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Thursday, 17 December
Geothermal remains an option for the Swiss although not in Basel
In my 25 June 2009 blog entry, I quoted Markus Haring, the Basel Project Manager, reporting on the sequence and the intensity of the surface tremors apparently associated with the EGS reservoir stimulation. The project had been on hold since 2006 with an government-appointed committee considering what happened and analysing future risks. This committee recently completed its work and released its report last week. Here is a summary of its findings. The Report was in German and I got the following by using the Google translation function. My high-school German is not sufficient to check the veracity of the translation but it was surprisingly readable and therefore I think Google did a good job.
The following are the risks, according to the Committee, that would apply if the Project were let to continue as planned:
- The risk of personal injury as a result of the EGS project would be low
- However, because of the high population density in Basel, the risk to property would be significant
- During its planned life of 30 years, the Committee believed that the project could lead to 14 to 170 significant earthquakes and a property damage of CHF$6m (A$6.4m) per year
- The Committee concluded that this risk to property was unacceptable and recommended a termination of the project. The detailed results of the Risk Analysis will be released in January 2010.
- The Committee emphasizes that its findings cannot be transferred to other locations that may be subject to other circumstances. The Committee recognises that Projects initiated at other locations in Switzerland and elsewhere are subject to different requirements and are designed differently from the Basel project
- Against the background of the climate change and the limited fossil fuel resources, geothermal energy remains an option like all other forms of renewable energy.
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A diagram on the Basel project from the project web site |
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This could be my last entry until February 2010. I am flying to Istanbul this weekend for holidays. While I am there, I am hoping that I will have a chance to meet with people from the flourishing Turkish geothermal sector. On 8 July, I quoted from an Austrade release: "Turkey has one-eighth of the world's geothermal potential and is ranked seventh in the world. The cost of electricity generated from geothermal reserves ranges from €0.03 to €0.10c/kWh, the bottom end of which is competitive with conventional systems". If I see and hear interesting things I may record them here. Otherwise, my next entry will be in February 2010.
Merry Christmas to all geothermal energy enthusiasts and let us hope that 2010 will be a good year for the Australian and global geothermal industry.
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Monday, 14 December
Results announced from the Second Round of the Geothermal Drilling Program: $35m to five projects in four states
Martin Ferguson announced yesterday on the results of the Round Two of the Geothermal Drilling program(GDP). The $50m GDP was launched on 20 August 2008, during the 2008 AGEG/AGEA Australian Geothermal Energy Conference. The program provided funding for proof-of-concept geothermal drilling projects. The Commonwealth funds were to be matched dollar-per-dollar with the company funds and each grant was capped at $7m. The first round announced in march 2009 had two winners, Panax for the Limestone Coast project and Petratherm for Paralana.
This second round, there were five winners:
- The Hot Rock Limited proof of concept project at Koroit in the Otway Basin, Victoria will aim to define 'proven reserves' through the drilling and testing of two deep deviated standard size production appraisal wells. Hot Rock's project could result in the first geothermal pilot power plant in Victoria by the end of 2010, followed by plans for a 10MW demonstration plant by 2012. The Koroit project is about 30 kilometers northwest of Warrnambool and, according to the Company, has Indicated and Inferred Geothermal Resources of 7.6 EJ and 67 EJ (see my blog in June 2009 for what "inferred" and "indicated" means in this context).
- The Geodynamics proof of concept project in the Hunter Valley, New South Wales will aim to drill two 4,500m holes followed by stimulation and flow testing. Geodynamics believes this resource has the potential to support a 200 MW plant. The latest funding supplements the $10m granted in late 2009 under the NSW Climate Change Fund Renewable Energy Development Program to develop a geothermal power plant in the Hunter Valley. The company holds two tenements in NSW, EL5560 in Muswellbrook and EL5886 in Bulga.
- The Green Rock Energy project in Perth will aim to prove the geothermal energy that is recoverable within the Perth Metropolitan Area. This resource is significant as a demonstration of medium temperature geothermal resources for commercial applications like air conditioning. Using this grant, the company will drill two 3000-m geothermal wells, one production and injection. The 100oC fluid to be produced from the production well will power absorption chiller plants to provide air conditioning for commercial buildings. I think LiBr absorption cycle is being considered although I do not know if a final decision has been made in that regard.
