Coalition.

BP predicts $1 bn revenue in its solar business in 2007

BP sets target to cut emissions from operations to 10% below 1990 levels by 2010

BP begins funding the Carbon Mitigation Initiative at Princeton University, exploring solutions to climate change

BP initiates the CO2 Capture Project with other companies and governments, studying methods of capturing and storing carbon dioxide at power plants

BP’s solar business moves into profit and announces plans to double production. On track to meet 1997 revenue prediction

BP launches carbon dioxide capture and storage project at gas field in Algeria

BP announces plans for world’s first commercial hydrogen power station.

BP launches Alternative Energy

20

01

20

03

BP achieves its 2010 target 9 years early, having reduced GHG emissions by energy efficiency projects and cutting flaring of unwanted gas

Based on work at Princeton, BP sets out range of technology options to stabilize GHG emissions over 50 years, including increases in solar, wind, gas-fired power and carbon capture and storage

20

02

20

04

BP announces plans to build wind farm at Nerefco, Netherlands

20

05

the technology blocks are available today

Coal GASIFIER

WGSH2S & CO2

Removal

CO2

Compression

H2 GT HRSG ST Power

CO2 Storage

Coal Handlin

g

SRU

ASU

Pipeline

SLAG Handlin

g

IGCC plant with CCS

Gas REFORMER

WGSH2S & CO2

Removal

CO2

Compression

H2 GT HRSG ST Power

CO2 Storage

AIR

Pipeline

NGCC plant with CCS

Thus capturing and Storing the Carbon requires significant investment above conventional power plant

Capital costs. CCS adds a substantial amount of processing equipment upstream of the power generation block, approximately doubling the capital cost of plant

– Reforming or gasification

– Air Separation in the case of coal in IGCC

– Water gas shift

– Acid Gas removal (CO2 separation)

– CO2 compression

– Pipeline and injection

Operating costs. The increased plant complexity increases the manpower required to operate and maintain the plant, with consequent increase in operating and maintenance costs

Fuel costs. The extra processing units have a substantial net requirement for power, thereby reducing the net export power from the plant and consequently the overall thermal efficiency of the plant

Actual project costs appear to be significantly above some publicly quoted estimates

Source Estimate (cost per tonne of CO2 abated) ($2007)

Generic estimates

IPCC 35 - 80 for PC

23 - 80 for IGCC

McKinsey/Vattenfall (for 2030) 40

Project estimates

Statoil 96

BP c. 70-110

Notes:

• All estimates are against plant using same fuel without CCS. Costs per tonne would be likely to be higher (potentially more than double) if a coal plant with CCS were compared with CCGT without capture. The cost of abatement would depend on the gas price.

• Estimates exclude the value of EOR and other products e.g. steam sales. BP estimate allows $10/tCO2 for transport and storage.

• Statoil based on publicly quoted cost of €61/tCO2, assumed to be per tonne captured.

Source: Published data and BP estimates.

This is consistent with the pattern that has been observed for other technologies

Initial costs of FGD were higher (by a factor of at least 2 to 3) than earlier estimates

Costs of projects reduced towards originally estimated levels over a period of decades.

Similar patterns to that shown for FGD are found for, SCR, CCGT and LNG plant

Source: IEA

Such a trend for CCS would imply that a substantial premium over the carbon price will be required for some years

$/tCO2

Years

Carbon price

Cost of CCS

Cost of CCS can be supported by carbon

price alone from some time over the period

2020 to 2040?

Current required premium

over carbon price

Cost to 2030 assuming current spend

0

5

10

15

20

25

30

Europeanhealthcare

budget

Globalinvestment in

energyinfrastructure

US defencebudget

One percent ofOECD GDP

Global cost ofcommercialisingCCS (additionalto carbon price)

$ t

rillio

n (

20

07

)But….. The sums required are not large compared with benchmarks

Note: data is indicative only

DF1 – Peterhead, Scotland

technology elements

Uses proven reforming technology to manufacture syngas from CH4 (BP Trinidad)

Uses proven shift reaction to generate H2 and CO2

Uses proven amine capture technology to capture and remove CO2 (BP Algeria)

Hydrogen fired CCGT proven and warranted by vendors

Duplex steel well completions of Miller proven capable of handling Co2

Uses proven reforming technology to manufacture syngas from CH4 (BP Trinidad)

Uses proven shift reaction to generate H2 and CO2

Uses proven amine capture technology to capture and remove CO2 (BP Algeria)

Hydrogen fired CCGT proven and warranted by vendors

Duplex steel well completions of Miller proven capable of handling Co2

Proven Technology

SteamShift

ConversionCO2

CaptureCCGT

CH4

H2+CO H2+CO2

CO2

H2

Air

H2O

CatalyticReformer

Steam + H20

All technology proven at this scale around the world

‘UK Average’ Source: "Note on the UK Government’s Proposed Approach to allocation of EU ETS allowances to the Electricity Generating Industry (Incumbents) for Phase II", DTI March 2006.

876

723

430 404 368 343

43

491

0

100

200

300

400

500

600

700

800

900

gCO2 /kWh

net electricity generation

UK AverageCoal

UK AverageOil

UK GridElectricityAverage

E Class CCGT UK ProvenCCGT

Technology - FClass

Baglan Bay - HClass CCGT

Peterhead DF1

Generating Type

CO2 Emission Comparison for Reference Generating Plants

CO2 Captured

CO2 to atmosphere

comparison with other UK power

DF1 project specific benefits

Delivers as much power as the UK’s current wind farms generate

Generates 475 MW of base load low carbon power and will not require redundant systems in reserve

Stores 1.8 million tonnes of CO2 pa in the first UK re-use of a reservoir for CCS

50-60 mmbbls Enhanced Oil Recovery (EOR)

Creates 1000 direct engineering and construction jobs over the next 4 years and 150+ permanent skilled jobs

DF2 – Carson, California

DF2 Significance

Will generate 500MW of clean electricity.

