chapter8.pdf

advanced

energy supply

technologies

CHAPTER 8

Robert H. Williams (United States)

CONTRIBUTING AUTHORS: Matthew Bunn (United States), Stefano Consonni (Italy),

William Gunter (Canada), Sam Holloway (United Kingdom), Robert Moore (United States),

and Dale Simbeck (United States)

Fossil energy technologies. Sustainability principles

indicate that fossil energy technologies should

evolve towards the long-term goal of near-zero air pollutant

and greenhouse gas emissions—without complicated end-

of-pipe control technologies. Near-term technologies and

strategies should support this long-term goal.

The technological revolution under way in power generation—

where advanced systems are replacing steam turbine tech-

nologies—supports this long-term goal. Natural-gas-fired

combined cycles offering low costs, high efficiency, and low

environmental impacts are being chosen wherever natural gas

is readily available. Cogeneration is more cost-effective and can

play a much larger role in the energy economy if based on gas

turbines and combined cycles rather than on steam turbines.

Reciprocating engines and emerging microturbine and

fuel cell technologies are strong candidates for cogeneration

at smaller scales. Coal gasification by partial oxidation with

oxygen to make syngas (mainly carbon monoxide, CO, and

hydrogen, H 2 ) makes it possible to provide electricity

through integrated gasifier combined cycle plants with air

pollutant emissions nearly as low as for those plants using

natural gas combined cycles. Today power from integrated

gasifier combined cycle cogeneration plants can often compete

with power from coal steam-electric plants in either cogeneration

or power-only configurations.

Although synthetic liquid fuels made in single-product facilities

are not competitive, superclean syngas-derived synthetic fuels

that are produced in polygeneration facilities making several

products simultaneously may soon be. Syngas can be produced

from natural gas by steam reforming or other means or from

coal by gasification with oxygen. Expanding markets for clean

synthetic fuels are likely to result from toughening air pollution

regulations. Synthetic fuels produced through polygeneration

will be based on natural gas, if it is readily available. In natural-

gas-poor, coal-rich regions, polygeneration based on coal

gasification is promising.

The barriers to widespread deployment of advanced cogen-

eration and polygeneration systems are mainly institutional.

Most such systems will produce far more electricity than can

be consumed on site, so achieving favourable economics depends

on being able to sell coproduct electricity at competitive prices

into electric grids. Utility policies have often made doing so

difficult, but under the competitive market conditions towards

which electric systems are evolving in many regions, cogeneration

and polygeneration systems will often fare well.

Near-term pursuit of a syngas-based strategy could pave the

way for widespread use of H 2 as an energy carrier, because

for decades the cheapest way to make H 2 will be from fossil-

fuel-derived syngas. Syngas-based power and H 2 production

strategies facilitate the separation and storage of carbon dioxide

from fossil energy systems, making it possible to obtain useful

energy with near-zero emissions of greenhouse gases, without

large increases in energy costs. Successful development of fuel

cells would, in turn, facilitate introduction of H 2 for energy.

Fuel cells are getting intense attention, because they offer high

efficiency and near-zero air pollutant emissions. Automakers

are racing to develop fuel cell cars, with market entry targeted

for 2004–10.

Other advanced technologies not based on syngas offer some

benefits relative to conventional technologies. But unlike syngas-

based technologies, such options pursued in the near term would

not offer clear paths to the long-term goal of near-zero emissions

without significant increases in costs for energy services.

Nuclear energy technologies. World-wide, nuclear energy

accounts for 6 percent of energy and 16 percent of electricity.

Although it dominates electricity generation in some countries,

its initial promise has not been realised. Most analysts project

that nuclear energy’s contribution to global energy will not grow

and might decline in the near future. Nuclear power is more

costly than originally expected, competition from alternative

technologies is increasing, and there has been a loss of public

confidence because of concerns relating to safety, radioactive

waste management, and potential nuclear weapons proliferation.

Because nuclear power can provide energy without emitting

conventional air pollutants and greenhouse gases, however, it

is worth exploring whether advanced technologies might offer

lower costs, restore public confidence in the safety of reactors,

assure that nuclear programmes are not used for military

purposes, and facilitate effective waste management.

In contrast to Chernobyl-type reactors, the light water

reactors (LWRs) that dominate nuclear power globally have

had a good safety record, though this has been achieved at

considerable cost to minimise the risk of accidents.

The potential linkage between peaceful and military uses of

nuclear energy was recognised at the dawn of the nuclear age.

