A Green Future for Captured Carbon

In the prior post, evidence was presented for the necessity of carbon capture deployment in order to avoid triggering irreversible climate changes within the next two decades.  As noted there, attempts to develop commercial scale capture facilities have thus far languished.  This post will examine the factors hampering commercialization and review technical and regulatory advances required for widespread deployment of emissions capture technology.  In the absence of strong disincentives for emitting carbon, carbon capture technology will be most efficiently developed and deployed via converting carbon, either chemically or biologically, into valuable end products.  Algae, one of the planet’s earliest and most prodigious carbon devourers, offer an attractive means of doing just this.

Existing Capture Efforts

The conversation regarding carbon capture alternative has been dominated by carbon capture and sequestration (CCS), wherein captured CO2 is pressurized, transported to and injected into underground reservoirs.  Commercial scale projects have focused on the post-combustion absorption of CO2 from flue gas, as this technique is the best candidate for retrofitting existing plants.  Globally, there has been little economic rationale for undertaking such a retrofit.  This capture infrastructure has significant upfront and operating expenses; additionally, pressurizing and transporting the captured CO2 consumes electricity, requiring the plant to increase its fuel consumption to meet customer demand.

Commercial CCS projects operating or under construction have been supported by mandates and funding from governments eager to accelerate technology development and emissions reductions, not by emitters seeking a competitive edge.  However, tightening regulations threaten to change this; capturing emissions could keep carbon-heavy assets from being retired early (“stranded”) in the face of increasingly stringent emissions limits or mounting fines.

Mandating CCS retrofits, limiting emissions or fining emitters all require political will and a long-term commitment to supporting carbon reductions.  Even in times of political stability, these are tough to come by.  First-of-a-kind commercial scale carbon capture facilities have been behind schedule, significantly over budget, and underperforming, as every engineer expected; progressing along a learning curve to increase efficiency and drive down costs is a critical stage in the development of any emerging technology.  (Note: the budgetary and timeline setbacks at the Kemper IGCC capture facility in MS, often pointed to as a proof-of-concept for coal carbon capture, have been at least partially driven by managerial decisions prioritizing attaining federal subsidies over robust engineering.)

When these projects are taxpayer funded, and even environmentalist sentiment is uncertain, political support tends to evaporate rapidly in the face of such setbacks.  For capture projects to be economically attractive to carbon emitters, and technology development to therefore be market-driven rather than mandated, there must exist either an economic disincentive (e.g. price on carbon) or incentive (e.g. price premium on low carbon goods, valuable uses for captured carbon,).

Carrot vs. Stick: How incentives and disincentives can drive carbon capture development

The additional cost of capturing and storing carbon from fossil energy generators dictates what the carbon price would have to be to incentivize investment in capture technologies.  For first-of-a-kind capture plants, these costs are likely to range from $100 to $150 per metric ton of CO2 (mT CO­2) captured, with the learning curve expected to drive costs down to $30 to $50 per mT CO2.  With the exception of the ever-progressive Swedes, such costs exceed (significantly) levied carbon prices and the value of tradable carbon credits around the planet.  The political feasibility of implementing a national carbon price in the United States, much less one that would stimulate investment in CCS, is challenged by the broader toxicity of the global warming rhetoric in this country.  While tax credits in the US aimed at incentivizing usage or storage of captured carbon have received bilateral support, the credits are too small ($10/mT CO2 for usage, $20/mT CO2 for storage) to offset the extra capital expense and energy penalty associated with current capture technology.

Carbon footprint labeling has the potential to affect consumer willingness to pay for low carbon goods, provided that a methodology for determining life cycle emissions can be standardized.  The price premium garnered by organic foods, based upon customer perception of the animal welfare, human health, and environmental benefits of such goods, makes a strong case for the potential efficacy of eco-labeling to promote low carbon items.  In the meantime, governments can accelerate capture technology development by replicating the attractive margins provided by market premiums with targeted producer incentives.

The development of advanced biofuel production systems has benefitted from federal production tax credits, available only to systems demonstrating significant carbon emissions reductions relative to conventional fuels.  Applying life cycle analysis to carbon utilization projects would identify opportunities to displace other petroleum derived products with captured carbon-based feedstocks; making available similar tax credits could spurn the development of such systems and thereby accelerate the elimination of fossil energy emissions.  Technological maturation and increasing customer perception of the added value of such goods would allow these subsidies to fade, with market-competitiveness driving further innovation.

Captured carbon usage (CCU) has gained interest as a means of incentivizing emissions capture by generating a new revenue stream from the many valuable uses of CO2.  One of the biggest potential markets for captured carbon has been in enhanced oil recovery (EOR); injecting CO2 into wells allows oil producers to recover up to an additional two-thirds of that extracted via traditional drilling.  However, the goal of reducing global CO2 emissions should stay at the fore when considering opportunities for using captured carbon.  The life cycle emissions from using captured CO2 from electricity generation to extract more crude tend to be greater than those from electricity generation with carbon sequestration (how much greater depends on the accounting).

These uses are valuable insofar as they are able to offset demand for carbon intensive products; if oil produced from an EOR operation using captured CO­2 offsets demand for extremely energy intensive tar sands-produced crude, it could generate life cycle emissions reductions.  Finding valuable uses for captured carbon can provide emitters an economic incentive to reduce emissions, providing lower-carbon energy from existing infrastructure during the development of a fully cost-competitive, reliable renewable energy system.

