FT REPORT – ENERGY 2007: Big hopes pinned on carbon capture

By Rebecca Bream, Utilities Correspondent, Financial Times
Published: Nov 09, 2007

While debates about whether to build nuclear reactors rage on and the developed world frets about its reliance on imported gas, the issue of coal is often overlooked. But a growing number of energy industry figures believe that coal, and technology that reduces its impact on the environment, will be one of the fastest-growing parts of the energy market in the coming decades.

Coal is abundant and relatively cheap. China and India have huge coal reserves and are using it to fuel their rapid economic development. But coal is a dirty fuel, and burning it in power stations produces significantly more carbon dioxide than burning gas. If the burning of coal goes unchecked, the affect on the global climate and sea levels is likely to be catastrophic.

Asking developing countries not to exploit their coal reserves is unrealistic, say many energy analysts. The answer is finding a way to burn coal that limits its carbon emissions, hence the current interest in so-called “clean-coal technology”.

Clean coal technology includes equipment to make coal-fired power plants more efficient, such as “super-critical” boilers, but the most exciting prospect is so-called “carbon capture and storage”. This involves capturing the carbon dioxide before it is released into the atmosphere, turning it into a liquid and storing it, usually in salt caverns or old oil and gas fields under the sea.

Lord Oxburgh, former chairman of Shell, said at an energy debate last month that clean coal technology was the world’s best hope for tackling climate change. He said coal would continue to be burnt, and while renewables and nuclear could play a part in reducing emissions, carbon capture was “the only technology for managing climate change that we cannot do without”.

Carbon capture technology has yet to be rolled out on a commercial scale, and the existing technology is expensive. A study by Climate Change Capital has estimated that the cost of capturing carbon dioxide from coal- and gas-fired plants ranges between $40 and $90 a tonne. Although energy companies are keen to develop the technology, they say they need government subsidies to begin with. And in the longer term, carbon capture power plants will be competitive only if there is a global price for carbon.

The main types of carbon capture technology are defined by whether the carbon is removed before or after the fuel is burnt. One form of pre-combustion carbon capture is called integrated gasification combined cycle. This requires the coal or natural gas to be combined with oxygen, air, or steam, to produce a gas consisting mainly of carbon monoxide and hydrogen. A reaction between carbon monoxide and steam then produces hydrogen and carbon dioxide, which is separated off. Post-combustion techniques involve carbon dioxide being separated from the flue gas produced by fossil-fuel burning power plants.

A chemical solvent is used to take out the carbon dioxide, by a well-established industrial process used in the oil and chemical industries.

There are pros and cons to both techniques. Post-combustion carbon capture uses more energy than pre-combustion, and the equipment is bulkier, requiring more land to be made available at each power station. But pre-combustion technology is only suitable for new power stations, while post-combustion can be retro-fitted at existing plants. The US and the UK are among the current leaders in carbon capture research. The UK government plans to give funding for one commercial scale coal-fired post-combustion plant, and will launch the competition for funding this month.

But its backing of post-combustion technology has upset energy companies, such as Centrica, that were concentrating efforts on pre-combustion technology.

Mike Farley, director of technology policy liaison at Doosan Babcock, the power equipment manufacturer, says the UK government was right to support post-combustion technology as it has a wider application than pre-combustion technology.

“If you focus on pre-combustion, you can only focus on the market for new power plants,” whereas post-combustion could be applied to hundreds of plants, provided they are relatively modern.

“The fastest signs of progress are in the US,” says Mr Farley.

There are several demonstration carbon capture plants being built in the US, although at about 100MW each, they are not commercial scale.

Mr Farley says that, apart from a few cases, power plants in the developing world are not yet being designed to be “carbon capture-ready”. “That should be one of the early objectives, to get them to adopt the idea of being carbon capture-ready. But we can’t ask them to do it before we are doing it ourselves.”

Lord Oxburgh says the carbon capture market will be a great opportunity for companies that can develop the best technology.

“This will be one of the big new industries in the world, worth close to $1,000bn. This is going to be an industry of the same magnitude as the oil industry is today.”