Steps taken to create a non-proliferation regime through treaties,

controls on nuclear commerce, and safeguards on nuclear

materials have kept peaceful and military uses separate. But

if there is to be a major expansion of nuclear power, stronger

institutional and technological measures will be needed to

maintain this separation both for proliferation by nations and

theft of weapons-usable materials by subnational groups.

Reactor vendors now offer several evolutionary LWRs

with improved safety features and standardised designs,

and there is some ongoing work on new reactor concepts.

Limited supplies of low-cost uranium might constrain LWR-

based nuclear power development after 2050. Plutonium

breeder reactors could address the resource constraint, but

keeping peaceful and military uses of nuclear materials

separate would be more challenging with breeders. Other

possibilities for dealing with the resource constraint are

extraction of uranium from seawater and thermonuclear

fusion. There are many uncertainties regarding such advanced

technologies, and all would take decades to develop.

Radioactive waste by-products of nuclear energy must be

isolated so that they can never return to the human environment

in harmful concentrations. Many in the technical community

are confident that this objective can be met. But in most countries

there is no consensus on waste disposal strategies. The current

stalemate regarding waste disposal clouds prospects for

nuclear expansion.

ABSTRACT

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Chapter 8: Advanced Energy Supply Technologies

he arguments for marginal, incremental change are not convincing—not in this day and age. The future, after all, is not

linear. History is full of sparks that set the status quo ablaze. —Peter Bijur, chief executive officer and chairman, Texaco,

keynote speech to 17th Congress of World Energy Council, Houston, 14 September 1998

This chapter discusses advanced energy supply technologies with regard to their potential for facilitating the widespread use

of fossil and nuclear energy sources in ways consistent with sustainable development objectives. 1 In each case the current

situation is described, goals for innovation are formulated in the context of these objectives, near-term and long-term

technology options are discussed in relation to these goals, and illustrative cost estimates are presented for options with

reasonably well-understood costs.*

ADVANCED FOSSIL ENERGY TECHNOLOGIES

at relatively low oil price levels. Moreover, the private sector, rather

than the government, is taking the lead in advancing these new

technologies. The government’s role has shifted from managing

demonstration projects to supporting research and development

that enables private-sector-led commercialisation and to helping

remove institutional barriers to deployment.

Fossil fuel supply considerations as a

context for fossil energy innovation

Fossil energy technology development will be strongly shaped by

energy supply security concerns and environmental challenges.

The emerging need for oil supplements

in liquid fuel markets

Oil, the dominant fossil fuel, accounted for 44 percent of fossil fuel

use in 1998. Although there is no imminent danger of running out

of oil (chapter 5), dependence on oil from the Persian Gulf, where

remaining low-cost oil resources are concentrated, is expected to

grow. For example, the U.S. Energy Information Administration

projects in its reference scenario that from 1997–2020, as global

oil production increases by nearly 50 percent, the Persian Gulf’s

production share will increase from 27 to 37 percent (EIA, 1999a).

This increase suggests the need to seek greater supply diversity in

liquid fuel markets to reduce energy supply security concerns

(chapter 4).

In addition, growing concerns about air quality are leading to

increased interest in new fuels that have a higher degree of inherent

cleanliness than traditional liquid fuels derived from crude oil,

especially for transportation applications. To meet growing fluid fuel

demand in the face of such constraints, some combination of a shift to

natural gas and the introduction of clean synthetic fuels derived from

various feedstocks (natural gas, petroleum residuals, coal, biomass) is

likely to be needed to supplement oil during the next 25 years.

The oil crises of the 1970s catalysed major development efforts for

synthetic fuels. For example, U.S. President Jimmy Carter’s administration

supported a synfuels programme that involved large government-

supported commercialisation projects. Most such projects failed

because the technologies were rendered uneconomic by the collapse

of world oil prices in the mid-1980s. But, as will be shown, emerging

synfuel technologies generally have better environmental characteristics

and, when deployed through innovative multiple-energy-product (poly-

generation) strategies, reasonably good economic prospects, even

Entering the age of gas

For natural gas, the cleanest, least-carbon-intensive fossil fuel, ultimately

recoverable conventional resources are at least as abundant as for

oil (chapter 5). Although the global consumption rate for gas is about

half that for oil, the abundance of natural gas and its economic and

environmental attractiveness have led it to play a growing role. 2

Since 1980 the share of natural gas in the global energy economy

has grown, while oil and coal shares have declined. Wherever natural

gas supplies are readily available, the natural-gas-fired gas-turbine–

steam-turbine combined cycle (NGCC) has become the technology

of choice for power generation, in which applications it is typically

both the cleanest and least-costly fossil fuel option. As will be

shown, clean natural-gas-derived synthetic fuels also have good

prospects of beginning to compete in liquid fuels markets.

