policies for advanced coal technologies in india (and … · policies for advanced coal...

Policies for Advanced Coal Technologies in India (and China)

Ananth Chikkatur Energy Technology Innovation Policy Project

Kennedy School of Government, Harvard University

World BankMay 6, 2008

May 6, 2008 Chikkatur (World Bank) 2

1. Electricity and Coal Scenario

2. Technology Policy & Coal Power Technologies

3. Challenges/Constraints in Indian Coal-Power

4. Some key issues in India

5. Policy options and facilitating conditions

6. Possible roles for the Bank

Outline


1.0 Total Primary Energy Supply

Source: IEA 2007; 2005 data

0

500

1000

1500

2000

2500

U.S. China India

TPES

(mto

e)

Coal Oil Gas Nuclear Hydro Combust. Renew./Waste Others

Per capita consumption (toe)World 1.78U.S. 7.89China 1.32India 0.49

Presenter

Presentation Notes

India’s TPES is 1/3 of China and 1/4 of U.S. Per-capita energy consumption low in both India and China Coal is dominant commercial energy in India and China About 30% of energy consumption in India is from biomass, dung, and waste


0.0

1.0

2.0

3.0

4.0

5.0

U.S. China India

Trill

ion

kWh

Coal Petroleum Gas Nuclear Hydro Combust. Renewables Geothermal/Solar/Wind

1.1 Electricity Generation


Per capita consumption(kWh)World 2600U.S. 13,600China 1800India 480

Electricity generation dominated by coal

Presenter

Presentation Notes

Electricity is a key modern energy source (critical for industrial growth) Large populations without electricity (India—490 million; China—8 million) Coal dominates electricity sectors in U.S., China and India More than 70% is coal-based electricity in China and India


1.2 Coal consumption/production


0

500

1000

1500

2000

2500

U.S. China India

Mill

ion

Tons

Steam Coal Coking Coal LigniteElectricity/Heat Other Energy Industry Other Sectors

Prod

uctio

n

Con

sum

ptio

n

U.S. China India

Most of domestic coal production is for electricity generation

Presenter

Presentation Notes

About 80% of coal use in U.S. and India is for electricity generation Coal mining has severe social and environmental impacts Coal use accounts for about 40% of global GHG emissions and 70% of coal related emissions is from electricity production


1.3 Increasing electricity supply• Electricity consumption/supply bound to increase

– India: 600 TWh in 2004-05 3600-4500 TWh by 2030 – China: 2500 TWh in 2005 7200-9800 TWh by 2030

• Energy security greater coal-based electricity– Low domestic resources of oil and gas, but significant domestic coal

resources– China: 115 billion tons; India: ~55-70 billion tons; U.S.: 247 billion tons

India– 10 GW of coal-power installed 2002-2007 (Planned: 20 GW) – 45 GW of coal-power planned for 2007-2012– Nuclear to contribute significantly only beyond 2050

China– 135 GW of coal power 2002-2005– 220 GW planned for 2006-2010; 170 GW already installed by 2007– Growth in coal power to decrease after 2030

Presenter

Presentation Notes

Electricity: Driver of economic growth Increasing access to affordable electricity (key for poverty reduction)


1.4a Future Coal Demand – India

Domestic production might be unable to cope with demand Rising imports (11% to 45% of coal demand by 2030)

0

500

1000

1500

2000

2500

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

Mill

ion

Tons

Actual ProductionCoal Vision 2025 (8% GDP)IEP ReportIEP--Scenario 5WG for XI Plan5.35% growthEIA-IEO2006 (ref)EIA-IEO2006 (high)EIA-IEO2006 (low)IEA-WEO2006 (ref)

Presenter

Presentation Notes

Indian projections higher than IEA/EIA


1.4b Future Coal Demand -- China

0

1000

2000

3000

4000

5000

6000

2000 2010 2020 2030 2040 2050

Mill

ion

tons

ProductionChina Energy Group (NDRC)IEA 2007 ReferenceIEA 2007 High GrowthIEA 2007 Alternative PolicyEIA 2006 ReferenceEIA 2006 High GrowthEIA 2006 Low Growth

U.S.20041 BT

20301.3-1.6 BT

Chinese projections indicate slow down in growth of coal consumption by 2030

Presenter

Presentation Notes

EIA and IEA reference projections are above Chinese projections No expected slowdown in coal consumption beyond 2030


Technology Policy and

Coal Power Technologies


2.0 Need for technology policies• Most of the focus over the last couple of decades has been

on institutional and regulatory reforms– Breaking up of government monopolies– Privatization– Introduction of independent regulation– Pricing reforms / reduction of subsidies

• Climate change mitigation– Requires a major reorientation of the energy sector in a short

timeframe– Technologies play an important role

• Policies for technology development & deployment– Complement to institutional reforms (necessary, but not sufficient)– Energy technologies last a long time and have high investment costs– Need for government support for faster deployment and scale-up of

technologies that meet future challengesNeed for appropriate energy technology policies


2.1a Current Technologies – India• Full-scale domestic manufacturing started in late 60s-early

70s– Bharat Heavy Electricals Limited (BHEL)– Technologies licensed from foreign manufacturers

• Subcritical Pulverized Coal (PC)– Little domestic innovation for advanced PC technologies.

