1 Economics of CO 2 Storage and Sink Enhancement Options: A Utility Perspective Research Funded by DOE, TVA, and EPRI Collaborators: EPRI, MIT, Parsons, IEA GHG Programme, SFA Pacific, UTK Bert Bock

2 Utility Options Internal operations –Improved energy efficiency –Fuels containing less carbon per unit of energy –Renewable energy sources External operations –Storage of captured CO 2 –CO 2 storage in forests and soils (CO 2 sink enhancement) Utilities need better economic assessment of external options

3 CO 2 Sequestration Options Compared Storage of Captured CO 2 --Depleted gas reservoirs --Depleted oil reservoirs --Deep saline aquifers --Enhanced oil recovery --Enhanced coalbed methane recovery --Ocean pipeline --Ocean tanker CO 2 Sink Enhancement --Forest management New plantations Restoration Agro-forestry Avoided deforestation --Cropland via reducing tillage (USA)

4 Challenges CO 2 capture costs + storage costs (DOE/EPRI, 2000) (this project) compared with CO 2 sink enhancement costs (this project) Estimating net reductions in GHG emissions (avoided GHG emissions) Life-cycle basis (cradle to grave) Accounting for timing differences –Costs of Storage and sink enhancement (NPV) –Avoided GHG emissions Revenues from GHG markets (NPV) Avoided carbon taxes (NPV) 100-year planning horizon

5 Net Cost of Storing Captured CO 2

6 CO 2 Capture Cost (DOE/EPRI, 2000) IGCC reference plant (425 MW net, 43% efficiency) vs. IGCC CO 2 capture plant (404 MW net, 37% efficiency) $64/tonne C eq. LC GHG avoided in capture process IGCC CO 2 capture costs are 3 to 7 times > typical storage costs without by-products

7 CO 2 Capture + Net Storage Costs: Base Cases, NPV Basis CO 2 Storage Process$/tonne C eq. LC GHG avoided Enhanced oil recovery15 Enhanced coalbed methane recovery41 Depleted gas reservoir86 Depleted oil reservoir81 Deep saline aquifer77 Ocean pipeline89 Ocean tanker143

8 Deep Aquifer Example: COE, $/MWh Reference plant (no capture)43.98 CO 2 Capture costs (years 1-20)11.10 CO 2 Storage costs (years 1-20) 2.27 Monitoring costs, etc. (years ) 0.03 Total cost of electricity57.38

9 Conclusions Methodologies were developed to compare economics of a wide range of CO 2 storage and sink enhancement options from a utility perspective Base-case cost ranges: –CO 2 capture and storage ($15 to 145/tonne CE avoided) –Forest management Aboveground ($10 to 175/tonne CE avoided) “All” ($-160 to 55/tonne CE avoided) –Cropland via reducing tillage ($50 to 90/tonne CE avoided) Significant opportunity for early adopters to reap “low hanging fruit”

10 Forestry Cases Management TypeType of TreesCountry/region New PlantationLoblolly pineUSA (South) New PlantationDouglas FirUSA (Pacific NW) New PlantationSpanish CedarMexico RestorationPine-oakMexico RestorationMiomboSouthern Africa Agro-forestryMango-TamarindIndia (South) Avoidance of deforestation VariousMexico

11 Costs: Medium Productivity Cases, NPV Basis

12 Reducing Tillage on U.S. Cropland: Factors Affecting Costs ($/tonne C eq. LC GHG avoided) Adoption incentive paid to farmer by utility = f (Δ crop yield, Δ crop production costs, Δ risk) Transaction costs Monitoring costs Δ C sequestered in soil organic matter Δ N 2 O emissions from soil Δ GHG emissions from crop production inputs

13 Intensive Till to No Till Costs: Base Cases, NPV Basis