- The Greenearth Energy project near Geelong in Victoria will aim to drill two wells into a hot sedimentary aquifer to a depth of up to 4 kilometres. A sustained extraction and injection of hot fluids will be demonstrated from wells co-located at the surface. The GDP grant announcement comes a week after the Victorian Government award of $25m of staged funding towards a 12MW Geelong geothermal demonstration plant. Preliminary work by Greenearth suggests that the Geelong project eventually may have the potential to support a 140-MW geothermal plant.
- Torrens Energy Parachilna project in South Australia aims to prove the expected temperatures of the geothermal resource and the suitability as an enhanced geothermal system(EGS) for generating power. Previous work by the company indicates temperatures of 200+oC at approximately 4000m. If proven, this would make the Parachilna project the hottest Australian geothermal project located on the electricity grid. The inferred resource at Parachilna is 780 EJ.
The funding granted under the Geothermal Drilling Program is staged over the duration of the exploration activity with the final amount payable following the successful completion of ‘Proof of Concept’ drilling.
This last announcement brings the amount the Australian Commonwealth Government has far committed to geothermal energy to over $200 million, leveraging a total investment in excess of $720 million from private industry.
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On other news, which I am afraid are not as favourable, I have read a New York Times article that reports on AltaRock Energy stopping its Geysers EGS project. This project was being supported by the DoE and was aiming to develop an EGS reservoir in Geysers. Geysers is of course the home to the world's largest concentration of geothermal electricity that uses water heated from volcanic sources. The AltaRock project would be the first EGS project in this area. The AltaRock project had been troubled with local perceptions about the induced seismicity risk with a temporary suspension of drilling operations (shown in the photo above) announced on 2 September. The company web site does not have any announcement about this NYT report on the permanent abandonment of the project. I guess we will have to wait and see. On a similar vein, the Basel geothermal project was stopped last week for the same reasons. The Basel Deep Heat Mining project drilled five kilometres into the earth. The borehole was designed to be injected with water to capture the extreme heat. Back at the surface, the hot water – at a temperature of around 160° Celsius - would run a steam turbine coupled with a generator. A risk analysis study published last Thursday found that the danger of setting off more earthquakes was too great if drilling at the site resumed and, based on tat report, the canton authorities announced the cancellation of the project.
See an earlier blog (25 June 2009) for my thoughts on the seismic risks of EGS projects.
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Wednesday, 9 December
The CO2 Geothermal Siphon Concept Hotting Up
I reported on 30 October that the DoE awarded $3,000,000 to Symmyx Technologies Inc of Sunnyvale, California, to model the chemical interactions between geothermal rocks, supercritical carbon dioxide and water. Symyx, a combinatorial chemistry firm, will work with the Lawrence Berkeley National Laboratory in collaboration with Idaho National Laboratory. A number of other universities in the U.S. will take part as well. The Geothermal Digest reports on a recent conversation with materials scientist Miroslav Petro of Symyx Technologies about this project. Petro is the Symyx Project manager for this project. Symyx will be studying the interaction between CO2 and the wide variety of minerals likely to be encountered at depth.Petro notes that there is a great deal of fundamental CO2 science and the deep crustal environment that is not as yet understood.
The readers of this blog will know that I am very interested in developments in this area and will report on them as any is achieved. Contrary to some of the more optimistic analyses that come from Berkeley, our research however indicates that the CO2 geothermal siphon concept (this is what we call it) does not offer significant advantages over water as a geothermal heat exchange fluid unless the loop is closed on the surface through a supercritical CO2 turbine. The exergy transfer from the geothermal reservoir to the surface is not superior to water and, in our opinion, does not make it worthwhile (unless there are auxiliary benefits like sequestration, which are difficult to quantify and to validate). However, if we directly expand the CO2 that comes to the surface through a supercritical CO2 turbine, this would eliminate the binary plant heat exchanger, which is the largest source of efficiency loss in a binary power plant. In other words, the system would work just like a dry steam plant but extracting heat from an EGS reservoir. Aleks Atrens et al presented a paper to the AGEG/AGEA conference last month.
