Lighting the Way: Toward a Sustainable Energy Future

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  • 3.1 Fossil fuels

    Fossil fuels—coal, petroleum, natural gas, and their byproducts—supply approximately 80 percent of the world’s primary energy needs today. Use of these fuels drives industrialized economies and has become integral to virtually every aspect of productive activity and daily life throughout the modern world. Yet almost from the beginning, humanity’s steadily growing dependence on fossil fuels has been a source of anxiety as well as prosperity. As early as 1866, when the Industrial Age was just getting underway, the British author Stanley Jevons wondered how long his country’s coal reserves would last. Coal turned out to be a more abundant resource than Jevons could have imagined, but similar questions have long been asked about the world’s petroleum and natural gas supply. More recently, concerns about global climate change have emerged as a new—and perhaps ultimately more limiting—constraint on the long-term sustainability of current patterns of fossil-fuel use.

    Those patterns suggest that fossil fuels will continue to play a dominant role in the world’s energy mix for at least the next several decades, even with concerted efforts to promote energy efficiency and non-carbon alternatives. How to manage and improve humanity’s use of coal, petroleum, and natural gas resources during the transition to a more sustainable energy future—and in particular, whether it is possible to do so in ways that begin to mitigate climate change and energy security risks while also responding to the urgent energy needs of developing countries—is therefore a key question for policymakers and political leaders the world over. This section describes the specific challenges that exist today in connection with each of the major fossil fuel options. A significant portion of the discussion focuses on the prospects for a new generation of climate-friendly coal technologies because of the unique potential they hold for advancing multiple economic, development, energy security, and environmental policy objectives.

    Status of global fossil-fuel resources
    As context for this discussion, it is useful to begin by reviewing the status of fossil fuel resources in relation to current and projected patterns of consumption. Table 3.1 shows proved reserves of natural gas, oil, and coal relative to current levels of consumption and relative to estimates of the total global resource endowment for each fuel. Proved reserves reflect the quantity of fuel that industry estimates, with reasonable certainty based on available geological and engineering data, to be recoverable in the future from known reservoirs under existing economic and operating conditions. Proved reserves generally represent only a small fraction of the total global resource base. Both figures tend to shift over time as better data become available and as technological and economic conditions change. In the case of oil, for example, estimated reserves grew for much of the last half century because improved extraction capabilities and new discoveries more than kept pace with rising consumption. This has begun to change










    Note: Under Resource base, 1 zettajoule (ZJ) equals 103 exajoules (EJ). Resources are defined as concentrations of naturally occurring solid, liquid, or gaseous material in or on the Earth’s crust in such form that economic extraction is potentially feasible. The Resource base includes proven reserves plus additional (conventional and unconventional) resources. Unconventional resources could extend lifetime of oil, gas, and coal by a factor of 5-10, but their extraction will involve advanced technologies, higher costs, and possibly serious environmental problems

    Sources: (a) UNDP, UNDESA, WEC, 2000: Table 5.7. (b) BP, 2007

    in recent years, however, prompting concern that oil production could peak within the next few decades leading to a period of inevitable decline in available supplies.

    Global coal supplies—both in terms of known reserves and estimated total resources—are far more abundant than global supplies of conventional oil and natural gas (Table 3.1); for the latter fuels, the ratio of known conventional reserves to current consumption is on the order of 40–60 years, whereas known coal reserves are adequate to support another 150 years at 2006 rates of consumption. Obviously, any estimate of known reserves—since reserves are a measure of the resource base that is economically retrievable using current technology—is subject to change over time: as prices rise and/or technology improves, estimated reserves can grow. Nevertheless, price and supply pressures are likely to continue to affect oil and natural gas markets over the next several decades (Table 3.1). The inclusion of unconventional resources greatly expands the potential resource base, especially for natural gas, if estimates of ‘additional occurrences’—that is, more speculative hydrocarbon deposits that are not yet technically accessible for energy purposes, such as methane hydrates—are included. This will be discussed further in the section on unconventional resources.

