CCS - Commercially Viable but a Political Priority?

Transcription

1 CCS - Commercially Viable but a Political Priority? Presentation to the United States Energy Association Joan MacNaughton, Senior Vice President, Power & Environmental Policies August 4, 2011

2 Agenda Alstom in the U.S. - P 1 Alstom 2011

3 Power Technologies for all Energy Sources Hydro Gas Nuclear Coal Life Cycle Management Oil Geothermal Biomass Wind Solar Alstom in the U.S. - P 2 Alstom 2011

4 Alstom Power in the U.S. Wind Coal Solar Hydro Nuclear Biomass Geothermal Equipment in Half of all U.S. Power Plants Industry-leading equipment and services for all energy sources Approx. 4,300 U.S. Employees Key Customers: Ameren American Electric Power (AEP) Dominion Energy Duke Energy Tennessee Valley Authority (TVA) U.S. Army Corps of Engineers Major investments in U.S. Wind and Solar energy markets NREL Wind turbine certification BrightSource Energy partnership Alstom in the U.S. - P 3 Alstom 2011

5 Agenda Alstom in the U.S. - P 4 Alstom 2011

6 The CCS Vision International Energy Agency BLUE Map CCS accounting for 19% of the 2050 CO2 emissions reduction goal Failure to deploy CCS would increase cost of 2050 power sector decarbonization by 70% Alstom in the U.S. - P 5 Alstom 2011

7 The CCS Vision Carbon Sequestration Leadership Forum 2009 Secretary Chu endorsed rapid CCS deployment: 100 plants by ,400 plants by 2050 U.S. Dept. of Energy goal: 5-10 large CCS projects by 2016 Pathway to further driving down the cost of CCS Alstom in the U.S. - P 6 Alstom 2011

8 The CCS Reality Government support for 25 CCS projects worldwide Some major demonstrations postponed indefinitely due to uncertain policy environment & lack of funding Technology hit bump in the road to commercialization Government support has detached from timetable set for CCS deployment Impossible to achieve 2020 targets at current pace Alstom in the U.S. - P 7 Alstom 2011

9 Agenda Alstom in the U.S. - P 8 Alstom 2011

10 CCS Landscape: U.S. - Policy Limited prospects for unified action on climate legislation Congress No discussion of comprehensive climate legislation Some Senate exploration of CES & incremental CCS bill No likelihood of significant action until 2013 Administration (EPA) Draft GHG regulations expected in September 2011 Final by May 2012 Highly unlikely to drive CCS States Three distinct trading schemes: California, RGGI, WCI Trading alone does not drive CCS Alstom in the U.S. - P 9 Alstom 2011

11 CCS Landscape: U.S. Projects Important validation projects completed to-date Project pipeline includes: Project Status Timeline AEP Mountaineer II On-hold N/A Basin Electric On-hold N/A Summit FEED 2016 Kemper Construction 2014 HECA Negotiation 2017 NRG FEED 2016 Chilled ammonia CCS project AEP Mountaineer Plant New Haven, WV FutureGen FEED 2017 Alstom in the U.S. - P 10 Alstom 2011

12 CCS Landscape U.S. Projects, )! 2' ) /! 7 )78#/!" $%!!" ' (8* Key: 80% DoE Cost Share EOR!" #!" $% &!" ' ()* 7- - ;)) ) /1 &!" 78#.!" $% 1!" ' ()* +,)- ),$.. " /01" 78#! " $% 0!" ' 7-79)- )4 ) 73 : 1!" 78#.!" $% &" ' ()* $ - 9 <- - ) 00".. " 7 )78#/&" $%.&" ' 7-50% DoE Cost Share Alstom in the U.S. - P 11 Alstom 2011

13 CCS Landscape: U.K. Policy A worldwide leader on CCS regulations Energy Act of 2008 Legislated impact of long-term CO2 storage Drove CO2 storage regulations in 2010 National Energy Policy Statements stipulated: 25% CCS for all new coal plants All new fossil plants must be CCS-ready Adopted long-term liability regime in EU CCS Directive Long-term liability for CO2 storage sites transferred to state State can request financial security from CCS operators Alstom in the U.S. - P 12 Alstom 2011

14 CCS Landscape: U.K. - Projects Government commitment to 4 demo projects 3 coal, 1 gas 1 st demo in negotiation Applications for 2-4 to launch by end other projects bidding for funding 7 in running for add l EU funding Decision by end 2012 Projects clustered in Scotland and Humber/Tees Alstom in the U.S. - P 14 Alstom 2011

15 CCS Landscape: Europe Policy Legal directive, deployment ongoing European Union CCS Directive (2011) Legal basis for CO2 capture, transport & storage Weak provisions on CCS readiness Storage liabilities transferred to the state 12 of 27 member states have implemented to-date Germany - struggling with CCS law Prospects are not good No European feed-in tariff for CCS UK implementing one, others considering Only the U.K. and the Netherlands have committed public funding for CCS Alstom in the U.S. - P 15 Alstom 2011

16 CCS Landscape: Europe - Projects European Union commitment to fund up to 12 demos 6 demos already funded at 180m each 2 Oxy-combustion 3 Post-combustion (amines) 1 IGCC 3bn fund set to be awarded in 2 nd half of projects competing for up to 8 grants Working toward mix of post- pre- and oxy-combustion Alstom in the U.S. - P 16 Alstom 2011

17 CCS Landscape: Asia Policy Carbon markets taking shape China Approved creation of regional pilot carbon trading scheme by 2012 Covers 4 cities and 2 provinces National carbon trading scheme to be implemented by 2015/16 Considering carbon tax for sectors outside trading scheme Australia Emissions Trading System being implemented in 2012 Targeting 80% emissions cut by 2050 Fixed carbon prices at $23/ton AUD in 2012, $25/ton AUD in 2015 Carbon price to float in 2015 India Proposed Perform, Achieve & Trade scheme covering 8 industry sectors including power generation Baseline & credit scheme Alstom in the U.S. - P 17 Alstom 2011