• Circulating Fluidized Bed Combustion (only for lignite)• Supercritical (SC) PC

– Two plants under construction using Korean/Russian technologies– Ultra Mega Power Plant scheme

• Main focus on particulate control; only one FGD in operation• Efficiency has improved slightly, but not significantly

– 1-2 percentage point improvement possible in all power plants

• Integrated Gasification Combined Cycle (IGCC) – pilot scale plant

Technologies constrained by quality of Indian coal (high ash and low calorific value)

Presenter

Presentation Notes

Technologies need to be adapted for Indian coal CFBC: BHEL R&D success; Niche applications (lignite) SCPC: Currently led by NTPC Ultra Mega Power Plant scheme using imported coal (private sector) Efficiency: Overall net efficiency 29% HHV; 500 MW units: 33.3% HHV IGCC: Pilot scale plant (BHEL) using fluidized bed gasifier Standard gasifiers do not work for Indian coal


2.1b Current Technologies -- China• Domestic manufacturing started in early 80s

– Built up a strong domestic manufacturing with innovation capability

• Dominated by subcritical PC, but now focused on supercritical PC

• Ultra-Supercritical (USC) PC– Seven 1-GW and three 600-MW units in operation (all indigenous)

• Efficiency has improved significantly– Shutting down of old and smaller power plants – Increasing use of SC and USC boilers

• Pollution control– FGD capacity 270 GW – over 50% of total capacity

• Gasification– Three IGCC and two oil-electricity co-production demonstration plants

under construction

Presenter

Presentation Notes

Manufacturing: Acquired technology licenses from global technology manufacturers There are a large number of small <100 MW units SCPC: Operating since early 90s; first indigenous supercritical PC plant in 2004 USCPC: 80 contracts have been signed for 1-GW units and 50 for 600-MW units (more bids as well) Efficiency: Net average efficiency: 30%34.4% (LHV) during 1997-2007 Shutting down of old and smaller power plants (14 GW closed in 2007) Pollution control: Penetration of flue gas desulfurization (FGD) significantly increased


Challenges and Constraints in Indian Coal Power


3.0 Challenges for Indian Coal Power

• Need for rapid growth to keep with development needs– Implication: Relatively high maturity of technologies (fast deployment)

• Enhancing Energy Security– Implication: Able to use domestic coal or be fuel flexible

• Protection of Local Environment– Regulations on particulate emissions, but not SOx /NOx (only ambient air)– Implication: Install high efficiency plants

Promote installation of pollution control equipment

• Carbon Mitigation– India’s per capita carbon emissions low compared to China & U.S.– Carbon Capture and Storage (CCS) – expensive and untested at scale– Implication: Prepare for capture & storage


3.1 Constraints in Indian coal power• Coal availability

– Problems with reserve estimates, coal quality– Implication: Technology choices for domestic coal may be limited

Technology pathways depend on domestic/imported coal

• Availability of “right” technologies– Limited technical capacity (R&D, manufacturing, O&M)– Implication: Technologies need to be consonant with capacity

• Financial resource limitations– Higher cost of advanced technologies limits early and faster

deployment– Implication: Low cost/risk technologies are favored

• Institutional issues – Government domination, “panic mode” of operation, lack of significant

domestic energy policy analysis – Implication: Affect technology choice/deployment strategies

Presenter

Presentation Notes

Power projects in India are mostly financed with domestic resources


Key Issues


4.0 Problems in Indian Coal Sector• Better estimates of reserves is lacking

– Critical for long-term electricity policies– Only geological resources are assessed in India (not reserves)– Only tentative reserve estimates are available– Coal reserve estimates are poor in almost all countries (EWG report)

• Heavy emphasis on open cast mining – land degradation• Social and Environmental impacts

– Displacement and problems with resettlement and rehabilitation (R&R)– Reclamation and illegal mining/marketing– Balance between forest conservation and mining

• Reducing human resource– Shortage/graying of appropriately trained manpower; retention– Affects building up of technological capacity

• Institutional and Pricing Reforms– Better coordination among ministries– Need for greater competition and independent regulation– Price coal according to its quality; contracts rather than linkages

Presenter

Presentation Notes

Reserves: Confusion among experts regarding “reserve” vs. “resources” Only tentative reserve estimates are available Basis for estimation is not reliable (nor publicly available) No data on depleted reserves (only cumulative production) Social and environmental issues: There is no authoritative socio-economic data on displacement World Bank Project on coal sector environmental and social management has had mixed results – lessons learned not applied across the whole coal sector Institutional reforms: Need to reduce the conflicts of interests among different agencies


