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Economics of CO 2 Storage and Sink Enhancement Options: A Utility Perspective

Economics of CO 2 Storage and Sink Enhancement Options: A Utility Perspective. Research Funded by DOE, TVA, and EPRI Collaborators: EPRI, MIT, Parsons, IEA GHG Programme, SFA Pacific, UTK Bert Bock. Utility Options. Internal operations Improved energy efficiency

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Economics of CO 2 Storage and Sink Enhancement Options: A Utility Perspective

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  1. Economics of CO2 Storage and Sink Enhancement Options:A Utility Perspective Research Funded by DOE, TVA, and EPRI Collaborators: EPRI, MIT, Parsons, IEA GHG Programme, SFA Pacific, UTK Bert Bock

  2. Utility Options • Internal operations • Improved energy efficiency • Fuels containing less carbon per unit of energy • Renewable energy sources • External operations • Storage of captured CO2 • CO2 storage in forests and soils (CO2 sink enhancement) • Utilities need better economic assessment of external options

  3. Storage of Captured CO2--Depleted gas reservoirs--Depleted oil reservoirs--Deep saline aquifers--Enhanced oil recovery--Enhanced coalbed methane recovery--Ocean pipeline--Ocean tanker CO2 Sink Enhancement--Forest management New plantations Restoration Agro-forestry Avoided deforestation--Cropland via reducing tillage (USA) CO2 Sequestration Options Compared

  4. Challenges • CO2 capture costs + storage costs(DOE/EPRI, 2000) (this project) compared withCO2 sink enhancement costs (this project) • Estimating net reductions in GHG emissions(avoided GHG emissions) • Life-cycle basis (cradle to grave) • Accounting for timing differences • Costs of Storage and sink enhancement (NPV) • Avoided GHG emissions • Revenues from GHG markets (NPV) • Avoided carbon taxes (NPV) • 100-year planning horizon

  5. Net Cost of Storing Captured CO2

  6. CO2 Capture Cost (DOE/EPRI, 2000) • IGCC reference plant (425 MW net, 43% efficiency) vs.IGCC CO2 capture plant (404 MW net, 37% efficiency) • $64/tonne C eq. LC GHG avoided in capture process • IGCC CO2 capture costs are 3 to 7 times > typical storage costs without by-products

  7. CO2 Capture + Net Storage Costs: Base Cases, NPV Basis

  8. Deep Aquifer Example: COE, $/MWh

  9. Conclusions • Methodologies were developed to compare economics of a wide range of CO2 storage and sink enhancement options from a utility perspective • Base-case cost ranges: • CO2 capture and storage ($15 to 145/tonne CE avoided) • Forest management • Aboveground ($10 to 175/tonne CE avoided) • “All” ($-160 to 55/tonne CE avoided) • Cropland via reducing tillage ($50 to 90/tonne CE avoided) • Significant opportunity for early adopters to reap “low hanging fruit”

  10. Forestry Cases

  11. Costs: Medium Productivity Cases, NPV Basis

  12. Reducing Tillage on U.S. Cropland: Factors Affecting Costs ($/tonne C eq. LC GHG avoided) • Adoption incentive paid to farmer by utility= f (Δ crop yield, Δ crop production costs, Δ risk) • Transaction costs • Monitoring costs • Δ C sequestered in soil organic matter • Δ N2O emissions from soil • Δ GHG emissions from crop production inputs

  13. Intensive Till to No Till Costs:Base Cases, NPV Basis

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