Launching of the second European Climate

Change Programme (ECCP II)

Stakeholder Conference Brussels

24th October 2005

Lars Strömberg
Vattenfall AB
Stockholm/Berlin

© Vattenfall AB
 Who’s got the problem ?

© Vattenfall AB 2
 CO2 free power plant

ECCP I - experiences

© Vattenfall AB 3
 Cost and Potential of options to reduce CO2 emissions
Principal example

Cost for carbon dioxide

avoidance
Solar
[EUR/ton CO2]
Wind
100 Hydro

Biofuel

Late change coal Reforestation

CO2 sequestration
Oil to gas
50
Coal to coal

Coal to gas

Potential
[Percent]
0
0 20 40 60 80 100

The picture will look different when different time

perspectives are adopted

2000-07-16
© Vattenfall AB 4
Lars Strömberg Vattenfall AB
 Reductions of CO2 – What ECCP 1 gave

• The ECCP 1 work identified a number of measures

which could to be taken.
• Without agreement among all, it was concluded that
almost 30 % reduction could be reached at a cost
below 50 €/ton CO2
– Change from coal to gas
– Introduce more efficient coal power technology
– Wind power
– Biofuels, especially in the heat sector
– More CHP

© Vattenfall AB 5
 Cost and Potential of options to reduce CO2 emissions until 2010
Derived from ECCP Energy Supply Preliminary report.

Cost for carbon dioxide

avoidance
[EUR/ton CO2] Solar

100 Wind
Coal to Coal
CHP

Biomass heat CO2 sequestration

Coal to gas
50
Biomass heat

Potential
[Percent]
0
0 20 40 60 80 100
Methane mines

© Vattenfall AB 6
 Reductions of CO2 – What we have learned (2)

• Now, after 4 years we have learned a few things:

– We will remain to be dependant on fossil fuels for a long time
– Change from coal to gas has not happened
• Due to high gas prices and lack of long time confidence
– Building new efficient coal - yes
• Several large plants have been built and at least seven large units
under way.
– Wind power has severe limitations
• Cost lies about 70 – 90 €/MWh
• When capacity (MWs) exceeds about 10 % in an area, the system
cannot take any more, need for extra transmission and reserve
power
• 39 000 MW wind leads to that conventional power can only be
reduced 2 500 MW according to one study

© Vattenfall AB 7
 Reductions of CO2 – What we have learned (3)

– Biofuels are used, especially in the heat sector.

• All district heat and CHP is using biofuel in Sweden
today (140 TWh fuel)
• To maintain competitiveness for bio fuels, it is
necessary to keep CO2 tax in parallel with the trading
system, at a level of 75 €/ton of CO2
• Biofuel usage has reached its limit in Sweden. 45 %
of the fuel is imported from Russia, Baltic states and
Canada !
– CHP is built wherever possible
• Few opportunities left

© Vattenfall AB 8
 Reductions of CO2 – What we have learned (3)
• Carbon Capture and Storage CCS has gained much recognition
and development is going fast.
– Many countries have recognized CCS as a powerful tool and have
introduced it in their plans to fulfill their environmental goals
• The USA, UK, Australia, France, Germany among many others
– CCS does cost 20 – 25 €/ton CO2
• ECCP 1 assumed 50 €/ton of CO2
– Storage capacity exceeds the remaining fossil fuel reserves
– Storage in geological formations is available all over the world, all over
Europe, off-shore and on-shore
– CCS will not be available in a large scale until 2015 –2020
• ECCP 1 assumed before 2010
– CCS can probably reach half of the mitigation necessary to reach our
long term goals of 60 – 80 % of reduction until 2050

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 Emission Trading

Emission Trading
sets the commercial
framework for new
technology in Europe

© Vattenfall AB 10
 European CO2 trading system Sept. 2005

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 Allocations in the European trading system
In total 12 000 units is included in the trading system. In the National allocation plans 2 100 Mton/year or 6300
Mtons for three years have been distributed. This is the roof set for emissions.
The deficit is calculated to 180 Mton for 3 years. The power industry has a deficit of 360 Mton. Other sectors have
an overallocation.

