Carbon Capture | Prime Movers Lab, Exercises of Engineering

Download Carbon Capture | Prime Movers Lab and more Exercises Engineering in PDF only on Docsity!

Carly Anderson, PhD July 2020

Carbon

Capture

The growing resources available to sup- port carbon capture technologies along with domestic and foreign policy changes and increasing levels of private sector support tell us that we will see significant commercialization of carbon capture technologies in the next 10 years. Carbon capture technologies fill one of two roles:

1. reducing CO 2 emissions from industrial processes, making them more carbon neutral, or 2) removing CO 2 from the air, acting as a negative emissions technology (NET).

Two key things are happening: markets for CO 2 capture are being created, and a few CO 2 capture technologies are moving down the cost curve. A 2018 amendment turned California’s Low Carbon Fuel Standard (LCFS) into a $2.5B potential market for CO 2 capture and sequestration. Clarifica- tions on the federal “45Q” tax credit will unlock several projects for CO 2 capture from industrial facilities, specifically from ethanol production. Food and beverage, new CO 2 utilization technologies, possibly enhanced oil recovery offer growing mar- kets for pure CO 2 (albeit small relative to total emissions).

from large industrial sources, unless there is significant process innovation around solid adsorbents or membranes. Svante, a leader in carbon capture process innova- tion, is a possible disrupter, and research continues into fluidized beds and other types of processes that could make CO 2 capture with solid materials more cost effec- tive for gases with high CO 2 contents (5–30% CO 2 ).

The cost of directly capturing CO 2 from air (0.04% CO 2 ) will fall significantly due to inno- vations in solid materials for CO 2 capture, process innovations leading to more effi- cient material heating and cooling strategies, and optimization of carbonation tech- nologies. This field is currently led by new companies rather than large established ones: specifically Climeworks and Carbon Engineering are currently deploying carbon capture plants. Business model innovation may enable “crowdsourcing” or corporate funding of capturing CO 2 directly from the air if capture costs can be reduced to $ per metric tonne or less. In all cases, the ability to site carbon capture systems near pipelines, storage sites or other CO 2 users is critical.

Small scale CO 2 capture plus utilization or chemical conversion technologies mature, CO 2 -to-products plays at smaller scales of 10,000–100,000 metric tonnes of CO 2 per year could become an area of rapid growth. These technologies require either very low capture costs ($40/tonne or less), or the ability to use non-pure CO 2.

Prime Movers Lab is excited about the growing opportunities for CO 2 capture, specifi- cally in the direct air capture space. We have invested in Idealab’s “Carbon Capture” a new carbon capture startup led by Bill Gross to develop a low cost system for direct air capture that can be rapidly scaled. The growth of a US negative emissions industry will create enormous economic opportunity, create hundreds of thousands of jobs (consistent with the solar industry), and change billions of lives for the better.

Introduction

The discussion around climate change and possible solutions is evolving rapidly. In the US, an increasing number of large companies (Microsoft, Delta, Nestle, and Stripe to name a few) have made public announcements supporting renewable energy and climate change solutions. Tree planting, regenerable agriculture, and CO 2 capture from the air receive significant attention in the mainstream media. We believe that CO 2 capture is poised to become a huge economic opportunity if carbon markets develop.

For carbon capture technologies to make a significant impact on global CO 2 emis- sions, they would need to capture gigatonnes of CO 2 per year scale (1 gigatonne = 1

billion tonnes = 1 trillion kilograms.) The scientific community estimates that the world’s yearly CO 2 emissions (attributed to humans) are roughly 35 gigatonnes per year (Gt/yr). [1] Emissions from the US energy sector alone account for 5.3 Gt/yr. [2]

How does the scale of impactful CO 2 removal compare to the scale of money that might flow into this area? If a carbon tax appeared overnight at the level of Micro- soft’s recently publicized internal carbon tax — $15 per metric tonne of CO 2 — remov- ing a gigatonne of CO 2 per year would be a $15B opportunity. (For context, Microsoft estimates that their direct and indirect activities produce 20mm metric tonnes (mt) of CO 2 annually, which means that offsetting their current emissions would cost them $300mm/yr.)

Why is now the right time for this technology? The amount of capital funding for climate-related technologies has increased dramatically, as has the level of public attention (which corporations are increasingly leveraging for branding and other reasons). California recently changed regulations to extend fuel credits to carbon capture. Research and development (R&D) programs under the US Department of Energy (DOE) and Advanced Research Projects Agency-Energy (ARPA-E) that began in the late 2000s and early 2010s have invested billions of dollars and raised the level of technical readiness of several technologies to the stage where they can be demon- strated at large scale in the real world. [3] The situation is similar in Europe where the European CO 2 Test Centre Mongstad (TCM) is also testing many new technologies.

