IMPLICATIONS OF LOW NATURAL GAS PRICES ON LIFE CYCLE GREENHOUSE

Carnegie Mellon University

IMPLICATIONS OF LOW NATURAL GAS PRICES ON LIFE CYCLE GREENHOUSE

GAS EMISSIONS IN THE U.S. POWER GENERATION SECTOR

Presented by Paulina Jaramillo Co-authors: Aranya Venkatesh, Mike Griffin, Scott

Matthews

USAEE, November 2012


Motivation •  With the increases in natural gas production

there has been increased interests in understanding the reductions in GHG emissions from power generation.

•  Life Cycle Analysis assumes that 1 MWh of

natural gas-based power replaces 1 MWh of coal-based power.

•  No consideration is given to the economics or the operations of the power system.

2

Carnegie Mellon University 3

Life cycle GHGs – US Natural gas

Life cycle GHG emissions (g CO2e/MJ)"

Den

sity"

Source: Venkatesh et al, 2011

Mean Life Cycle GHG Emissions of Domestic Natural Gas = 66 g CO2e/MJ 90% CI = 62-72 g CO2e/MJ


Different studies have resulted in different values

4

Conventional

Unconventional

Howarth et al. 2011 Stephenson et al. 2011


Den

sity"


80 90 100 110 120 130 140 1500

0.02

0.04

0.06

0.08

0.1

Den

sity

5

Life cycle GHGs – US Coal


Den

sity"

Mean Life Cycle GHG Emissions of Coal = 96 g CO2e/MJ 90% CI = 89-106 g CO2e/MJ

Source: Venkatesh, et al. 2012


Life cycle GHG emissions of electricity

6 Source: Jiang et.al, 2011


•  We know, however, that the electricity grid is a complex system that has to be operated to instantaneously match supply and demand. Producing one additional MWh of natural gas will not necessarily replace one MWh of coal.

7


Research Question

•  Given the recent development on Shale gas and low natural gas prices, what will be the implications for life cycle GHG emissions associated with the fuels used for power generation?

8


Method

Supply curve [eGRID & EPA

IPM data]

2010 hourly load

[ISO data] Annual

combustion emissions from

ISO

Upstream natural gas and coal

emissions factors

Total annual GHG

emissions from ISO

Ranking Algorithm

Fuels Used

9


Supply Curve Inputs

10

*Ranges represent regional fuel prices 15 Newcomer et al (2008). Env. Science and Technology

Plant type Unit Price Nuclear ($/MWh) 16.515 Wind ($/MWh) 2015 Hydro ($/MWh) 1015 Biomass ($/MWh) 5015 Coal* ($/MMBtu) 1.88 - 2.6924 Natural gas* ($/MMBtu) 4.26 – 5.1324 Oil* ($/MMBtu) 19.99 - 22.3124

!


Ranking Algorithm

•  Some constraints – Added availability factors for thermal

units. Average capacity factors were used for hydro and wind.

– Added minimum operating limits •  30% for coal plants •  25% for NG plants larger than 800 MW •  Must run nuclear

11


Base Case Supply Curve (PJM)

12

0 20 40 60 80 100 120 140 160 180 2000

50

100

150

200

250

300

350

400

450

500PJM

Cumulative capacity (GW)

Short−ru

n marg

inal c

osts

($/MW

h)

HYDRONUCLEARWINDCOALNATURAL GASBIOMASSOIL

Natural gas price: $4.5/MMBtu


Model Validation

•  We confirmed that the supply model resulted in appropriate percentage generation by fuel type

13


Modified NG prices

•  Varied U.S. Average Delivered Natural Gas Prices between $1.5 and $7.5 per MMBtu – Delivered prices in the different regions are

not the same. The U.S. average was used as a basis to determine region specific delivered prices for PJM, MISO, and ERCOT through simple regressions

14


Sample Modified Supply Curve for PJM (NG Price = $2.5/MMBtu)

15

0 20 40 60 80 100 120 140 160 180 2000

50

100

150

200

250

300

350

400

450

500PJM


Short−r

un m

argina

l cos

ts ($/

MWh)


0 20 40 60 80 100 120 140 160 180 2000

50

100

150

200

250

300

350

400

450

500PJM


Shor

t−run

mar

ginal

costs

($/M

Wh)


Original Supply curve (NG = $4.5/MMBtu

Modified Supply Curve


Results of modified natural gas prices

16

Minimum coal generation limit = 30%

ERCOT MISO PJM

Per

cent

age

Ele

ctric

ity G

ener

atio

n

0

10

20

30

50

60

70

80

100

40

90

20

0

10

50

60

70

80

100

40

90

30

0

10

20

30

50

60

70

80

100

40

90

Base Case

4.5 5.5 1.5+ Must-run Nucl.