For developing countries, the huge investments needed for natural

gas infrastructure (pipelines, liquid natural gas facilities) are daunting.

But NGCC plants might be built as targeted initial gas users, using the

revenues to facilitate infrastructure financing.

Alternatives to conventional gas might be needed to meet the

growing demand for fluid fuels in 2025–50. Options include

synthetic fluid fuels derived from coal and various unconventional

natural gas resources (chapter 5).

Unconventional natural gas resources associated with methane

hydrates are especially large, although the quantities that might be

recoverable and delivered to major markets at competitive costs are

highly uncertain (chapter 5). There is little private sector interest in

better understanding the magnitude and cost dimensions of the

methane hydrate resource, because conventional natural gas supplies

_____________________________________________________________________________________________________________

* Life-cycle costs are presented for an assumed 10 percent real (inflation-corrected) cost of capital (discount rate), neglecting corporate income and property

taxes. Neglecting such taxes is appropriate in a global study such as this report, partly because tax codes vary markedly from country to country, and partly

because such taxes are transfer payments rather than true costs. Moreover, such capital-related taxes discriminate against many capital-intensive technologies

that offer promise in addressing sustainable development objectives. Including such taxes, annual capital charge rates—including a 0.5 percent a year insurance

charge—are typically 15 percent for a plant with a 25-year operating life, in comparison with 11.5 percent when such taxes are neglected (U.S. conditions).

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WORLD ENERGY ASSESSMENT: ENERGY AND THE CHALLENGE OF SUSTAINABILITY

Chapter 8: Advanced Energy Supply Technologies

The most formidable

challenges facing the fossil energy

system are likely to be achieving

near-zero emissions of air

pollutant and CO 2

emissions.

are abundant on time scales of

interest to business.

An understanding of methane

hydrate issues is important for decisions

on near-term research and development

priorities related to unconventional gas

resource development versus coal synthetic fuels

development. For this reason—as well as the theoretical

potential of the hydrate resource and the attractions of natural gas

as an energy carrier—the U.S. President’s Committee of Advisors on

Science and Technology has urged international collaborative

research and development in this area, building on embryonic

efforts in India, Japan, and Russia (PCAST Energy Research and

Development Panel, 1997; PCAST Panel on ICERD 3 , 1999).

greenhouse gases be sufficiently low

to meet the objectives of the United

Nations Framework Convention on

Climate Change (UNFCC, 1992). 3

If fossil fuels are to play major roles in

facilitating sustainable development, all these

objectives must be met simultaneously—which is

impossible with today’s technologies. Thus there is a

need for substantial research, development, demonstration, and

deployment programmes aimed at launching advanced, sustainable

fossil energy technologies in the market. Because resources avail-

able to support energy innovation are scarce (and the fossil energy com-

munity must share these scarce resources with the end-use energy effi-

ciency, renewable energy, and nuclear energy communities), crite-

ria should be established for the long-term goals of the innovation

effort. In addition, alternative technological strategies should be

assessed with regard to their prospects for meeting these goals. This

section introduces sustainable development goals for advanced fos-

sil energy technologies. Later sections discuss the prospects for

meeting these goals with alternative clusters of technologies.

The objective of making energy widely affordable is satisfied for

most consuming groups with existing fossil energy technologies,

which tend to be the least costly energy supplies. Addressing other

sustainability objectives simultaneously will tend to increase costs.

However, advanced technologies can help contain costs when these

other objectives are also pursued. Moreover, as will be shown, new

approaches to organising energy systems so that multiple products

are made in a single facility—polygeneration strategies—can also

lead to lower energy costs. The fossil energy technologies with the

greatest potential to meet environmental goals are especially well-

suited to polygeneration.

A key aspect of the objective of satisfying unmet energy needs for

development involves giving the poor—especially the rural poor in

developing countries—access to clean, modern energy carriers.

Clean cooking fuels and electricity to satisfy basic needs are

particularly important (chapters 2, 3, and 10). Advanced fossil

energy technologies can help address these needs. Innovations in

synthetic fuel technology, together with the attractive economics

associated with deploying such technologies in polygeneration

configurations, make the prospects for clean synthetic fuels much

brighter today than they have been.

