SaskPower CCS head gives interview on economic future of CCS

An interview given to the Financial Times by SaskPower’s Head of Carbon Capture and Storage Initiatives, Mike Monea, has revealed a little more behind the economics of CCS. As has been well-reported to date, SaskPower’s Boundary Dam Unit 3, the first commercial-scale CCS-equipped coal-fired unit in the world, is financially viable because of the deal to sell CO₂ for enhanced oil recovery at a nearby oil field, as well as the partial government subsidy of around 17% of the capital cost of the upgrade to the unit. What is new is the estimate by Dr Monea that, if SaskPower were to equip another unit with CCS, the capital costs would be around 30% lower, due to learnings from the first unit. With further deployment, costs are expected to decrease further; however, Dr Monea believes that in general (i.e. without the highly beneficial circumstances enjoyed by Boundary Dam Unit 3), CCS will only be cost effective with further government support and a high enough price on carbon.  This leads to the familiar conclusion that CCS, despite being central to the world’s efforts to reduce greenhouse gas emissions, faces a somewhat uncertain future.

Global CCS Institute Status of CCS 2014 Report released

Supporting Dr Monea’s views is the Global Carbon Capture and Storage Institute’s Global Status of CCS Report 2014, released in November. Emphasised is the need for more governmental support and deployment, and the unique role that CCS has to play in reducing carbon emissions from non-power generation industries (for instance cement and steel making). While the tone of the report is on the whole positive, especially after the launch of Boundary Dam Unit 3, there is data to encourage pessimism. The report identifies 55 large-scale CCS projects worldwide, in states of increasing realisation, from identification, to evaluation, to definition, to execution (construction), and finally operation. This number is down from 65 in 2013, with twelve projects cancelled or put on hold throughout the year (seven in Europe, two in the US, one in Australia, one in China, and one in the UAE), and only two projects newly identified. Weak economies around the world have probably contributed to this decline; with the encouragement of Boundary Dam Unit 3, and the increasing recognition by bodies such as the UN of the importance of CCS set against possible continued weak or even further weakening economies, it will be interesting indeed to see what unfolds over 2015.

US Supreme Court admits case against mercury rules

The US Supreme Court is to review the federal Environmental Protection Agency’s rules regarding emissions of mercury and other pollutants from power plants, having accepted as valid some of the arguments put to it by a coalition of over two dozen states and industry bodies. The rules, which took effect in 2012, require coal- and oil-fired power plants to significantly reduce emissions of mercury and other pollutants. The prime issue is if the EPA should have considered how much the rules would cost utilities, estimated by utilities at $US 9.6 billion/€7.7 billion annually. The EPA estimates that the public health savings arising from the new rules are between $US 37-90 billion (€29.7 – 72.2 billion) annually, in addition preventing 11,000 premature deaths per year. The benefits thus far outweigh the costs, and the EPA must have presumed that the costs would ultimately be borne by consumers, rather than absorbed by utilities. The decision to review the rules may affect other regulations concerning power plants, for instance the proposed carbon emissions rules and a proposed update to ground-level ozone rules. The outcome of the review is expected in June 2015.

Germany pressures Swedish government on Vattenfall in Germany

The Financial Times has carried an interesting article about German government pressure on the Swedish government to prevent Vattenfall cancelling plans to expand two coal mines in the north-east of Germany. Vattenfall are in fact considering selling the coal mines as well as some power plants, in which case an expansion of the mines would be off the radar, at least by Vattenfall. A letter from the vice-chancellor and minister for the economy of Germany, Sigmar Gabriel, to Stefan Löfven, Sweden’s new prime minister, stated that there would be “serious consequences” for electricity supplies and jobs (in Germany) in the event of the cancellation of the expansion of the mines. Prime Minister Löfven has in response explained to Vice-Chancellor Gabriel that Vattenfall’s board is independent of the Swedish state for individual decisions but is acting in line with Swedish state policy that Vattenfall should be a “leading actor in renewables and clean energy”.   Germany coal use is currently at a high not seen since 1990 as the phase out of nuclear energy creates a shift to coal, meaning the country is struggling to meet its carbon reduction targets, despite its concurrent shift to renewables. Complicating the picture is that Vattenfall is suing the German state for €4.7 billion ($US 5.88 billion) in lost revenues as a result of the phase-out of nuclear energy.

Ghanaian government creates power ministry to battle electricity shortages

The government of Ghana has created a new power ministry separate to its energy ministry, in an effort to better address the country’s electricity shortages, which are believed to be retarding economic growth.  The former chairman of the parliamentary committee on energy, Kwabena Donkor, will become the new power minister.  Ghana produces the bulk of its electricity using three hydropower plants, but supplies are not sufficient to meet demand, and power outages are experienced. Ghanaian President John Mahama sacked the head of the Electricity Company of Ghana, seen as one of the most inefficient of state power companies, in mid-November.

Geoengineering options to mitigate climate change worse than thought but need more research

The BBC has reported on research conducted by three British universities – Leeds, Bristol and Oxford – into the implications of geoengineering options to mitigate climate change.  Such options, for instance shielding sunlight from the earth by injecting particulates into the atmosphere (‘solar radiation management’), are seen as a potential means to avert the worst of climate change in the event of continuing ‘business as usual’ rising levels of greenhouse gas emissions. The central conclusion of the research to date is that the effects of geoengineering are “really, really complicated”, and require more research, as the current level of knowledge is akin to “a few islands of knowledge in a sea of ignorance”. In general, however, such geoengineering options were found to have the potential to negatively affect more than a billion people around the world, for instance by changing rainfall patterns. None of the ‘solar radiation management’ options modelled by the researchers kept global temperatures to 1986-2005 levels.

UK backup generation power station fails monthly test

The UK government’s scheme in which it pays for three power plants to provide standby generation capacity has been dealt a blow, with one of the plants failing a test run. SSE’s Peterhead plant, which is both oil- and gas-fired, passed a discretionary test on 5 November, but then failed its mandatory monthly test later in the month, during which plant output fell from 780 MW to zero, bringing the test to a close hours before scheduled. The other two plants in the scheme, which are both in England – RWE’s Littlebrook in Kent and Scottish Power’s Rye House in Hertfordshire – passed their tests without problem. The scheme, run by the UK’s National Grid, is designed to maintain a level of emergency power generation capacity in the grid to come online in the event of the failure (and/or low output in the case of renewables) of other power generation. The current spare capacity is at around 4%, and is predicted to narrow to 2% next year, meaning the failure will cause some concern for the National Grid.

Siemens to provide turbines to new Kobe Steel power plant

Siemens has won an order from Kobe Steel to provide two H-class gas turbines for a 1.2 GW power plant to be located in Moka City, where Kobe Steel has a steel plant. Kobe Steel will commence construction of the new power plant when it receives environmental approval, which could be around mid-2016, with the first of the two 600 MW units expected to come online in 2019, and the second in 2020. Curiously, the plant will be Japan’s first inland full-scale thermal power plant. A pipeline currently being constructed by Tokyo Gas will supply the plant with fuel, and Kobe Steel will in turn sell excess electricity produced to Tokyo Gas. For Siemens, the two turbines will be the 40th and 41st orders of their high-efficiency ‘next generation’ line, with 13 already in commercial operation.