In This Issue
Our Energy Future
June 1, 2002 Volume 32 Issue 2

The Energy-Environment Nexus

Saturday, June 1, 2002

Author: Rita A. Bajura

A sustainable, diversified energy future will depend on the wise use of new technologies.

The mission of the National Energy Technology Laboratory (NETL), one of the U.S. Department of Energy’s (DOE’s) 17 national laboratories, is to develop improved technologies for fossil-fuel energy supply, delivery, and end use. NETL implements all of the programs for DOE’s Office of Fossil Energy, and a few for the Office of Energy Efficiency and Renewable Energy, through an onsite research program and through contracts with industry, universities, and other laboratories. NETL focuses on technologies for generating electric power from coal, clean liquid fuels, and natural gas. The lab has more than 1,000 research activities in all 50 states and in several foreign countries.

Figure 1 shows the U.S. electricity generation mix from 1950 to 2000. Fossil fuels provide more than 70 percent of our electricity--52 percent from coal, 16 percent from natural gas, and 3 percent from oil. The issue facing us is how we as a nation can move toward a more sustainable electricity future. The word "sustainable" means different things to different people. To some, it means integration of the social, economic, and environmental domains. To some it means energy that lasts forever. And to some it means energy with no environmental cost for its production and use. Energy from every source has environmental or cost consequences. The challenge for us as a society is to agree on a practical definition of sustainability and then to develop a road map to achieve it. The road map should include public policies, incentives, and research and development (R&D) agendas.

In the past 30 years, the U.S. electricity sector has made excellent progress in improving air quality. From 1970 to 2000, coal use tripled, electricity generation increased by a factor of two-and-a-half, and natural gas use increased by 50 percent. On a tons-per-year basis, nitrogen oxide (NOx) emissions from power plants have been declining since 1980, sulfur dioxide (SO2) emissions have dropped by almost half since 1970, and particulate emissions are about one-tenth of what they were in 1970. Technology is now commercially available to reduce NOx and SO2 to very low levels. The nation is moving toward requiring all fossil-fuel plants to install NOx and SO2 pollution-control equipment. The National Energy Policy proposed three-pollutant control legislation for SO2, NOx, and mercury. Under the reduction levels being considered, SO2 emissions would be one-ninth of their 1970 level, and NOx emissions would be one-fourth of their 1970 level. Of course, these stringent reductions would not be without cost, but we have the technology--and the regulations appear to be coming--to make urban pollution a non-issue.

Global contaminants are an issue, however--especially mercury. The global atmospheric circulation of mercury is 5,600 tons. Utilities in the United States release 41 tons of mercury per year, one-third of U.S. anthropogenic emissions. Proposals have been made to cap mercury emissions at 7.5 tons per year. Achieving this level of reduction will be extremely challenging in terms of cost, timing, and uncertainty of the science of mercury. No commercial mercury-control technologies are available today, but field-scale tests are under way.

The concept of sustainability includes not only air emissions, but also resource production. New technologies have dramatically reduced the environmental impact of exploration for and production of natural gas. Industry today drills fewer wells to supply the same level of resources; at the same time, they produce less drilling waste and less wastewater. Using slimhole drilling, wells now have smaller footprints and cause less damage to unique and sensitive environments. In addition, air pollutants and greenhouse gas emissions have been reduced.

Using new technology, industry is working to further reduce the environmental impacts of oil and gas production. Consider, for example, horizontal and directional drilling. Horizontal wells would enable a hypothetical driller in the center of the District of Columbia to tap gas six miles away in Maryland. The use of this technology has risen sharply. In just 10 years, the number of horizontal wells increased from near zero to 4,000 per year.

The environmental impact of mining coal is also being reduced through improved planning, groundwater management, reclamation practices, and increased use of coal-mine methane.

As the U.S. energy industry moves toward internalizing most externalities, an increasing focus is on emissions of greenhouse gases. Figure 2 shows atmospheric concentrations of carbon dioxide (CO2) and temperature fluctuations as measured from ice core samples at the Vostok station in Antarctica. Current CO2 levels are at 370 ppm--a 30 percent increase over preindustrial levels and higher than at any time in the past 200,000 years. The two curves show that CO2 concentrations and temperatures are correlated, although cause-and-effect relationships are not entirely clear. Nevertheless, the rising concentration of CO2 is cause for concern, and CO2 from energy production and use is a major contributor. We know that the production and use of fossil fuels are responsible for most anthropogenic greenhouse gas emissions. In the United States, CO2 from energy accounts for 82 percent of U.S. emissions. Methane (9 percent) and N2O (5.6 percent) are also significant contributors.