Again in the same stimulus package, Wall Street Journal reports on Baker Hughes starting a project to develop drilling and measuring equipment that can operate at 315 oC. Careful readers of this blog should remember that the DoE stimulus package had given $5,000,000 to Baker Hughers to develop directional drilling systems that can withstand temperatures up to 300 oC. So the WSJ article is probably referring to that same project. But since it appeared on Wall Street Journal, it will probably do a few rounds (as it appears here). Schlumberger (a Baker Hughes competitor) had also been awarded a similar amount to the same purpose as part of the same package. Hopefully one of them, or even better, two of them, will succeed. The EGS sector sure needs it.
Tuesday, 8 December
The Copenhagen meeting started. It is difficult to predict its outcome. While browsing through the COP15 web page, I was interested in reading what the definition of a good outcome is for Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change (UNFCCC). Yvo de Boer is hoping that the Conference will bring clarity in the following four essentials:
- How much are the industrialized countries willing to reduce their emissions of greenhouse gases?
- How much are major developing countries such as China and India willing to do to limit the growth of their emissions?
- How is the help needed by developing countries to engage in reducing their emissions and adapting to the impacts of climate change going to be financed?
- How is that money going to be managed?
De Boer feels confident that President Barack Obama can successfully engage China and India and convince them to sign the next treaty.
Speaking of climate change, I think all sensible people agree that there is uncertainty in future predictions. However, it is important to realise that the uncertainty means it could actually be better or it could actually be worse than what is predicted. A new article to be published in Nature Geoscience concludes that the long-term effect of an increase in atmospheric CO2 on global temperatures could be about 45% more than the short-term effects previously considered in past IPCC modelling. The paper by Lunt at al reports on the results of a study which modelled the temperatures in a mid-Pliocene period (about 3.3 - 3 million years ago). They picked this period because:
- the atmospheric CO2 concentrations at about 400 PPM were higher than the pre-industrial values; and
- there is good proxy data about the temperatures in the same period.
The modelling included the feedback from variable vegetation and ice covers but not aerosols and atmoshperic chemistry. They compared the modelled mid-Pliocene temperatures against the temperature estimates based on a combination of faunal analysis of planktic foraminifera, Mg/Ca and alkenones. I am not exactly sure what these things are but they sound like examination of past fossil layers and proper references are given to the sources where the estimates are made. The comparison between the modelled temperatures and the measured (by proxy) temperatures is pretty good (about 0.15 oC). The model calculates the global temperature increase that would be caused by a jump in the CO2 levels from 280 to 400 ppmv and finds it as 2.3 oC. The shorter-term feedback modelling used in IPCC scenarios predicted only 1.6 oC. Hence my starting comment that the uncertainty means uncertainty both ways. According to this paper, the long-term global temperatures for a particular CO2 emission scenario could be as high as 45% above the most-likely scenario from past IPCC models. Food for thought.
Monday, 7 December
Power Conversion Tutorial 1: Laws of Thermodynamics
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A geothermal power plant converts the geothermal heat to electricity. The geothermal heat is transported to the surface by the geothermal fluid, the brine. So a geothermal power plant takes the heat in the brine stream and converts that to electricity. In other words, it is a heat engine. Like other heat engines, for example, like those used in coal- and gas-fired power plants, a geothermal power plant obeys the two laws of thermodynamics.
The first law of thermodynamics is nothing more than the principle of energy conservation. Work and heat are different forms of energy and they are convertible. The 1st Law states that to produce work one must supply heat. There is no such thing as a free lunch and you do not get something for nothing.
The second law says that, it is not only that you don't get something for nothing, but you always get less than what you paid for. According to the 2nd law of Thermodynamics, it is impossible to build a heat engine that takes X units of heat from a source and produces X units of electricity. The amount of electricity will always be substantially less than the heat supplied to the heat engine. In fact, the only way a heat engine may work is by extracting heat (Qh) from a hot source, convert some of it to work (W), and dump the remainder (Qc).
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For this heat engine, the 1st Law is almost intuitive and says that W=Qh-Qc. The Second Law goes one step further and sets the relationship between the three terms, Qh, Qc, and W.