Other

Cement, Lime, Glass

Oil and Gas

Metals

Pulp and Paper

Public Power and Heat

Total

-100 -50 0 50 100 150 200 250 300 350 400

Mio. t CO2

© Vattenfall AB 12
 Marginal cost vs. Reduction of CO2 emissions in EUR/ton CO2
Marginal
Source: ECOFYScost vs. reduction
Economic evaluationof CO2 emissions
of sectorial reduction in Euro/ton
objectives for CO2
climate change
source: ECOFYS Economic Evaluation of sectorial Emission Reduction Objectives for Climate Change

Marginal cost for reduction in Euro/ton 300

250
The price in Sept 2005 is about 24 €/ton CO2 ???
200
CO2

150

100

50

0
0 200 400 600 800 1000 1200 1400 1600
Emission reduction in mio ton CO2

© Vattenfall AB 13
 Capture and storage of CO2

Capture and storage

© Vattenfall AB 14
 The CO2 free Power Plant principle

• The principle of capture and storage

of the CO2 under ground

The CO2 can be captured either

from the flue gases, or is the
carbon captured from the fuel
before the combustion process.
The CO2 is cleaned and
compressed. Then it is pumped
as a liquid down into a porous
rock formation for permanent
storage.

© Vattenfall AB 15
 CO2 free power plant

Storage and transport

© Vattenfall AB 16
 Storage of CO2 in a Saline Aquifer under the North Sea

CO2-injection into
the saline aquifer
Utsira.
(Source:STATOIL)

The Sleipner field. Oil and gas production facilities. (Source: STATOIL )

© Vattenfall AB 17
 Storage Capacity, saline aquifers

There exists more

storage capacity
within Eorope (and
in the world) than
the remaining fossil
fuels

Source:
Franz May,
Peter Gerling,
Paul Krull
Bundesanstalt für
Geowissenschaften und
Rohstoffe, Hannover

© Vattenfall AB 18
 CO2 Transport and storage Schweinrich structure

 Two pipeline transport routes are

possible
 Both routes can be designed to
follow existing pipeline corridors
>90%
 Structure can contain 1,4 billion ton
Berlin
of CO2, equivalent to about
emissions from 6000 MW their
whole lifetime

© Vattenfall AB 19
 Reservoir simulation – 40 year model

 Due to buoyancy, the CO2

strive against the top of the
formation
 The CO2 spreads in the
whole reservoir
 Conclusion: It is possible to
inject 400 Mt CO2

Injection at flanks
© Vattenfall AB 20
 Geological structure modelling. Schweinrich

10 years 200 years 500 years

2000 years 5000 years 10000 years

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 CO2 free power plant

Capture

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 Post-combustion capture
This technology is already commercially available in
large scale (500 MW). It is at present the most expensive

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 Pre-combustion capture

This technology needs development. Might be

competitive. The gasifier exists in demo plants.
The turbine is in the lab stage.
Produces Hydrogen as an intermediary product

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 O2/CO2 combustion is the preferred option at present

At present the most competitive and

preferred technology for coal.
It needs development, pilot and demo
plants to get design data

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 COE [EUR/MWhe]
IE
A
G

© Vattenfall AB
HG
IE
A PF
G
HG 20
IE 0
A PF 4 n
G o
HG 20 ca

0
10
20
30
40
50
60
IE 04 pt 70
A PF p ur
G o st e
HG 20
20 c om
M PF n b.
its 20 o c
ui 20 a p
20 po ture
M 04 s
its PF tco
m
Hard Coal

M u i2 n b
its 00 o ca .
ui 4
20 O p tur
20
2/
C e
IE M O
A its PF 2
G u no PF
HG i 2
IE 0 2 c a
A IG 0
G CC O p tur
H 2
2/
C e
IE G
A IG 0 03 O2
G
H CC no PF
IE G I 20 ca
A G
G C 03 pt
HG C 2 pr u re
e
IG 0 20 - co
CC no mb
20 c .
20 a ptu
EN p re
CA re-
P c o
IE PF mb
A O O .

