Highlights:

  1. Several technological factors make natural gas with carbon capture and storage a potentially attractive mid- and long-term energy source.
  2. Compared to coal, using carbon capture for natural gas is both cheaper and cleaner.
  3. However, due to a lack of ongoing research and demonstration projects, NGCCS is many steps removed from commercial development.
  4. With technological innovation, R&D, and sufficient policy support, natural gas with CCS could provide a clean, reliable, and affordable low-carbon energy source.

Introduction

Natural gas with carbon capture and storage could be an ideal long-term cheap and reliable low-carbon energy source.

When most people in energy policy or markets hear “carbon capture and storage” (CCS), they think of coal generation. And rightly so.

Almost all major carbon capture demonstration or commercial projects in the power sector have been for coal-fired power plants; most federal energy research on CCS focuses on coal. Coal has the worst carbon profile of any fuel source, making CCS necessary for continued use of coal in a low-carbon world.

However, while CCS for coal has received the most research and development support, carbon capture may actually be better suited for natural gas. With low natural gas prices in the U.S., lower CO2 emissions per MWh, and much cleaner air emissions, natural gas with CCS could be a critical technology to mitigate climate change while reliably delivering electricity.

Carbon Capture for Coal Remains a Technological Challenge

Carbon capture for coal is struggling.

The 110 MW coal-fired unit #3 at Boundary Dam in Canada ended up costing $1.3 billion and has captured much less CO2 than initially expected due to undisclosed technical issues.

More dramatically, the 582 MW flagship Kemper CCS project in Mississippi has suffered massive cost and time overruns. From an initial cost of $2.4 billion, the project is two years overdue and now expected to cost $6.5 billion, and rising.

Meanwhile, many other coal CCS projects have been outright cancelled. These problems in large part reflect a range of technical obstacles associated with Coal CCS deployment.

At first glance, carbon capture and storage resembles other ‘traditional’ pollution control technologies used at coal-fired power plants. Waste flue gas from combustion is scrubbed of CO2, which is then transported offsite. This is a major attraction of carbon capture as a means of addressing climate change – it feels like a familiar control method for engineers and utilities.

However, several factors make capturing and storing CO2 from a power plant much more difficult than controlling other air pollutants:

  • Combusting coal produces significantly more CO2 than other pollutants, meaning that the capture equipment has to be very large.
  • Capturing CO2 can bring significant energy penalties, reducing efficiency at new plants by as much as 28% and potentially more for existing plants.
  • Due to capture and transport technical reasons, all other pollutants need to be removed from the flue gas before the CO2 can be extracted, requiring expensive non-CO2 control measures.
  • There is a significant amount of captured CO2 in gaseous form, requiring significant pipeline infrastructure to transport it.

These challenges make carbon capture a much more expensive process than other pollution control techniques.

There are significant capital costs to install the capture equipment, harmonize it with operations at the plant, and build the transportation infrastructure. Running the carbon capture and other pollution control bring significant energy penalties, increasing the operating/marginal costs of capturing, transporting, and storing CO2. In total, estimated levelized costs for an advanced coal facility with CCS can be nearly double an uncontrolled facility.

Today carbon capture for coal is still early in the commercialization process – over time we should expect costs to go down as more projects are built and new technologies commercialized.

Nevertheless, the severe cost overruns at Kemper and low natural gas prices have tempered any major desire for carbon capture and storage for coal-fired facilities in the U.S. in the short term. The costs and risks are just too high, particularly in restructured power markets where such a project cannot be rate-based.

Net Efficiency (HHV) of Coal and Natural Gas Power Plants with and without CCS

Efficiency loss from applying CCS at coal plants is almost twice what it is for natural gas

Source: Spark Library, based on data from NETL

Carbon Capture for Natural Gas is Much Better

While coal with CCS is killed by cost, key technical differences could make natural gas with CCS an ideal technology.

It primarily comes down to volume. Natural gas is 43% less CO2 intense than bituminous coal on a heat content basis (per MMBtu) and the average natural gas combined cycle power plant has 56% less CO2 emissions per MWh (unit electricity) than the average existing coal plant.

