CARBON CAPTURE, UTILIZATION, AND STORAGE: Technology and Policy Status and Opportunities National Association of Regulatory Utility Commissioners | November 2018 Kiera Zitelman, NARUC James Ekmann, John Huston, and Pradeep Indrakanti, Leonardo Technologies, Inc. Acknowledgments and Disclaimers The report you are reading was developed under the project: “Carbon Capture Storage and Utilization Partnership between NARUC and the United States Department of Energy,” an initiative of the National Association of Regulatory Utility Commissioners (NARUC) Center for Partnerships and Innovation. This material is based upon work supported by the U.S. Department of Energy under Award Number DE-FE0027486. This report was authored by Kiera Zitelman of NARUC and James Ekmann, John Huston, and Pradeep Indrakanti of Leonardo Technologies Inc., under subcontract to NARUC. Throughout the preparation process, NARUC staff and members provided the authors with editorial comments and suggestions. However, the views and opinions expressed herein are strictly those of the authors and may not necessarily agree with positions of NARUC or those of the U.S. Department of Energy. Special thanks to: Danielle Sass Byrnett, NARUC Center for Partnerships & Innovation Joseph Giove, U.S. Department of Energy Tom Sarkus and Venkat Venkataraman, National Energy Technology Laboratory Hon. Jeremy Oden, Alabama Public Service Commission Hon. Kara B. Fornstrom, Wyoming Public Service Commission Hon. Thomas Johnson, Public Utility Commission of Ohio Please direct questions regarding this report to Kiera Zitelman, NARUC Center for Partnerships & Innovation at [email protected] or (202) 898-2212. © November 2018 National Association of Regulatory Utility Commissioners Cover photo courtesy of Kiera Zitelman, NARUC. Disclaimer: This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. Table of Contents Executive Summary 1 I. Historical Context 3 A. Regulation of coal-fired electricity, 1970–2018 3 B. Coal and competing generation sources 5 C. CCUS at coal facilities 6 1. Projects in development 7 2. Utilization: Enhanced Oil Recovery (EOR) 7 II. Benefits of Encouraging Carbon Capture and Storage for Coal Power Plants 9 A. Decreasing CO2 emissions 9 B. Economic development benefit 10 C. Grid reliability and fuel diversity 11 D. International development 12 III. CCUS Technology Primer 13 A. Post-combustion 15 1. Advanced solvents 17 2. Advanced sorbents 17 3. Membranes 17 B. Oxy combustion 20 1. Chemical loopin 22 C. Pre-combustion 23 D. CO2 utilization: EOR, fuels, other 25 E. Future applicability of CCUS to natural gas-fired generation 27 F. CCUS outside the electricity sector: industrial facilities 28 G. Sequestration 31 1. Oil and gas reservoirs 32 2. Deep saline reservoirs 32 3. Unmineable coal seams 32 4. Future potential 34 5. Global status 34 6. Offshore 34 H. Technology lessons learned from major demonstration projects 35 1. Petra Nova 35 2. Kemper 36 3. Boundary Dam 37 4. Industrial projects: Air Products, Archer Daniels Midland 39 5. International lessons: Where has CCUS worked in other countries? 41 I. Challenges remaining/barriers to widespread adoption 45 1. Technical status 45 2. Cost status 46 3. Immediately achievable cost reductions for power plants 47 4. Regulatory status 49 J. Summary of RD&D opportunities 51 IV. Policy Approaches to Expand CCUS 53 A. Public utility commission options 55 1. RPS compliance 55 2. Low-carbon credits 57 3. Enabling cost recovery for CCUS 57 4. Siting 58 5. Planning 59 B. State government beyond PUC 59 1. Requiring CCUS 60 2. Bonding authority 60 3. Underground injection control program primacy 60 4. Long-term sequestration liability 61 5. Subsurface ownership 62 C. Federal government 62 1. Financial options to reduce risk and lower cost of capital 62 2. Section 45Q tax credits 64 3. New source review 65 4. Direct funding 65 5. National infrastructure planning 67 V. Collaboration and Partnerships 69 A. International Collaboration 69 B. U.S. Regional Partnerships 70 C. CCUS Possibilities in the Eastern Interconnection 73 Appendix A. Glossary 81 List of Figures Figure I.1 Current CO2-EOR projects and pipeline infrastructure 8 Figure II.1 Comparative costs of CO2 reductions across technologies 10 Figure III.1 Typical schematic of an oxy-fuel pulverized coal-fired power plant 20 Figure III.2 Schematic of the CDCL process 22 Figure III.3 Schematic of TDA Research’s pre-combustion capture system in an IGCC power plant 24 Figure III.4 Potential utilization streams for captured CO2 25 Figure III.5 Quantity of CO2 available from U.S. industrial sources by region 28 Figure III.6 Comparison of economics of