Gas Week

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At $4500/kW, cost for new integrated gas combined cycle plant (IGCC) with carbon capture not sustainable; new thinking needed round CO2 disposal

Posted by gasweek on 25 September, 2007

A senior Rio Tinto executive, Andy Lloyd, had said that a conventional power plant that cost $1300 a kilowatt in 2003 now costs $2500/kW, reported The Australian Financial Review (22/9/2007).

Economically and politically unsustainable: Lloyd estimated the cost for a new integrated gas combined cycle plant (IGCC) with carbon capture and sequestration (CCS) at $4500/kW. This sharp rise was chewing up funds previously expected to fully cover the costs of installing CCS equipment. Lloyd said operational costs would be higher too, as CCS could use up to 30 per cent of a plant’s gross power output. Costs should fall as power companies “learn by doing” when running new plants, but it would be a “big mistake” for governments to sit back and think an emissions trading scheme would fix everything. Lloyd said: “A very high price on carbon would be necessary to deploy this technology [IGCC-CCS] at current costs. This would not be economically or politically sustainable. For the first-of-a-kind plant, emissions trading is not an adequate tool to encourage the investment required.”

Early cost estimates for CO2 dumps too optimistic: The Australian Business and Climate Group, which includes Rio, BP, Santos and Anglo Coal, acknowledged that government help would also be needed to provide a “technology push” for the large scale deployment of other clean energy sources such as solar and geothermal. “While this can easily be dismissed as just another business plea for a handout,” said the AFR, “the sobering reality is that earlier estimates of the cost of CCS now look too optimistic. Precise figures weren’t available… but it looks like being hard to get below $40 to $50 a tonne of CO2, in the next decade or two. Consequently, it makes no sense for governments to forgo revenue to assist movement down the cost curve in the early stages of deployment.”

Rethinking alternatives to CO2 dumps: Yet Labor and the coalition don’t intend to auction all emissions permits in the proposed new trading scheme and will even exempt some sectors entirely,” the newspaper said. “The US national laboratory at Los Alamos proposes gasifying coal to make electricity and converting the CO2 byproduct into a mineralised carbonate for use as a building material. Another idea involves using solar energy, plus a source of hydrogen, to convert CO2 into methanol for use as a transport fuel or chemical feedstock. None of these proposals may prove commercially feasible, but contributing to a serious research program would seem justified. Otherwise, the coal industry’s future will rely on a costly business model for burying vast amounts of waste while costs for clean competitors such as solar, geothermal, wave and wind continue to fall.”

The Australian Financial Review, 22/9/2007, p. 62

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