joint reduction of petroleum consumption and carbon emissions · 2006-09-22 · joint reduction of...

Joint Reduction of Petroleum Consumption and Carbon Emissions

NETL/ANL Scenario Analysis Results“Peak Oil” and Other Sensitivities

USAEE/IAEE North American ConferenceSeptember 26, 2005

Peter C. Balash1 and Donald A. Hanson2

1Economist, National Energy Technology Laboratory2Economist, Argonne National Laboratory

Disclaimer/acknowledgements

• We would like to thank our co-authors and colleagues:• Dave Schmalzer, ANL Dale Keairns, NETL • John Molburg, ANL Kathy Stirling, NETL, ret.• John Marano, ANL/NETL Ken Kern, NETL• And other colleagues for their helpful comments along

the way• This work is funded by the National Energy Technology Laboratory,

Pittsburgh, PA, Morgantown, WV and Tulsa, OK, and performed using the AMIGA economic model from Argonne National Laboratory, Chicago, IL.

• All views expressed are those of the authors and should not be construed to reflect the policies or views of the United States Department of Energy, the National Energy Technology Laboratory, or Argonne National Laboratory.

Outline

• Scope• Review of Initial Results• Sensitivity Cases• Future Work• Model information

Scope and Accomplishments

• Presidential goals of reduction in petroleum consumption of 11 million barrels/day and 500 million tonnes carbon by year 2040.

• Transform Presidential objectives into alternative scenarios for use in economic model− Interpret Goals as reductions from baseline

• High-level economic analysis of technology and the ‘hydrogen economy”− Integrate rigorous engineering cost estimates with

macroeconomic model

Coal-Fuels Substitution and Efficient Vehicles Meet Presidential Reduction Goals

• Goals met through− Penetration of more efficient vehicle technologies, either

hybrid-electric (HEVs) or fuel cell vehicles (FCVs)− Carbon capture from Integrated Gasification Combined

Cycle and power-fuels coproduction plants− Moderate substitution of coal-Fischer-Tropsch fuels for

petroleum• Sensitivities stress importance of coal in both “peak

oil” and Kyoto-type carbon-reduction cases• Coal consumption rises significantly in all cases

Technical Challenges

• Integration of cost and performance specifications of refinery and coproduction plants with AMIGA economic model.− Important for richer representation of investment

choices• Implementation of DOE’s H2A production cost

estimates −Must assume technological breakthrough in FCV

case• Identification of appropriate performance

characteristics of advanced vehicles

Scenario Structure

• Uses Presidential reduction goals as drivers−Reductions from future, not current, levels−H2-economy based on FCVs a possible means to

achieving quantitative goals, not an end in itself• As distinct from Academy study (2004)

• replacement of petroleum-based light-duty vehicle fleet, or • DOE H2 Posture plan (2005)

• Focus on renewable hydrogen

• Recognition of scientific debate− E.g. Romm (2004), Shinnar (2003), Demirdöven and Deutch

(2004)

Petroleum Target

0

5

10

15

20

25

30

35

2005 2025 2040

AEO2005 AMIGA

21 21

28 27

35

3111mmb/d reduction

from AMIGA ref.

implies future consumption

at today’s levels

Mill

ion

barr

els p

er d

ay

Source: EIA AEO2005 Yearly Table 11; author extrapolation;AMIGA reference run

Carbon Emissions Target

0

500

1000

1500

2000

2500

2005 2025 2040

AEO2005 AMIGA Ref

1171 1169

1645 1562

2151

1761C target

reduction from AMIGA ref. reduces C to level ~7%

above today’s

Mill

ion

Met

ric to

ns C

eq.

per

yea

r

Source: EIA AEO2005 Yearly Table 18 (transport petroleum; electric power); author extrapolation; AMIGA reference run

Scale of Challenge

Small Car

Large Car

Conv. SUV

Large SUV

HEVs

Small Car

Large Car

Conv. SUV

Large SUV

HEVs

0

50

100

150

200

250

300

350

2005 2040

Vehicle Stock Increases

63%

Source: AMIGA Reference Run

Mill

ions

of V

ehic

les

How to Achieve CutsReference Case:“Business as usual”

Extended TransitionHybrid-electric vehiclesand Clean Hydrocarbons“HEV case”

Hydrogen AchievementHydrogen Production for Fuel Cell Vehicles“FCV case”