In 19th Century, Sadi Carnot demonstrated that the maximum power that can be produced by a heat engine is related to the temperature, Th, at which the heat is supplied, and the temperature Tc, at which it is rejected. This maximum power is given by the following equation:
The temperatures Tc and Th are expressed in the absolute temperature units, i.e. in degrees Kelvin.
The chart shows the maximum power conversion efficiency that a geothermal plant can enjoy as a function of Th on the x axis. The three curves correspond to the three different heat dump temperatures. Other things being the same, a geothermal resource at a higher temperature will always deliver a higher conversion efficiency. Similarly, a geothermal plant at a lower heat dump temperature Tc, e.g. a plant that can use sea water for its condensers, will also enjoy a higher efficiency, other things being the same.
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IMPORTANT 1: The actual geothermal plant efficiencies are much lower than what is shown on this chart. This is because the above equation calculates the maximum efficiency for a perfect heat engine. There is no such thing in the real world. Geothermal plants achieve only about 30-40% of their theoretical limit shown in the above chart. The actual conversion efficiency depends on the type of the plant and the type of the power cycle. We will address these in another posting.
IMPORTANT 2: While the geothermal plants achieve only 30-40% of their theoretical limit, power plants using more mature technology, e.g. coal, gas or nuclear plants, are all able to enjoy a ratio of about 70% of their theoretical limit. This tells us that there is room for improvement. The QGECE is working on power conversion technologies aiming to have geothermal plants achieve up to 60% of their theoretical limit, in other words a 50% improvement on geothermal power plant performance.
Is one less carton of beer per year too much a sacrifice? -- Thursday, 3 December
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Ridiculuous numbers are being tossed around about the possible cost of the CO2 abatement. Let us take a sanity check.
The CPRS Bill aimed to reduce net greenhouse gas emissions by 5% and 15% below 2000 levels by 2020. 5% is the minimum target and 15% is the aspirational target.
The chart shows the 2006 emissions per capita for various nations. Two bars are shown for each country. The blue bar shows the emissions including agricultural emissions, the orange bar shows the emissions excluding the emissions from agricultural and forestry activities. I copied this chart from the Garnaut Review. Australian emissions were about 25 tonnes/person in 2004 excluding agricultural emissions. This is in 2004. 2000 numbers would probably be less than 2004 numbers, but to be conservative, let us use the 2004 numbers for the following simple calculation.
Let us take the aspirational target of 15%. What is 15% of the Australian per capita emission of 25 tonnes? It is less than 3.75 tonnes per person. Achievement of a reduction of 3.75 tonnes/person was the aspirational target of the CPRS Bill that failed the Senate. The penalty would have been $11/tonne if an emitter failed to reduce its emissions. Let us assume that all of the CO2 emitters decide to do nothing and pay the penalty. Let us also assume that through electricity pricing and other mechanisms they spread this penalty equally to the population. What is the cost per person? It is $11 times 3.75 tonnes/person. Hardly more than the price of a carton of beer. This is per year and it is for the maximum target. For the minimum target of 5% it would have been one third of that of about $14 per person per year. Admittedly the price of $11 would probably increase in future years but you get the idea. It is difficult to seriously maintain that this would have been the end of life as we know it. This is excluding all those CO2 abatement options that would actually save money as I noted Friday last week.
Am I missing something?
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Feedback: 4 Dec 2009, Bahay Ozcakmak, Activated Logic
Dear Hal,
Another insightful post into the real cost of excluding agricultural enterprise from the CPRS Bill.
Although I agree with your methodology, there are two assumptions which will ultimately determine the cost of this scenario. Firstly, economists would frown on the dislocation of markets and the inefficiencies which would arise from subsidising low carbon dioxide efficient agriculture by taxing all power users. Secondly, the cost of carbon is forecast to be much higher than $10 or $11/t, this is merely an introductory cost as we transition to a low carbon economy. The forecast carbon price in chapter 6 of the Garnaut report makes for interesting reading. (http://www.treasury.gov.au/lowpollutionfuture/report/html/06_Chapter6.asp)
Figure 6.3 specifically highlights, that depending on the severity of proposed cuts in carbon emissions, the cost of carbon emissions may be as high as $100/t CO2e by 2030 and $200/t CO2e by 2050. On that basis, the liability for every man, woman and child in Australia could be as high as 20cartons of beer per year, depending on the quality of the brew obviously!
