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Project Number: 52041-002 August 2021 Integrated High Impact Innovation in Sustainable Energy Technology Prefeasibility Analysis for Carbon Capture, Utilization and Storage (Subproject 2) Prepared by BCS Baliga, Ramesh Bhujade, Subhamoy Kar, Guido Magneschi, V Karthi Velan, Dewika Wattal, and Jun Zhang For ADB Energy Sector Group This the Government cannot be held liable for its contents. Project Number: 52041-002 Integrated High Impact Innovation in Sustainable Energy Technology - Prefeasibility Analysis for Carbon Capture, Utilization and Storage (Subproject 2) Prefeasibility Study on Carbon Capture and Utilization in Cement Industry of India August 2021 1 ABBREVIATIONS AND NOTES ABBREVIATIONS ADB Asian Development Bank CCS Carbon Capture and Storage CCU Carbon Capture and Utilization CCUS Carbon Capture Utilization and Storage CAPEX Capital expenditure CIF Cost, Insurance and Freight CO2 Carbon dioxide CSI Cement Sustainability Initiative CUP CO2 Utilization Plant DAC Direct air capture DBL Dalmia Bharat Limited DCBL Dalmia Cement (Bharat) Limited EA Executing Agency EOR Enhanced oil Recovery EGR Enhanced gas Recovery ECBM Enhanced coal bed methane FOB Free on Board FY Financial Year H2 Hydrogen IA Implementing Agency INDC Intended Nationally Determined Contributions IRR Internal Rate of Return MCA Multi Criteria Analysis MIRR Modified Internal Rate of Return MTPA Million Tonnes Per Annum NPV Net Present Value OPEX Operating expenditure SPV Special Purpose Vehicle 2 TA Technical Assistance tpa tonnes per annum TRL Technology readiness level VGF Viability Gap Funding WACC Weighted Average Cost of Capital WDV Written Down Value NOTES (i) The fiscal year (FY) of the Government and its agencies ends on March 31. (ii)In this report, "$" refers to US dollars, unless otherwise stated. 3 Table of Contents Executive Summary ............................................................................................................... 5 I. Introduction ..................................................................................................................... 10 II. Carbon capture review and conceptual design................................................................. 11 III. CO2 Utilization ................................................................................................................ 47 IV. Environment assessment ............................................................................................... 94 V. Civil engineering design ................................................................................................. 131 VI. Financial assessment .................................................................................................... 140 VII. Emissions reduction by employing biomass and green ammonia ................................. 186 VIII. Conclusions and suggestions ...................................................................................... 189 Acknowledgement ............................................................................................................ 189 4 Executive Summary Background Cement industry contributes to about 8 per cent of global CO2 emissions, and it has been considered, along with iron/steel, as the hard-to-abate sector. Unlike other manufacturing sectors where CO2 emissions are mostly from energy usage, significant proportion of CO2 emissions from cement industry are process centric. Without practical alternatives, the sector needs carbon capture, utilization and storage (CCUS) to achieve its climate change goals. Dalmia Cement (Bharat) Limited , one of the leading cement companies in India, has announced to become carbon negative by 2040. Carbon capture and Utilisation (CCU) is one of the key levers identified by the company to achieve its goal, considering 55-60% GHG emissions in cement plant are attributable to cement process. The company is exploring the feasibility of building a large-scale demonstration CCU plant in its Ariyalur cement facility. This study is being commissioned to assess the techno-economic pre-feasibility of the CCUS options in the Ariyalur cement factory with support from Asian Development Bank (ADB). Key findings of this study are presented below. Capture CO2 from a cement plant Despite a lack of commercial CCUS projects in the cement sector, there are numerous demonstration and pilot CCUS projects at cement plants around the world. Most applicable CO2 capture technologies (commercially applied in other industries) for cement industry are post combustion and oxy-fuel combustion technologies. Post-combustion technologies are preferred as it is commercially available and applied to other dilute CO2 streams (power stations) and it does not interfere with the