    In sum, near-term energy security and supply concerns are mostly relevant for oil and, to a lesser extent, for natural gas. These concerns are serious given the central role both fuels now play in the global energy economy. With the notable exception of Brazil, which uses substantial quantities of ethanol as a vehicle fuel, transportation systems throughout the world continue to rely almost exclusively on petroleum products. The rapid modernization of large developing countries like China and India, combined with stagnant or falling vehicle fuel-economy in major consuming countries like the United States and continued growth in freight and air transport, has sharply increased global oil demand in recent years, straining the capacity of producing countries and generating strong upward pressure on oil prices. Most of the world’s proven reserves of conventional oil are concentrated in a few large deposits in a few regions of the globe, most notably, of course, in the Middle East. Natural gas, meanwhile, is already an important source of energy in many parts of the world and—as the cleanest and least carbon-intensive fossil-fuel option—has an important role to play in mitigating greenhouse gas and other pollutant emissions in the transition to a next generation of energy technologies. Though remaining natural gas reserves are more widely distributed around the world than oil reserves, regional supply constraints and high prices are beginning to affect gas markets as well, driving investments to develop new resources and to expand global capacity for producing and transporting liquefied natural gas.

    Defining the sustainability challenge for fossil fuels
    For oil and natural gas, ther efore, the immediate policy challenge consists of finding ways to enhance and diversify supplies in an environmentally acceptable manner while, at the same time, reducing demand through improved end-use efficiency and increased use of alternatives such as biomass-based fuels (these topics are covered elsewhere in this report). Overall, however, the estimates in Table 3.1 suggest that resource adequacy per se is not likely to pose a fundamental challenge for fossil fuels within the next century and perhaps longer. Coal, in particular, is abundant—both globally and in some of the nations that are likely to be among the world’s largest energy consumers in the 21st century (including the United States, China, and India). At present, coal is used primarily to generate electricity (the power sector accounts for more than 60 percent of global coal combustion) and as an energy source for the industrial sector (e.g., for steel production). More recently, rising oil and natural gas prices have generated renewed interest in using coal as a source of alternative liquid fuels.

    Without substantial technology improvements, however, increased reliance on coal to meet a wider array of energy needs—while perhaps positive from an energy security standpoint—would have serious environmental implications. Coal combustion in conventional pulverized-coal steam-electric power plants and coal conversion to liquid or gaseous fuels using conventional methods—that is, without carbon capture and sequestration—generates substantially larger quantities of carbon dioxide than does the direct combustion of oil or natural gas. Of course, the carbon generated in the process of converting coal to liquid fuel can theoretically be captured and sequestered (although few if any recent proposals for coal-to-liquids production provide for carbon capture). The carbon in the resulting liquid fuel is still released, however, when the fuel is combusted, generating in-use greenhouse gas emissions similar to those associated with conventional gasoline or diesel fuel. From a climate perspective, therefore, coal-to-liquids technology generates emissions that are—at best—roughly equivalent to those of the conventional fuels it replaces. If carbon dioxide is not captured and sequestered as part of the conversion process, coal-to-liquids generate as much as two times the full fuel-cycle emissions of conventional petroleum.

    Thus, climate impacts, more than resource depletion, are likely to emerge as the most important long-term constraint on fossil-fuel use in general, and coal use in particular. Current means of utilizing fossil fuels all produce emissions of carbon dioxide, the primary greenhouse gas directly generated by human activities. Today’s known reserves total more than twice the cumulative consumption that occurred between 1860 and 1998 (Table 3.1). Even if future consumption of fossil fuels were limited to today’s known reserves, the result of burning these fuels (absent measures to capture and sequester resulting carbon dioxide emissions) would be to release more than double the amount of carbon that has already been emitted to the atmosphere. Accordingly, much of the remainder of this discussion focuses on the prospects for a new generation of coal technologies that would allow for continued use of the world’s most abundant fossil-fuel resource in a manner compatible with the imperative of reducing climate-change risks.

    Coal consumption is expected to grow strongly over the next several decades primarily in response to rapidly increasing global demand for electricity, especially in the emerging economies of Asia. At present, coal supplies nearly 40 percent of global electricity production; as a share of overall energy supply, coal use is expected to remain roughly constant or even decline slightly, but in absolute terms global coal consumption is expected to increase by more than 50 percent over the next quarter century— from 2,389 million tons oil equivalent in 2002 to 3,601 million tons oil equivalent in 2030, according to the most recent IEA (2006) reference case forecast. Increased consumption is all but inevitable given that coal is by far the most abundant and cheapest resource available to China and India as these countries continue industrializing and seek to raise living standards for hundreds of millions of people. China alone is expanding its coal-based electric-generating capacity by some 50 gigawatts per year, or the equivalent of roughly one large (1 gigawatt) power plant per week. At 1.9 billion metric tons in 2004, its coal use already exceeds that of the United States, Japan, and the European Union combined. At the annual growth rate of 10.9 percent in 2005, China’s coal consumption could double in seven years. India is in a similar situation with rapid economic growth and a population that is expanding more quickly than China’s.