18 CCS Landscape: Asia - Projects Australia - 2 demo projects under active development Delta - 100,000 tpy post combustion 2014 start Callide -100,000 tpy oxy-firing 2011 start China 4 significant projects GreenGen - IGCC - full capture by 2018 (power generation) Shidongkou amines 100,000 tpy 2011 start-up (power generation) Shenhua coal liquifaction 100,000 tpy 2011 start (industrial) India Drafting mission document on carbon capture, exploring CCS pilots *tpy = tons per year Alstom in the U.S. - P 18 Alstom 2011

19 CCS Landscape: Government Funding United States Grants (50-80%) and loan guarantees Very limited state support due to absence of regulation Questionable private financing due to uncertainty European Union Funding requirements beyond grants will be tested Asia Australian CCS Flagship Program $2 billion AUD allocated by federal government Some matching from states and Australian Coal Association No Programs Are in Line with Original Roadmap for CCS Deployment Alstom in the U.S. - P 19 Alstom 2011

20 Agenda Alstom in the U.S. - P 20 Alstom 2011

21 How We Got Off the Path It s the economics stupid It s not the technology CCS works Capture rates as high as 90% CO2 purity about 99% Energy penalty <20%, on the way to 15% 20% 19% 18% CCS PLANT ENERGY PENALTY % AGAINST MWe net REF PLANT CCS OXY CCS PCC 17% 16% 15% Alstom in the U.S. - P 21 Alstom %

22 How We Got Off the Path It s not the cost CCS already is cost-competitive In-depth Alstom cost analysis shows that: Coal & Gas with CCS Electricity cost lower than solar, geothermal, offshore wind Competitive with nuclear, large hydro & onshore wind Competitive/cheaper than renewables even without counting for system costs Alstom in the U.S. - P 22 Alstom 2011

23 CCS Cost Study Key Assumptions Study based on New Plant in Europe Add-on costs for energy penalty and increase cost of electricity generation rises Considers cost of electricity generated with CCS & cost of CO2 avoided Two capture technologies: post-combustion and oxy-combustion using two fuels: hard coal and gas Coal and gas (combined cycle) plants with CCS operating as base-load CO2 capture rate of 90% Conservative learning curves up to 2030; based on Rubin/CMU curves Alstom in the U.S. - P 23 Alstom 2011

24 CCS: Essential & Affordable on Gas and Coal Euro / MWh net ( " " HARDCOAL - EUROPE GAS - EUROPE ' " & " % " $ " # "!" * " ) " ( " " +, % +46% REF CCS REF CCS Transport &Storage Fuel Cost CCS/Coal REF Capex & Opex CCS/Gas REF Capex & Opex % % 42 REF CCS REF CCS CCS Cost of Electricity Impact is lower on gas than on coal Cost increase <50% by 2030 for both Coal and Gas Cost of CO2 avoided: 37 /t for coal & 49 /t for gas in 2030 Alstom in the U.S. - P 24 Alstom 2011

25 CCS Cost Study - U.S. Implications NETL analysis shows some similarities to Alstom findings Alstom findings shared with key U.S. Stakeholders Customers, Congress, DOE, EPRI Alstom planning U.S. and Asia studies - Fall 2011 Alstom in the U.S. - P 25 Alstom 2011

26 CCS Cost Comparison / MWh CoE - Low Carbon Technologies Ordered in Period Reference case Nuclear Hydro Geothermal CCGT CCS 2015 Onshore Wind PC Hardcoal CCS 2015 Offshore Wind Solar PV Solar Thermal Source : Alstom analysis CCS 2015 costs, including on shore T&S and CO 2 price (Flue Gas Recirculation case for CCS Gas CC, average Amine/Oxy for CCS Hardcoal) With realistic assumptions and variation range, CCS on Coal & Gas Combined Cycle is competitive as of 2015 Alstom in the U.S. - P 26 Alstom 2011

27 CCS Cost Study Overall Results CCS on gas or coal is cost competitive with wind before cost reductions from learning effects With same FIT given to wind, CCS will be commercially viable in 2015 Learning effects will increase CCS competitiveness against more mature renewables A target of CO2 avoided cost in the range of 30-35/t is realistic by 2030 for coal CoE uplift in 2030 will be 45% for coal & 30% for gas CCS on gas is thus commercially viable and cheaper than CCS on coal Carbon price of 43 in 2025 means coal w/ccs will be commercially viable without FIT Gas, at a price of 54 in 2026 The main determinant of CoE remains the fuel price, especially for gas Alstom in the U.S. - P 27 Alstom 2011

28 Agenda Alstom in the U.S. - P 28 Alstom 2011

29 Getting Back on Track Address the Challenges to CCS Deployment CCS Deplo oyment Increase Financial Support Address Permitting & Regulation Validate Storage Sites Educate the Public Build Rate Recovery Framework Establish carbon price, policy or regulatory framework Equal stance for CCS and other lowcarbon options Subsidize sequestration Sell credits into existing carbon market Uniform sector or regional wire charge EOR royalties or other funding diversions Alstom in the U.S. - P 29 Alstom 2011

30 Getting Back on Track Funding Establish funding mechanism for large-scale demonstration Market Re-engage discussions on policy framework for regulation and financial support Technology Return to critical path for CCS evolution, drive down cost curve to meet customer needs CCS Deployment & Progress Towards Climate Goals Alstom in the U.S. - P 30 Alstom 2011

31 Thank You alstom.com Alstom in the U.S. - P 31 Alstom 2011