Oil Prices From $37/b in 2010; Gas Prices from $6/mmBtu

Coal Power/Fischer-Tropsch Co-Production Plants

DOE H2 Posture Plan guidelines

“Clear Skies”-Like Emissions Targets

Energy Security Charges on premium fuels from 2010

H2A program (DOE EE)H2 cost data

Gasification, Hydrotreating and Clean fuels Refinery Modeling

Carbon Charges on Electricity generation from 2015

More stringent clean air regulations begin in California

Nuclear Generating Capacity Constant

Four size categories of Hybrids; eventual Plug-Ins

Technological “breakthroughs”assumed

Assumptions are kept from left to right

Externality Charges

$ per metric ton C;$ per barrel oil

More stringent

anti-smog measures

+ higher fuel economyimplies lower

C charge for

FCV case

Source: AMIGA Presidential Goals Scenario Runs

0

10

20

30

40

50

60

70

80

2005 2010 2015 2020 2025 2030 2035 2040

Reference Carb Ch - HEV Carb Ch - FCV ES Prem - HEV ES Prem - FCV

Model optimizes imposition of charges

Effective Oil Prices

0

10

20

30

40

50

60

70

2005 2010 2015 2020 2025 2030 2035 2040

World Oil Price ES charge per bbl Carb Ch per bbl

0

10

20

30

40

50

60

70

2005 2010 2015 2020 2025 2030 2035 2040

World Oil Price ES charge per bbl Carb Ch per bbl

$/bb

l

HEV-only Case HEV+FCV case

Externality charges result in higher effective than nominal oil prices;Slightly higher imputed carbon and energy security charges in HEV-only case


Vehicle Stocks

0

50

100

150

200

250

300

2005 2010 2015 2020 2025 2030 2035 2040

ICEs HEVs FCVs

0

50

100

150

200

250

300

2005 2010 2015 2020 2025 2030 2035 2040

ICEs HEVs

Mill

ion

vehi

cles

Extended Transition Hydrogen Achievement


Internal Combustion Engines decline but remain;

externality charges drive adoption of alternative vehicles

Reduced Petroleum Consumption

Source: AMIGA Presidential Goals Scenario Runs - HEV case

Mill

ion

barr

els p

er d

ay

0

5

10

15

20

25

30

2005 2010 2015 2020 2025 2030 2035 2040

FT-Fuels Offset Other fuels vehicle fuels

15% of goal met by coal-fuels substitution; 85% through efficiency

Consumption v. Share of HEV Sales

0

2

4

6

8

10

12

14

16

2005 2010 2015 2020 2025 2030 2035 2040

mm

b/d

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% n

ew c

ar s

ales

LDV oil con., BAULDV oil cons, HEV casehybrid sales, BAUhybrid sales, HEV case

HEV new car sales must reach ~45% before consumption falls

Source: AMIGA Presidential Goals Run

HEV wedge

0

5.8

3.9

2.3

1.1

0.40.1

8

0

1

2

3

4

5

6

7

8

9

2005 2010 2015 2020 2025 2030 2035 2040

HEV wedge

Fall in consumption due to HEV penetration

mmB/d

Source: AMIGA Presidential Goals Run

Hydrogen Production, FCV case

0

5

10

15

20

25

30

35

2020 2025 2030 2035 2040

CoaltoH2SMR_Distrb

By 2030, distributed Steam Methane Reforming

H2 production Eclipsed by

Coal to H2 plants

Source: AMIGA Presidential Goals Scenario Runs,FCV Case

Bill

ion

Kilo

gram

s H

2

Caveat: Methane Hydrates?

Energy Supply to Vehicles, Extended Transition

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2005 2010 2015 2020 2025 2030 2035 2040

Petroleum Grid

Growth in Energy Input to Transport

Sector levels off as more efficient

plug-in HEVs become

prevalent

Source: AMIGA Presidential Goals Scenario Runs - HEV case

Trill

ion

Btu

s

GRID

PETROLEUM

Power Sector Generation by Fuel Type, Year 2040

447

3411

929

780

807

0

155

3288

1018

780

1029

137

26

3333

1073

780

1170

290

0

1000

2000

3000

4000

5000

6000

7000

reference FCV case HEV case

Coal Existing Coal New Gas & Oil Nuclear Renewables Fischer-Tropsch

Trill

ion

Wat

t Hou

rs


Renewable Generation Capacity and Growth

0

200

400

600

800

1000

1200

1400

2005 2010 2015 2020 2025 2030 2035 20400%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Ref FCV HEV Refsh FCV share HEV share

Trill

ion

Wat

t Hou

rs

Sha

re o

f Pow

er S

ecto

r Gen

erat

ion


All growth is in non-hydro renewables;Renewable share of total generation grows fastest in FCV case;