Will generate enough clean electricity to power 325,000 Southern California homes.

Will capture 4 million tonnes per annum of CO2 – equivalent to removing 800,000 cars from the roads.

Will be the world’s largest hydrogen fired power generation facility in the world.

Use of petcoke potentially enabling clean coal technology and major change in US security of energy supply.

DF3 – Kwinana, Western Australia

some observations

• The world needs to move fast to address the climate change problem

• CCS will be an important part of the solution

• But costs are currently high relative to carbon prices, and likely to remain so

• Hundreds of billions of dollars of additional incentives may be required before CCS is commercial on the basis of the carbon price alone (as for other clean generation technologies)

• Some implications for the business

– This is going to be a major industry with many, many opportunities

– Governments and regulatory bodies are the customers for these projects: we need to give the customers what they want

– “Follow the money”: choice of projects will be largely determined by where there is a supportive policy and regulatory framework

– Cap and trade is only a small part of the story for at least the next ten years

Background Context

UK CO2 Sources

Total UK emissions c. 560 million tonnes (Mt) CO2

Emissions from industrial point sources = 283 Mt CO2

Of the 20 largest emitters, 17 are power plant, 3 are integrated steel plant and 1 is a refinery /petrochemicals plant

Emissions from 20 largest power stations = 132 Mt CO2

– If emissions from these could be reduced by 85-90%, UK emissions would be reduced by 18-20%

UK Storage sites

Oil fields

Gas fields

Gas/condensate fields

Saline-water-bearing reservoir rocks (saline aquifers)

Coal seams

EXISTING MARKETS

Alabama

ArizonaArkansas

California

Colorado

Connecticut

Delaw are

Florida

Georgia

Idaho

IllinoisIndiana

Iow a

KansasKentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Missouri

Montana

NebraskaNevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

W. Virginia

Wisconsin

Wyoming

North Dakota

Mississippi

McElmo Dome Sheep Mountain

Bravo Dome

Terrell, Puckett,M itchell, Grey Ranch

Plants

LaBarge

J ackson Dome

Great Plains Coal Plant

CURRENT CO2 SOURCES and PIPELINES

1561185 Ft/In

PETRA 12/1/99 10:10:02 AM

Permian BasinLouisiana/Mississippi

Canadian

Wyoming

US CO2 Markets

DF1 EOR Monitoring – CO2 Model

Storage model to provide assurance of long term storage integrity after site closure

CO2 storage model

– Covers full volume of potential migration

– Important physico-chemical processes for CO2 over thousands of years

– CO2 location, saturation, pressure, temperature from calibrated reservoir model

Kms of impervious rock impede vertical water flow (<5 cm per 1000 yrs)

rock types

Water flowvectors very few Cells with

>50m/My Upwards Water Flow

Mol Fraction CO2 in 2100

Lo Hi

Miller outlineat surface

4 km

U.K.U.K.

potential market for CCS 2005 to 2030

Source: IEA, DTI, BAH analysis

WorldWorld

Retrofit

New Capacity

Replacement

climate change problem - discussed for a long time

Event Date Years ago

Warming effect of gases in the atmosphere first recognised (Fourier)

1827 180

Measurement of radiative absorption of CO2 and water vapour, suggestion that ice ages due to changing greenhouse gas concentrations (Tyndall)

c.1860 150

Estimate that doubling of CO2 concentrations would lead to temperature rise of 5-6C (Arrhenius) - but serious objections from other scientist

1896 111

First estimates of warming due to fossil fuel burning – objections remained

c.1940 67

Beginning of measurements of CO2 concentration in Hawaii

1957 50

Detailed computer models showing resolution at regional level

Late 1970s

c.30

Increasingly wide range of observational and modelling evidence

1980s-date

0-25

Many people have commented on the issue over the years

"We would then have some right to indulge in the pleasant belief that our descendants, albeit after many generations, might live under a milder sky and in less barren surroundings than is our lot at present." Arrhenius (1896)

“Human beings are now carrying out a large scale geophysical experiment" Revelle and Seuss (1957)

“ scenarios suggests that warming would bring drier conditions to most of the US, across Europe and over the great grain growing regions of the USSR … And yet, no serious effort is being made to curtail the destruction of our dwindling reserves of tropical forest … or to require fossil-fuel power station to scrub carbon from the gases they release.” New Scientist magazine (1980)

“We will work to cut down the use of fossil fuels, a cause of … the greenhouse effect … No generation has a freehold on this earth. All we have is a life tenancy—with a full repairing lease”. Margaret Thatcher (1988)

A policy response has emerged slowly over the last 20 yearsEvent Date Years

ago

Increasing expressions of concern by politicians of wide ranging political views

Mid-Late

1980s

c.20-25

IPCC established (First Assessment Report published two years later)

1988 19

EU discusses carbon/energy tax equivalent to $10/bbl oil

1990-1995

c.15

UNFCCC (Rio convention) 1992 15

Kyoto Protocol agreed 1997 10

EU ETS Directive enters into force 2003 4

EU ETS begins 2005 2

carbon emissions per year

1950 2000

2050

0

14

7

Billion of Tonnes ofCarbon Emittedper Year

Historicalemissions

StabilizationTriangle

Flat path

At LeastTripling

CO2

Avoid Doubling

CO2