Joint Reduction of Petroleum Consumption and Carbon Emissions NETL/ANL Scenario Analysis Results “Peak Oil” and Other Sensitivities USAEE/IAEE North American Conference September 26, 2005 Peter C. Balash 1 and Donald A. Hanson 2 1 Economist, National Energy Technology Laboratory 2 Economist, Argonne National Laboratory
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Joint Reduction of Petroleum Consumption and Carbon Emissions
NETL/ANL Scenario Analysis Results“Peak Oil” and Other Sensitivities
USAEE/IAEE North American ConferenceSeptember 26, 2005
Peter C. Balash1 and Donald A. Hanson2
1Economist, National Energy Technology Laboratory2Economist, Argonne National Laboratory
Disclaimer/acknowledgements
• We would like to thank our co-authors and colleagues:• Dave Schmalzer, ANL Dale Keairns, NETL • John Molburg, ANL Kathy Stirling, NETL, ret.• John Marano, ANL/NETL Ken Kern, NETL• And other colleagues for their helpful comments along
the way• This work is funded by the National Energy Technology Laboratory,
Pittsburgh, PA, Morgantown, WV and Tulsa, OK, and performed using the AMIGA economic model from Argonne National Laboratory, Chicago, IL.
• All views expressed are those of the authors and should not be construed to reflect the policies or views of the United States Department of Energy, the National Energy Technology Laboratory, or Argonne National Laboratory.
Outline
• Scope• Review of Initial Results• Sensitivity Cases• Future Work• Model information
Scope and Accomplishments
• Presidential goals of reduction in petroleum consumption of 11 million barrels/day and 500 million tonnes carbon by year 2040.
• Transform Presidential objectives into alternative scenarios for use in economic model− Interpret Goals as reductions from baseline
• High-level economic analysis of technology and the ‘hydrogen economy”− Integrate rigorous engineering cost estimates with
macroeconomic model
Coal-Fuels Substitution and Efficient Vehicles Meet Presidential Reduction Goals
• Goals met through− Penetration of more efficient vehicle technologies, either
hybrid-electric (HEVs) or fuel cell vehicles (FCVs)− Carbon capture from Integrated Gasification Combined
Cycle and power-fuels coproduction plants− Moderate substitution of coal-Fischer-Tropsch fuels for
petroleum• Sensitivities stress importance of coal in both “peak
oil” and Kyoto-type carbon-reduction cases• Coal consumption rises significantly in all cases
Technical Challenges
• Integration of cost and performance specifications of refinery and coproduction plants with AMIGA economic model.− Important for richer representation of investment
choices• Implementation of DOE’s H2A production cost
estimates −Must assume technological breakthrough in FCV
case• Identification of appropriate performance
characteristics of advanced vehicles
Scenario Structure
• Uses Presidential reduction goals as drivers−Reductions from future, not current, levels−H2-economy based on FCVs a possible means to
achieving quantitative goals, not an end in itself• As distinct from Academy study (2004)
• replacement of petroleum-based light-duty vehicle fleet, or • DOE H2 Posture plan (2005)
• Focus on renewable hydrogen
• Recognition of scientific debate− E.g. Romm (2004), Shinnar (2003), Demirdöven and Deutch
(2004)
Petroleum Target
0
5
10
15
20
25
30
35
2005 2025 2040
AEO2005 AMIGA
21 21
28 27
35
3111mmb/d reduction
from AMIGA ref.
implies future consumption
at today’s levels
Mill
ion
barr
els p
er d
ay
Source: EIA AEO2005 Yearly Table 11; author extrapolation;AMIGA reference run
Carbon Emissions Target
0
500
1000
1500
2000
2500
2005 2025 2040
AEO2005 AMIGA Ref
1171 1169
1645 1562
2151
1761C target
reduction from AMIGA ref. reduces C to level ~7%
above today’s
Mill
ion
Met
ric to
ns C
eq.