    Advanced coal technology options
    Today’s dominant coal-using technologies involve the direct combustion of finely ground, or pulverized, coal in steam boilers. Older coal plants and coal plants in much of the developing world operate at relatively low rates of efficiency and generate large quantities of sulfur dioxide, nitrogen oxides, soot, and mercury as well as carbon dioxide. These pollutants create substantial public health risks, especially where emissions remain largely unregulated (as is the case in many developing countries). In some parts of the world, emissions from coal-fired power plants also contribute to pollution transport problems that transcend national and even continental borders. In addition, coal mining itself typically produces substantial local environmental impacts and poses significant health and safety risks to miners. Over time, pulverized coal technology has improved to achieve electricity-production efficiencies in excess of 40 percent and sophisticated pollution control technologies have been developed that can reliably reduce sulfur, nitrogen, particulate, and toxic air emissions by 97 percent or more. Importantly, these technologies do not reduce carbon dioxide emissions, which remain essentially uncontrolled in current conventional coal applications.

    Significant environmental benefits can therefore be achieved simply by raising the efficiency of conventional pulverized coal plants (thereby reducing fuel consumption and carbon emissions per unit of electricity generated) and by adding modern pollution controls. Figure 3.1 plots the average conversion efficiency of coal-fired power plants in different countries over time. The graph shows that several countries have achieved significant improvements in average efficiency over the last decade, but that further progress has slowed or plateaued in several cases. Remaining variation in average power-plant performance across different countries suggests there is room for further gains and that substantial carbon reductions can be achieved from efficiency improvements at conventional coal plants. Meanwhile, a new generation of coal technologies offers promise for further improving efficiency, generating useful co-products, and enhancing opportunities for cost-effective carbon capture and sequestration.

    Two technologies that improve on conventional pulverized coal technology have been under development for some time and are already in commercial use worldwide. So-called ‘supercritical’ systems generate steam at very high pressure, resulting in higher cycle efficiency and lower emissions. Currently, about 10 percent of orders for new coal-fired plants are for supercritical steam systems. Of the more than 500 units of this type that already exist, most are in the countries of the former Soviet Union, Europe, and Japan. Another technology, known as fluidized-bed combustion,


















    Figure 3.1 Efficiency of coal-fired power production

    Source: Graus and Worrell, 2006.

    was developed as early as the 1960s. By combusting coal on a hot bed of sorbent particles, this technology capitalizes on the unique characteristics of fluidization to control the combustion process. Fluidized-bed combustion can be used to burn a wide range of coals with varying sulfur and ash content while still achieving advanced levels of pollution control; currently, some 1,200 plants around the world use this technology. Fluidized-bed systems have actually become less common in power plant applications, however, because the technology is best suited for smaller-scale applications (e.g., 30 megawatt units).

    In contrast to supercritical or fluidized-bed systems, further advances in coal technology are likely to involve first gasifying the coal rather than burning it directly in pulverized form. Gasification converts coal (or potentially any carbon-containing material) into a synthesis gas composed primarily of carbon monoxide and hydrogen. The gas, in turn, can be used as a fuel to generate electricity; it can also be used to synthesize chemicals (such as ammonia, oxy-chemicals, and liquid fuels) and to produce hydrogen. Figure 3.2 describes the potential diversity of applications for coal gasification technology in schematic form.

    Gasification technology itself is well developed (worldwide, some 385 modern gasifiers were in operation in 2004), but historically it has been used primarily in industrial applications for the production of chemicals, with electricity generation as a secondary and subordinate process. More recently, interest has focused on coal-based integrated gasification combined cycle (IGCC) technology as an option for generating electricity.










    Figure 3.2 From coal to electricity and usable products

    The gasification process not only allows for very low emissions of conventional pollutants, it facilitates carbon capture and sequestration and allows for the simultaneous production of valuable co-products, including liquid fuels. Given that high levels of pollution control can also be achieved in state-of-the-art pulverized coal plants, the latter two attributes provide the primary motivation for current interest in coal IGCC.