26
G xy xy Lig
ni
HG fu fu te
IE el e
A 20 wi l W
G 0 th FG
IE
HG 4
NG out D
A 20 C W
G 0 C F
Lignite

G
IE
HG 4
NG n o D
A 20 ca
G 2 0 CC pt
HG ur
NG p o e
M 2 0 C
st
c
2 C om
its 0 b.
ui NG n o
20 C c a pt
M 04 N C p ur
its G o st e
ui co
20 CC
04 no mb
O
Natural gas

ca .
2/ pt
C
O ur
e
2
NG
CC
COE
Total generation cost of electricity with CO2 penalty

CO2 penalty 10EUR/T

CO2 penalty 20EUR/T
CO2 penalty 30EUR/T
 Generation cost with and without CO2 capture
60
Hard Coal Lignite Natural gas

50

40
COE [EUR/MWh]

COE penalty
30
COE origninal

20

10

0
IEA GHG IEA GHG Mitsui 2004 Mitsui 2020 IEA GHG IEA GHG Oxyfuel Oxyfuel IEA GHG IEA GHG Mitsui 2004
PF 2004 PF 2020 O2/CO2 PF O2/CO2 PF IGCC 2003 IGCC 2020 WFGD without 2004 NGCC 2020 NGCC O2/CO2
postcomb. postcomb. pre-comb. pre-comb. WFGD postcomb. postcomb. NGCC

© Vattenfall AB 27
 Electricity generation costs
60,0

50,0
Electricity production cost EUR/MWh

40,0 Fuel and

consumables
Fixed O&M +
additional op costs
30,0
Running O&M

Capital costs
20,0 EUR/MWh

10,0

0,0
PF CC PF oxyfuel CC CO2 capt.

© Vattenfall AB 28
 Generation costs incl. CO2 costs (20 €/ton)
60,0

50,0
Electricity Production cost EUR/MWh

40,0
CO2 penalty

Fuel and
30,0 consumables
Fixed O&M +
additional op costs
Running O&M
20,0
Capital costs
EUR/MWh

10,0

0,0
PF CC PF oxyfuel CC CO2 capt.

© Vattenfall AB 29
 Avoidance costs of CO2
60,0

Avoidance costs
50,0

40,0
Avoidance cost €/ton CO2
CO2 penalty
Fuel and consumables
30,0
Fixed O&M + additional op costs
Running O&M
Capital costs EUR/MWh
20,0

10,0

0,0

PF with CO2 capture Gas CC with CO2 capt

© Vattenfall AB 30
 Cost and Potential of options to reduce CO2 emissions
Principal example

Cost for carbon dioxide New Picture 2005 including recent knowledge
avoidance
Solar
[EUR/ton CO2]
Wind
100 Biofuel El

Hydro

New efficient coal Savings

Oil to gas Biofuel Heat

50 CO2 Capture and Storage

Coal to gas

Potential
[Percent]
0
0 20 40 60 80 100

2000-07-16
© Vattenfall AB 31
Lars Strömberg Vattenfall AB
 Conclusions from analysis - Reduction of CO2

• Carbon capture and storage from Coal fired Power plants can
be done at a cost close to 20 €/ton CO2
– Capture at about 15 €/ton of CO2
– Storage at lower than 2 €/ton CO2
– Transport depending on distance and volume, but 5 €/ton of CO2 for
large plants on shore
• More than enough storage capacity on shore and off shore is at
hand in saline aquifers
• Technology choice is not yet made. Oxyfuel is preferred
technology in Vattenfall at present
• The commercial choice stands between Gasfired CC without
CCS, taking the penalty of CO2 emission, and Coal fired
plants with CCS

Lars Strömberg 2003 07 05

© VattenfallVattenfall
AB AB
32
Corporate Strategies
 Taking responsibilty

• Lord Oxburgh, former chairman of Shell Transport and Trading:

