Modeling the Interrelationships of Shale Gas, LNG Exports and CO 2. Controls Using MARKAL

Transcription

1 Modeling the Interrelationships of Shale Gas, LNG Exports and CO 2 Controls Using MARKAL Chris Nichols, Analyst Office of Strategic Energy Analysis, NETL 31 st USAEE/IAEE Conference Nov 7 th 2012, Austin TX USAEE Conference 2011, CJN Oct 2011

2 Overview Background: Discussion of what we re modeling and why we did it Approach Model used and scenarios run Results Summary graphs of significant results Conclusions What can we say about the interplay between shale gas, LNG exports and CCS under this modeling regime 2

3 Background In developing CO2 reduction strategies, it is vital to understand the roles of natural gas utilization, LNG exports and CO2 capture and storage (CCS) This analysis examines the interplay of shale gas, LNG exports and CCS through the use of multiple scenario comparisons Shale gas supplies allow for electricity generation and LNG exports Under various CO2 control regimes, LNG exports and industrial use of natural gas are curtailed Coal with CCS allows for both CO2 reductions in the electricity sector AND the higher value utilization of natural gas (industrial and exports) 3

4 Modeling Approach We applied the Environmental Protection Agency s Nine Region MARKAL Database (EPAUS9r) that was developed by EPA around the nine U.S. Census divisions. Each of the nine (R1-R9) regions has its own conventional Reference Energy System (RES) and these nine RESs are interconnected through trade technologies links. EPAUS9r contains both existing and future technologies, so even in a base case scenario, without additional constraints, a shift towards more costefficient technologies occurs. 4

5 5 Regions Map and Definitions in EPAUS9r Database

6 Scenarios examined BASE: Base case (resource supply and end-use demands are taken from AEO 2012) BASEHG: Base case with shale gas reserves BASELNG: Base case with shale gas reserves and export LNG option BSMEDCES Base CES: (84% of electricity from clean energy by 2035) Renewable, hydro and nuclear power plants worth 1 credit Coal and natural gas power plants with CCS worth 0.9 credit Natural gas power plants are awarded 0.5 credit for new investments but not for generation at existing plants CESLNG : CES scenario with LNG and reduced NGCC credit Renewable, hydro and nuclear power plants and CCS as above Natural gas power plants don t have credit Export LNG option 6

7 Under the BASE scenario, coal and natural gas are the primary drivers of electricity growth 6,000 Electricity Production by Technology 5,000 Distributed Solar PV Quantity (Thousand GWh) 4,000 3,000 2,000 Central Solar Thermal Wind Power Hydropower Conventional Nuclear Power NGA to Combined-Cycle NGA to Combustion Turbine 1,000 Coal to Existing Steam BASE 7

8 With higher shale gas availability, coal is displaced in favor of gas generation 6,000 Electricity Production by Technology 5,000 Distributed Solar PV Wind Power Quantity (Thousand GWh) 4,000 3,000 2,000 1,000 Hydropower Conventional Nuclear Power NGA to Combined- Cycle NGA to Combustion Tu rbin e Coal to New Steam Coal to Existing Steam BASE BASEHG 8

9 Allowing for LNG exports slightly lowers the overall use of natural gas for electricity generation 6,000 Electricity Production by Technology 5,000 Distributed Solar PV Wind Power Quantity (Thousand GWh) 4,000 3,000 2,000 Hydropower Conventional Nuclear Power NGA to Combined- Cycle NGA to Combustion Tu rbin e Coal to New Steam 1,000 Coal to Existing Steam BASE BASELNG 9

10 When a CES is applied, gas is still the favored choice, with lower generation overall 6,000 Electricity Production by Technology Quantity (Thousand GWh) 5,000 4,000 3,000 2,000 1,000 Distributed Solar PV Central Solar Thermal Wind Power Hydropower Conventional Nuclear Power NGA to Combined- Cycle-CCS NGA to Combined- Cycle NGA to Combustion Turbin e Coal to IGCC-CCS Coal to Existing Steam BASE BSMEDCES

11 With a CES and LNG exports, coal with CCS allows for generation needs to be met 6,000 Electricity Production by Technology 5,000 Distributed Solar PV Central Solar Thermal Quantity (Thousand GWh) 4,000 3,000 2,000 1,000 Wind Power Hydropower Conventional Nuclear Power NGA to Combined- Cycle-CCS NGA to Combined- Cycle NGA to Combustion Turbine NGA to Steam Electric Coal to IGCC-CCS Coal to Existing Steam BASE CESLNG

12 12 Coal with CCUS allows moderate LNG exports to occur...

13 13 while reducing CO2 emissions...

14 14 and providing NG for industrial use...

15 Conclusions Shale gas and LNG exports have potential to provide for continued electricity growth, support for the industrial sector and exports of high-value product In a CES which more directly controls CO 2, coal and gas with CCS develop earlier and more substantially, allowing for continued LNG exports and industrial utilization of natural gas Electricity-only CO 2 reduction policy will push gas use to industrial sector use (with corresponding increase in emissions) 15