    The first IGCC power plant was tested in Germany in the 1970s, but commercial-scale applications of this technology for electricity generation remain limited to a handful of demonstration facilities around the world. This situation may change significantly in the next few years, given rapidly growing interest in IGCC technology and recent announcements of a new round of demonstration plants in the United States and elsewhere. At the same time, concerns about cost, reliability, and lack of familiarity with IGCC technology in the electric power industry are likely to continue to present hurdles for some time. Cost estimates vary, but run as much as 20–25 percent higher for a new coal IGCC plant compared to a conventional pulverized coal plant, particularly if the conventional plant lacks modern pollution controls for sulfur and nitrogen oxide emissions. In addition, gasification-based processes are more sensitive to coal quality; from a cost perspective, the use of coals with lower heating values further disadvantages IGCC technology relative to the conventional alternatives. This may be a significant issue in countries like China and India that have large deposits of relatively poor-quality coal.

    The higher cost of coal IGCC technology can obviously create a major impediment in some developing countries where access to capital may be constrained and where competing economic and development needs are particularly urgent. Often, advanced coal systems are also more complicated to construct and operate and more difficult to maintain. This need not be an impediment per se (apart from the cost implications) since construction and operation can usually be outsourced to large multinational companies, but the need to rely on outside parts and expertise may be viewed as an additional disadvantage by some countries. To overcome these obstacles, some countries have adopted incentives and other policies to accelerate the demonstration and deployment of IGCC technology, but the vast majority of new coal plants proposed or under construction in industrialized and developing countries alike still rely on pulverized coal technology. Given that each new facility represents a multi-decade commitment in terms of capital investment and future emissions (power plants are typically expected to have an operating life as long as 75 years), the importance of accelerating the market penetration of advanced coal technologies is difficult to overstate.

    Future efforts to speed the deployment of cleaner coal technologies generally and IGCC technology in particular will be affected by several factors: the cost of competing low-emission options, including post-combustion carbon capture and sequestration for conventional coal technologies as well as natural gas and renewable technologies; the existence of continued support in the form of incentives, public funding for related research and development (R&D) activities, and favorable regulatory treatment; and—perhaps most importantly—the evolution of environmental mandates, especially as regards the control of greenhouse gas emissions.28 The next section of this chapter provides a more detailed discussion of the prospects for different coal technologies—including conventional pulverized coal technology and oxy-fuel combustion as well as coal gasification—in combination with carbon capture and sequestration. Among other things, it suggests that for power production alone (that is, leaving aside opportunities to co-produce liquid fuels), the cost advantages of familiar pulverized coal technology relative to IGCC could largely offset the cost disadvantages of post-combustion carbon capture. Another important finding is that sequestration is not currently expected to pose any insurmountable challenges, either from the standpoint of available geologic repositories or from the standpoint of the technology needed to capture, transport, and inject carbon waste streams. Nevertheless, carbon capture and sequestration will generally represent an added cost (except perhaps in some instances where it can be used for enhanced oil recovery) and experience with sequestration systems at the scale necessary to capture emissions from commercial power plants remains limited at present.

    Whichever technology combination proves most cost-effective and attractive to the investors, the price signals associated with future carbon constraints will need to be predictable and sufficient in magnitude to overcome remaining cost differentials when those cost differentials reflect not only the cost and risk premium associated with advanced coal technologies but the cost and feasibility of capturing and sequestering carbon. Progress toward reducing those cost differentials would greatly enhance the prospects for a successful transition toward sustainable energy systems given the relative abundance and low cost of the world’s coal resource base. Besides providing electricity, advanced coal gasification systems with carbon capture and sequestration could become an important source of alternative transportation fuels.

    Technologies already exist for directly or indirectly (via gasification) converting solid hydrocarbons such as coal to liquid fuel. Such coal-to-liquids systems may become increasingly attractive in the future, especially as countries that are coal-rich but oil-poor confront rising petroleum prices. Unfortunately, existing liquefaction processes are energy intensive, require large quantities of water, and generate very substantial carbon emissions. Modern, integrated gasification systems that produce both electricity and clean-burning liquid fuels offer the potential to greatly improve overall cycle efficiency and environmental performance, especially if coupled with cost-effective carbon capture and sequestration.

