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Renewables alone won’t satisfy California’s clean energy ambitions

3 November 2020

Carbon capture and storage will be needed for the state to decarbonize its economy by midcentury, a new report says.

Carbon capture and storage (CCS) would provide California with 15% of the emissions reductions necessary to meet its goal of a carbon-neutral economy in 2045, and it would save the state $750 million in costs for solar generation and grid-scale batteries, according to a new study. The report was released on 22 October by the nonprofit Energy Futures Initiative (EFI) and Stanford University. It finds that of the carbon dioxide emitted by 76 of the state’s large industrial and power-generating emitters, one-third of it—or 20 million tons annually—could be extracted and stored underground at a profit today.

The report warns that limitations on available land and the intermittency of wind and solar will cap the amount of renewable generation that California can deploy toward meeting its decarbonization goals, which are the nation’s most ambitious. “Clean firm power,” available whenever needed and most likely to come from natural gas, is necessary to smooth out the peaks and valleys that are inherent to wind, solar, and hydroelectric generation, said report co-lead Melanie Kenderdine of EFI. In 2017 there were 90 days with little or no wind generation in the state, she said. Many such slack periods extended for days or more than a week, but current grid-scale batteries can provide just four hours of storage.

Transportation accounts for 40% of California’s greenhouse gas emissions. The need for clean firm power will surge in concert with the growth of electric vehicles as the state moves to phase out gasoline-fueled cars by 2035.

California emissions by sector.
Industry and electricity, two sectors that could cut future emissions via carbon capture, accounted for about 36% of California’s greenhouse gas emissions in 2017. General sectors are shown in the inner ring, subsectors in the outer ring. Credit: Energy Futures Initiative and Stanford University, 2020. Data adapted from California Air Resources Board, 2019.

A 2019 EFI study said California could meet its 2030 statutory goal of slashing CO2 emissions 40% by 2030, but only if the state followed more than two dozen recommended technological pathways. “We saw the largest potential reduction in CO2 for both electricity and industry would be a strong push on CCS, taking advantage of the incentives that are out there,” said Ernest Moniz, EFI founder and former secretary of energy. “Without CCS, it looks awfully tough to meet those standards.” Industry in California is a larger source of emissions than the power sector today, and it has few options available to reduce CO2 apart from CCS. Cement production, for example, requires high temperatures, but only 40% of its emissions are from combustion; a larger fraction is process related.

A federal tax credit known as 45Q offers $22 per ton of CO2 that is captured and used for enhanced oil recovery or other end uses, increasing to $35 in 2026 and adjusted for inflation thereafter. The credit is $34 per ton, increasing to $50, for CO2 that is captured and injected to geologic storage. In addition, California’s fluctuating credit established by the Low Carbon Fuel Standard (LCFS) currently stands at around $200 per ton. Both incentives are available to CCS plants, but the plants must be built by 2024 to qualify for 45Q, which applies to the first 12 years of operation.

The International Energy Agency estimates that the world will need a CCS capacity of 450 million tons of CO2 per year by 2030 to be consistent with targets in the 2016 Paris Agreement. Worldwide, 19 large-scale CCS plants are operating or under construction, and a total of 350 million tons of CO2 have been captured from 2010–18. The 10 CCS systems in the US are located at hydrogen refineries, fertilizer plants, natural gas processing plants, an ethanol plant, and a coal-fired power station. In all but one case, the captured CO2 is used in enhanced oil recovery.

Suitable geological storage capacity for more than 70 billion tons of CO2 has been identified in California, said study co-lead Sally Benson, a Stanford University engineer. That could accommodate 1000 years’ worth of CO2 from the 76 largest emitters in the state—those that produce the minimum 100 000 tons per year required to qualify for the 45Q credit.

Potential CCS facilities in California.
The new report identifies 51 California industrial facilities, including refineries and combined heat and power (CHP), that could cut three-quarters of their 36 million tons of CO2 emissions per year by capturing and storing carbon. Credit: Energy Futures Initiative and Stanford University, 2020. Data adapted from EPA, 2020.

The research found that ethanol plants, hydrogen producers, and refineries in the state could capture and store CO2 profitably with existing incentives. But CCS at natural gas combined-cycle power generating stations and cement plants would still incur costs of as much as $50 per ton with CCS.

Regulatory complexity, financial uncertainty, and a lack of public awareness and support for CCS all were identified by emitting businesses as impediments to CCS deployment, Benson said. CCS is ineligible for California’s CO2 emissions cap-and-trade system. Cement plants, though ineligible for the LCFS credit, could profitably implement CCS if they were made eligible for cap-and-trade, the report says.

Kate Gordon, senior adviser on climate change to California’s governor, Gavin Newsom, said at the report’s release that the state has only recently begun to focus on carbon removal as part of its integrated approach to meeting its zero-carbon goal. An interagency task force is now looking into noncombustion bioenergy, such as pyrolysis or gasification, with CCS. “We have a whole lot of nonmerchantable wood coming out of the forests now in California, and we need to figure out what to do with it,” she said. Direct air capture is also being examined.

Additional nuclear capacity, another obvious option for clean firm power, was not considered in the analysis. An EFI spokesperson said it was assumed the state won’t lift its 1976 prohibition on new nuclear plant construction until a permanent repository is designated for spent fuel.

A recent Environmental Defense Fund study found that the need for clean firm power in the state will be “overwhelming” as electrification of the economy doubles demand for power by 2045, said Jane Long, an EDF senior contributing scientist. Although EDF was neutral on the source of the firm power, Long said, “it’s hard to imagine the magnitude of what we need without CCS.”

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