Furthermore agriculture is a highly subsidised proposition in many parts of the world with food security issues at the heart. By taxing Australian farmers, we are effectively putting ourselves at a significant competitive disadvantage against our major international competitors. The flip-side of course is that a strong carbon price would provide a strong price signal for forestry/soil based carbon sequestration.
Just some more Friday afternoon musings.
Enjoy the weekend.
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Wednesday, 2 December
Two Queensland towns, Dalby and Maleny, are running dry says the ABC Online Bulletin. The Western Downs Regional Council warned Dalby only had eight hours of water reserves left because the residents had been using too much. With the town's weir and the Condamine River dry, only two megalitres are left in storage, while the daily consumption is six megalitres per day, or about 420 litres/day (Dalby has a population of close to 12000). In Maleny, the town's only source of water, Obi Obi Creek, is on the brink of running dry because of a lack of rain.
Is it about time Queensland should seriously start thinking about geothermal desalination? Queensland has substantial geothermal resources ranging from high-temperature Hot Fractured Rock (HFR) resources of Cooper and Eromanga and possibly Drummond Basins to Hot Sedimentary Aquifers (HSA) through and around the Great Artesian Basin. Some of these resources may not be hot enough for electricity generation but would be a perfect fit for thermal desalination of brackish aquifers. I do not know the quantity of salty or brackish water resources that are suitable for desalination but let us assume that there is enough of them accessible at a negligible cost.
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Australian emphasis so far has been on large-scale desalination plants serving metropolitan cities. As water shortage is becoming a serious problem for country towns, it is probably the time to rethink. An 2008 analysis of desalination costs (Withtholz et al, Desalination, 229:10-20, 2008) concluded that for plants in the range of 1 to 100 ML/day, thermal desalination technologies are more suitable if there is a cheap supply of heat. A geothermally-powered multi-effect distillation(MED) or multi-stage flash (MSF) desalination unit can easily provide the entire fresh water needs for an outback city at the cost of around $1.00-$1.40/kL. This is a rough but conservative cost estimate based on the following parameters:
- Cost of thermal desalination without considering the cost of the heat = $0.55-$0.95/kL (from the GHD Report commissioned by the QLD Department of Natural Resources and Mines, 2001)
- Heat input required = 10-20 kWh/kL (the same reference)
- Cost of geothermal heat (assume $0.03/kWh)
The cost of $1.00-$1.40/kL compares very well against the 2010/2011 bulk water prices of $1.00 to $2.00 per kL listed on the Queensland Water Commission web site. While this shows that large-scale geothermal desalination should be of interest, small-scale applications are even more interesting especially when combined with agricultural usage.
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A recent paper (Mahmoudi et al, Renewable and Sustainable Energy reviews, 14:512-517), is proposing the use of geothermal heat and the sea/brackish greenhouse water desalination process to produce water in arid regions. This is a clever combination where desalination function is coupled with a plant-growing function. It may not be the solution for large-scale desalination like for Brisbane but should have significant contribution in smaller towns. A schematic of the process is shown on the left. The brackish water is pumped and filtered from a well and sent into a ground heat exchanger where it absorbs heat from a geothermal fluid. This heat exchanger can be built of polyethylene to conserve costs. The heated brackish water is then fed in a cascade to the first evaporator then to the second evaporator. The brine can be circulated in the circuit several times until its concentration increases over an acceptable dissolved salt concentration. The concentrated brine is finally collected in a tank, where it is stored for later treatment or processing or reinjection. The evaporator is the entire front wall of the greenhouse structure. It consists of a cardboard honeycomb lattice and faces the prevailing wind. Hot brackish water trickles down over this lattice, heating and humidifying the ambient cooler air passing through into the planting area and contributing to the heating of the greenhouse. Fans draw the air through the greenhouse. Air passes through a second evaporator and is further humidified to saturation point. Air leaving the evaporator is nearly saturated and passes over the passive cooling system with a condenser (IC) immersed in a water basin. The fresh water condensing from the humid air is piped for irrigation or other purposes. This design can be scaled up to provide 10-20 kL/day while also helping greenhouse plant growing. |
Monday, 30 November
| While we have been watching the antics of our pollies on the CPRS bill, a similar theatre is unfolding in the United States. While they probably would not bet even money on it, a 28-November Editorial in the Los Angeles Times notes that the bi-partisan effort by the Senators John Kerry (Democrat-Mass) and Lindsey Graham (Republican - South Carolina) offers the only hope for the US Senate passing the cap-and-trade bill this year. Nevertheless, the Editorial laments the fact that Kerry and Graham had to amend the draft by adding billions of dollars in loan guarantees and other subsidies for nuclear power, to increase its appeal to the conservative senators.
