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Friday, 8 July 2011

Cleaner at the coalface

08 July 2011 

The International Energy Agency's Keith Burnard, Carlos Fernández Alvarez and
Dennis Volk discuss the merits of clean coal technologies in the quest for decarbonisation…

Considering the reputation of coal as the 'dirtiest of the dirty fossil fuels', it may seem an oxymoron to highlight clean coal technologies (CCTs). Yet in recent decades, numerous technological advances have transformed coal into a low emission fuel source and dramatically reduced the negative health and environmental impacts associated with burning coal.

CCTs work because they are used throughout the coal chain, from production through to final end-use. They have been developed over decades to reduce 'traditional' emissions such as sulphur dioxide (SO2), nitrogen oxides (NOX), heavy metals and particulate matter (PM).1 Prior to transport to a power station, for example, raw coal may be washed (using cyclones or vibrators) to partially separate out unwanted minerals and reduce the ash content that would normally be a waste product of conventional combustion. At the power station, other CCTs either inhibit pollutants from forming or capture them before release into the atmosphere. 

Governments and industry have worked together to avoid emissions from coal, largely through three approaches:

- Encouraging the uptake of alternative 'cleaner' fuels;
- Improving the efficiency of power generation plants; and
- Developing better ways to prevent emissions from entering the atmosphere. 

The CCTs that minimise traditional emissions are now widely deployed around the world. But coal still struggles to shed its tainted reputation for two reasons: an evolving definition of 'clean' and market competition. 

Though it remains important to think of 'near-zero' emissions in terms of all pollutants from coal-fired electricity production, governments and intergovernmental organisations have become increasingly focused on carbon dioxide (CO2) emissions known to play a major role in global warming. In 2008, coal-fired power stations contributed 30% of global CO2 emissions (IEA, 2010a). But the CCTs proven to reduce CO2 often add costs to plant construction and operation. Thus, unless clear policy drivers are in place, the cleanest coal plants have a hard time competing against plants without CCTs. 

Why use coal?

Coal is the most abundant and widely distributed fossil fuel on the planet. Proven reserves are estimated at around one trillion tonnes (IEA, 2010a) – enough to meet current consumption rates for another 150 years. Reserves are located in around 75 countries (WEC, 2010), with the bulk in the US, Russia, China and India. 

In 2008, coal provided more than one-quarter of global energy demand. It was the fuel source for over 40% of the world's electricity, and is also vital to iron-making, cement manufacture and industrial processes. 

Because it offers abundant, cheap and affordable energy worldwide, coal will continue to play a key role in meeting energy demand well into the 21st Century. 
Its use is central to supporting global economic development and alleviating poverty. But geographical differences are important. Dependence on coal will drop off for OECD countries in which overall energy demand will remain relatively stable; CO2 emissions in these countries are expected to decline. By contrast, as coal is likely to remain the fuel of choice for major developing economies for several decades (IEA, 2010b), rising energy demand will also drive up CO2 emissions. In 2008, China alone accounted for over 40% of global coal consumption (IEA, 2010a).

There are three ways to reduce emissions from coal:
- Fuel switching refers to strategies that use 'cleaner' fuel sources to meet electricity demand with lower consumption of coal. Some countries aim for 'zero carbon' sources such as nuclear or renewable energy; others opt for 'CO2 neutral' fuels such as biomass, or a less carbon-intensive fuel such as gas; 
- Increasing efficiency focuses on technologies to improve processes so that coal-fired plants produce more electricity from each tonne of raw coal and therefore emit less CO2 per unit of electricity generated. New technologies have led to substantial gains: in the 1980s, typical subcritical plants had maximum efficiencies of around 38%, whereas today's ultra-supercritical plants operate at 45% or higher and prospects of reaching 50% appear very realistic in the near future. Moreover, great scope remains for upgrading or replacing existing coal plants: too many small, inefficient coal-fired power stations are still operating in both OECD and non-OECD countries;
- Carbon capture and storage (CCS) aims to capture CO2 emissions and lock them deep underground, effectively preventing them from entering the atmosphere. It is the only technology currently under development that can legitimately stake a claim for producing electricity with near-zero CO2 emissions. Possible storage locations must be well characterised and may include saline aquifers,2 depleted oil fields or abandoned mines. Early CCS options show some possible side benefits: pumping CO2 into depleting oil or gas fields can boost recovery; injecting it into disused coal seams displaces methane, which can then be extracted for use as a fuel. But being a 'young' technology, CCS has not yet been demonstrated on a large scale at a commercial coal-fired power station, and power-sector stakeholders (particularly investors) are uncertain of its potential.

Can clean coal compete? 

In a liberalised power market, investors base decisions on the benefits (including revenues) they can expect to achieve. Assuming that the final price paid for electricity is independent of the original fuel source, the cost of plant construction and operation becomes the determining factor. In general, investors have three options: plants with high capital but low operating costs (such as nuclear and renewables), plants with low capital but high operating costs (such as gas), or something in the middle, which is where coal typically sits. 