2.5

U.S. Average Electricity Sector Delivered NG Price ($/MMBtu)

3.5 Base Case


2.5


3.5 Base Case


2.5


3.5


GHG Emission Reductions S

yste

m w

ide

GH

G E

mis

sion

Red

uctio

n (%

)


Conclusions •  LCA studies suggest a 50% reduction in GHG

emissions associated with displacing coal with natural gas. These studies do not consider grid operations

•  Our numbers suggest that the maximum emission reduction that could be observed with the current power plant fleets are less than 25%. At a realistic natural gas price, they are less than 5%.

•  Reductions of GHG emissions from the power system may not be a sufficient motivation for supporting increased production of unconventional gas resources; unless there is a complete transformation of the power plant fleet.

18



Acknowledgements •  Funding for the authors was provided by the Energy

Foundation and the RenewElec Project, which was funded by the Doris Duke Charitable Foundation, the RK Mellon Foundation, the Heinz Endowment, the Electric Power Research Institute, the National Energy Technology Lab, and the Carnegie Mellon Electricity Industry Center

–  Any opinions, findings, and conclusions expressed in this

material are those of the authors and do not necessarily reflect the views of these organizations.

20


References •  Jaramillo, P.; Griffin, W.; Matthews, H. Comparative life-cycle air emissions of coal,

domestic natural gas, LNG, and SNG for electricity generation Environmental Science and Technology. 2007, 41, 6290–6296.

•  Newcomer, A.; Blumsack, S.; Apt, J.; Lave, L.; Morgan, M. Short run effects of a price on carbon dioxide emissions from US electric generators. Environmental Science Technology. 2008, 42, 3139–3144.

•  Venkatesh, A.; Jaramillo, P.; Griffin, W. M.; Matthews, H. S. Uncertainty in Life Cycle Greenhouse Gas Emissions from United States Natural Gas End-Uses and its Effects on Policy. Environmental Science and Technology 2011, 45, 8182–8189.

•  Jiang, M.; Michael Griffin, W.; Hendrickson, C.; Jaramillo, P.; VanBriesen, J.; Venkatesh, A. Life cycle greenhouse gas emissions of Marcellus shale gas. Environmental Research Letters 2011, 6, 034014.

•  Howarth, R. W.; Santoro, R.; Ingraffea, A. Methane and the greenhouse-gas footprint of natural gas from shale formations. Climatic Change. 2011, 106, 679–690.

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References •  Stephenson, T.; Valle, J. Modeling the Relative GHG Emissions of Conventional

and Shale Gas Production. Environmental Science & Technology. 2011, 45, 10757-10764

•  Weber, C.; Clavin, C. Life Cycle Carbon Footprint of Shale Gas: Review of Evidence and Implications. Environmental Science & Technology. 2012, 46 (11): 5688–5695

•  Venkatesh, A.; Jaramillo, P.; Griffin, W. M.; Matthews, H. S. Implications of changing natural gas prices in the United States electricity sector for sulfur and nitrogen oxides, and life cycle greenhouse gas emissions. Environmental Research Letters. 2012, 7: 034018

•  Venkatesh, A.; Jaramillo, P.; Griffin, W. M.; Matthews, H. S. Uncertainty in life cycle greenhouse gas emissions from U.S. coal. Energy and Fuels. 2012, 26 (8): 4917–4923

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Thank you for your attention

You can contact me at [email protected]

www.RenewElec.org

23


Region specific delivered natural gas prices

24

2

4

6

8

10

12

a)ERCOT: y=0.94x, R2=0.97

0

2

4

6

8

10

12

14

Regi

onal

Ele

ctric

ity s

ecto

r del

ivere

d na

tura

l gas

pric

e ($

/MM

Btu)

b)MISO: y=0.96x, R2=0.91

2 4 6 8 10 12 140

5

10

15

U.S. Average Electricity sector delivered natural gas price($/MMBtu)

c)PJM: y=1.14x, R2=0.95

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IMPLICATIONS OF LOW NATURAL GAS PRICES ON LIFE CYCLE GREENHOUSE

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