    In the near future, new coal IGCC facilities are most likely to be constructed in the United States, Japan, and—to a lesser extent, given relatively small growth in overall coal capacity—the European Union. Some developing countries, notably China and India, have also expressed strong interest in this technology. In sum, knowledgeable observers express different degrees of optimism (or pessimism) about the prospects for accelerated diffusion of advanced coal technologies, but there is little disagreement about the nature of the obstacles that stand in the way or about how much may be at stake in successfully overcoming them.29

    Carbon capture and sequestration
    Successful development of carbon capture and sequestration technology could dramatically improve prospects for achieving the goal of reducing greenhouse gas emissions. From a technical standpoint, several options exist for separating and capturing carbon either before or after the point of fuel combustion. In addition, the magnitude of potentially suitable storage capacity in geologic repositories worldwide is thought to be sufficient to accommodate many decades (and perhaps centuries) of emissions at current rates of fossil-fuel use. At the same time, however, substantial hurdles must be overcome: large-scale efforts to capture and sequester carbon will add cost, will require additional energy and new infrastructure (including pipelines to transport the carbon dioxide to sequestration sites and wells to inject it underground), may necessitate new institutional and regulatory arrangements, and may have difficulty winning public acceptance. Operational experience to date with some of the requisite systems for implementing carbon capture and sequestration has come primarily from the chemical processing, petroleum refining, and natural gas processing industries and from the use of compressed carbon dioxide for enhanced oil recovery. Several demonstration projects specifically aimed at exploring carbon capture and sequestration as a greenhouse gas-reduction strategy are now proposed or underway and two industrial-scale facilities are currently implementing carbon dioxide storage for the sole purpose of avoiding emissions to the atmosphere. Nevertheless, large-scale deployment of such systems is likely to continue to be slow—except in those instances where enhanced oil recovery provides favorable economic opportunities—without compelling regulatory or market signals to avoid carbon dioxide emissions.


    The most straightforward way to capture carbon from fossil energy systems is to recover it after combustion from the flue gases of large combustors such as power plants. On a volume basis, carbon dioxide typically accounts for between 3 percent (in the case of a natural gas combined-cycle plant) and 15 percent (for a coal combustion plant) of the flow of exhaust gases from such facilities. Though several options for post-combustion capture are available, the preferred approach exploits a reversible chemical reaction between an aqueous alkaline solvent (usually an amine) and carbon dioxide.

    Because this approach involves separating carbon dioxide at relatively low concentrations from a much larger volume of flue gases, and because the regeneration of amine solvent and other aspects of the process are energy intensive, post-combustion carbon capture carries significant cost and energy penalties. According to a IPCC (2005) literature review, the fuel requirements for a new steam electric coal plant with an amine scrubber are anywhere from 24–40 percent higher than for the same plant venting carbon dioxide. Put another way, carbon capture reduces the efficiency of the power plant such that its electricity output per unit of fuel consumed is reduced by 20–30 percent.

    Another approach, known as oxy-fuel combustion uses oxygen instead of air for combustion producing an exhaust stream that consists primarily of water and carbon dioxide. This option is still under development. A third approach is to separate carbon prior to combustion by first converting the subject fuel to a synthesis gas composed primarily of carbon monoxide and hydrogen. The carbon monoxide in the synthesis gas is then reacted with steam to form more hydrogen and carbon dioxide. Typically, carbon dioxide is removed from the synthesis gas using a physical solvent that does not chemically bind the carbon dioxide as amines do. At that point, the favored approach for electricity production is to burn the remaining hydrogen-rich synthesis gas in a gas turbine/steam turbine combined-cycle power plant. Alternatively, the process can be adjusted to leave a higher carbon-to-hydrogen ratio in the syngas and then convert it, using Fischer-Tropsch or other chemical processes, to synthetic liquid fuels.

    Efforts to explore pre-combustion carbon capture have mostly focused on IGCC technology to generate power using coal, petcoke or other petroleum residues, or biomass. The gasification process offers potential benefits—and some offsetting cost savings—with respect to conventional-pollutant control. On the other hand, it remains for now more expensive and—until more experience is gained with full-scale demonstration plants—less familiar than conventional combustion systems in power plant applications. However, interest in advanced coal systems has intensified significantly in recent years; and the marketplace for IGCC technology, at least in some parts of the world, now appears to be evolving rapidly.

    Coal IGCC accounts for less than 1 gigawatt-electricity out of the 4 gigawatts-electricity of total IGCC capacity that has been built—most of the rest involves gasification of petroleum residues. While there has been only modest experience with coal IGCC without carbon capture, experience with gasification and capture-related technologies in the chemical process and petroleum-refining industries makes it possible to estimate capture costs for coal IGCC with about the same degree of confidence as for conventional steam-electric coal plants. Importantly, the decisive advantage of coal IGCC in terms of carbon capture is for bituminous coals, which have been the focus of most studies. The situation is less clear for subbituminous coals and lignites, for which very few IGCC analyses have been published. More study is needed to clarify the relative ranking of carbon capture and sequestration technologies for lower-quality coals.

