Week of May 11 - Our Second Carbon Capture Imbroglio

There seems to be a lot of interest in carbon capture and sequestration CCS, and I plan to give the issue more coverage in the future. Recently I spent about six months focusing on the carbon economy and how it was supposed to come into being and solve our climate change problems, so I reckon I can speak with some authority.

Last week I alluded to a dissertation written by Swedish researcher Anders Jansson which has been getting a lot of attention in the energy and environmental press. I noted the paucity of documentation relating to the cost and feasibility of CCS prior to Jansson's research, but now a new report is available that purports to provide us with just this sort of information in concise form. It emanates from the folks at Greenpeace, and in many quarters would be immediately suspect on that basis. It is, I assure you, well worth reading, however.

Obviously one must be wary of screeds masquerading as disinterested scientific research. "False Hope – Why Carbon Capture and Storage Won't Save the Climate" is a screed, no doubt about it, and, like all such efforts, it is based upon selective scientific reporting. But unlike a lot of the rubbish on energy and the environment emanating from the right wing think tanks, there are no egregious falsehoods here, at least none that I can detect. Everything is worst case scenario, but as a summary judgment on the state of the CCS industry today, it's actually pretty factual.

The study notes quite accurately that none of the established techniques for either capturing or sequestering CO2 are cost effective or energy efficient at present, and that to attempt to implement CCS on a scale sufficiently massive to make a difference in atmospheric carbon levels would raise the price of utility electrical power and with it everything subject to energy intensive manufacturing to unprecedented high levels. It would also lead to the more rapid depletion of remaining fossil fuels.

The study also points out some of the dangers inherent in long term storage, and, given the huge volumes of the gas that would eventually be sequestered, the utter uselessness of the endeavor if even a single percent of the gas were released on an annual basis. If the long term goal is to reduce emissions by over 80%, then a total reservoir capacity representing decades of emissions and one that is growing ever larger by the day, represents a potential secondary emitter of formidable proportions.

Where the study is remiss is in the lack of consideration given to ocean storage and the lack of attention to the procedures by which it is accomplished. I don't happen to believe that deep ocean sequestration is very likely to occur, but it could work and it could represent the optimal strategy with current technology. Carbon dioxide released at depths of thousands of feet forms a stable, solid clathrate that stays on the sea floor indefinitely. The gas simply cannot be released unless the temperatures significantly increase or the pressure is reduced, and the sea floor is environment where such changes simply don't occur.

The stated purpose of the study is to advance the position that fossil fuel energy sources must be swiftly phased out and replaced entirely by renewable sources, but, unfortunately, no similarly rigorous analysis is provided for the economics and feasibility of doing so. The implicit assumption is that it will be fairly easy.

As long time readers of this journal are aware, I am not so sanguine regarding the economics of such a transition, though surely it will have to occur eventually. Renewable energy advocates like to focus on the costs of renewable sources used to supplement base load power provided by coal and natural gas plants, but when renewables become the mainstay the economics change radically.

I performed an admittedly incomplete analysis of the matter in a lengthy tutorial included in our Primers section but I don't pretend it’s the last word. And now I am happy to report that the DOE has published a much more extensive consideration of the relevant issues in a somewhat awkwardly titled book length report, "20% Wind by 2030"

DOE Wind Study

I am at this point wading through the hundreds of pages of text, and I will refrain from comment until I have finished. The study does consider matters of transmission and power quality that have been neglected in almost all other studies of pervasive wind power, but the authors do not attempt to analyze the operation of a completely renewable energy based electrical utility system. And, in truth, it is hard to envision just what form such a network might take. To attempt to construct such a system solely with wind generators would be to encounter almost insurmountable problems in provisioning base load power. True, a massive build out of concentrating solar facilities would provide a certain amount of base load power, but only during the hours of daylight if conventional generators were used. Solar heat can be stored by certain means so that sun powered engines can in fact continue to operate after sundown, but the greater the storage capacity the more massive and costly the collector apparatus becomes since fully half of the concentrated solar energy is going to heat a thermal reservoir instead of directly powering a heat engine.

Of course there are other renewables—hydroelectric power, traditional and low impact; ocean power in its various forms; geothermal; and high altitude wind, each with its own promise and pitfalls. But except for traditional hydroelectric power, which cannot be greatly expanded without severe environmental impacts, none of these dark horses has demonstrated, proven potential for generating electrical power cost effectively on a scale that would make a difference. I see no truly intractable problems with any of the dark horse renewables, but that doesn't change the fact that they're experimental today and are not apt to attract enough investment to gain much momentum.

One of the seldom stated but significant problems with replacing fossil fuel generation with renewable energy in electrical utilities is the amount of structural materials such facilities require. All renewables, but especially wind and solar, require very large physical plants relative to the amount of energy harvested. Right now the costs of materials for such structures are acceptable at current energy prices, but we are seeing very rapid increases in the price of structural steel, and I predict similar increases in the price of concrete. The carbon fiber laminates used in many wind turbines are also likely to exhibit considerable price rises as well. All of this arises from the fact that fossil fuels costs are rising. All of these materials undergo energy intensive manufacturing processes and so inevitably grow more costly. That puts electrical generation technologies requiring a lot of these materials at a disadvantage, particularly inasmuch as the incumbent technologies are already extensively built out and have construction costs that are fully amortized.