per
yea
r
Source: EIA AEO2005 Yearly Table 18 (transport petroleum; electric power); author extrapolation; AMIGA reference run
Scale of Challenge
Small Car
Large Car
Conv. SUV
Large SUV
HEVs
Small Car
Large Car
Conv. SUV
Large SUV
HEVs
0
50
100
150
200
250
300
350
2005 2040
Vehicle Stock Increases
63%
Source: AMIGA Reference Run
Mill
ions
of V
ehic
les
How to Achieve CutsReference Case:“Business as usual”
Refinery Fuel Mix and the Transition to Alternative Vehicles
• Reference Case – Current refinery configuration, optimized for gasoline production using fluid catalytic cracking (FCC)− FCC capacity continues to grow with gasoline demand − FCC produces gasoline by rejecting carbon from heavier fuel oils
• Alternative cases – As crude consumption falls due to declining LDV gasoline demand, demand for diesel fuel remains strong− However FCC is not optimal for producing clean diesel fuel− Refiners have trouble meeting diesel fuel demand and quality as the ratio of
gasoline to diesel produced from a barrel of oil decreases− Refinery hydrocracking capacity increases to provide higher quality diesel− Unlike FCC, hydrocracking adds large amounts of hydrogen to heavier fuel
oils
• In the HEV case, about 55% of current FCC capacity would need to be replaced with new hydrocracking capacity by 2040; additional hydrocracking capacity would also need to be built to meet incremental growth in diesel demand− Conversion of existing FCC-based refineries to hydrocracking refineries is
feasible but expensive, and would require a huge amount of additional refinery hydrogen production, resulting in increased diesel fuel prices
Carbon Emission Sensitivities
0
500
1000
1500
2000
2500
2005 2010 2015 2020 2025 2030 2035 2040
BAU HEV FCV PEAK CO2 90 FT IMPR PERF
MM metric tons C
year
Small DifferencesBetween FCV, HEV,FT-improvement, and Performance cases
• Implementation of alternate coal-synfuel pathways
• Construction of ethanol and biomass co-firing modules
• Incorporate recent H2A delivery cost estimates
• Continual upgrading of existing modules
Appendix
• Model information
The AMIGA Model
• AMIGA is a Computable General Equilibrium (CGE) Model of the US economy with considerable sector detail
• It features characterizations of major end-use electricity- and gas- using technologies, and consumer choice behavioral representations
• AMIGA includes reduced form representations of electricity generation and petroleum refining as they are embedded into the structure of the US economy
• AMIGA can be used to examine structural change in the economy arising from alternative future scenarios, including impacts from climate-related and/or energy-related policies.
The AMIGA Model
Bureau of Economic Analysis sectors of the economyGeneral model of production costs and pricesSpecific energy conversion technologies and capacities
Electric power generationHydrogen productionFuels refining
Market shares: Where are the margins?(often not a question of which is cheaper but at what market shares do marginal costs equate; there may be some role/niche for many energy technologies).
Supply and Demand equal in all marketsIncome and price effects, e.g., income effects of reducing oil imports
Flows Within the AMIGA Energy-Economic Model
Coal Power/FT Fuels
• Plant Products− 1.63 bpd of F-T liquid fuel precursors/ton per day of dry
coal feed− 33 kWe/ton per day of dry coal feed
• Capital Cost: $135,000 per ton per day of dry coal including carbon capture w/o sequestration (2003 $)
• Carbon for sequestration: 53% of carbon in coal feed− Lower cost than capture from a power only plant
Source: Dale Keairns and Richard Newby, 2005, “Fuels and Electric Co-Production Plant Cost and Performance Projections,”NETL working paper
Future F-T Liquid Cost Forecast
• Projection for cost of F-T liquid production represented by increase in performance for the reference case investment
• Assume consistent with advanced coal plant performance used in NETL benefit studies
• Project ~20% increase in capacity during 2030-2040 time frame.