    The IPCC (2005) literature review summarized available information on carbon capture and sequestration costs. It concluded that available methods could reduce carbon dioxide emissions by 80–90 percent and that, across all plant types, the addition of carbon capture increases electricity production costs by US$12–36 per megawatt-hour. The IPCC review further concluded that the overall cost of energy production for fossil-fuel plants with carbon capture ranged from US$43–86 per megawatt-hour. The cost for avoiding carbon dioxide emissions (taking into account any extra energy requirements for the capture technology and including the compression but not the transport of captured carbon dioxide) ranged from US$13–74 per metric ton of carbon dioxide.

    According to the IPCC, most studies indicated that ‘IGCC plants are slightly more costly without capture and slightly less costly with capture than similarly sized [pulverized coal] plants, but the differences in cost for plants with [carbon dioxide] capture can vary with coal type and other local factors.’ Moreover, ‘in all cases, [carbon dioxide] capture costs are highly dependent upon technical, economic and financial factors related to the design and operation of the production process or power system of interest, as well as the design and operation of the [carbon dioxide] capture technology employed. Thus, comparisons of alternative technologies, or the use of [carbon capture and storage] cost estimates, require a specific context to be meaningful.’ In other words, no clear winner has yet emerged among competing options for carbon capture—on the contrary, a healthy competition is currently underway between different technologies—and it is likely that different approaches will prove more cost-effective in different contexts and for different coal types.


    Three types of geological formations are being considered for sequestering carbon dioxide: depleted oil and gas fields; deep salt-water filled formations (saline formations); and deep unminable coal formations (Figure 3.3). These formations occur in sedimentary basins, where layers of sand, silt, clay, and evaporate have been compressed over geological time to form natural, impermeable seals capable of trapping buoyant fluids, such as oil and gas, underground. Most experience to date with the technologies needed for carbon sequestration has come from the use of carbon dioxide for enhanced oil recovery in depleted oil fields—an approach that is likely to continue to offer significant cost-advantages in the near term, given current high oil prices. As a long-term emissions-reduction strategy, however, carbon sequestration would need to expand beyond enhanced oil or natural gas recovery to make use of saline formations, which have the largest storage potential for keeping carbon dioxide out of the atmosphere.

    Research organizations have undertaken local, regional, and global assessments of potential geologic sequestration capacity since the early













    Figure 3.3 Schematic illustration of a sedimentary basin with a number of geological sequestration options

    Source: IPCC, 2005

    1990s (IPCC, 2005). In general, the most reliable information is available from oil and gas reservoirs; the least reliable information is available for coal seams. The reliability of capacity estimates for saline formations varies, depending on the quality of geological information available and the method used to calculate capacity. Table 3.2 summarizes the most current assessment of sequestration capacity. Saline formations have the largest potential capacity, but the upper estimates are highly uncertain, due both to a lack of accepted methodology for assessing capacity and a lack of data, especially for some parts of the world such as China, Latin America, and India). Overall, current estimates suggest that a minimum of about 2,000 gigatons of carbon dioxide sequestration capacity is available worldwide; roughly equivalent to 100 years of emissions at the current global emissions rate of roughly 24 gigatons per year.30







    (a)These estimates would increase by 25 percent if undiscovered reserves were included.Note: GtCO2 refers to gigatons carbon dioxide.

    Source: IPCC, 2005

    There are several reasons to think that carbon dioxide sequestration can be essentially permanent. The existence of natural reservoirs of oil, gas, and carbon dioxide by itself is indicative. Further evidence comes from extensive experience with methods for injecting and storing fluids underground in other industrial contexts and from more recent experience with several early demonstration projects. Finally, the existence of several natural trapping mechanisms, which together tend to diminish the likelihood of leakage over time, and results from computer simulation models provide grounds for additional confidence in the ability to achieve very long-term storage in underground reservoirs.

    In its recent assessment, the IPCC concluded that the fraction of carbon dioxide retained in appropriately selected and managed geological reservoirs is ‘very likely to exceed 99% over 100 years, and is likely to exceed 99% over 1,000 years’ (IPCC, 2005). Past experience also indicates that the risks associated with geologic sequestration are likely to be manageable using standard engineering controls, although regulatory oversight and new institutional capacities will likely be needed to enhance safety and to ensure robust strategies for selecting and monitoring sites. Employed on a scale comparable to existing industrial analogues, the risks associated with carbon capture and sequestration are comparable to those of today’s oil and gas operations.

