Status of U.S. CCUS Policies and R&D Jarad Daniels. S2_2_US DOE Jarad... · 2019-09-17 · U.S. Department of Energy 5 5| Office of Fossil Energy Federal government promotes U.S

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Status of U.S. CCUS Policies and R&D Jarad Daniels

Office of Clean Coal and Carbon ManagementClean Coal Day International Symposium

September 9, 2019 | Tokyo, Japan

2U.S. Department of Energy

2 | Office of Fossil Energy

Projected future U.S. energy mix heavily impacted by projected natural gas prices

Source: EIA, Annual Energy Outlook 2019



Boosting Domestic Energy ProductionGrid Reliability and Resiliency

Job CreationEnergy Security

Trump Administration’s energy priorities



• U.S. Environmental Protection Agency (EPA) issued ACE in June 2019, which

• replaces the Clean Power Plan• requires states to perform an analysis of heat rate improvements that can be

implemented at power plants to increase efficiency and lower CO2 emissions• directs states to establish plans by July of 2022• provides flexibilities to states to design regulations, including consideration of

remaining useful life, cost of controls, and recent technologies installed at the plant

• EPA estimates that ACE would reduce power sector emissions in 2030 from projected levels absent rule:

• CO2: 10 million metric tons ● SO2: 5,200 metric tons• NOx: 6,400 metric tons ● PM2.5: 360 metric tons• Hg: 27 kilograms

• EPA intends to take action on New Source Review reform at a later date

Affordable Clean Energy (ACE) Rule



Federal government promotes U.S. coal exports

Source: National Coal Council, Advancing U.S. Coal Exports, 2018

Executive Order on Promoting Energy Infrastructure and Economic Growth, issued on April 10, 2019, requires assessment of “the economic and other effects caused by limitations on the export of coal, oil, natural gas, and other domestic energy resources through the west coast of the United States.”



CO2 Capture and UtilizationCrosscutting Research

Crosscutting technology development program

• Water management• Critical mineral extraction from coal and coal byproducts

• Modeling, simulations and analysis

• University research

Advanced Energy Systems

Clean Coal and Carbon Management: R&D overview

Efficiency improvements for new and existing units

• High‐performance materials• Solid oxide fuel cells• Modular design• Advanced cycles (e.g., sCO2)• Advanced turbines• Advanced combustion• Gasification• Sensors and controls• Power generation efficiency

Discover and develop advanced coal technologies that ensure America’s access to and use of secure, affordable, and reliable fossil energy resources

Reducing CO2 capture cost for new and existing units

• Post‐combustion capture• Pre‐combustion capture• New pathways to utilize captured CO2

Safely and permanently storing CO2

• Safe use and permanent storage of CO2 from power generation and industry

• Minimizing subsurface risks (coordinated with other subsurface offices, i.e., Oil and Gas Offices)

• CO2 infrastructure

Advancing R&D for the existing coal fleet

Reducing the Cost of Capture

Creating New Markets for Coal

Advancing R&D for plants of the future

CO2 Storage



Clean Coal and Carbon Management: R&D budget

Carbon Capture, 21%

Carbon Storage & Utilization,

20%

Supercritical Transformational

Electric Power, 5%Transformational Coal Pilots, 5%

Other, 11%

Advanced Energy Systems,

27%

Cross cutting Research,

11%

FY 2019 enacted: $486 million



Federal investment in carbon capture, utilization, and storage (CCUS) R&D – “Technology push”

101.0 101.0 100.7 100.7

96.0 85.3 86.0 86.0

10.010.0 12.0 12.0

207.0196.3 198.7 198.7

FY 2016Enacted

FY 2017Enacted

FY 2018Enacted

FY 2019Enacted

Carbon Capture Carbon Storage Carbon Utilization

$ millions

Carbon storageSafe, cost‐effective, and permanent geologic storage of CO2

Carbon capture R&D and scale‐up on capture CO2 technologiesfor new and existing industrial and power plants

CO2 utilizationR&D to convert CO2 to value‐added products



Financial incentives for commercial CCUS, §45Q Tax Credits – “Market pull”• Tax benefits have been available since 2008 for qualified CCUS projects in

the United States• Bipartisan Budget Act 2018 extended and significantly expanded benefits:

– Increased credit amount:Saline storage: $20/ton up to $50/ton; utilization:$10/ton up to $35/ton

– Expanded qualified carbon oxides to include carbon monoxide (CO)– Expanded qualified uses to include CO2 utilization other than enhanced oil or

natural gas recovery– Lowered qualifying threshold for amount of CO2 captured to allow more

industries to participate– Increased flexibility to allow credit assignment to capture or disposal facility– Removed program cap