World demand for energy is growing rapidly, but, as history has repeatedly shown, it is difficult to predict future energy demand. In the next 100 years, world energy demand will increase to support growing populations and aspirations for higher standards of living. Demand in industrialized countries may double. Demand in developing countries may increase eightfold, although per capita energy consumption in developing countries will still be much lower than in industrialized countries. Overall worldwide energy use may increase fourfold.

Economic growth has been strongly linked to electricity consumption for the past 30 years (Figure 3). Electricity represents a growing fraction of our energy mix, and increases in electricity prices--and price volatility--affect the economy. In 1970, 25 percent of U.S. primary energy consumption was used to produce electricity. Today, it is 40 percent. The Electric Power Research Institute (EPRI) projects that it could increase to 70 percent as we evolve toward a future in which electricity provides all of our stationary energy and hydrogen provides our transportation energy.

Stabilizing atmospheric concentrations of CO2 will require sharp cuts in emissions. Figure 4 shows worldwide CO2 emissions. In the "business as usual" case (the IS92a curve), world carbon emissions rise from 6 Gtons/year in 1990 to more than 20 Gtons/yr in 2100; the atmospheric concentration of CO2 in 2100 would be around 700 ppm, and rising. A more accurate name for the IS92a curve would be the "innovation as usual" case. It assumes, for example, that in 2035, we will be using large quantities of dedicated commercial biomass crops; the land area required for these crops will be 10 times the land area currently farmed in the state of Iowa. And these 10 "Iowas" will be growing crops with significantly higher productivity than today. The vast majority of renewable energy currently in the R&D pipeline is already assumed in this case.

The lower family of curves shows emission pathways to stabilize atmospheric CO2 concentrations. The 550 ceiling curve, in the middle, shows an emissions pathway that would stabilize atmospheric CO2 at 550 ppm, roughly double the preindustrial level. This is also the lowest level many analysts believe we can practically achieve.

Ultimately, emissions would have to be decreased to slightly more than 2 Gtons per year to maintain a steady state. This would amount to a 60 percent reduction from 1990 levels and a 90 percent reduction from IS92a emissions in 2100. A reduction of this magnitude would be a staggering undertaking, and, to achieve it, we would have to change our energy systems dramatically.

The electricity sector produces approximately one-third of current CO2 emissions. The transportation sector also produces roughly one-third. The remaining third is produced by a mix of industrial, residential, and commercial emissions. Petroleum produces 42 percent of our emissions, followed closely by coal at 37 percent, and natural gas at 21 percent. Coal is the largest producer of emissions in the electricity supply sector. If emission caps are imposed at some future time, power plants may be expected to do more than their proportionate share to reduce emissions for several reasons:

  • Electric power plants are among the largest point sources of CO2 emissions.
  • Because capital and management are centralized, the electricity sector might be easier to regulate than the industrial or transportation sectors.
  • Electricity production cannot migrate offshore.
In addition, industrialized countries may decide to make earlier and sharper reductions than developing countries. Thus, it is plausible to consider a scenario in which the U.S. electricity sector is required to transition to a zero-emission world before other sectors.

The United States needs more power plants. Even with conservation, the National Energy Policy projects that we will need 400 GW to 600 GW of new power between now and 2020 to meet growing demand and to offset retirements. Four hundred gigawatts represents a conservative 1.8 percent per year increase in demand (in the 1990s, demand increased by 2.3 percent per year). Making the right choices for new power plants will be crucial, because investments in infrastructure have a lifetime of up to 100 years for transmission and distribution.

The electricity industry agrees that new plants are necessary, and for the first time in a decade, substantial numbers of new coal-fired plants have been announced. More than 40 GW of coal-fired plants are under development, most of them subcritical or supercritical steam plants. A few are fluidized-bed plants, and fewer still are gasification plants. Some of these plants were announced when natural gas prices were very high, and with today’s lower prices, some may not be built.

Some renewable plants have also been announced, but the vast majority of new plants will be fueled by natural gas. The Utility Data Institute database of September 10 shows that 170 GW of new gas-fired capacity is under development (a conservative estimate). Other published estimates have been in the range of 300 GW. In a competitive electricity market, gas-fired plants are currently the lowest cost, lowest risk option. Even if all of these plants are not built, gas-generated electric power will certainly increase significantly. Many of these plants are large, base-load, combined-cycle units that use large amounts of gas.

Is there enough affordable gas to meet this demand growth? DOE’s Energy Information Administration projects that gas use will rise to 35 trillion cubic feet (Tcf) per year by 2020 (Figure 5). Based on the recent "dash for gas," the number could be even higher. The issue is not supply in the ground but availability of infrastructure and the cost of producing gas as we tap into more unconventional gas reserves in more hostile locations.