Can algae (finally) come through?  The case for biological carbon capture and usage

Algae has lately made waves as a source of environmental damage, not benefit; nutrient runoff into waterways allows these microscopic plants to grow rapidly, choking off oxygen supply to aquatic ecosystems.  This characteristic rapid growth rate, combined with the ability of algal cells to accumulate more than half their cell weight in energy-rich oils, has driven interest in algal biofuels production since the 1950s.  Critically, with a photosynthetic efficiency up to 40% greater than land-based crops, algae are capable of converting gaseous CO2 into biomass rapidly enough to open applications for point source carbon capture.  While many studies (this one, for example) have proven the ability of certain varieties of algae to remove CO2 from coal and natural gas power plant exhaust streams, this concept has yet to be proven at commercial scale.  What sort of environmental benefits could such a system provide?

Consider a 300 MW coal plant combusting lignite coal with a 58% capacity factor.  With an average of .98 kg CO2 emitted per kWh electricity produced, such a facility produces roughly 1.5 million metric tons of CO2 per year (mT CO2/yr).  Roughly half of each algae cell is carbon; assuming the growth system can capture 80% of the CO2 emitted (average carbon utilization efficiency for enclosed growth systems), such a coal plant would produce 6.6 million metric tons of algae per year with reducing direct atmospheric emissions to 300,000 mT CO2/yr.  From the power plant’s perspective, investing in the algal capture infrastructure allows them to reduce atmospheric CO2 emissions from electricity generation by 80%.  However, unless these emissions have an associated cost to the power plant, it has no incentive to build the capture infrastructure unless the produced algae provides value.

A primary motivation for the investigation of industrial algae production is the vast array of commercially valuable products that these microscopic plants can generate.  While whole algal biomass has been used as an alternative for chemical fertilizers and as feed for livestock and fish, these “cell factories” can be harnessed to produce high volume, low value biofuels as well as low volume, extravagantly high value specialty chemicals.  Indeed, these high value products have sustained many algae companies whose biofuel margins have disappeared as crude prices have bottomed out.  The ability of a single facility to produce both specialty and commodity products has led to great interest in algal “biorefineries” that mitigate market risk with a diverse product mix.  For the purposes of this post, we’ll be conservative and consider only the production of algal biofuel.

Let’s assume our 6.6 million metric tons of algae is sent to a conventional (i.e. transesterification) biodiesel conversion process with a combined (i.e. algae harvesting, dewatering, lipid extraction and conversion) efficiency of 64%.  In this manner, the captured CO2 in the biomass is converted into 31 million gallons of biodiesel, the energy equivalent of 29 million gallons of diesel.  From a life cycle perspective, producing this biodiesel with captured carbon offsets the conventional production of diesel from crude, and therefore avoids the emissions associated with exploration, drilling, and refining crude oil (since the biodiesel combustion emissions are releasing the carbon captured from coal combustion, combustion of this biofuel is not considered “carbon neutral”).  By displacing the production of 29 million gallons of diesel, the algal biofuel carbon capture facility avoids 45,000 metric tons of diesel production CO2 emissions per year, resulting in net emissions for the coal-fired electric plant of 255,000 metric tons CO2 per year (an 83% reduction).  Offsetting energy intensive diesel production makes the use of captured carbon-grown algal biomass to produce biodiesel to achieve greater emissions reductions than would simply storing the algal biomass.

Making such a system a reality requires consideration of several financial and technical parameters.  The economic case for the power producer is as yet unclear, due to uncertainty regarding the capital expenses of a commercial scale capture facility.  Assuming a biodiesel price of $2.80 (average sale price in April 2016), annual revenues from algal biodiesel sales come to $81,200,000 per year; regional production tax credits, accelerated depreciation of capture and conversion infrastructure, and loan guarantees may further strengthen the viability of such a system.

The emissions reductions of such a system are closely linked to several operational parameters, particularly the capture and conversion efficiency.  The assumed efficiency of carbon capture of 80% is only possible when algae are grown in enclosed reactors, currently considered prohibitively expensive for commercial scale algal biofuels systems.  Open pond cultivation is a lower cost alternative to enclosed reactors; with an uptake efficiency of roughly 20%, capture via ponds would result in the coal plant in our example having net emissions of 1.2 million metric tons of CO2 annually, a 21% emissions reduction, with only 7 million gallons of conventional diesel displaced.

Further, the above example assumes that low-quality energy, generally wasted from power plants (especially older coal plants) is available to meet the demands for algal growth and conversion system.  If power plant electricity is cannibalized from plant output, fuel costs to meet customer demand will rise and the benefits of the capture system will be reduced.

Concluding thoughts

Capturing emissions from existing energy infrastructure, which might otherwise be shuttered ahead of schedule in the face of tightening regulations or rising carbon costs, and emerging fossil infrastructure in developing regions will be critical to staying within globally recognized warming thresholds.  In this manner, carbon capture can serve as a low-carbon bridge, allowing the use of existing infrastructure and resources to power the development of a reliable, low cost, zero-carbon energy system.  In time, the fuel costs associated with fossil energy generation will make them uncompetitive with advanced renewables, and the era of mankind’s dependence on fossil fuels will conclude.  Finding valuable uses for captured carbon offers the opportunity to accelerate emissions reductions during this transition, incentivizing the development and installation of revenue-generating capture technologies.  With a broad range of possible products, ranging from high value/low volume specialty chemicals to low value/high volume biofuels, algal carbon capture facilities can help make an economic case for emissions reductions.

Photo Credit: Dave Sizer via Flickr