Source: Dale Keairns and Richard Newby, 2005, “Fuels and Electric Co-Production Plant Cost and Performance Projections,”NETL working paper
Plant Design Basis Choices
• Plant capacity and availability• Fuel and plant location• Product distribution (fuel, power)• Technology selection (state-of-art,
advanced)• Design choices (e.g. spare gasifiers)• Emissions control• Degree of CO2 capture• Degree of F-T upgrading
Source: Dale Keairns and Richard Newby, 2005, “Fuels and Electric Co-Production Plant Cost and Performance Projections,”NETL working paper
High F-T Liquid Plant With Carbon CaptureCase 3
AGR MDEA & AC Sulfur
Polishing
Coal Gasifier E-Gas & Heat
Recovery
Low-Temperature Gas Cleaning
F-TSynthesis
Liquid FuelPrecursors
Coal
ASUAir
Oxidant
WGS System &CO2 AbsorberReheat Compress
Off-gas
Steam
CO2 toSequester
Sulfur
HalidesAmmoniaMercury Steam
GasTurbine
HRSG &Steam Cycle
AirSteam
Power StackGas
Power
Steam
Source: Dale Keairns and Richard Newby, 2005, “Fuels and Electric Co-Production Plant Cost and Performance Projections,”NETL working paper
Plant Performance ResultsCarbon capture significantly reduces net plant power
Base Plant Case 2 Plant Case 3 Plant
Coal feed rate (TPD)
9,266 9,266 9,266
Liquid fuel precursors (BPD)
12,377 15,063 15,063
Net Plant Power (MW)
675.9 543.8 307.8
Liquid fuel-to-Power (BPD/MW)
13.7 27.7 48.9
Thermal Efficiency (HH%)
52.8 54.4 46.2
Source: Dale Keairns and Richard Newby, 2005, “Fuels and Electric Co-Production Plant Cost and Performance Projections,”NETL working paper
Plant Carbon BalanceBase Plant Case 2 Plant Case 3 Plant
Coal carbon input (TPD) 6,488 6,488 6,488
Carbon in slag (TPD) 308 308 308
Carbon in stack gas (TPD) 4,952 4,626 1,202
Carbon in liquid fuel (TPD) 1,477 1,797 1,826
Carbon in CO2 sequester stream (TPD)
0 0 3,430 (53% of coal C)
Total carbon not emitted to stack (% of coal C)
23.7 28.7 81.5
CO2 reduction from Base Case (%)
--- 6.6 75.8
Source: Dale Keairns and Richard Newby, 2005, “Fuels and Electric Co-Production Plant Cost and Performance Projections,”NETL working paper
Plant Cost Estimates
Base Plant Case 2 Plant Case 3 PlantSolids Handling Area 28,317 28,317 28,317Air Separation Unit 149,791 149,791 149,791Coal Gasification Area 434,094 434,094 434,094F-T Liquids Area 94,283 108,180 108,180Water-Gas Shift Area 0 0 8,630CO2 Removal Area 0 0 44,467CO2 Compression Area 0 0 48,200Power Block 348,788 308,220 246,764BOP 103,785 103,785 103,785Total (mid-2000$) 1,159,058 1,132,386 1,172,228Total (esc. Mid-2003$) 1,239,033 1,210,521 1,253,112
Source: Dale Keairns and Richard Newby, 2005, “Fuels and Electric Co-Production Plant Cost and Performance Projections,”NETL working paper
Macro Analysis of Petroleum Refining SystemsOverview
• MARS is a working prototype refinery forecasting model− Represents 26 primary & secondary refinery processes− Also includes representation of CTL co-production plant
feeding eastern or western coal− Includes 8 major refinery products including gasoline, diesel &
jet fuel− Includes existing regional capacities with provision to expand
existing process capacities during forecast period − Assays for six crude types represented: Low-Sulfur Light, MS
• Coal-To-Liquids (CTL)− Yields for Eastern & Western Coal with and without
CO2 capture & sequestration− Yield of FT Liquids & Power fixed− Sulfur yield by S balance− FT raw product distribution & properties fixed− Utilities consumption fixed
• FT Liquid Hydroisomerization (FHI)− Upgrading assumed to occur at refinery via
hydrotreating, hydrocracking & isomerization− Products: FT Light & Heavy Naphthas, FT Kerosene