operation of cement production. It is technologically feasible to build and operate a 500,000 tonnes per year CO2 capture plant at the Ariyalur plant, using chemical absorption with amine-based solvents. A conceptual design for an amine-based solvent carbon capture plant was completed with major equipment sizing and costing. Process emissions (kiln stack flue gas) is the preferred stream for capture due to higher CO2 concentrations. However, the flue gas does contain relatively high levels of NOx and SOx, which can lead to faster amine degradation and increase operational costs. Water consumption at the capture plant could be substantial and proper management is required, which may include heat recovery and integration between the capture process (reboiler steam generation), cement production process and CO2 utilization process. I -term decarbonisation strategy, more sustainable alternatives to produce steam for the capture plant reboiler should be considered and evaluated. Those measures may include system heat recovery from flue gas, biomass fuel, fuel switch (biomass), and renewable energy powered electric steam generator. Utilization of captured CO2 CO2 utilization review CO2 utilization is recognized as one of the key levers for making the cement industry carbon negative. There are multiple pathways for utilization of CO2. This study carried out an extensive overview of CO2 utilization landscape. The review included market demand, Technology Readiness Level (TRL) and relevance of the technology for implementation in cement industry. 5 CO2 utilisation screening methodology A quantitative Multi Criteria Analysis (MCA) methodology has been developed to assess various CO2 utilization options. This methodology may be used by other cement producers when evaluating their CCUS routes. Key parameters for the methodology include Technology Readiness Level (TRL), CAPEX, OPEX, Payback period, Market demand, Energy consumption, CO2 avoidance. Employing this methodology, detailed MCA analysis was then performed for six products: urea, soda ash, mineralization, methanol, algae for feed and algae for oil with the results below: Product Urea Soda Ash Mineralization Methanol Algae feed Algal Oil TRL 9 9 8 to 9 7 to 9 5 to 7 5 to 7 Overall Score * 89 79 87 79 69 75 Overall score Includes scores for all the 8 parameters listed earlier. (Details in the utilization section) The above analysis provides directional guidance towards shortlisting a product for the prefeasibility study. It is noted that, when applying this methodology, other project implementation related factors (besides those considered for MCA) may need to be taken into consideration while deciding a final CO2 derived product. According to MCA screening scores, urea and mineralization are the top-ranking options. Though the mineralization is recognised as one of the most promising CO2 utilization options in developed countries, it emerged out during the discussions that the CO2 derived cement requires more than 5 to 6 years in technical approval. Hence, the option was dropped. Soda ash and methanol emerged out as the next best options. The project team expressed the view that the soda ash has limited market. Methanol has a great potential for CO2 utilization as a long-term solution, particularly in view of the continual fall in the cost of renewable electricity and traction that is getting from the government and research institutes for the hydrogen economy. Based on the discussions with the officials of DCBL, and after considering all the possible factors and organizational priorities, urea was selected for the prefeasibility study. Urea production For the prefeasibility study, a process based on ammonia stripping has been considered. Urea production is a mature and commercial technology and large plants have the benefits of economies of scale. For the prefeasibility study, two cases have been considered: Base case: 0.5 million tpa of CO2 utilization Advanced case: 1.0 million tpa of CO2 utilization In case of integrated urea plants, ammonia is an intermediate product made out of fossil fuel, while in case of standalone urea plant for CO2 utilization, ammonia would need to be purchased. Environmental impact and CO2 emissions analysis of CCU chain Based on data available, the preliminary environment impact assessment (EIA) identifies no significant adverse environmental impacts for the proposed project. Overall, the proposed project would not cause air, water, or soil to be contaminated with waste (assuming best operation and maintenance practices) to a degree that would pose a threat to human or ecological health and safety. This study calculated CO2 abatement potential for several scenarios, based on a 0.5 mpta carbon capture plant and corresponding urea plant. Key results are listed in Table