And it is creating a new urgency for the technology called
carbon capture storage and has created something called cap and trade. Here is
how carbon capture and storage works and which companies are leading the way.
What is Cap and Trade?
Cap and trade is something the government has come up with
to reduce pollution. The government sets a cap or limit on how much pollution
or greenhouse gases a company can produce. Then the government will issue
credits to a company, these credits allow the company to produce pollution. The
number of credits a company gets is based on how big the company is and what
industry the company is in.
For example, XYX Utility and Coal Company have been issued
10 credits from the government. If XYZ pollutes less than their cap says they
can, they would have extra credits. XYZ can then sell or trade their credits to
another company who needs more cap room to pollute. This is to give an
incentive to companies to cut their pollution and if successful in cutting
their pollution, they can also make a profit by selling or trading their
credits to some other company. Since this system of cap and trade is most
common in carbon emission industries, it is also called “Carbon trading”.
How Carbon Capture Technology Works
Coal fired power plants are the worst producers of carbon
dioxide (CO2) pollution. The actual name of this technology is called Carbon
Capture and Storage (CCS). This is a process that strips the carbon dioxide
from the fossil fuels before or after they are burnt producing energy. This can
then be compressed and transported by pipeline to a site where the carbon is
then buried underground in secure ‘vaults’ that shouldn’t leak the carbon back
into the air. This process has been around for about a decade, the problem is
using this on a large scale with large power plants.
Utility companies haven’t had a great incentive to pay for
this at this time or pass part of the costs onto their customer. That is why it
is hoped the cap and trade will give them incentives to trap their carbon
pollution. The less carbon dioxide they emit, the more of their carbon permits
they can sell. In 2014 this system will change where companies will have to buy
all of their permits that they need. So the more carbon the company can keep from
being emitted into the air, the fewer permits they will have to buy.
That is why it is thought that cap and trade will increase
the incentive for the carbon capture storage technology. The International
Energy Agency said in a 2008 report that carbon capture storage will become the
most important technology for cutting polluting emissions. The carbon capture
storage industry involves the capturing, compressing, transporting by pipeline
and or injecting into the ground technologies.
Oil drilling companies use natural carbon dioxide to force
oil to the surface using what is called “enhanced oil recovery”. The captured
carbon dioxide from coal plants is piped to oilfields and used instead of using
the natural underground carbon dioxide. In fact several companies like EnCana
and Apache are doing this now.
The Arguments Against Carbon Capture Storage
There are a lot of arguments against carbon capture storage
and some think it is nothing more than a scam that has to do with what they say
is the other scam, global warming. Some of the arguments against carbon capture
are that it will increase our utility bills by at least 30%. Industry analysts
say that it will cost $1 trillion to convert the 400 plants in the United
States.
There will be a lot of this captured carbon and there isn’t
enough room to store all of it underground. Another argument states that this
carbon dioxide cannot stay underground and will leak out of the storage areas.
Yet another worry is that pumping liquid into the ground has been proven to cause earthquakes [1].
This past week, the Guardian came out with an article
accusing the International Energy Association of playing fast and loose with
the oil inventory numbers because of pressure from the US.
The U.K.
newspaper went on to say that we could be running out of oil sooner than is
thought, which would mean a larger reliance on coal, coal that needs to be
cleaned to meet the new carbon requirements. Whether we agree with using coal
for energy and using carbon capture to reduce pollution, it is here to stay.
Investing in this technology could be a wise investment.
Publicly Traded Companies Involved in Carbon Capture Storage
- Cemex Inc. (CX), the countries largest cement and ready-mix company, was picked by the US Department of Energy (DOE) to develop technology for capturing and storing carbon emissions at one of its cement plants. Cemex will design a dry sorbent carbon dioxide capture and compression system. They will also develop the pipeline if needed and the injection station to inject the carbon into the ground. This demonstration project could remove up to one million tons of carbon dioxide (CO2) per year.
- Praxair (PX) is an industrial gas producer but also owns hundred of CCS patents and could be a leader in the carbon capture industry.
- Statoil ASA (STO) Built the first working carbon capture storage facility in the North Sea in 1996. They are partnering with Total (TOT) and Hess Corporation (HES) to further develop their carbon capture storage business.
- American Electric Power (AEP) has a large carbon capture storage facility at a coal-fueled power plant in West Virginia. AEP at this time is capturing and storing 100,000 metric tons of captured carbon per year and injects it underground.
- Royal Dutch Shell (RDS) and ConocoPhillips (COP) are receiving billions of government dollars to develop CCS technology.
- Siemens (SIE) has developed a post-combustion carbon capture process using a special scrubbing agent, which removes 90% of the low temperature carbon.
- Dow Chemical (DOW) and Alstom have started a test program at Dow owned facility in W.V. to capture 1,800 metric tons of CO2 per year.
- Fluor Corp. (FLR) is involved in the construction of these projects.
- General Electric (GE) will be providing the industrial machines and compresses for compressing gases that will inject the carbon dioxide in the earth. This is a $400 million contract for a project in Australia.
Other companies are Spectra Energies (SE), Air Products and
Chemicals (APD), NRG Energy (NRG) and Chevron (CVX).
Carbon Capture Companies in the European Union
- ArcelorMittal (MT) the largest and has good trading volume.
- Alstom SA (AOMFF) has at least 10 carbon capture projects around the world.
- Enel (ESOCF) and Endesa (ELEZF) are also EU companies in the CCS industry.
Carbon Capture Using Crystals
The University of California
at Los Angeles (UCLA) with
financial backing from BASF (BASFY) has developed a cheap and non-toxic way to
elimiate the CO2 emission using a newly developed crystal. The crystal is
called zeolitic imidazolate frameworks or ZIF’s. These ZIF’s can store up to
five times more carbon than current technology can.
There are also companies using carbon capture technology to
grow algae and using the algae as bio-fuel. There are the
software companies that will be writing the carbon accounting software,
including Microsoft (MSFT), Computer
Associates (CA), SAP (SAP) and various smaller companies.
© Sam Montana - November 2009
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