Absolute renewable capacity greatest in HEV case

Sensitivities

• HEVs are more efficient relative to both conventional Internal Combustion Engines and H2 FCVs than in the National Academy Study

• Higher carbon reduction targets would require more coal plant sequestration

• Sensitivities include − constrained oil supplies (eg “peak” oil from 2015)− less efficient advanced vehicles (consumers prefer

performance, no plug-in HEVs)− higher carbon reduction targets (Back to 1990 levels)− faster development of coal technologies (better FT

technology)

Light-Duty Vehicle Oil Consumption

0

2

4

6

8

10

12

14

16

2005 2010 2015 2020 2025 2030 2035 2040

BAU HEV FCV PEAK CO2 90 FT IMPR PERF

No Discernible difference in

HEV, CO2 1990,

AndFT-TechnologyImprovement

cases

Peak Oil after 2015 quickens pace

Performance over efficiency slows pace

of reductionsMmb/d

Source: AMIGA Presidential Goals Scenario Sensitivity Runs

Consumption can fall in long-term, but 15 years need elapse before more efficient vehicles lead to less consumption

Effective Oil Price Sensitivities, 2040

0

20

40

60

80

100

120

BAU2005

BAU HEV FCV PEAK CO2 FTIMPR

PERF

energy security charge carbon charge per bblworld oil price

Peak Oil removes need for energy

security premium as world oil price rises

Performance over efficiency forces

higher energysecurity premium

If real-time (2006) prices persist,Economics predict change will occur; declining oil supplies hasten technological change


$/bbl

scenario

The Rise of Diesel

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

ReferenceHEV CaseFCV Case

Distillate share of premium fuels


Refinery Fuel Mix and the Transition to Alternative Vehicles

• Reference Case – Current refinery configuration, optimized for gasoline production using fluid catalytic cracking (FCC)− FCC capacity continues to grow with gasoline demand − FCC produces gasoline by rejecting carbon from heavier fuel oils

• Alternative cases – As crude consumption falls due to declining LDV gasoline demand, demand for diesel fuel remains strong− However FCC is not optimal for producing clean diesel fuel− Refiners have trouble meeting diesel fuel demand and quality as the ratio of

gasoline to diesel produced from a barrel of oil decreases− Refinery hydrocracking capacity increases to provide higher quality diesel− Unlike FCC, hydrocracking adds large amounts of hydrogen to heavier fuel

oils

• In the HEV case, about 55% of current FCC capacity would need to be replaced with new hydrocracking capacity by 2040; additional hydrocracking capacity would also need to be built to meet incremental growth in diesel demand− Conversion of existing FCC-based refineries to hydrocracking refineries is

feasible but expensive, and would require a huge amount of additional refinery hydrogen production, resulting in increased diesel fuel prices