4.1 Advanced Cleaner Coal Tech.• Advanced Combustion

– Supercritical and Ultra-supercritical PC• Well tested and commercial technology; China is already heavily invested• Coal quality (high ash) is an issue; requires washing

– Oxyfuel combustion• Use O2 instead of air and recycle flue gas• High CO2 concentration in flue gas—helpful for carbon capture

– Fluidized bed combustion• Combination with supercritical steam might be relevant for Indian coals

• Gasification (IGCC)– Current focus is on better environmental characteristics of IGCC– Entrained flow slagging gasification (GE/Shell) does not work for

Indian coals– Need for fluidized bed gasification (BHEL/Southern) or moving bed

gasification (Sasol)– Plans to scale up BHEL technology to demonstration stage (100 MW)– Carbon capture is more economic with IGCC

Presenter

Presentation Notes

Oxyfuel: Planned demonstration plants in Europe and U.S. and pilot-scale plant in China Pressurized fluidized bed combustion (only Japan is investing) IGCC: Polygeneration (electricity, chemicals, liquid fuels) could improve economics


4.2 Technology Analysis for India

Present circumstances

Future scenario

Attribute Subcritical PC -no FGD SC-PC USC-PC CFBC

(subcritical) PFBC Oxyfuel PC/CFBC

IGCC Entrained

IGCC Fluidized

IGCC Moving

Ability to use domestic coal 10 8 5 10 10 8 1 7 7

Maturity of technology 10 9 7 10 2 1 5 2 2

Indigenous Technical Capability 10 8 3 10 1 3 1 5 4

Low capital cost 10 7 3 9 3 1 3 2 2

Efficiency 1 5 10 1 6 3 9 8 8

Low environmental impact 1 4 7 3 5 6 10 10 10

Attribute Subcritical PC-no FGD SC-PC USC-PC CFBC

(supercritical) APFBC Oxyfuel PC/CFBC

IGCC Entrained

IGCC Fluidized

IGCC Moving

Ability to use domestic coal 10 10 6 10 10 10 1 7 7

Maturity of technology 10 10 9 10 1 3 8 4 4

Indigenous Technical Capability 10 9 5 9 1 4 5 7 6

Low capital cost 10 8 6 8 1 4 6 4 4

Efficiency 1 7 9 6 8 4 10 9 9

Low environmental impact 1 4 8 5 7 6 10 10 10

Carbon capture potential 2 4 7 5 1 10 9 9 9

• Cannot transfer technology analyses• Proper techno-economic assessments require detailed engineering studies • Rate technologies on relevant attributes; ratings based on assessment of different

technologies in the Indian context

Presenter

Presentation Notes

Engineering analyses in the Indian context are only available for some technologies, but not for a whole range of technologies


4.3 Carbon Capture and Storage• Price on carbon is critical for deploying CCS in India

– Nature and timing of international climate treaty and domestic carbon policy– Financial and technical support from developed countries

• Technologies– Post-combustion (PC): amine scrubbing; multi-pollutant capture– Precombustion (IGCC): water-gas shift reactor + Selexol

• Economic carbon capture requires:– Low pollutant levels in flue gas– High power plant efficiency

• Deterrents: high aux. consumption (lowered cap.), efficiency loss, high cost– Efficiency loss for retrofitting is about 30% for 210 MW units.– Capture cost of $33-38/tCO2 – doubles the price of power

• Potential storage sites in Gangetic and Brahmaputra river plains & offshore– 360 GtCO2 in saline reservoirs, 200 GtCO2 in basalts, 7 GtCO2 in depleted oil and

gas fields– Only 18% of Indian sedimentary basins well explored, 30% unexplored

• Critical need for detailed geological assessments

(Sonde, 2005)

(Singh et al, 2006)

Presenter

Presentation Notes

CC: 65 MW (30%) will be lost in a 210 MW unit for MEA post-combustion capture


Policy Options and

Facilitating Conditions


5.0 Short-term “no-regret” policies• Improve efficiency of existing system

– Gives the time and breathing space to enact changes– Generation– T&D loss reduction– Demand management and end-use efficiency

• Deploy high-efficiency combustion technologies in the near term (SC and USC PC/CFBC)– Focus on the state and private sector (in addition to NTPC)

• Long-term approach for emerging technologies– Create a monitoring and feasibility assessment program– Strategic RD3 for advancing emerging technologies—technology

roadmapping

Presenter

Presentation Notes

Generation Efficiency measurement, regulatory benchmarks, strengthen international efforts to deepen technical capacity, shut down older plants T&D loss reduction More investment, electricity metering, more auditing and penalties Demand management and end-use efficiency Reduce household demand, efficiency standards, labeling, incentives for deploying energy saving devices, more research


5.1 Focus on Process, not just outcome (Technology Roadmapping)

Technology innovation (RD3)

Basic Science

Academia,govt. labs,industry

Applied research and devt.