CO2 capture from industrial sources 30 Figure III.7 Global CO2 storage potential 33 Figure III.8 Comparison of lower storage capacity estimates and the demand for carbon storage under various scenarios 33 Figure III.9 View of the WA Parish Petra Nova project 35 Figure III.10 Cumulative oil production from the West Ranch oilfield following CO2 injection 36 Figure III.11 Average monthly quantity of CO2 captured from BD3 37 Figure III.12 Schematic of Port Arthur CCS project 39 Figure III.13 Breakeven costs for CO2 capture and availability 47 Figure III.14 Comparative costs for capture from candidate CO2 emitters 48 Figure III.15 Actual and anticipated progress in reducing CCUS costs 48 Figure IV.1 Power sector regulation 53 Figure IV.2 Federal, State, local, and tribal jurisdiction over electricity 54 Figure IV.3 Non-renewable resources eligible for RPS compliance 56 Figure IV.4 Illustration of UK CFD scheme 63 Figure IV.5 Cost declines for renewable technologies, 2008 - 2014 66 Figure IV.6 Recommendations for regional CO2 pipeline infrastructure 67 Figure V.1 ITCN sites around the world 69 Figure V.2 Regional Carbon Sequestration Partnerships 71 Figure V.3 RSCP large-scale development-phase projects 72 Figure V.4 RTOs/ISOs and non-RTOs comprising the Eastern Interconnection 74 Figure V.5 Fuel mix by power markets 75 Figure V.6 Summary of storage potential 76 Figure V.7 U.S. natural gas pipeline network 77 Figure V.8 U.S. CO2 pipeline network 77 Figure V.9 Illustration of pipeline segment build-out under low-carbon scenario 79 Figure V.10 Mineralization options and technology readiness levels 79 List of Tables Table III.1 Capture technology options and areas for further development 16 Table lll. 2 Oxy-fuel combustion technologies: Benefits, challenges, status 21 Table V.1 Generating capacity within the Eastern Interconnection 73 Table V.2 Geographic areas with large-scale CO2 pipeline systems operating currently in the U.S. 78 Executive Summary In the 19th and 20th centuries, coal was the energy resource that drove the electrification of the modern world, and to this day remains a key source of fuel for generating electricity in the United States and worldwide. Domestically, rising concern over environmental degradation associated with coal plants and competition from abundant natural gas and renewable generation have challenged coal’s dominance. From 2000 to 2017, more than 100 GW of U.S. coal-fired generation was retired, according to M.J. Bradley & Associates. Coal presently accounts for approximately 30 percent of overall electricity generation in the U.S., down from nearly 45 percent in 2009. Recently, the coal industry has focused on making a case for the reliability benefits coal plants offer and the national security advantages of domestic coal production, as well as the importance of maintaining fuel diversity in the electric sector. However, coal still faces a multitude of policy, technological, and financial obstacles to its remaining an indispensable source of power in the 21st century. Carbon capture, utilization, and storage (CCUS) technologies constitute an important opportunity for coal. Decades of public and private research, development, and demonstration (RD&D) have led to crucial breakthroughs in CCUS on coal-fired power plants. Although CCUS is confined to a handful of power plants and faces barriers to widespread adoption in the power sector, CCUS has shown promising results in industrial uses, and results from power sector applications have been encouraging. CCUS is an exciting technology area with the potential to deliver environmental benefits, improved reliability, and increased economic activity. These broad benefits have attracted support for CCUS from a wide range of stakeholders. With thoughtful policies at the federal, state, and local levels and continued investment in RD&D, the deployment of CCUS technology could be increased to improve the environmental performance of coal-fired power plants and other industrial processes. Such action could enable coal to deliver the benefits the industry cites while improving environmental performance—making coal a more robust clean energy competitor. This paper examines the present state of CCUS and the challenges to widespread deployment in the energy sector. It explores the policy and technology environment for coal-fired power generation and CCUS for energy and industrial uses. It offers an array of actions policymakers and regulators can use to encourage CCUS adoption to extend the life of existing coal-fired power plants while drastically cutting carbon dioxide emissions, illuminating how the coal plant of the future could look.