And, at the end of the day, investment is the key to renewables going forward—or carbon capture, for that matter—and the amount of private investment going into these sectors is trivial in terms of what is required to achieve a sufficiently accelerated development cycle to make a difference, if indeed carbon dioxide in the atmosphere and fossil fuel resource depletion are both problems of the magnitude that many believe they are. The problem is that return on investment for electrical utilities has been historically low. Over the years various schemes have been hatched by financial speculators for obtaining spectacular yields from stodgy utilities, beginning with Samuel Insull a hundred years ago and ending with Enron but I don't see any similar plays occurring with renewable energy farms. There is some interesting activity occurring in a related sector of the economy, however, namely, transportation. A number of major investment houses foreign and domestic are quietly acquiring pieces of the American public highway system from local governments desperate for cash, the justification being that the private sector can do a better job of maintaining them.

Obviously, the financial possibilities are intriguing here. Think of the value of such assets as collateral for further speculative investment. And then of course there are the tolls which would most probably not be subject to regulation in the anti-regulatory climate of the present. Perhaps such roads could be treated as tiered commodities with various lanes and levels of service open to different users. Service contracts could be sold and resold, the opportunities for profit are endless. But at this point that's all just speculation.

Project Better Place – Dusting off a Business Plan from a Hundred Years Ago

Recently the business press has been full of breathless accounts of a Silicon Valley investor's plan to launch electric cars into the mainstream by setting up a worldwide network of charging stations. The investor is one Shai Agassi, and the plan involves charging customers by the mile and swapping out batteries at the charging stations so the customer can get back on the road as quickly as the ordinary motorist stopping for gas. He claims the scheme is based upon the cell phone model.

Good idea?

Well, it's been tried before, which none of the commentators have mentioned. According to Gijs Mom, author of the magisterial and definitive study of electric cars entitled "The Electric Vehicle, Technology and Expectations in the Automobile Age", similar schemes were implemented in France, Germany, Holland, and the United States from the late eighteen nineties up through the teens of the century. No such scheme resulted in the long term survival of the electric car.

Agassi has written an interesting and generally thoughtful white paper outlining his company's business plan and arguing the case for the pure electric car displacing the familiar gas guzzler. The tome is entitled "Projecting the Future of Energy, Transportation, and Environment" and it's available on the company Website.

Mr. Agassi believes that a largely solar powered electrical grid will charge the world's electric cars, all one billion of them, and that internal combustion engine will go the way of the pterodactyl or the Tasmanian tiger, take your pick. He doesn't say anything about air or maritime transport, so maybe internal combustion gets to survive there. Or maybe not.

If Agassi is right, this publication will join the pterodactyl as well since we will have nothing to report upon. But is he? Here we're back to our previous discussion of the all renewable energy power grid, on the one hand, while a second issue—though it is the primary issue for Mr. Agassi—involves the viability of the improved electric car. One could, of course, operate electric cars off a fossil fuel powered grid, whether or not it employed carbon capture, but Agassi is not considering that option.

Hybrid electric cars are in strong contention today and may come to dominate the market eventually. Pure electric cars are another matter because the incumbent automotive industry has essentially rejected them. And once a particular technology option is rejected it is difficult to resurrect.

Is there any hope today? That's hard to say, but I will mention that Mom's book provides an unorthodox but plausible view as to why the electrics ultimately failed while demonstrating their strength within a number of niche markets up into the nineteen twenties. His view is that the electric failed not for technical reasons but because of the superior product promotion and market positioning strategies employed by the internal combustion crowd. Unfortunately, he doesn't care to speculate as to whether a twenty-first century electric has a fighting chance. Incidentally, it is worth noting here that during the 1890s steam and electric cars were heavily dominant and internal combustion types were in the minority. But three years into the twentieth century both steam and electric types were in decline.

For my part, I believe that no pure startup can possibly succeed on any major scale with an electric automobile today or with any other unconventional power plant for that matter. The current transportation system is built around the incumbent technology and much of the manufacturing and service sectors are entrained by it, while at the same time, the cost of building distribution and service networks is enormous. The only automotive startups who have succeeded to any extent have been manufacturers of exoticars, and they, of course, are aiming at niche markets.

Agassi may very well agree because according to Reuters he is in talks with Renault in France and Chery in China—in other words, he wants a major player to adopt his plan. Chery has already developed an innovative and luxurious plug-in hybrid for the U.S. market, so they may be willing to entertain something like this. But why do they need Agassi? There's plenty of prior art for what he's doing.

Incidentally, Agassi proposes to introduce his approach in small, densely settled developed countries like Denmark and Israel. That's probably wise.