Govt. labs,industry,utilities

Demonstration

Govt., industry,utilities

Commercial-ization/end-use

Industry,utilities

Early Deployment

Govt., industry,utilities

VisionLed by government, participation by all major stakeholders

Technology assessment/options analysisTechnical personnel and analysts from govt., industry, utilities, academia, NGOs

Technology roadmappingTechnical personnel and analysts from govt., industry, utilities, academia, NGOs

Presenter

Presentation Notes

This is a real weakness in India. There is very little systematic and critical analysis of technologies, data gaps, innovation needs, etc.


5.2 Illustrative Roadmap for India

2005 2010 2015

SC-PC

USC-PC

CFBC

PFBC

IGCC

Oxyfuel

Carbon Cap.

Sequest.

?

?

?

Review & Monitor

Basic Science Applied RD&D Deployment

?Carbon Capture

2005 2010 2015

SC-PC

USC-PC

CFBC

PFBC

IGCC

Oxyfuel

Carbon Cap.

Sequest.

?

?

?

Review & Monitor


?Carbon Capture

2007 2012 2017

Geological Storage

Research &Development

Technology monitoring & assessment

Demonstration Deployment &Commercialization

?

2005 2010 2015

SC-PC

USC-PC

CFBC

PFBC

IGCC

Oxyfuel

Carbon Cap.

Sequest.

?

?

?

Review & Monitor


?Carbon Capture

2005 2010 2015

SC-PC

USC-PC

CFBC

PFBC

IGCC

Oxyfuel

Carbon Cap.

Sequest.

?

?

?

Review & Monitor


?Carbon Capture

2007 2012 2017

Geological Storage

Research &Development

Technology monitoring & assessment

Demonstration Deployment &Commercialization

?

• Need for different RD3 strategies for each technology• Not make rigid technology choices (gasification vs. combustion)• Details available in recent discussion paper


5.3 Policies for CCS in India• Position power plants for economic CCS in the future

– Enforce and tighten environmental pollution controls (market-based approaches, incentives)

– Create SOx and NOx emission standards– Incentives for installing and using end-of-pipe technologies– Build capacity to monitor emissions from all power plants– Leave space for installing capture plants (retrofitting)– Research on India-specific capture technologies– Assess impact of carbon prices on power plant economics

• Invest in detailed geological storage assessments – Storage locations, capacity, and sealing mechanisms– Plan for monitoring and verification and resolve liability issues– Plan ahead for regulations (institutional and technical)– Government support for early demonstration projects– Leverage international and bilateral geological assessment activities– Siting of new power plants to consider storage locations


5.4 Facilitating conditions• Improve the coal sector

– Reduce uncertainties in coal reserves; better mining practices and technologies; resolve environmental and social issues

– Part of an ongoing project with the Indian Planning Commission

• Continue with institutional and regulatory reforms• Improve technology analysis and innovation systems

– Need for more funding and better use of funding

• Inter-ministerial and regulatory coordination• Domestically-driven energy policy analysis

– Necessary for integrating energy policies with broader issues (national security, environment, labor, etc.)

• International action & cooperation for climate change mitigation– Industrialized countries need to lead by example on CCS– Early action can lower technology risks and costs for developing

countries

Conditions for efficiently implementing short-term polices and preparing for future


6.0 Multiple roles for the Bank• Support the implementation of facilitating conditions

– Coal sector reforms– Reserve assessments– R&R and environmental practices– Power sector reforms– Equitable international framework for climate change mitigation

• Setting and enforcement of environmental standards• Capacity building

– Support for better technology decision-making processes and assessment processes (technology roadmapping)

– Knowledge bank and lessons learned– Help in building up domestic policy analysis capacity

• Help reduce financing costs– Support demonstration and first-of-a-kind projects of advanced technologies,

including CCS – Use of carbon finance mechanisms for supporting CCS in India and China

Presenter

Presentation Notes

Bank can help create model first projects


Acknowledgements

Ambuj Sagar Professor of Technology and Policy (Indian Institute of Technology, Delhi) Assistant Dean (School of Engineering, Harvard U.) Senior Research Associate (ETIP)Lifeng Zhao Associate Professor at Institute of Engineering Thermophysics (Beijing, China) Research Fellow (ETIP)

Funding:David and Lucille Packard FoundationBP Alternative Energy and BP Carbon Mitigation Initiative (general support grants)Shell exploration (gift)Pew Center for Global Climate Change

Project on Energy Technology Innovation Policy (ETIP) Belfer Center for Science and International Affairs Kennedy School of Government, Harvard U.

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