In 2010, the International Energy Agency (IEA) undertook a global study (IEA, 2010b) to examine whether investors might make different choices under different circumstances – particularly the development of a carbon market that puts a price on CO2 emissions. The study estimated levelised costs of electricity for the European power market, which includes prices for carbon emissions. Assuming a stable carbon price of €20 per tonne of CO2 (/tCO2) emitted, burning of brown coal came out as the cheapest domestic fuel, while high capital/operating costs made it impossible for nuclear and plants equipped with CCS to compete against coal or gas-fired plants. If the carbon price is set at €40/tCO2, CCS-equipped plants then become competitive.

Three ways to stimulate CCTs and CCS 

To avoid the more extreme consequences of climate change, scientists generally agree on the need to limit global warming to between 2°C and 3°C, which means stabilising CO2 emissions in the atmosphere at 450ppm (IPCC, 2007). All three CCT approaches are pivotal to this aim, but only CCS has the potential to deliver deep CO2 cuts quickly.

As CCS is still in an early stage, governments must take strong action to lead its further development and deployment. The current challenge is to demonstrate CCS performance at large scale to secure initial stakeholder buy-in. Progressive governments and governmental organisations (IEA, 2010c) are now providing funding support for demonstration projects. Globally, approximately 80 large-scale CCS projects are at various stages of development, five of which are operational (GCCSI, 2010).

But lessons from earlier CCT deployment show that barriers to uptake extend well beyond technology development. Industry needs assurance of a new technology's long-term competitiveness before it is likely to invest in the innovation needed to reduce capital and operational costs. In the case of proven CCTs, legislation that restricted emissions from coal-fired plants effectively drove such innovation. Over time, many governments have made legislation more stringent and extended it to cover more pollutants. The range of CCTs now available confirms that industry is very innovative when it feels certain of future markets. In fact, where emissions other than CO2 remain high, it is often because effective legislation is not yet in place or not being properly monitored or enforced. 

Given the urgent need to address climate change concerns, governments have an even more powerful tool to stimulate the deployment of CCS. The introduction of carbon markets with effective pricing schemes can further stimulate innovation, thereby driving down capital and operational costs for CCS, and reducing risk (as well as the perception of risk). 

Strategic action by governments can also revitalise a promising technology that has been somewhat dormant. Integrated gasification combined cycle (IGCC) technology offers an alternative that could be more cost-effective than combining CCS with conventional coal-fired plants. IGCC plants use high pressure (typically around 3MPa) to transform coal into a gas, and then combust the fuel gas. This process makes it easier and less expensive to reduce traditional emissions. To date, very few coal-based IGCC plants are in operation, but some analysts predict that their economic appeal would increase if governments were to regulate CO2 emissions. 

Ultimately, to limit global warming, the power sector needs to be virtually 'decarbonised', which implies greater contributions are needed from energy-efficiency, nuclear power and renewable energy technologies. IEA analysis demonstrates that failing to achieve broad deployment of CCS would make it much more difficult to avert climate change and significantly increase the overall cost. Without CCS in the clean energy technology mix, the additional investment cost in the power sector from 2010 to 2050 would increase by 78% (IEA, 2010d). 

1 Coal combustion produces both fly ash, a fine dust that can be transported and emitted with the plant exhaust gases, and bottom ash, a coarser substance that can be collected from the base of the combustion chamber
2 Saline aquifers are geological formations consisting of water-permeable rock (such a limestone) saturated with salt water (brine). When injected into an aquifer, pressurised CO2 may dissolve in the brine, react with dissolved minerals or the surrounding rock, or become trapped in porous spaces. Cement is used to plug the well after the injection
3 At present, the costs for CCS plants have a high degree of uncertainty; due to the newness of the technology, there is a lack of reference plants that can provide cost and performance data

- GCCSI (2010), 'Status of CCS Projects, Interim Report April 2010', Global CCS Institute, Canberra, Australia
- IEA (2010a), 'World Energy Outlook 2010', International Energy Agency, Paris, France, OECD/IEA
- IEA (2010b), 'Projected Costs of Generating Electricity', International Energy Agency, Paris, France, OECD/IEA
- IEA (2010c), 'IEA/CSLF Report to the Muskoka 2010 G8 Summit, Carbon Capture and Storage: Progress and Next Steps', International Energy Agency, Paris, France, OECD/IEA
- IEA (2010d), 'Energy Technology Perspectives 2010', International Energy Agency, Paris, France, OECD/IEA
- IPPC (2007), 'IPCC Fourth Assessment Report', Intergovernmental Panel on Climate Change, Geneva, Switzerland
- WEC (2010), '2010 Survey of Energy Resources', World Energy Council, London, UK

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