CO 2 Supply and Demand

To actually make an impact

on CO

emissions, we need to

use or store over 100x more

CO

than we use today.

The existing global merchant

market for CO

is roughly

20–23 million metric tonnes

(mm mt) of CO

per year [6]—

tiny compared to the 35–

BILLION metric tonnes of CO

emitted globally.

In the US, the total revenue generated by the merchant CO 2 market was $723mm in

2019. This implies that the maximum revenue potential for carbon capture compa- nies from these markets (absent incentives) is a few hundred million per year. [7] Of this, 38% from food industries, 25% from beverage producers, and 16% from the oil and gas sector.

In the US, the total revenue generated by the merchant CO 2 market was $723mm in

2019. This implies that the maximum revenue potential for carbon capture compa- nies from these markets (absent incentives) is a few hundred million per year. [7] Of this revenue, 38% came from food industries, 25% from beverage producers, and 16% from the oil and gas sector.

Prices for CO 2 are highest in the food and beverage sector due to strict purity require- ments. Across these markets, long-term contracts between larger CO 2 consumers (food processors, oil and gas and industrial users) and the largest industrial CO 2 suppliers are a major barrier to entry. Often, the cost of delivering CO 2 to customers is greater than the cost of producing the gas; existing distribution networks owned by large CO 2 suppliers drive profitability.

The CO 2 sold in the US is often extracted from natural underground reservoirs of CO 2 [8], but may also be collected from ethanol plants, ammonia plants, and other indus- trial sources that produce fairly pure CO 2 gas. Prior to 2018, the total amount of CO 2 captured from industrial processes in the US (not extracted from underground CO 2 reservoirs) was estimated to be 21 mm mt/yr. Of this, 8mm mt/yr went to the food & beverage industry and other uses that do not create any long term CO 2 storage.

Percent revenue by sector within the merchant CO 2 market

38% Food industries

6%Other Exports

11% Manufacturing & construction

16% Oil & gas

25% Beverage producers

Government Incentives and Regulatory Pressures

The most effective incentives, policies and regulatory pressures have so far come from state and national governments. Internationally, the United Nations “Framework Convention for Climate Change” (responsible for the Paris Agreement) and the Inter- governmental Panel on Climate Change (IPCC) provide forums for international collaboration and concerted action. The IPCC is a global assembly of scientists that assess the scientific knowledge that exists and makes recommendations according- ly. While these organizations are relevant, they do not have a direct impact on the adoption of carbon capture technologies. Globally, the use of carbon pricing and emissions trading systems is increasing; governments raised approximately US$ billion in carbon pricing and emissions trading revenues in 2018. [13]

US Government

Reformed 45Q. The reformed 45Q tax credit is the strongest incentive for carbon capture in the US. In 2018, the US expanded and enhanced section 45Q of the US tax code to give a tax credit of $35 per metric tonne of CO 2 or CO captured and used to either make useful products or for enhanced oil recovery. [14] The credit amount is $50/mt CO 2 if the CO 2 is stored in geologic formations (and not used for EOR). To qualify for the credit, power plants must capture at least 500,000 mt/yr and other industrial facilities must capture at least 100,000 mt/yr. New guidance on require- ments to receive the credit was released by the IRS in early 2020, but ground must be broken by 2024. One source estimates that $250mm in ethanol production and simi- lar projects are in the pipeline, awaiting clarification on 45Q.

DOE and Other Grant Programs. The US government also directly funds research and development (R&D) of carbon capture technologies through the DOE and ARPA-E. DOE began funding related R&D activities in 1997; over $5B has been invested by the DOE in public and private sector projects related to carbon capture since 2010. [15]

California and other US States

California’s Low Carbon Fuel Standard (LCFS) clearance market has effectively become a CO 2 “ X-Prize ” and offers an immediate $2.5B market for the CO 2 capture. In 2019, the value of credits solid was roughly $2.5B dollars, and reduced the emissions of California vehicles by the equivalent of 13mm tonnes of CO 2. LCFS credits traded near $200 per tonne of CO 2 mitigated in early 2020; even during the oil crisis in March, the LCFS credit price remained above $180 per tonne CO 2.

