Transcript Slide 1

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Accelerating Deployment of CCS:
A Trust Fund Approach
Based on papers written by
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Vello Kuuskraa;
Naomi Pena and Edward Rubin
Pew Center On Global Climate Change
Coal Initiative
Washington Coal Group
January 9, 2008
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The Pew Center’s Coal Initiative
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Addressing emissions from coal-fueled
power plants
I. U.S. Policy Options
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a) Standards
b) Trust fund (Pena and Rubin)
II. U.S. Technology Solutions (Kuuskraa)
III. State-level Opportunities
IV. Options for China and India
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Presentation Overview
I.
The need for carbon capture and
sequestration (CCS)
Options to accelerate use of CCS
A program that covers incremental costs
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III.
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IV.
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Program components
Alternative scales and objectives
First order cost estimates
A trust fund to manage the program
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U.S. trust funds
Lessons learned
Design Features
Considerations for the Coal Community
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The Need for CCS
1. 30% of U.S. and 80% of U.S. electricity
sector CO2 emissions come from coal
2. These emissions must be significantly
reduced to address climate change
3. CCS is the only suite of technologies
that currently has promise to enable
coal to be a major electricity-sector
energy source while meeting climate
objectives.
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Current Barriers to CCS Deployment
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• High expected costs (~30-70% increase
in cost of electricity)
• Large losses in net electricity output
• Lack of experience with technologies,
particularly at-scale, integrated use in the
utility sector
• Regulatory uncertainty, including liability
• Current lack of regulatory drivers
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How CCS Might be Accelerated
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Stringent enough cap on CO2
Mandate on generators or retailers
(standards)
Tax credits (must be revenue neutral)
State & regional policies; PUC actions
Program that pays incremental costs
of CCS
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Program Description
• Cover incremental costs of CCS
(installation; O & M for 5 years; reimburse
revenue lost due to reduced generation)
• Test CCS technologies for:
– Alternative electric generation technologies
(PC, IGCC, new & retrofit)
– Different coal types
– Different geologic settings
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Program Size and Cost
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• Sufficient funds for:
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~10 plants (500 MW) + 5 other large-point
sources
~30 plants (500 MW) + 10 other sources
• Average per 500 MW unit
– High: $950 million
– Low: $730 million
• Total Program Costs (10 -15 years)
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– Smaller program: $8-10 billion
– Larger program: $24 - $30 billion
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How to Pay for the Program?
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•Fees on electricity generated
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– Coal-fueled generation only
– All fossil fuel generation
– All electricity generation
•Fees on coal
•Allowances
•Other
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Scale of Fees if per kWh on Coal
Based on current generation from coal:
• Smaller program: $0.0004 to $0.0005 per
kWh
• Larger program: $0.0011 to $0.0014 per kWh
Costs (and fees) decline as:
• As coal-fueled generation increase
• Costs of CCS decline
Costs (and fees) could be reduced by:
• Requiring cost-sharing
• Supporting fewer projects per year
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Trust Fund Basics
Trust funds can:
• Raise and administer large sums
• Ensure that funds are dispersed only for
specified purposes
Federally established trust funds use
legislation to determine:
• Whether funds go into Treasury and
through annual appropriations or not
• The entity that manages the fund
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Some Successful U.S. Trust Funds
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• Highway Trust fund: $38 billion over 15
years; built new infrastructure across U.S.
• Propane Education and Research Council
– fees enabled by federal legislation; up
and running in 2 years
• Ultra-Deepwater and Unconventional
Natural Gas and Other Petroleum
Resources – managed by private
stakeholder group under DOE oversight.
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U.S. Experience: Key Lessons
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• Establish clear objectives
• Establish clear guidelines for program
termination
• Ensure reliability of fund dispersal:
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– insulate funds from annual appropriations
– do not use tax-credits
• Use independent or quasi-independent
entity to manage funds
• Self-financed programs survive
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Well-designed Trust Fund
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• Very rapid start-up possible
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• Reliable fund dispersal
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• Cost-effective: private-sector standards
for project selection and management
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• Transparent: stakeholder + experts control
under federal oversight
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Considerations for Coal Community
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Climate legislation is on the way
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Possibility of move away from coal if
CCS costs remain high
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Urgency of gaining CCS experience
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Means to quickly and cost-effectively
achieve deployment of CCS at coalfueled power plants
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For Further Information
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See papers at
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www.pewclimate.org/white_papers/coal_initiative
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1. A Program to Accelerate the Deployment of CO2
Capture and Storage: Rationale, Objectives, and
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Costs. 2007. Vello Kuuskraa
2. A Trust Fund Approach to Financing a CCS
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Deployment Program. 2008. Naomi Pena and
Edward Rubin.
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