"CCS is absolutely essential if the world is serious about
limiting greenhouse gas emissions“

• The new report from the Intergovernmental Panel on Climate Change

(IPCC) concludes:
“CCS could achieve more than half of the emissions
reductions necessary to mitigate climate change up to 2100”

Vattenfall agrees with this. We also believe CCS is needed to

fulfill our climate goals
© Vattenfall AB 33
 CO2 free power plant

Back up

© Vattenfall AB 34
 The Climate Change

• The Climate Change problem is for real

• EU ministers have agreed on, that we have to reduce

the emissions to maintain a reasonable CO2
concentration in atmosphere
– 15 – 30 % until 2030
– 60 – 80 % until 2050

• A radical solution is necessary. We cannot wait

© Vattenfall AB 35
 CO2 storage cost

Storage at Schweinrich of 10 Mton CO2 per year over 40 years:

Fictive cost calculations using tool developed in EU-funded GESTCO project:

© Vattenfall AB 36
 CO2 transport cost:

Transport to Schweinrich from Schwarze Pumpe power plant:

 Distance 320 km
 10 Mton CO2 per year over 40 years:

7,00
Opex
6,00

5,00
€ per ton CO2

4,00

3,00
Capex
2,00

1,00

0,00
€/ton €/ton
Left: 25 years, 7,5% Right: 10 years, 10%

© Vattenfall AB 37
 CO2 free power plant

Pilot Plant

© Vattenfall AB 38
 Construction area

© Vattenfall AB 39
 Boxberg IV

Why Oxy-fuel technology ?

We work with all three (four)

technologies, but:

• Oxyfuel technology is the

technology giving lowest costs
at present
• It is suitable for coal and have
relatively little development
work left
• We can build on our good
experience with present PF
technology

© Vattenfall AB 40
 CO2 free power plant

Analysis of some
technology options

© Vattenfall AB 41
 CO2 Free Power Plant: Technology Choice
The ultimate technology choice is not clear yet. Several technologies will
probably be applied to different commercial situations.

• Post combustion capture.

– At present the most expensive option but commercially available in large size.
– Can be applied to existing plants.
– Needs no demo. Optimization of existing options needed.
• Pre combustion capture.
– The most complicated technology. IGCC demos have not been successful
– Produces hydrogen as integrated intermediate fuel for the power process, from coal
or gas.
– Development need for the gas turbine run on hydrogen – Lab tests + pilot + demo
• CO2/O2 (oxy-fuel) capture
– The most preferred option at present
– Technology straight forward and builds on the modern supercritical coal fired boilers
– Tests in technical scale positive. Needs pilot plant and demo plant
• Chemical Looping technology is the most interesting long term option.
– Lab experiments very encouraging.

© Vattenfall AB 42
 Options for reduction of CO2

• Specific data for the plants

PF CC PF CC with
oxyfuel capture
Specific Investment 1000 550 1425 938
costs €/kWe
Additional investment 140 100
mio €
Power output MW 900 500 720 405

Energy penalty MW 180 95

Efficiency % 45 60 36,5 49

Lars Strömberg 2003 07 05

© VattenfallVattenfall
AB AB
43
Corporate Strategies
 Options for reduction of CO2

• Common data used for the four plants:

Coal Price 50 $/ton ~ 5,7 €/MWh

Gas price 13 €/MWh
Depreciation time 25 years
Interest rate 10%

© Vattenfall AB 44
 The Problem
• Fossil fuels are needed
– Analysis show that fossil fuels will remain as major energy source
in 2030 ( 85 %)
• The top priority is to introduce renewable energy sources in
the energy system
– All analysis show that renewable energy sources will play a large
role, but not large enough and soon enough
• In several countries nuclear power is decommissioned
• No renewable energy source not known today can play a
significant role in 25 years from now, i.e. 2030

• Emissions from fossil fuels must be reduced

© Vattenfall AB 45
 Schwarze Pumpe power plant

© Vattenfall AB 46