    Even after the carbon dioxide is injected, long-term monitoring will be important for assuring effective containment and maintaining public confidence in sequestration facilities. While carbon dioxide is generally regarded as safe and non-toxic, it is hazardous to breathe at elevated concentrations and could pose risks if it were to accumulate in low-lying, confined, or poorly ventilated spaces. Past experience suggests that leakage or surface releases are most likely to occur at the injection site or at older, abandoned wells that were not properly sealed; fortunately, several methods exist for locating such leaks and monitoring injection wells. Nevertheless, public acceptance of underground carbon sequestration in light of the potential for leakage and associated safety risks could emerge as a significant issue—especially in the early phases of deployment—and will need to be addressed.

    Cost penalties for carbon capture and sequestration can be broken down into capture costs (which include drying and compressing the carbon dioxide), costs for transporting carbon dioxide to storage sites, and storage costs. The 2005 IPCC literature review arrived at an average, overall cost figure of US$20–95 per ton of carbon dioxide captured and sequestered based on the following estimates: capture costs ranging from US$15–75 per ton; pipeline transport costs ranging from US$1–8 per ton (US$2–4 per ton per 250 kilometers of onshore pipeline transport); geologic storage costs of US$0.5–8.0 per ton (excluding opportunities for enhanced oil recovery); and monitoring costs of US$0.1–0.3 per ton.


    The first commercial amine scrubber plant to employ post-combustion carbon dioxide capture has been operating in Malaysia since 1999. This plant recovers approximately 200 tons of carbon dioxide per day for urea manufacture (equivalent to the emission rate for a 41 megawatts-thermal coal combustor). An IGCC plant with carbon capture has not yet been built and, as noted previously, experience with coal IGCC systems for power generation (even without carbon capture and sequestration) remains limited. The first example of an IGCC unit with capture and sequestration is likely to be a 500 megawatts-electricity unit that will gasify petroleum coke at the Carson refinery in southern California and use the captured carbon dioxide for enhanced oil recovery in nearby onshore oil fields. The project will be carried out by BP and Edison Mission Energy and is scheduled to come on line early in the next decade.

    In terms of geological sequestration for the purpose of avoiding carbon emissions to the atmosphere, two industrial-scale projects are operating today: a ten year old project in the Norwegian North Sea and a more recent project in Algeria. A third project in Norway is expected to be operational in late 2007. (Industrial-scale geologic sequestration is also being implemented at the Weyburn project in Canada, but in this case for purposes of enhanced oil recovery.) To date, all of these projects have operated safely with no indication of leakage. Plans for new sequestration projects are now being announced at a rate of several each year, with plans for further large scale applications announced in Australia, Norway, the United Kingdom, and the United States (as part of the FutureGEN consortium). In addition, dozens of small-scale sequestration pilot projects are underway worldwide and more are expected. For example, the U.S. Department of Energy has sponsored seven Regional Sequestration Partnerships to conduct 25 sequestration pilot tests in different geological formations; similar pilot tests are being carried out in Australia, Canada, Germany, Japan, the Netherlands, and Poland.

    Looking ahead, enhanced oil recovery may offer the most promising near-term opportunities for carbon capture and sequestration. Carbon dioxide, mostly from natural sources, is already being used to support about 200,000 barrels per day of incremental oil production in the United States. This has already produced valuable experience with many aspects of the technology needed for successful transport and sequestration—including experience with carbon dioxide pipelines. As a result, costs for the technologies required to capture carbon dioxide at large power plants or other energy facilities are already low enough to be competitive where there are enhanced oil recovery opportunities nearby (Williams and others, 2006a; and 2006b). The economic potential for carbon dioxide-enhanced oil recovery is substantial (e.g., enough to support 4 million barrels per day of crude oil production for 30 years in the United States alone). Although coupling gasification energy and enhanced oil recovery projects will not always be feasible, this niche opportunity could nevertheless be significant enough to gain extensive early experience and ‘buy down’ technology costs for both gasification energy and carbon capture and storage technologies, even before a climate change mitigation policy is put into place.

    Unconventional resources, including methane hydrates
    The world’s petroleum and natural gas resource base is considerably larger if unconventional sources of these fuels are included (noted in Table 3.1). In the case of petroleum, unconventional resources include heavy oil, tar sands, and oil shale. It has been estimated that if these resources could at some point be economically recovered in an environmentally acceptable fashion, the hemispheric balance of global petroleum resources would shift substantially. Interest in exploiting unconventional resources has grown of late as a direct result of high oil and natural gas prices and in response to energy security concerns that have heightened interest in options for diversifying global oil supplies and widening the gap between available production capacity and demand. At present, Canada is producing about 1 million barrels per day of unconventional oil from tar sands, and Venezuela has started to tap its substantial heavy oil reserves.