IMHO, while the nuclear seems to be offering a plausible zero-emission alternative at the first glance, its cost is of concern. The Los Angles Times Editorial reiterates this concern with probably even more emphasis than I would have placed. I quote from the Editorial: "Nuclear energy is not a reasonable solution because plants take too long to build and cost far too much. Actually, it's been so long since one has been built in this country that no engineering firm will even provide an estimate on the cost...The last time there was a wave of nuclear construction in the United States, it took an average of nine years to build a plant, meaning we wouldn't see the first one until at least 2018 -- too late to play any significant role in meeting the Senate climate bill's goal of cutting emissions 20% by 2020."
And the Editorial offers the geothermal energy as the principal and the superior alternative to nuclear: "The nation's fleet of 104 nuclear plants supplies nearly 20% of our electricity. Building 100 more, as nuclear proponents have proposed, would supply a vast amount of carbon-free energy, and do so 24 hours a day without interruption. But then, so would geothermal power plants. Electricity can be generated by pumping water into hot, permeable rocks deep underground, and as the technology improves, the potential for geothermal is enormous. According to an MIT study, in fact, geothermal plants could eventually supply as much power as the nation currently gets from its nuclear reactors -- without producing any radioactive waste." And finally: "Nuclear power is a failed experiment of the past, not an answer for the future. Every dollar invested in it is a dollar misdirected, one that should have gone to more efficient, cheaper and cleaner power sources."
My PhD (years and years ago) was on simulation and control heat transfer and flow instabilities in nuclear reactor steam generators. Although I have migrated to other areas since then, I have always maintained an interest in nuclear electricity. However, I think it is foolish to think that nuclear energy will be a cheap alternative. At the moment, with construction periods for new plants projected as somewhere between 7 and 20 years, it is probably the most expensive alternative because of the financing costs. Whether anything can be done to fast-track a nuclear project, while ensuring public safety is not compromised remains to be seen.
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The Nuclear Plants Around the World from the INSCDB Web Site
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Friday, 27 November
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The carbon pollution reduction scheme has been hijacked by the political theatre. It is unfortunate that most commentators are presenting this as pretty bitter medicine to swallow. Some advocate that we have no choice and others say that we have to wait. Very few people are talking about the positive aspects of CO2 reduction policies.
Therefore, while the Liberal Party is agonising over its response to the CPRS bill and while some pundits from the finance sector are predicting doom and gloom if the bill passes the Senate, it would be refreshing to report on calmer commentary from overseas. One such commentary comes from the CEO of Vattenfall, Lars Josefsson. Vattenfall is a large electricity generating company owned by Swedish government with heavy investments in coal-fired power generation in Germany and Poland. The company is not apologising for investment in coal-fired plants, "we do not invest in coal because we love coal," Power Engineering International reports Mr Josefsson: "We invest in coal because the people in Germany and Poland need electricity. Our job is to over time turn them into zero emissions plants."
Josefsson is also the chairman of the Combat Climate Change, which is a group of over 60 large energy companies that includes not only the Western companies like BP, GE, Unilever but also developing world members, such as China National Offshore Oil and Russia's Gazprom. In an interview with the Financial Times, Josefsson has called on governments to agree on binding climate change emission cuts: "The necessary investments will only be made when you have a binding treaty and legislation. Of the money required to implement a deal, the vast majority – about 80 per cent – will come from the private sector. That can only come when there is a stable legal framework."
The figure shows the cost of different CO2 emission reduction measures as prepared by Vattenfall and published in a Combat Climate Change document. The main conclusions are
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Feedback: 27 Nov 2009, Bahay Ozcakmak, Activated Logic
Nice blog content today, particularly the Vattenfall work. This analysis is excellent in demonstrating the across the board abatement options available.
