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Prospects for Coal-To-Liquid Conversion: A General Equilibrium Analysis. Henry Chen, John Reilly, and Sergey Paltsev Presentation for the 33 rd IAEE Conference June 8 th , 2010. Introduction. Explore the economics for coal-to-liquid (CTL) conversion under the climate policy.
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Prospects for Coal-To-Liquid Conversion: A General Equilibrium Analysis Henry Chen, John Reilly, and Sergey Paltsev Presentation for the 33rd IAEE Conference June 8th, 2010
Introduction • Explore the economics for coal-to-liquid (CTL) conversion under the climate policy. • When, where, and under what conditions will this technology become profitable? • Focus on a polygeneration strategy from DOE (2007) that uses CTL conversion to produce: diesel, gasoline, and electricity with: • gasification unit for generating syngas. • Fischer-Tropsch unit for liquid fuels production. • combined cycle power plant for power generation. • The general approach we develop could be applied to other polygeneration approaches that • produce different fixed or variable output bundles. • rely on other feedstocks (biomass for example).
Sectors Non-Energy Agriculture Energy Intensive Ind. Other Industry Services Industrial Transport Household Transport Other Household Cons. Fuels Supply Crude oil Refined oil Biofuels Shale oil Natural gas Coal Gas from coal Coal to Liquid (CTL) Electricity Generation Crops Livestock Forestry Biofuel crops Gasoline & diesel PHEV Biofuels, CNG Fossil (oil, gas & coal) Coal with CCS Gas with CCS Adv. gas without CCS Nuclear Hydro Wind and solar Biomass Electricity from CTL Model EPPA-ROIL Model Sectors Crude slate Gasoline Diesel Petroleum coke Heavy oil Refinery gases Biodiesel ethanol NGLs & explicit upgrading
Model CTL Production Function Transformation elasticities characterize the response to change in output prices. Substitution elasticities characterize the response to change in input prices.
Data • We use DOE(2007) to calibrate the CTL technology. • O&M expenses => labor cost / year. • Total plant cost => capital cost / year. • Fuel cost => energy cost / year. • $36/Mt-C ($10/Mt-CO2) for CO2 sequestration (Herzog, 2000). • Extend representation for CTL to all EPPA regions by considering regional differences in input/output prices. • For the U.S., in 2009, to produce a given bundle of liquid fuels and electricity, CTL w/o CCS and CTL w/ CCS are 21% and 33% more expensive than conventional technologies, respectively.
Scenarios • Annex I: • Annex I countries cut CO2 emissions to 50% of 1990 levels by 2050. • International cap-and-trade. • World: • “Copenhagen target” before 2025. • After 2025, developing countries cut emissions to 50% of their 2000 levels by 2050. • After 2025, developed countries cut emissions to 50% of their 1990 levels by 2050. • International cap-and-trade.
Conclusion • The prospects for CTL depend on the climate policy and the availability of other fuel alternatives. • Without climate policy, liquid fuels from CTL could be a substantial part of the world supply (up to 30% by 2050). • With very tight climate policy, CTL even with CCS may not be economic. • Even with climate policy, CTL can play a role if no other low-carbon fuel alternatives are available.