    Current technologies for extracting unconventional oil may not, however, be sustainable from an environmental standpoint. Depending on the type of resource being accessed and the technologies used, current extraction methods are highly energy-intensive and thus generate significantly higher greenhouse gas emissions compared to conventional oil production. In many cases they also produce substantial air, water, and ground surface pollution. Unless technologies can be developed that address these impacts and unless the environmental costs of extraction (potentially including carbon capture and sequestration) are included, efforts to develop unconventional oil supplies are unlikely to be environmentally sustainable.

    Other fossil-fuel related technologies that could impact the longer-term supply outlook for conventional fuels, with potentially important implications for energy-security and sustainability objectives, include technologies for enhanced oil recovery, for collecting coal bed methane, for accessing ‘tight gas’ (natural gas that is trapped in highly impermeable, hard rock or non-porous sandstone or limestone), and for the underground gasification of coal.

    The situation for methane hydrates is more complex and remains, for now, more speculative given that the technologies needed to tap this resource have not yet been demonstrated. Hydrates occur under certain high-pressure and low-temperature conditions when molecules of gas become trapped in a lattice of water molecules to form a solid, ice-like structure. Huge deposits of methane hydrate are thought to exist in the Arctic region, both on- and off-shore, and in other locations below the ocean floor (typically at depths ranging from 300–1,000 meters). These hydrates hold some promise as a future source of energy, both because the size of the potential resource base is enormous and because natural gas (methane) is a relatively clean-burning fuel with lower carbon density than oil or coal. Ironically, however, there is also concern that the same deposits could play a negative role in accelerating climate change if warming temperatures cause the hydrates to break down, producing large, uncontrolled releases of methane—a potent warming gas—directly to the atmosphere. Technologies for exploiting methane hydrates are in the very early stages of development. As in conventional oil production, likely methods could involve depressurization, thermal stimulation, or possibly solvent injection. The fact that hydrates are stable only within a narrow band of temperature and pressure conditions complicates the technology challenge and creates some potential for significant unintended consequences (e.g., destabilizing sea beds or generating large accidental releases of methane to the atmosphere). At present, both the opportunities and the risks are poorly understood, and technologies for economically accessing the methane trapped in naturally occurring hydrates have yet to be demonstrated. Japan currently leads global efforts to remedy this gap and has created a research consortium with the aim of developing technologies feasible for commercial-scale extraction by 2016.

    In summary: Fossil fuels
    Dependence on fossil fuels for a dominant share of the world’s energy needs is at the core of the sustainability challenge humanity confronts in this century. The combustion of natural gas, oil, and coal generates carbon dioxide emissions along with other damaging forms of air pollution. The world’s steadily expanding stock of coal-fired power plants is expected to create significant climate liabilities for decades to come. At the same time, the prospect of an intensifying and potentially destabilizing global competition for relatively cheap and accessible oil and natural gas supplies is again stoking urgent energy security concerns in many parts of the world. For many poor countries, meanwhile, outlays for oil and other imported fuel commodities consume a large share of foreign exchange earnings that could otherwise be used to invest in economic growth and social development.

    In this context, the fundamental problem with fossil fuels is not primarily that they are in short supply. Coal in particular is relatively inexpensive and abundant worldwide and it is already being looked to as an alternative source of liquid and gaseous fuel substitutes in the context of tightening markets and rising prices for oil and natural gas. Unfortunately, expanded reliance on coal using today’s technologies would add substantially to rising levels of greenhouse gases in the atmosphere, creating a major source of environmental as well as (given the potential consequences of global warming) social and economic risk.

    Managing these risks demands an urgent focus on developing economical, low-carbon alternatives to today’s conventional fuels, along with new technologies for using fossil fuels that substantially reduce their negative impacts on environmental quality and public health. The availability of cost-effective methods for capturing and storing carbon dioxide emissions, in particular, would significantly improve prospects for achieving sustainability objectives in this century and should be the focus of sustained research, development, and deployment efforts in the years ahead. Current trends in fossil-fuel consumption are unlikely to change, however, without a decisive shift in market and regulatory conditions. Government policies must be re-aligned: subsidies for well-established conventional fuels should be phased out and firm price signals for avoided greenhouse gas emissions—of sufficient magnitude to offset cost differentials for lower-carbon technologies—must be introduced.