• The Internal Revenue Service is working with EPA, Department of Energy (DOE), and other agencies to provide clarity for stakeholders regarding the implementation of 45Q



• Unparalleled opportunity for CO2-EOR in the United States:– Technically recoverable resource:

o 137 billion barrels from conventional oil fields*o >100 billion barrels in unconventional tight oil formations**

– 40-60 billion metric tons of CO2 needed to produce 100 billion barrels of oil

• Regardless of modeling platform, analysts are finding that 45Q enables deployment of CCUS in the power and industrial sectors

Expected impact of §45Q Tax Credits

* National Energy Technology Laboratory, Improving Domestic Energy Security and Lowering CO2 Emissions with ”Next Generation” CO2 -Enhanced Oil Recovery (CO2-EOR), 2011** Energy & Environmental Research Center – U.S. Department of Energy (DOE) Joint Program on Research and Development for Fossil Energy-Related Resources, Final Report, 2018.



• Clean energy standards, such as low carbon fuel standards and electricity generation portfolio standards or voluntary goals, deem CCUS eligible for compliance or generation of saleable credits

• Tax credits for CO2-EOR and geologic storage provide reduction of corporate income taxes or severance taxes on oil produced, and exemption from property and sales taxes on machinery and equipment

• Direct financial assistance for CCUS projects and CO2 pipelines, often as grants or loans

• Off-take agreements provide a guaranteed buyer for the electricity or output from a CCUS project

• Utility cost recovery mechanism offers timely reimbursement of costs incurred during construction and operation or favorable rates of return for regulated utilities' investments. Some states have explicitly included CCUS as an eligible technology for cost recovery mechanisms

• State assumption of long-term liability for sequestered CO2 reduces the long-term costs of CO2 injection for private project developers

State policy support for CCUS



• Objectives– Evaluate CCUS value chain from capture through use and/or storage across

diverse industrial sectors and fuel types– Establish the business case for CCUS in the U.S.– Address broad range of factors consistent with the Secretary’s request (e.g.,

technology, legal, regulatory, economics, etc.)– Focus primarily on accelerating CCUS deployment within the U.S. while

learning from and considering implications for rest of the world– Deliver an actionable set of recommendations for short, medium and long

term scale-up of CCUS deployment, including specific recommendations for the U.S. government

• Scheduled release of final report: December 2020

National Petroleum Council CCUS study



International cooperation critical to advancing clean fossil energy

Multilateral partnerships• International Energy Agency (IEA)

o Working Party on Fossil Fuelso Greenhouse Gas R&D Programme (GHG) o Clean Coal Centre (CCC)o CCS Unit – CCS Roadmap and International CCS Regulatory Network

• Carbon Sequestration Leadership Forum (CSLF) • Clean Energy Ministerial (CEM) - CCUS Initiative • APEC Expert Group on Clean Fossil Energy (APEC EGCFE)• UN Economic Commission for Europe (UNECE)• Mission Innovation CCUS Initiative• Global CCS InstituteG20 Energy and Environment Ministerial• The Communiqué of the G20 Ministerial Meeting in 2019

recognizes the critical role of advanced and cleaner fossil fuel technologies and “the need for investment and financing of advanced and cleaner fossil fuel technologies including CCUS”

• The G20 Karuizawa Innovation Action Plan calls for “international cooperation on “Carbon Recycling” and “Emissions to Value” among industry, academia and government”



Clean Energy Ministerial CCUS Initiative (CEM-CCUS)

Key objectives• Expand the spectrum of clean energy technologies under CEM

to include CCUS• Create a sustained platform for the private sector,

governments, and the investment community to engage and accelerate CCUS deployment

• Facilitate identification of both near and longer-term investment opportunities to improve the business case for CCUS

• Disseminate emerging CCUS policy, regulatory, and investment best practices as part of integrated clean energy systems

Key developments• On May 30, 2019, the CEM-CCUS Initiative and the Oil and

Gas Climate Initiative (OGCI) announced their intention to collaborate to accelerate strategic investment opportunities in CCUS clusters around the world

• The CEM-CCUS Initiative is encouraging multilateral development banks and commercial banks to build CCUS into their energy development strategies and low-carbon portfolios

Members

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Documents

Status of U.S. CCUS Policies and R&D Jarad Daniels. S2_2_US DOE Jarad... · 2019-09-17 · U.S. Department of Energy 5 5| Office of Fossil Energy Federal government promotes U.S