Specific major projects with large footprints such as BHP-Billiton’s planned Olympic Dam Expansion have conducted abatement analysis using a similar framework to determine what is the most effective means of reducing maximum emissions per unit of investment. If you are interested in this, you might find the analysis on page 384 of the ODX-EIS (view link) useful. http://www.bhpbilliton.com/bbContentRepository/docs/odxEisChapter13GreenhouseGasAndAirQuality.pdf
At Activated Logic we use this sort of integrated-cascade analysis to be able to competitively position geothermal energy use over “interesting” but less effective CO2 abatement alternatives.
I think one thing CO2 warriors and some renewable energy players fail to realise is that there are competing mechanisms available for society for CO2 abatement, and markets should be allowed to identify the most effective abatement options.
Thursday, 26 November
It looks like the Carbon Pollution reduction Scheme Draft Bill will pass the Senate. I spent the afternoon today in reading and trying to understand what is in the Bill. The copy of the Bill as it was brought to the Senate can be downloaded from the Australian Parliament web site for Bills. The following are the notes I took while reading the legislation. I could not locate an official document on the amendments that came about after Wong-McFarlane negotiations but there was sufficient reporting in the press and I tried to note the amendments based on what I read in the press in the last couple of days.
WARNING -- The following is based on a half--a-day reading of about 500 pages (skimming through most of it) and please do not rely on these notes for any decision that matter.
The stated intended outcome of the Act is reduction of the net greenhouse gas emissions to 60% below 2000 levels by 2050; and by 5% to 15% below 2000 levels by 2020. A more stringent target would apply if there is global consensus towards measures capable of stabilizing CO2 levels at 450 PPM or lower. You form your own judgement but it does not look this is going to happen soon. Therefore, the applicable limit is between 5% and 15% by 2020. This represents an unconditional commitment to reduce it by 5% and a sort of aspirational target to achieve a 15% reduction.
The original bill did not have exclusions but the exclusions for the following industries were added through the negotiations between Wong and Mcfarlane:
- Agricultural emissions to be permanently excluded
- Fugitive emissions from coal mining to be excluded
- Electricity generation is still included but there is now a Transitional Electricity Cost Assistance Program to provide $1.1b to help mining and manufacturing industries that consume more than 300 MWh per year.
How is the scheme going to work?
The scheme begins on 1 July 2011 and operates on a financial year basis. It is a cap-and-trade scheme. Under the scheme, companies are assigned emission units (EU) at the beginning of each financial year. This is like their emission allowance. During the year, they surrender one EU for each tonne of CO2 they produce. They are also assigned emission numbers (EN). The emission number corresponds to the number of CO2-equivalent tonnes they emit in the year (Art 19). During the year, the realized emission numbers (tonnes of CO2 emitted) cancel the emission units (permits for emitting those tonnes). The cancellation is done by sending a notice to the Authority to surrender one's EUs. If at the end of the year, the surrendered EUs are less than the ENs, one would have a “unit shortfall” (Art 128 and 130) and would have to pay a penalty. The penalty for the financial year starting on 1 July 2011 is $11 per the unit shortfall (Art 133-1a). In other words, if you have no free EUs assigned and if you do not buy any EUs and if you emit 3 million of tones of CO2 in the financial year 2011/2012, you would be liable to pay $33m. The penalty for future years will be 110% of the average auction price of the preceding year unless specified otherwise by the Authority (Art 133-1b). Alan Kohler says that this will follow the international price but i could not a reference in the legislation to that effect. The current spot price on the European Climate Exchange for a tone of CO2 is €12.64, or $A20.59.
There is a limited number of EUs and they are auctioned at the beginning of the year, but some EUs may be issued free or at a fixed charge. The caps for the years 2011,2012, 2013, 2014, and 2015 will be set by 1 July 2010 and after that the caps will be defined for each year five years in advance.
Small enterprises emitting less than 25000 tonnes/year are exempt from the obligations of this Act. The exemption threshold is smaller for landfill operations (10000 tonnes).