Some of the most promising synthetic fuels (such as dimethyl

ether, or DME) are attractive energy carriers for serving both cooking

fuel and transportation markets. The revolution in power-generating

technology and the market reforms that are making small-scale

power generation (reciprocating engines, microturbines, fuel cells)

increasingly attractive economically in grid-connected power markets

can also be deployed in remote rural markets, many of which are

not currently served by grid electricity. Even in such markets where

fossil fuels are not readily available, these systems can be adapted

for use with locally available biomass resources in rural areas

(Mukunda, Dasappa, and Srinivasa, 1993; Kartha, Kruetz, and Williams,

1997; Henderick, 1999; Henderick and Williams, 2000). Likewise,

The drawbacks and attractions of coal

Coal use is declining in most industrialised countries other than the

United States, where use is expected to grow slowly. World-wide,

coal use is expected to grow as fast as oil use, with much of the

growth accounted for by China, whose global share might increase

from 30 percent today to nearly 50 percent by 2020 (EIA, 1999a).

For coal, the dirtiest, most carbon-intensive fossil fuel, global

resources are abundant (chapter 5). Coal is generally less costly

than other fossil fuels. Substantial productivity gains have been

made for coal production in both Australia and the United States

(Williams, 1999b). Such gains can be expected in other regions

once energy market reforms are put in place. Productivity gains have

caused coal prices in the United States to decline by a factor of 2 since

the early 1980s, to a level half that for natural gas.

During the next 20 years, a 20 percent rise in the price of natural

gas and a 30 percent drop in the price of coal are expected in the

United States (EIA, 1998a), leading to growth in the price ratio to 3.5.

In Europe coal prices are not as low as in the United States, but even

there the average price of coal imported into the European Union fell

by more than a factor of 2 between 1983 and 1995 (Decker, 1999).

Although many regions are moving away from coal, this chapter

shows that there are reasonable prospects that improved technology

could propel a shift back to coal by making it feasible to provide

from coal, at attractive costs, energy systems characterised by near-zero

emissions of both air pollutants and greenhouse gases. Concerted

efforts to develop and commercialise such technologies are desirable

in light of the strategic importance of coal to coal-rich countries

where conventional oil and natural gas resources are scarce (for

example, China and India).

Setting goals for advanced

fossil energy technologies

Designing advanced fossil energy technologies to be compatible

with sustainable development requires that:

Fossil energy be widely affordable.

Fossil energy help satisfy development needs not now being met.

Energy supply insecurity concerns be minimised.

Adverse environmental impacts be acceptably low.

For the longer term, emissions of carbon dioxide (CO 2 ) and other

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WORLD ENERGY ASSESSMENT: ENERGY AND THE CHALLENGE OF SUSTAINABILITY

Chapter 8: Advanced Energy Supply Technologies

clean synthetic fuels for cooking can also be derived from biomass

(Larson and Jin, 1999). Fossil energy technology advances have

made biomass applications feasible for both small-scale power

generation and synthetic cooking fuel production.

To a large extent, the objective of minimising energy supply

insecurity concerns can be addressed with advanced fossil energy

technologies by pursuing opportunities to diversify the supply base

for fluid fuels. Especially promising are opportunities to make

synthetic fluid fuels through polygeneration strategies—using

petroleum residuals, natural gas, and coal as feedstocks as

appropriate, depending on local resource endowments. And for the

longer term, successful development of methane clathrate hydrate

technology could lead to improved energy security for a number of

economies that heavily depend on imported hydrocarbons but have

large off-shore hydrate deposits (such as India, Japan, Republic of

Korea, and Taiwan, China).

The objective of making adverse environmental impacts acceptably

low requires addressing the question: how low is low enough?

Among environmental impacts, air pollution effects are especially

important, for developing and industrialised countries alike.

Moreover, adverse health impacts of air pollution tend to dominate

overall air pollution impacts (chapter 3).