Imports of natural gas have increased to 15 percent, but Canada and Mexico both want to retain more of their gas for domestic consumption. We could import more liquefied natural gas (LNG), but this is a concern in light of the events on September 11. If our oil supply is curtailed for long periods of time, natural gas would become the fuel of choice for the transportation sector--for producing gas-to-liquids fuels or for fueling LNG vehicles.

A common assumption is that we are quickly running out of fossil fuels and that there will be a rapid transition to carbon-free fuels. We are not! If technology continues to improve as it did in the past century, the world's fossil fuel reserves will last, at a minimum, for most of this century. In addition, if we can find a way to produce methane hydrates safely and cost effectively, we will have hundreds of years of supply. Supply is not the issue.

The issue is reconciling abundant, affordable fossil-fuel energy, which now provides 70 percent of U.S. electricity and 85 percent of our total energy supply, with the stabilization of greenhouse gas concentrations in the atmosphere. The solution lies in technology. We have four technological options for managing carbon: (1) reduce demand for energy; (2) reduce the carbon intensity of fuels (switch to less- or non-carbon-intensive sources of power generation); (3) increase the efficiency of energy generation and transmission; and (4) sequester carbon. I will focus on the last two options.

DOE is developing many options to increase the efficiency of power generation. In distributed generation, we are developing four different natural-gas-fired technologies: (1) fuel cells (more than 200 units installed worldwide); (2) fuel-cell/turbine hybrids (60 percent fuel-to-electricity efficiency in small units [250 kW]); (3) small turbines; and (4) microturbines. Distributed generation can be very efficient in combined heat and power applications and is likely to capture a larger share of the premium power generation market. Expanded natural-gas-fired distributed generation will require capital investment in the gas-distribution system to ensure electricity reliability.

Central station power plants will also remain an important part of the power generation mix, particularly in urban environments. Through cost-shared partnerships with industry, DOE is developing technologies to improve the efficiency of central power stations. The Vision 21 Program, for example, is developing energy plants for post 2015. A Vision 21 plant will use coal, natural gas, or biomass to produce electricity and possibly other products, such as liquids and process heat. DOE is also developing a technology base for highly efficient combustion turbines that can use natural gas, gasified coal, or biomass. As efficiency improves, CO2 emissions decrease. In 1999, the average fleet efficiency for coal-fired power generation was 33 percent. By 2015, Vision 21 coal plants should achieve efficiencies of 60 percent, nearly twice the 1999 average. Turbines fired with natural gas emit less CO2 than coal technologies because natural gas has less carbon than coal, and gas-fired combustion turbines are very efficient.

Another option for stabilizing the amount of carbon in the atmosphere is sequestration, which could enable all fossil-based systems to reduce CO2 emissions essentially to zero. Sequestration could decouple the use of fossil energy from greenhouse gas emissions.

There are two approaches to sequestering carbon. In the capture-and-storage approach, CO2 is collected inside a power plant or other large point source and pumped elsewhere for permanent storage--in deep, unmineable coal seams; deep ocean; depleted oil and gas reservoirs; or saline reservoirs. The second approach is to enhance natural sinks. This approach is particularly useful for smaller sources, such as homes, cars, and small industries. Concepts being explored include reforestation, enhanced photosynthesis in algae farms, and iron or nitrogen fertilization of the ocean. Sequestration could contribute to the goal of the Framework Convention on Climate Change to stabilize CO2 concentrations in the atmosphere.

We know that sequestration is technically feasible. CO2 is already being used to enhance oil recovery at 70 sites in eight states; several more projects are planned. CO2-enhanced oil recovery can be operated to leave the CO2 in the geologic formation. More than 2,500 miles of dedicated pipeline now deliver CO2 to fields, and upstream oil companies know how to handle CO2. Most components of this technology are already commercially used.

Statoil, the Norwegian oil company, has been operating a commercial geologic CO2 sequestration facility--the world’s first--since 1996. Statoil strips CO2 from natural gas produced by a well in the Sleipner oil field in the North Sea and sequesters the CO2 by injecting it into a saline aquifer 800 meters below the seabed. The amount of CO2 sequestered is equivalent to the amount produced by a 120 MW coal-fired power plant.

Pan Canadian Resources is starting a similar project at their Weyburn oil field in Saskatchewan. The CO2 is produced as a byprouduct by the Great Plains Coal Gasification plant in North Dakota. This project may be the first international trading of "physical" CO2 for emissions reduction.

For a sequestration method to be a viable public policy option, it must meet several requirements. It must be environmentally acceptable (i.e., it must leave no legacy for future generations, and it must respect existing ecosystems). It must be safe (i.e., there must be no risk of sudden large-scale discharges). It must include a way to verify the amount of CO2 sequestered. Finally, it must be economically viable compared with other options for managing carbon. DOE’s sequestration program is designed to address all of these requirements.