The LCFS market works by requiring anyone selling transportation fuels in California to purchase credits to bring the average “carbon intensity” (CI) of their fuels below CA’s targeted level. The California Air Resources Board (CARB) is responsible for certi- fying the fuel’s CI score. The size of the LCFS market depends on California’s demand for transportation fuels, and a multiplier that increases each year. Even if fuel demand goes down, the demand for credits increases. In 2019, the volume of fuels sold in California was 13.8B gallons of gasoline equivalents (GGEs). The LCFS model has already expanded to Oregon (for a 10% increase in market size), and Washington and New York have similar bills in their state legislative process.

Together with the federal 45Q tax credit, these programs create revenue streams of $215-250 per tonne of CO 2 captured.

State Pledges. California has pledged to reduce greenhouse gas emissions 40% below 1990 levels by 2030, which requires emissions to decrease from the equivalent of 424 million mt CO 2 /yr in 2017 to below 260mm mt CO 2 /yr in 2030. [16] Accomplishing this will likely require some level of carbon capture.

State Renewable Portfolio Standards (RPS) could also become a vehicle for carbon capture incentives in the future. In addition to California, twenty-nine US states have RPS targets, which require that a specified percentage of the electricity that utilities sell comes from clean or renewable resources. [17] Under these standards, utilities must obtain renewable energy credits (RECs); the REC structure and cost varies from state to state, with most having cost caps in their RPS policies to limit increases in ratepayers’ bills to a certain percentage.

Corporate Entities

While the motives and extent to which Oil & Gas majors fund carbon capture are frequently questioned, some have a long history of technology development in this area. Equinor (formerly Statoil), Shell, and Chevron have already built and operated commercial-scale carbon capture facilities. Equinor captures and re-injects CO 2 from natural gas production at the Sleipner and Snovit fields in the North Sea. Shell has been involved in two major CO 2 capture projects: the “Quest” project at an H2 plant in Alberta and the Boundary Dam project on a coal-fired power plant in Saskatchewan. In Aug 2019, Chevron began CO 2 injection at its Gorgon Liquified Natural Gas (LNG) plant in Australia, which can inject 3.5–4mm CO 2 /yr.

The industry also funds external development of new carbon capture and other emissions-related technologies. A major vehicle for this is the Oil and Gas Climate Initiative (OGCI), a $1B+ investment fund backed by thirteen of the largest oil and

Microsoft will start by gradually extending its $15/mt CO 2 internal carbon tax on direct emissions to supply chain (Phase 2) and indirect emissions (Phase 3) as well, and create a $1B climate innovation fund (no details yet on what this fund will be used for).

Jeff Bezos has responded by announcing a $10B “Bezos Earth Fund” in February 2020 (no details of what it will fund or how have yet been released) and a $2B venture fund investing in companies to cut greenhouse gas emissions. Previously in September 2019, Amazon set a goal of 100% renewable energy by 2030; so far the company has initiated 15 utility-scale wind and solar renewable energy projects that will generate 1.3 GW capacity. Amazon has also announced $100mm for reforestation projects, and pointed to a purchase order for 100,000 E-delivery vehicles from Rivian, which they estimate will avoid 4mm mt CO 2 /yr.

Tech company Stripe announced it’s first “negative emissions” purchases in May 2020, which include 332 tonnes from Climeworks at a price of $775/tonne ($250k total). Other prominent examples in the transportation sector include Delta, British Airways, Cathay Pacific and other airlines, who have committed to becoming carbon neutral in the future. These announcements come on the heels of the International Civilian Aviation Organization (ICAO) enacting a program called CORSIA (the Carbon Offsetting and Reduction Scheme for International Aviation), to prevent increases in total CO 2 emissions from international aviation above 2020 levels. Airlines operating within Europe are particularly affected, and will need to buy carbon neutral jet fuel or offsets. Additionally, Tesla promised last year to run on 100% renewable energy and assessed it’s current carbon impact (282kt/yr).

In summary, the US government and California have provided credit-based incentives that may make some carbon capture projects border on economically viable for oil & gas majors, if the regulatory risk is acceptable and the price of oil justifies EOR. Sev- eral billion dollars have been committed by other corporate entities, but much of this will likely go to lower cost offsets (planting trees, land use modification, methane capture from landfills) rather than carbon capture technologies. CO 2 capture from industrial sources would be enabled at a massive scale would be enabled by reliable subsidies from governments at the $50–$60+ per metric tonne level (which looks, if not likely, increasingly possible).

Alternatively, substantial investment in an emerging technology at initially high costs per tonne CO 2 could help reduce the cost of capturing some emissions below $50/mt CO 2. The next section discusses the current costs of CO 2 capture from differ- ent sources, and the impact that a $1B investment might have in different areas.

