We saw the brilliance of the Danish energy policy on Tuesday in the farm fields of Germany as we drove south from Berlin headed for the world’s first coal fired plant that may sequester CO2. Those fields were sprouting a great crop of 250 foot tall Vestas wind turbines slowly spinning in a very light wind. It is funny how a decision by the Danish parliament ended up planting wind turbines in German fields. I will bet the German framers make more per acre on their crop of turbines than on their picturesque crops of oats and rye.
The real treat of the day was visiting the Schwarze Pumpe Coal Fired Electrical plant, a place that could herald the dawn of a new age of clean coal – if it works. The plant is an enormous facility, gleaming an aluminum white for miles over the flat and bucolic fields of southern Germany. The plant has reduced its Co2 emissions by 20 to 30% already by the adoption of various efficiency measures. Now under construction is a 30 megawatt pilot plant that will use the oxyfuel method of capturing CO2 such that it can be sequestered underground. This will be world’s first on this scale for these purposes. The plant should be on line in the spring of 2008 to be followed with a commercial sized plant by 2015 to 2020.
The plant is owned by VAnttenefall company, a Swedish outfit that is making this enormous investment in the belief that costs will continue to be imposed on carbon and that coal has to find a way to be burned cleanly. It has even already planned on making all of its new plants compatible with post-combustion carbon capture, a process more expensive than the new system it intends to perfect. Since these plants have a 40 year expected life and it takes 5 years to plan them, having a long timeline is important when we write policy.
The company believes its technology will pencil out economically anytime CO2 permits cost 20 euros per ton. They look at the project as creating a new ‘value chain” of capture, transportation, and storage. Here is yet another example where businessmen look global warming as a chance to grow the economy. They know post combustion capture takes away 10 – 12% and the oxygen method 8%, but they believe they are both economically winning decisions due to the coming cost of Co2 emissions.
Now the company needs some more certainty so they can move forward. They need to have a regulatory system for establishing the sequestration areas. They also to need to know the answer to a very basic question – who will own the underground storage fields? These are questions we need to answer in the U.S. as well.
Looking down 300 feet from the top of the plant at the construction project of the new plant, I wondered if this site would be considered historic as the first place man learned how to burn coal cleanly. Only time will tell.
The plant got its name, “Schwarze Pumpe” from the fact that the german town adjacent to the plant painted its water pumps black when the Swedes invaded, because that represented the presence of bubonic plague and it discouraged the marauding Swedes form bothering the German ladies. These were smart Germans. Their descnedants who are not bothered that it is a Swedish company now back in town. If it learns to use coal cleanly, all sins may be forgiven.
We learned a lot from the articulate officials at the plant that we can use at home. First, we learned that when the cap and trade system came into Europe, electrical prices went up only about 2 -5% as result of the system. That gives a lie to the opponents of cap and trade who are attempting to defeat its adoption in America with the threat of exploding electricity prices. Second, the reason for volitility in the carbon price at the start was that Europe had very weak information about their emissions. We have had good statistics since 1990. Third, Germany is phasing out all their nuclear by 2025, so this has given clean coal even more emphasis.
Will sequestration work? Markus Sautoff, the suave director of generation for Vattenfall, said he was confident that there was more than enough geologically acceptable areas available. At the beginning, the CO2 from the pilot plant will be trucked to the sequestration site in Germany. Eventually, however, only piplines will do, since a commercial plant will generate one million tons of CO2 a day.
Markus said that his company is pursuing the oxyfuel system instead of the CGCC system that is being explored in the U.S. in part because this will give the world a good test of the competing technologies. If his works, it is unlikely that people will ever consider compressed and super critical CO2 as a more significant contribution to the world than German beer, but the planet’s atmosphere will be most grateful.
This attitude of favoring progress is not limited to the private sector in Germany. After our visit to the clean coal plant, we drove up the audobahn to visit Renate Kunast, a member of the German Parliament who has been a leader in building the renwable energy portfolio of Germany. She reported that German CO2 emissions have dropped from 1228 million tons in 1990 to 1007 million today and Germany will meet its Kyoto target of a 21% reduction in 2012. She believes Germany should set a further internal target for a full 40% reduction from 1990 levels by 2020 and points to its success in expanding solar and wind power much faster than even its targets originally called for. Germany’s taret for renewables for 2010 was met in 2007.
Germany has had spectacular success with its “feed in tariff” system in which homeowners and businesses are guaranteed a price from the utility for the renewable power they produce. This provides confidence for investors to build this power and they have done so with such alacrity that Germany leads the world in solar power and the fields of Germany are studded with graceful wind turbines with more to come.
She has a strong criticism, however, for a feature of Germany’s cap and trade system, in that it just give away permits, rather than requiring utilities to purchase them at auction. She says this eliminated an incentive for them to build green power and Germany intends to remedy this in the next round of permits, going to either 10% auction in 2012 and 100% thereafter. She attributes the run up of electrical prices not to the cap and trade system, but to the almost total inability of the regulators to either regulate windfall profits or encourage much competition in the system.
They have had actually more success in the feed in tariff regime, with that producing 100 million tons of CO2 saved compared to 50 million tons from the cap and trade system. Now solar will be market based in four or five years and the price is ramped down every year to prevent dependency. They use a holistic approach and now intend to focus on green building since that is the great untapped resource in Germany.
Germany’s fields are green. So are its policies. Unfortunately, Secretary Rice in Potsdam tonight preparing to refuse join other G-8 nations in tackling global warming. It is time to turn that policy around.