The fuel producers are not liable if they sell fuel to a customer large enough to be registered as a liable entity on its own right. It is only when the CO2 is emitted when it gets accounted. This was a bit confusing for me at the first reading, because at the beginning of the document the fuel suppliers are said to be accountable as if they were executing the actual emissions. However, later in the text it is stated that this obligation is passed on to the operation that burns the fuel. If, however, the operation that burns the fuel is the retail consumer, as is the case of natural gas or petrol, the CO2 liability rests with the retail supplier of the natural gas or petrol.
An Australian emissions unit is personal property and is transmissible by assignment( Art 94). Some units are bought in an auction, some are distributed at fixed charge or free of charge. Article 103B says that some of the freely-given units may be purchased back by the Authority at the rate of $10x per unit where “x” is a factor to be specified in regulations. This is only available to receivers of trade-exposed assistance or coal-fired generator assistance.
Free EUs may be issued to the following industries (there are conditions):
- Trade-exposed industries
- Coal-fired electricity generators
Free EUs may also be issued for
- reforestration projects (Part 10) or
- destruction of synthetic greenhouse gases (Part 11) (e.g. CO2 sequestration projects)
Tuesday, 24 November
It is only a fortnight before the UN COP15 meeting in Copenhagen. The COP15 means the 15th Conference of the Parties, where the "Parties" is the short of "Parties to the United Nations Framework Convention on Climate Change (UNFCCC)". The COP14 was in Poznan and it passed without much public attention. In contrast, the COP15 has been attracting a lot of media space because of the raised expectations about an outcome from this Conference about some form of united action against climate change.
Yesterday, I received the November copy of the Power Engineering International, which allocated its editorial to Clean Coal in expectation of the COP15 discussions on this topic. I must admit that I do not know enough about this area to make any useful comments but I thought it was strange that there had not yet been a large enough field demonstration project in this area considering its importance and the financial power of the stakeholders. According to the PEI Editorial, this might be changing, although most of the attention is focussed on "capture" with little note of "storage". The European Union last month proposed six CCS projects to receive a total of 1 billion euros. A number of different capture technologies are to be trialled in these projects. There are other projects also coming on stream in the coming years. While duly reporting on these projects, the editorial laments that the attention given to storage of the captured CO2 is nowhere near the effort spent on capture technologies. In fact, the title is "We can capture carbon, but can we store it?". I quote from the Editorial: "Is there sufficient space in the Earth's subsurface to store this (a mind-blowing scale of many billions of tonnes per year of) CO2. The answer to this question at the moment is quite simply, we don't know".
These are the new large-scale carbon projects mentioned in the Editorial:
- Powerfuel Power's Hatfield IGCC power plant in the UK (funded by the EU)
- Vattenfalls's Jaenschwalde plant with oxyfuel combustion in Germany (funded by the EU)
- Poland's Belchatow power station using an advanced amine post-combustion capture process (funded by the EU)
- The Meri-Pori CCS project of the Finnish utilities Fortum and Teollisuuden Voima Oyj in partnership with Siemens to treat approximately 50% of the flue gas with the aim of capturing 90% of the CO2 in the treated stream
- US Wisconsin Pleasant Prairie power plant of the utility company We Energies that uses an advanced chilled ammonia process to capture over 90% of the flue stream
- TransAlta of Canada and Alstom to construct a large-scale CCS facility in Alberta in partnership with the independent power produced Capital Power
The situation in Australia is murky at the moment but it will get clarified by June 2010. It appears that a recent Geoscience assessment will be used to choose up to four industrial-scale projects to be funded with the $2.4billion set aside in the May budget's "CCS flagships" program. All these developments are to be applauded. At the moment clean coal has a credibility problem allowing some pundits (Al Gore) to liken it to "healthy cigarettes". This is probably because the technology has not been demonstrated yet in the field at a scale large enough to be convincing. I know that the similar applies to the EGS or HFR geothermal as well. But I think the geothermal energy sector has the excuse that the players are much smaller and hardly with the financial muscle available to the coal mining companies and the owners of the coal-fired power generators. Having said that the HFR geothermal energy may beat Clean Coal to the first large-scale demonstration plant (or two) with the Innamincka and Paralana projects. Keep your fingers crossed.
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