Applications and Key Metrics

The cost of capturing CO

is

affected by the source of CO

,

size of the facility (scale), and

the technology maturity level.

These three of these factors are key to understanding the current landscape, and the impact of future investments in carbon capture

technologies. Capturing CO2 from gases with a higher CO2 content will cost less. Larger facilities will have lower costs per tonne of CO2 captured than small facilities, up to a point. Finally, the first facility built is always significantly more expensive, for a host of engineering and financial reasons. For emerging technologies, the first few facilities built will initially appear less cost competitive until the associated con- struction and manufacturing processes are standardized.

Carbon capture technologies are typically benchmarked by the cost (or expected cost) of capturing one metric tonne (1000kg) of CO 2 at commercial scale ($/mt of CO 2 ). This cost should include both the capital cost of purchasing the equipment and building the facility (CapEx), and operating expenses like utilities, labor, etc (OpEx).

The qualifier “at commercial scale” is critical because the per unit cost of capturing CO 2 (and producing most commodity products) falls as the facility size increases. As a first approximation, engineers often use “The 6/10ths Rule”: as size increases, costs generally increase by the size ratio raised to a factor of 0.6. For example, if a 100, mt/yr carbon capture facility costs $100mm to build, a 1 million mt/yr facility will cost $390mm. [18]

The cost of CO 2 capture also depends strongly on the source and CO 2 content of the gas. Some industrial processes (like ethanol production) produce nearly pure CO 2 that can currently be captured and utilized economically (at

Source

Ethanol & Ammonia Production Cement Production Power Plant, Coal Power Plant, Natural Gas Air

Commercial Pilot Scale Demonstration Scale Pilot Scale Pilot Scale

90% 20-30% 12-15% 3-4% 0.04% (400 ppm)

CO 2 Content

<$20/mt $55-65/mt $55-65/mt

$70/mt $200/mt

Cost of Capture Maturity

Table 1. Sources of CO 2 [21]

Building on these simple metrics, Life Cycle Assessments (LCAs) are increasingly important for businesses in the CO 2 mitigation space. An LCA goes beyond determin- ing the cost of CO 2 avoided to estimate the total impact of the project on other emis- sions, water, and land use over the project lifetime. For credit-based incentives such as California’s Low Carbon Fuel Standard (LCFS), an LCA is required to determine net emissions that result from making and burning the fuel.

Sources of CO (^2)

The source of CO2 significantly affects the cost and type of carbon capture technology used, so it’s worth additional discussion.

Sources of CO 2 vary widely in composition, from the low quantities found in air ( parts per million, ppm) to greater than 90% produced in fermentation processes (e.g. making beer and bio-ethanol production). The typical CO 2 content of different gases and estimated cost of capture are shown in Table 1. [21]

To visualize why carbon capture from concentrated sources like cement production and coal-fired power plants is cheaper than capturing it from a more diluted source like air, think about how much easier it is to pick a pint of blueberries when there are tons of blueberries on a bush, versus at the end of the season when very few are left. Capturing CO 2 from a concentrated source is like picking berries on a farm, where you are likely limited by how fast you can pick, rather than searching a large area for blueberries.

Likewise, a key difference between capturing CO 2 from air versus a concentrated source like a power plant is the amount of air you need to gather, process to gather a single tonne of CO 2. The concentration of CO 2 in air is 100 times lower than the exhaust from natural gas power plants, and 300 times lower than the exhaust from burning coal. [22] Direct air capture systems must handle hundreds of times more gas, requiring much larger equipment and more energy to capture the same amount of CO 2.

Existing carbon capture facilities in the US capture CO 2 from sources with high CO 2 contents. Of the 17 million metric tonnes (mm mt) of CO 2 captured in the US in 2018, 14 mm mt came from low-cost, almost pure CO 2 sources such as ethanol production, natural gas processing, and excess CO 2 at ammonia plants, with costs less than $20/mt CO 2. [21] Since the gas from these sources already contains >90% CO 2 , it is more cost effective to remove the other components (mostly water) rather than “cap- ture” the CO 2 — this is why the cost is so low. An additional ~1mm mt/yr is captured from bioethanol production at ADM’s Illinois Carbon Capture and Storage project and sequestered in an underground saline reservoir rather than being sold. The remaining 2–3mm mt/yr came from true carbon capture facilities, including NRG’s Petra Nova project (1.4mm+ mt/yr), and the Port Arthur hydrogen plant project operated by Air Products (1mm mt/yr). All received significant grants from the DOE’s National Energy Technology Laboratory (NETL).