Carbon Emission Sensitivities

0

500

1000

1500

2000

2500

2005 2010 2015 2020 2025 2030 2035 2040


MM metric tons C

year

Small DifferencesBetween FCV, HEV,FT-improvement, and Performance cases

Kyoto-like targets reduce carbon levels through…


Carbon Capture, 2040

0

100

200

300

400

500

600

700


IGCC CarbCapture FT CarbCapture Seq from H2A plants

MM metric tons C

More widespread capture employed

to reach stricter C targets

Capture @ H2 producing plants


Sectoral C emissions, 2040

0

200

400

600

800

1000

1200

1400

1600

1800

base FCV HEV FT PERF CO2 1990 PEAK

Power TransportH2 plants

mm

Mt C

For deepest cuts Power sector most economic


Coal Use by plant type, 2040


0

5

10

15

20

25

30

35

40

45

base 2005 BAU HEV FCV PEAK FT PERF CO2 90

Adv coal pwrOld coal pwrOther Coal FT Coal Feed

Wide variation in plant type: Peak Oil and Performance Vehicle

scenarios call forth substantially more FT

Quads

Rising Coal Use

BAU

HEV

FCV PERF

CO2 1990

Peak oil

0

500

1000

1500

2000

2500

2005 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

BAU HEV FCV PERF CO2 1990 Peak oil


Substantial increase in coal utilization in all scenarios

Mill

ion

sho

rt to

ns

CTL Plant Additions


-

10

20

30

40

50

60

70

80

90

2010 -2015 2 015 -2020 2 020 -2025 20 25 -2 030 203 0 -20 35 2035 -204 0

F C VH E VP E A KP E R F

Vertical scale dependent on plant size,but relative increments invariant

Number of Plants @9,266 tonsper day coal feed

Coal Use and Reserves


129123

115

116113

111

-

50

100

150

200

250

300

2005reserves

2040reserves

2005 R/P 2040 R/P

PERFFCV

HEVPeak oil

CO2 1990BAU

Billi

on s

hort

tons

; Yea

rs L

eft

267 billion tons of reserves in 2004

245 years of production

left in 2004

No reserve growthassumed. Increase in

coal use for power,CTL and/or H2

reduces R/P ratio by ~ half, in 35 years

Future Work/Possible Extensions

• Implementation of alternate coal-synfuel pathways

• Construction of ethanol and biomass co-firing modules

• Incorporate recent H2A delivery cost estimates

• Continual upgrading of existing modules

Appendix

• Model information

The AMIGA Model

• AMIGA is a Computable General Equilibrium (CGE) Model of the US economy with considerable sector detail

• It features characterizations of major end-use electricity- and gas- using technologies, and consumer choice behavioral representations

• AMIGA includes reduced form representations of electricity generation and petroleum refining as they are embedded into the structure of the US economy

• AMIGA can be used to examine structural change in the economy arising from alternative future scenarios, including impacts from climate-related and/or energy-related policies.

The AMIGA Model

Bureau of Economic Analysis sectors of the economyGeneral model of production costs and pricesSpecific energy conversion technologies and capacities

Electric power generationHydrogen productionFuels refining

Market shares: Where are the margins?(often not a question of which is cheaper but at what market shares do marginal costs equate; there may be some role/niche for many energy technologies).

Supply and Demand equal in all marketsIncome and price effects, e.g., income effects of reducing oil imports

Flows Within the AMIGA Energy-Economic Model

Coal Power/FT Fuels

• Plant Products− 1.63 bpd of F-T liquid fuel precursors/ton per day of dry

coal feed− 33 kWe/ton per day of dry coal feed

• Capital Cost: $135,000 per ton per day of dry coal including carbon capture w/o sequestration (2003 $)

• Carbon for sequestration: 53% of carbon in coal feed− Lower cost than capture from a power only plant

Source: Dale Keairns and Richard Newby, 2005, “Fuels and Electric Co-Production Plant Cost and Performance Projections,”NETL working paper

Future F-T Liquid Cost Forecast

• Projection for cost of F-T liquid production represented by increase in performance for the reference case investment

• Assume consistent with advanced coal plant performance used in NETL benefit studies

• Project ~20% increase in capacity during 2030-2040 time frame.


Plant Design Basis Choices

• Plant capacity and availability• Fuel and plant location• Product distribution (fuel, power)• Technology selection (state-of-art,

advanced)• Design choices (e.g. spare gasifiers)• Emissions control• Degree of CO2 capture• Degree of F-T upgrading


High F-T Liquid Plant With Carbon CaptureCase 3

AGR MDEA & AC Sulfur

Polishing

Coal Gasifier E-Gas & Heat

Recovery

Low-Temperature Gas Cleaning

F-TSynthesis

Liquid FuelPrecursors

Coal

ASUAir

Oxidant

WGS System &CO2 AbsorberReheat Compress

Off-gas

Steam

CO2 toSequester

Sulfur

HalidesAmmoniaMercury Steam

GasTurbine

HRSG &Steam Cycle

AirSteam

Power StackGas

Power

Steam


Plant Performance ResultsCarbon capture significantly reduces net plant power

Base Plant Case 2 Plant Case 3 Plant

Coal feed rate (TPD)

9,266 9,266 9,266

Liquid fuel precursors (BPD)

12,377 15,063 15,063

Net Plant Power (MW)

675.9 543.8 307.8

Liquid fuel-to-Power (BPD/MW)

13.7 27.7 48.9

Thermal Efficiency (HH%)

52.8 54.4 46.2


Plant Carbon BalanceBase Plant Case 2 Plant Case 3 Plant

Coal carbon input (TPD) 6,488 6,488 6,488

Carbon in slag (TPD) 308 308 308

Carbon in stack gas (TPD) 4,952 4,626 1,202

Carbon in liquid fuel (TPD) 1,477 1,797 1,826

Carbon in CO2 sequester stream (TPD)

0 0 3,430 (53% of coal C)

Total carbon not emitted to stack (% of coal C)

23.7 28.7 81.5

CO2 reduction from Base Case (%)

--- 6.6 75.8


Plant Cost Estimates

Base Plant Case 2 Plant Case 3 PlantSolids Handling Area 28,317 28,317 28,317Air Separation Unit 149,791 149,791 149,791Coal Gasification Area 434,094 434,094 434,094F-T Liquids Area 94,283 108,180 108,180Water-Gas Shift Area 0 0 8,630CO2 Removal Area 0 0 44,467CO2 Compression Area 0 0 48,200Power Block 348,788 308,220 246,764BOP 103,785 103,785 103,785Total (mid-2000$) 1,159,058 1,132,386 1,172,228Total (esc. Mid-2003$) 1,239,033 1,210,521 1,253,112


