Organizations and Markets

Burying the Carbon Issue

29 January 2009 at 7:50 pm dgerard 1 comment

| David Gerard |

As noted here, a “small” chunk of the House stimulus package is earmarked for carbon capture and sequestration (CCS) demonstration projects. For a coal-fired electric power plant, CCS entails the separation of the carbon dioxide during the combustion stage, compression into a fluid, and injection into a deep (> 1 km) geological formation where it will remain indefinitely.

Regardless of one’s views on global climate change or the government’s role in addressing it, it seems pretty clear that policy makers are moving us toward a carbon-constrained world. The rationale for CCS in such a world is straightforward. Unlike conventional pollutants, today’s carbon emissions will remain in the atmosphere for close to 100 years. Stabilizing atmospheric CO2 concentrations at current levels will require extraordinary (perhaps 80%+) reductions from current emissions levels. However, carbon or no carbon, it is highly improbable that we can meet our projected energy needs (at least in the near term) without continued reliance on fossil energy sources.

I am involved with the CCSReg project that is developing recommendations for the development of a regulatory framework for CCS if the US legislates reductions in carbon emissions. Earlier this month, we issued an interim report with several preliminary recommendations, including putting money toward demonstration projects (summary).

The potential regulatory issues range from identifying and mitigating environmental and safety risks to addressing public acceptance issues associated with the NUMBY (not under my back yard) syndrome. The property rights issue might interest many in this audience, as it is not clear who owns the underground pore space (if anyone), or how much these owners should be compensated for having CO2 filling it up (if anything). This could be resolved on a state-by-state basis, though many potential sequestration sites are located in multiple states.

The commercial aspects of CCS deployment are also paramount, as CCS is considerably more expensive than a conventional coal plant in terms of both capital and operating costs. Because capturing and compressing the CO2 is energy intensive, CCS requires 15-30% percent more coal input to generate the same energy output. Another issue is the nature of contractual relationships that will emerge between power plants, pipelines, and field operators.

The message is pretty clear: Carbon reductions are not likely to be easy or cheap.

And, in case you were wondering, Al Gore is unconvinced.

Entry filed under: Bailout / Financial Crisis, Former Guest Bloggers, Innovation.