For many developing countries, the cost of the environmental

damage caused by air pollution is high even though per capita energy

consumption is low—mainly because pollution controls are largely

lacking. 4 Costs from air pollution are also high for industrialised

countries with strong pollution controls, 5 not only because of much

higher energy consumption but also because the cost of uncontrolled

emissions grows much faster than energy consumption, given that

economists measure these costs on the basis of willingness to pay to

avoid these damages (chapter 3). 6 Tables 8.1 and 8.2 show that

even low estimates of these damage costs are significant relative to

typical direct economic costs (direct costs are $0.03–0.04 a kilowatt-

hour for electricity and $0.20–0.30 a litre for transport fuels) for

both coal power plants and for automobiles, but are low for modern

natural gas power plants. 7

Here it is assumed that a major long-term goal for advanced

fossil energy technology that is implicit in the objective of making

adverse environmental impacts acceptably low is near-zero air

pollutant emissions—without the need for complicated and costly

end-of-pipe control technologies. ‘Near-zero emissions’ is taken to

mean emissions so low that residual environmental damage costs

are a tiny fraction of the direct economic cost of energy. ‘Long-term’

TABLE 8.1. EMISSION RATES FOR AND ESTIMATED COSTS OF ENVIRONMENTAL DAMAGE FROM AIR POLLUTANT

EMISSIONS OF FOSSIL FUEL POWER PLANT (LOW VALUATION FOR TYPICAL EUROPEAN CONDITIONS)

Emission rate

(grams per

kilowatt-hour)

Low estimate of costs

of environmental damages

(dollars per thousand kilowatt-hours) a

Environmental

damage costs

relative to NGCC

SO 2

NO x

PM 10

SO 2

NO x

PM 10

Total

Primary air pollutant

6.10 b

3.47 b

0.16 c

Average U.S. coal

steam-electric plant, 1997

15.9

13.9

0.7

30.5

0.15 c

New coal steam-electric plant with

best available control technology d

0.46

0.87

1.2

3.5

0.6

5.3

Coal IGCC plant e

0.075

0.082

0.0025

0.20

0.33

0.01

0.54

1.5

NGCC plant f

—

0.092

—

0.37

—

0.37

1.0

a. Environmental damage costs from power plant air pollutant emissions are assumed to be 25 percent of the median estimates of Rabl and Spadaro

(2000) for typical power plant sitings in Europe. (The Rabl and Spadaro calculations were carried out under the European Commission’s ExternE

Programme. Nearly all the estimated costs of environmental damages are associated with adverse health impacts; the economic values of health

impacts were estimated on the basis of the principle of willingness to pay to avoid adverse health effects.) Rabl and Spadaro considered a wide range

of pollutants, but the only significant damage costs were from SO 2 , NO x , and PM 10 , for which their median estimates of damage costs (in dollars per kilogram)

were $10.44, $16.00, and $17.00. Damage costs at 25 percent of the median estimates of Rabl and Spadaro (equivalent to one standard deviation below the

median) are assumed, to put a conservatism into the calculation to reflect the scientific uncertainty. b. Average emission rates in 1997 for U.S. coal

plants, whose average efficiency was 33 percent (EIA, 1998b). c. In 1990 PM 10 emissions from U.S. electric utility coal power plants amounted to 245,000

tonnes (Spengler and Wilson, 1996) when these plants consumed 17.1 exajoules of coal (EIA, 1998b), so the PM 10 emission rate was 14.34 grams per

gigajoule—the assumed emission rate for all steam-electric cases in this table. d. It is assumed that the new coal steam-electric plant is 35.5 percent

efficient; that the coal contains 454 grams of sulphur per gigajoule (1.08 percent sulphur by weight), the average for U.S. coal power plants in 1997

(EIA, 1998b); that SO 2 emissions are reduced 95 percent, a commercially feasible rate; and that the NO x emission rate is 86 grams per gigajoule—achievable with

advanced low-NO x burners that will be commercially available shortly; e. It is assumed that the coal integrated gasifier combined cycle (IGCC) plant is

43.8 percent efficient, based on use of steam-cooled gas turbines (see table 8.4); that the emission rates equal the measured values for the Buggenum

coal IGCC plant (Netherlands): 10.0 and 0.3 grams per gigajoule of coal for NO x and particulates, respectively, as well as 99 percent sulphur recovery

(data presented by Co van Liere, KEMA, at the Gasification Technologies Conference in San Francisco, 17–20 October 1999); and that the coal

contains 454 grams of sulphur per gigajoule. f. It is assumed that the natural gas combined cycle (NGCC) plant is 54.1 percent efficient, based on use

of steam-cooled gas turbines (see table 8.4); and that the NO x emission rate is 9 parts per million on a dry volume basis (at 15 percent O 2 ), corresponding

to an emission rate of 0.092 grams per kilowatt-hour.

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WORLD ENERGY ASSESSMENT: ENERGY AND THE CHALLENGE OF SUSTAINABILITY

Chapter 8: Advanced Energy Supply Technologies

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