Macro Analysis of Petroleum Refining SystemsOverview

• MARS is a working prototype refinery forecasting model− Represents 26 primary & secondary refinery processes− Also includes representation of CTL co-production plant

feeding eastern or western coal− Includes 8 major refinery products including gasoline, diesel &

jet fuel− Includes existing regional capacities with provision to expand

existing process capacities during forecast period − Assays for six crude types represented: Low-Sulfur Light, MS

Heavy, HS Light, HS Heavy, HS Very-Heavy, Syncrude

SMR

MARS U.S. Refinery Configuration

Crude Oil

DLC

Prm Gasoline

Reg Gasoline

Field Butanes

Natural

Gasoline

Purchased

EthanolI4O

GSF

LPG

Kerosene(Jet Fuel)

DFO

Petcoke

RFO

Asphalt

Diesel

SRU

PFS

Sulfur

SGPUGP

SFA

Dist

Pool

ISO

NHTDHX

KHTACU

VCU

LPR

DHT

GHT

HCK

CCU

ARD

GDS

HSR

LSR

SRK

SRD

AGO

VGO

VRC

n-Butane

LSR/DHO/HCL

RFT

ISO

ALK

CCLN/CCHN

CSO

HTCN

HTK

SRD

HTD

HCK

HCD

H2

H2

H2

NGS,RGS

H2S

NGS,RGS

ARC

Gaso

Pool

MARS Coal-To-Liquids Submodels

• Coal-To-Liquids (CTL)− Yields for Eastern & Western Coal with and without

CO2 capture & sequestration− Yield of FT Liquids & Power fixed− Sulfur yield by S balance− FT raw product distribution & properties fixed− Utilities consumption fixed

• FT Liquid Hydroisomerization (FHI)− Upgrading assumed to occur at refinery via

hydrotreating, hydrocracking & isomerization− Products: FT Light & Heavy Naphthas, FT Kerosene

& FT Diesel− Hydrogen consumption & product yields fixed− Utilities consumption fixed

FT Liquids Upgrading

lgt Naph

Syncrude C5+

700+ Recycle

Purge

H2 Rec

Purge

H2 Rec

FT Dist C5+

FT Reactor Wax

HDT HIS

H2 Makeup H2 Makeup

• Other product slates are possible besides all light products− Degree of FT wax cracking can be controlled by adjusting

reactor severity & recycle to produce FT Gas Oil− Allows greater flexibility in producing desired ratio of

gasoline to diesel from the refinery

FT Liquids Upgrading OptionsHIS Minimum Conversion

10%26%

25%11%

28%

Naphtha

KeroseneDistillate

Gas Oil

LPG

Max.Gaso.= LPG+.8 Naph.+.75 G.O.= 52%

HIS Maximum O/T Conversion

26%

32%15%

17%

10% Naphtha

Kerosene

Distillate

Gas Oil

LPG

HIS 100% Conversion

34%

36%

19%

11%Naphtha

Kerosene

Distillate

LPG

Max.Dsl.= Dst.+Kero.= 55%Max.Jet.= Kero.+.25 Naph.= 45%

This is representation currently in MARS…but is least likely to be pursued

for “remotely” located GTL/CTL plants

MARS Economic Model

Corporation

E&CContractor

Lenders

Investors

Federal & StateGovernments

Consumers

EmployeesVendorsSuppliers

EmployeesVendorsSuppliers

OSBLoperations

ISBLoperation

CorporateFunds

Refinery

Gross Revenues

Depreciation Charge for Books

Taxable Income

Income Taxes

Repayment& Interest

Dividends

Debt

Equity

GeneralExpenses

Net Income

CashFlow

Project InvestmentsContractor’s Costs

OperatingIncome

OperatingCosts

Internal Revenue& Expense Flows

Macro Analysis of Petroleum Refining SystemsAccomplishments

• MARS model has been used by ANL/NETL to evaluate alternate pathways to reduced petroleum consumption and greenhouse gas emissions

• MARS can be executed as part of AMIGA−Could also be executed as stand-alone program, or −Excel submodels can be used individually or linked

together• Further upgrades to MARS are necessary to

perform wider range of analyses −Problems with near to mid term horizons−Regional issues and product transfers−Seasonality

joint reduction of petroleum consumption and carbon emissions · 2006-09-22 · joint reduction of...

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