Compared to coal with CCS, the carbon capture equipment for a natural gas facility can be much smaller, require less transportation infrastructure, and has greatly reduced energy penalties. Further, the lack of toxic air emissions from natural gas means that other pollutant controls are not required.

These characteristics bring major potential costs savings. Natural gas power plants already have capital cost advantages compared to coal – these advantages are maintained even after applying carbon capture technology. A natural gas combined cycle unit with carbon capture would have total overnight capital costs of $1,497/KW, almost 60% lower than for an advanced coal unit. Capture, transit, and fixed costs would all be lower as well.

The chart below, from the Global CCS Institute, illustrates the costs advantages of natural gas with CCS compared to coal.

Levelized cost of electricity for plant in the US (2014 US$)

LCOE for CCS for natural gas is between $82-93/MWh, comparable with wind and better than most other technologies

Source: Global CCS Institute

This analysis also indicates how natural gas with CCS has similar or lower levelized costs to many other carbon mitigation options, including nuclear, biomass, offshore wind, and solar. Of course, levelized costs of energy calculations have notable limitations.

Critically, the analysis by the Global CCS Institute assumes natural gas prices of $4.98/MMBtu. With low natural gas prices, carbon capture for natural gas is very competitive. The chart below from NETL illustrates this by comparing the cost competitiveness of coal and natural gas (with and without CCS) at different natural gas and carbon prices.

Lowest Cost Power Generation Options with Coal and Natural Gas

Cost of energy for natural gas is better than coal both with and without CCS at prevailing natural gas and carbon prices

Source: NETL

The massive increase in natural gas supplies and low prices resulting from the shale revolution could make natural gas with CCS even more attractive.

Shale Revolution to Ensure Long Term Supply of Natural Gas

Recent technological advances in hydraulic fracturing and horizontal drilling have led to a massive boom in natural gas production in the United States. Between 2005 and 2014, total natural gas marketed production increased from 18.9 trillion cubic feet (TCF) to 27.3 TCF, an astonishing 44% increase. Power sector natural gas consumption has increased by 2.3 TCF (38%) since 2005.

Not only has hydraulic fracturing and horizontal drilling made natural gas more abundant, it has made it much cheaper. From a pre-shale range of around $5-15/MMBtu during 2005-2009, natural gas prices during the last five years have generally settled between $2-5/MMBtu. Technological innovation in shale fields continue to reduce extraction costs and could keep natural gas extraction costs low for decades, even if prices remain volatile.

Annual Natural Gas Prices at Henry Hub versus U.S. Natural Gas Proved Reserves

Since the beginning of the shale revolution, natural gas reserves have almost tripled while prices have fallen precipitously

Source: Spark Library, based on data from EIA

In the United States, natural gas and coal primarily compete with each other due to similar marginal costs. As a result, higher natural gas generation has led to reduced coal generation and natural gas is on the verge of passing coal as the primary source of power generation in the United States. As the earlier chart from NETL indicates, natural gas generation (with or without CCS) is cost competitive with coal at any carbon price as long as natural gas prices are below $6/MMBtu.

The environment benefits of this transition are huge, with large decreases in CO2 emissions getting significant attention. More dramatically, however, natural gas reduces emissions of other pollutants almost entirely – SO2, particulate matter, and mercury emissions are almost completely eliminated, while NOx emissions can be reduced by around 90%.

In the short term, lower natural gas prices and greater natural gas supply are likely to drive continued reductions in coal generation, lowering total U.S. carbon emissions. However, natural gas still emits a significant amount of carbon dioxide when burned. Longer term, the need to significantly reduce carbon emissions means that carbon capture is necessary if natural gas is to remain a major fuel source in the United States or globally.

Carbon Capture for Natural Gas Could Prolong the Shale Revolution

In order to reduce the chances of severe climate disruption, the U.S. is aiming to reduce net greenhouse gas emissions by up to 83% by 2050. Even though natural gas is less emission intense than coal or oil, it was still responsible for 22% of power sector and 27% of total energy CO2 emissions in 2013. These numbers are only likely to grow as natural gas continues to displace coal in the power sector.