Sequestration reservoirs underlie much of the United States, so most power plants are within a reasonable distance of a potential reservoir. Worldwide, the potential storage capacity for CO2 is hundreds of times our annual emission rate. Annual world carbon emissions are about 6.2 Gtons. Estimates of storage capacity will change as we come to understand the science of sequestration--for example, the potential for changing the chemistry of the ocean. However, we believe that storage capacity is not an issue.

Funding for the Office of Fossil Energy’s carbon sequestration program has grown from $1 million in fiscal year 1998 to an anticipated $32 million in fiscal year 2002. With nearly 60 projects in six research areas, we are exploring a range of options to see which ones will meet the four requirements discussed above. The program has generated a tremendous amount of industry interest; 40 percent of funding for recent projects has been provided by industry. Participants include industry (e.g., American Electric Power, Tennessee Valley Authority, and Consol), The Nature Conservancy, universities, and national laboratories. We recently awarded a $25 million, three-year project to a team led by BP Amoco, which includes Chevron, Texaco, and four European oil companies. The European Union and the companies are sharing in the cost.

The economics of sequestration can be improved with new plant designs that produce a concentrated stream of CO2 at high pressure as part of the process. Coal-gasification plants could use a water-gas shift reaction to produce hydrogen for a combustion turbine and a concentrated stream of CO2 for sequestration. Pressurized combustion using pure oxygen could also produce concentrated CO2.

In a recent study jointly funded by EPRI and DOE to estimate the cost of an integrated gasification combined cycle (IGCC) plant with 90 percent capture of CO2, the cost of electricity would be 5.6 cents/kWh. If the CO2 could be sold for use in enhanced oil recovery, the cost of electricity would be less. If the CO2 were injected into a geological formation, the estimated costs of transportation and injection would add 0.2 cents/kWh to the base cost.

For distributed generation, we are assessing a fully sequestered, 20-MW fuel-cell power park. The plant would operate in combined heat and power mode, providing electricity and process heat. Solid oxide fuel cells would be configured to produce a concentrated stream of CO2 that could be shipped off site. Natural gas would be piped to the site.

IGCC technology for cost-effective sequestration is beginning to enter the commercial market. Worldwide, there is 70 GW of existing or planned gasification capacity. Of this, about one-third is sequestered by IGCC, which translates to 10 GW capacity. Two coal-fired 250-MW IGCC plants are currently operating in the United States, and we appear to be leaning toward this scenario.

Figure 6 shows the potential effects of increasingly stringent regulations on SO2 and NOx emissions and caps to reduce (modestly) CO2 emissions. In this scenario, from the Electric Power Research Institute (EPRI) natural gas use would increase from 15 percent to 60 percent of our electricity generation over the next 20 years. Coal use would decline from more than 50 percent to 10 percent. EPRI concluded that, even if we could make this initial shift, we could not continue to rely this heavily on natural gas. When gas prices finally rise, new sequestered coal and renewable technologies would be introduced.

There are three problems with this scenario. First, it is a simplistic first strike at incremental reductions in CO2 emissions. This scenario would not put the United States on a path to stabilizing CO2 concentrations. Second, it would hurt the U.S. economy because both the gas and coal industries would be forced to abandon capital assets prematurely. Third, the United States would reduce its fuel diversity, a principle that has served the U.S. electricity industry well.

I believe it is essential that we resolve the environmental issues associated with fossil fuels, which pro-vide 85 percent of our energy and 70 percent of our electricity. We cannot eliminate the biggest resource from the world market, at least for the remainder of this century. Fossil fuels will continue to be used domestically and internationally. I also believe that carbon management will be necessary to stabilize carbon emissions. As a public benefit, we should accelerate the development and deployment of more efficient fossil energy technologies that are sequestration capable. That way, if the United States decides to regulate CO2 emissions in the future, we will have the technologies to do so. We must also support the transfer of these technologies to developing countries where the bulk of the growth in energy consumption will occur. I believe that no matter which pathway we finally choose for stabilization, we will be able to meet our target cost effectively with fossil fuels.

We must focus on all of our technological options for reducing the environmental footprint of power generation, and avoid simplistic, one-dimensional solutions. Technology will help us reconcile our economic imperative--the creation of jobs and wealth--with our environmental imperative--leaving the world not despoiled for future generations.

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(E-EPIC) Study. Palo Alto, Calif.: EPRI.
Wigley, T.M.L., R. Richels, and J.A. Edmonds. 1996. Economic and environmental choices in the stabilization of atmospheric CO2 concentrations. Nature 379(6562): 240-243.
About the Author:Rita A. Bajura is director of the National Energy Technology Laboratory. This article is based on a presentation given at the Technical Session of the NAE Annual Meeting in October 2001.