A notable non-point source project on the horizon is the proposed engineering study and collaboration between Carbon Engineering (a direct air capture company) and Occidental Petroleum to determine if a 1mm mt CO 2 /yr facility in the Permian Basin of TX is economically viable. The facility would be powered by cheap surplus natural gas, the captured CO 2 would be used for EOR, and Occidental could potentially claim a “carbon negative barrel of oil” eligible for LCFS and 45Q credits.

This example underlines the value of co-locating carbon capture with a) transport or storage infrastructure and b) cheap energy. For any CO 2 captured to be monetized, it must be transported to where it can be utilized, stored or sequestered. Storing and sequestering CO 2 is a major logistical challenge; if there are not enough “cheap tonnes” of CO 2 in a given region to justify a pipeline, storage facility, or utilization facility, more expensive sources of CO 2 may come into play.

Looking ahead, many experts think that carbon capture from dilute sources (and particularly direct air capture) will not see significant traction until after more con- centrated sources are exhausted, given the higher cost of capture. However, there are some cases where public incentives, environmental regulations, transportation con- siderations, and business plan innovation can create opportunities for seemingly less cost-effective technologies.

The challenges associated with cost-effectively removing the small amount of CO2 in air require process designs and adsorbents that are very different from point-source technologies. This generally leads to higher capital and operating costs to capture CO 2 from air. Estimated costs of $90–250/tonne CO 2 for DAC systems at commercial scale were published in a 2019 report from the US National Academy of Sciences.

However, direct air capture (DAC) facilities have the advantage that they can be locat- ed anywhere, including next to cheap energy sources, CO 2 utilization facilities, or sequestration sites. Unlike point-source carbon capture technologies, which reduce industrial emissions (bringing them closer to carbon neutral), DAC technologies are negative emissions technologies (NETs). Analyses from numerous groups, including the International Panel on Climate Change (IPCC), indicate that NETs and specifically carbon capture and storage will be required to limit global temperature rise to < degrees C. [27] The capture costs at the low end of the NAS range may be economically viable with a sufficient market price for CO 2 coupled with growing public or private incentives.

Overview

Before diving into specific technologies, here is a brief overview of carbon capture approaches that have seen significant traction. The most mature technologies are liquid absorption processes that are similar to the CO 2 removal systems used in the oil and gas industry. The gas containing CO 2 is bubbled through a liquid (called a “solvent”), which absorbs CO 2 and lets the rest of the gas pass through. Many liquid- based technologies use a family of chemicals called “ amines ” that react strongly with CO 2. Other liquid-based approaches use liquids that dissolve the CO 2 but don’t chemically react with it ( physical solvents ).

Other technologies utilize solid materials called “adsorbents” (note the “ad-” for solids vs “ab-” for liquids) to trap and later release CO 2 in a similar reversible process. The gas or air is passed through a container of solid material (much like an air filter) that traps CO 2.

Advances in membrane technologies over the last decade have led some teams to include membranes in their carbon capture designs, particularly for gases with high CO 2 contents. Membranes are thin sheets of material which only allow certain gases to pass through, in this case CO 2.

Some companies combine carbon capture and storage with mineralization techno- logies. In these technologies, CO 2 is permanently converted to a mineral: limestone (a component of concrete), baking soda, or other useful inorganic products. These technologies avoid many of the challenges of gas pre-cleaning and CO 2 purification, but may be limited by the demand for the final product.

CO 2 capture companies generally focus on either capturing CO 2 from point-sources (emissions from power plants, chemical plants, cement production, etc.), or on cap- turing CO 2 directly from the air (DAC). Liquid absorption processes and membranes are used almost exclusively for point source CO 2 capture. Most companies developing DAC systems are using solid adsorbent or carbonate formation approaches, although these approaches have been used for point source capture as well.

Liquid Absorption with Amines

The oil and gas industry has been using liquid “ amine scrubbers ” to remove the CO 2 present in natural gas coming up from oil and gas fields since the 1930s. The process of capturing CO 2 from emissions is not the same as removing CO 2 from natural gas for several reasons. The pressure of the natural gas is 20–100 times higher and differ- ent contaminants are present. Still, much of the engineering and equipment design is the same, and this is by far the most mature carbon capture technology. A large number of companies including oil majors (Equinor/Statoil, Shell), established tech- nology providers (e.g. Fluor), and startups (ION Engineering, Carbon Clean Solutions)

Treated gas

Gas

CO 2

Solvent

Solvent

Solvent + CO (^2)

ABSORBER STRIPPER

Pump

Heat

Basic overview of a liquid absorption process