Currently, natural gas is reducing overall U.S. emissions by replacing coal. However, in doing so, natural gas emissions are beginning to rise and will need to eventually fall, in both the power and industrial sectors. Simply put, natural gas emissions will have to decrease by 2050, regardless of what happens to other fuels.

U.S. CO2 Emissions from Fossil Fuel Combustion, by Fuel Source

Natural gas emissions are rising even as coal emissions decline

Source: Spark Library, based on data from EIA

Emissions can either decrease through reduced consumption or through carbon capture.

There is also a very strong short term argument for natural gas with carbon capture: it can mitigate the effects of methane leakage. As has been extensively covered, natural gas extraction and transportation infrastructure releases significant amounts of methane.

As methane is a stronger greenhouse gas than carbon dioxide, these releases reduce the climate benefits of natural gas compared to coal. The exact amount of methane leakage remains a matter of considerable controversy and rhetoric.

The most comprehensive meta-analysis to date, Brandt et. al. (2014), supports the most defensible conclusion: methane leakage is likely higher than official numbers but not so high as to completely erode climate benefits compared to coal.

Regardless of the precise amount of methane leakage, applying carbon capture as soon as possible to natural gas will reduce overall lifecycle greenhouse gas emissions from natural gas. A simplified lifecycle emissions model shows why:

Lifecycle Emissions from Natural Gas with and without CCS

Carbon capture can reduce lifecycle emisisions from natural gas in the power sector by 40-85%

Source: Spark Library, based on data from NETL and Alvarez et. al.

This model indicates that at lower levels of leakage (1-3%), carbon capture can reduce lifecycle emissions from natural gas in the power sector by 56-70%. At the highest leakage rates that the best science indicates are possible (4-6%), carbon capture can still reduce lifecycle natural gas emissions by 41-50%.

Finally, natural gas is very different from coal in how it is used in the United States – while coal is almost completely used for power, natural gas is heavily used in both the power sector and industrial sectors. Carbon capture technologies for natural gas could be used to address industrial emissions, which are much more difficult to reduce with renewable or nuclear energy.

Together, the long term need to reduce emissions and short term concerns about methane leakage lead to one inescapable conclusion for the natural gas industry and for policy makers– if natural gas is to avoid the fate of the coal industry, carbon capture is an absolute necessity.

Technological Innovation Desperately Needed

Unfortunately, if carbon capture for coal is in its infancy, carbon capture for natural gas has barely been conceived. The overwhelming majority of power sector carbon capture demonstration and commercial projects have been for coal.

Significantly increased support is needed from the power sector, government, and the natural gas industry to research, develop, and deploy commercial scale carbon capture at natural gas facilities. Fortunately, such focus is beginning to emerge.

In its recent Quadrennial Technology Review, the Department of Energy examined using carbon capture for natural gas. Most importantly, the DOE concluded that most capture technology developed to date (for coal) is directly applicable to natural gas combined cycle systems.

Nevertheless, the review noted several major technical challenges that need to be addressed through new research: higher oxygen content in flue gas could lead to degradation of capture solvents, lower CO2 content can make capture harder, and the flexible operations that natural gas facilities are known for have not been tested with carbon capture technology.

Perhaps most exciting, a new combustion process could unlock very cheap carbon capture for natural gas. Using its’ Allam Cycle, Net Power is currently developing a demonstration natural gas power plant that uses supercritical CO2 instead of water to transfer heat within a turbine. If successful, the process could be more efficient than existing natural gas combined cycles, have lower dispatch costs, and produce pipeline-ready CO2 without the need for additional carbon capture equipment.

Although it is unclear whether this specific project will be successful, it is clear that continued research for natural gas with carbon capture could unlock a powerful, new carbon mitigation technique.

For More Information:

  1. A good overview of carbon capture technologies: https://www.fas.org/sgp/crs/misc/R41325.pdf
  2. A brief technical overview with key details of NG CCS: http://www.netl.doe.gov/KMD/cds/disk50/NGCC%20Technology_051507.pdf
  3. A brief list of federal research and regulations regarding carbon capture: http://www3.epa.gov/climatechange/ccs/federal.html
  4. Very good overview regarding natural gas and emissions: http://www.nrel.gov/docs/fy16osti/64652.pdf