DOI: 10.3303/CET2188097 Paper Received: 30 May 2021; Revised: 22 September 2021; Accepted: 10 October 2021 Please cite this article as: Lameh M., Al-Mohannadi D.M., Linke P., 2021, Cost Analysis for CO2 Reduction Pathways, Chemical Engineering Transactions, 88, 583-588 DOI:10.3303/CET2188097 CHEMICAL ENGINEERING TRANSACTIONS VOL. 88, 2021 A publication of The Italian Association of Chemical Engineering Online at www.aidic.it/cet Guest Editors: Petar S. Varbanov, Yee Van Fan, Jiří J. Klemeš Copyright © 2021, AIDIC Servizi S.r.l. ISBN 978-88-95608-86-0; ISSN 2283-9216 Cost Analysis for CO2 Reduction Pathways Mohammad Lameh, Dhabia M. Al-Mohannadi, Patrick Linke* Department of Chemical Engineering, Texas A&M University at Qatar, Education City, PO Box 23874, Doha, Qatar patrick.linke@qatar.tamu.edu It has been widely acknowledged that addressing the issue of climate change should focus on reducing, and ideally eliminating, the influx of CO2 to the atmosphere. This has led to the emergence of various CO2- reducing technologies, which differ in their economic and environmental performances. Considering only one side of the problem may be misleading, so this work introduces a novel high-level cost analysis methodology which assesses the different CO2 reduction options based on CO2 marginal abatement cost - MAC (an indicator that integrates environmental and economic performances). The study contributes to the existing literature by accounting for the impact of the temporal variations in power demand and renewable energy sources on the MAC of the considered options. The proposed approach is demonstrated through an analysis that explores integrated pathways for CO2 reduction through CCUS technologies and renewable energy technologies. Energy storage is considered for the intermittent renewable energy options. The results for the different scenarios are combined on a Mini-MAC curve, a recently developed cost analysis tool for planning CO2 reduction pathways, in which significant insights on the economics of the CO2 reduction are demonstrated and analyzed. 1. Introduction Climate change is a major challenge that requires urgent actions towards reducing greenhouse gas emissions to limit the rise in global temperature. This would require reducing the global CO2 emissions to net zero (IEA, 2021), which in turn requires a wide scale implementation of CO2 reducing technologies. Different options exist for CO2 reduction among which renewable energy systems (RES) and CO2 capture, utilization, and storage (CCUS) are considered as key pillars (IEA, 2021). The performance of such pathways is assessed from the environmental point of view through life cycle assessment analyses - LCAs (Thonemann and Pizzol, 2019) or from a technological/economic perspective through technoeconomic analyses - TEAs (Hepburn et al., 2019). It is important to consider both the techno-economic and environmental performances when planning for CO2 reduction in order to avoid falling in common pitfalls of prioritizing options that perform well in one criterion but fail in another (example: profitable CO2 utilization pathways that produce more CO2 as secondary emissions than they utilize). One method of integrating LCAs and TEAs is by considering the marginal abatement cost (MAC) of CO2 reduction, which is the cost associated with a certain life cycle CO2 reduction level (Zimmermann et al., 2020). Optimization approaches have been developed to guide a detailed implementation of cost-optimal CO2 reduction pathways while considering the total cost of a net CO2 reduction target (Al-Mohannadi et al., 2020). However, it is important to have a higher-level planning perspective to be able to assess and understand the solutions obtained from optimization. To address this gap, Lameh et al. (2021) developed a methodology for assessing and analyzing CO2 reduction options through developing minimum marginal abatement cost (mini-MAC) curves which represent integrated systems consisting of various CO2 reduction options. The approach uses high level parameters (costs and secondary emissions) to represent the different options based on their MAC and CO2 reduction potential. The mini-MAC method assumes linearity of cost with CO2 reduction for a given option, which may not apply when accounting for the temporal variations of energy supply and demand. The dynamics of the varying renewable energy sources and the fluctuating demand can play a major role in designing energy systems (Limpens et al., 2019). To our knowledge, there is no high-level cost analysis approach that can demonstrate the economic and environmental performances of CO2 reduction strategies while considering the temporal variations in energy 583 supply and demand and the effect of that on the design, sizing, and costs of the integrated system. Hence the contribution of this work is in proposing a high-level method for representing integrated systems while accounting for intermittencies and temporal variations of energy supply, demand, and storage. The proposed method is a two-step approach which identifies the proper sizes of the energy system components and the corresponding costs, considering the availability of resources and the demand. The mini-MAC profile of the integrated system is then developed based on the determined costs. The approach is represented through a case study based on the current situation of CO2 emissions and energy resources availability in Qatar. 2. Methodology This work considers the possibility of CO2 reduction from a set of CO2-emitting point sources by either implementing renewable energy (RE) options or by capturing and utilizing/storing the emissions. The aim is to understand the CO2 reduction potential and the costs associated with the different achievable CO2 reduction levels involving the implementation of the economically efficient pathways. This requires an integration between the environmental and the techno-economic performances of the considered options to determine the cost associated with the resulting CO2 abatement. The proposed methodology is a two-step approach which starts by the identification of the minimum MAC (mini-MAC) of the different options while accounting for the dynamic variations in the supply of renewable energy, followed by the representation of the efficient options on a combined mini-MAC curve to analyze the performance of the integrated system. Figure 1 defines the scope followed for the considered technologies. (a) (b) Figure 1: Flow diagrams showing the scope of the considered (a) RES and (b) CCUS pathways The first step of the approach is conducting an analysis for the individual options to determine their CO2 reduction capacity and the MAC. For the renewable energy systems, the cost and the level of CO2 reduction depend on the sizes of the RE generation and the RE storage units (Figure 1a). The energy security is ensured by assuming that the demand for power is always covered either by the RES (directly through the generated power or indirectly through discharging the stored energy) or by the backup fuel plant. This is done by performing the energy balance on each time step of the considered period, considering the RE generation and storage constraints which depend on the capacities of the RES components. In the case study shown in Section 3, hourly data throughout a typical year for the solar energy supply and for the demand for electricity is input into the method based on which the calculations are performed. The mini-MAC for the RES options corresponding to a certain level of CO2 reduction is determined by varying the capacities of the RE generation and storage components, calculating their annualized costs, and calculating the power needed from the backup fuel-to-power plant and the corresponding CO2 emissions. Eq(1) shows definition of the MAC for RES options. The mini-MAC profile is obtained by plotting the MAC against the CO2 reduction level (Figure 2a).= total annualised cost of the energy system − (1) Considering the CCUS options, the mini-MAC is determined as described in Lameh et al. (2020), depending on the capture cost, the economics of the sink (CO2 utilization or storage), and the secondary emissions. However, most technoeconomic studies of CO2 utilization technologies do not consider the raw materials (other than CO2) as part of the scope, but rather assume a price neglecting the environmental impact of attaining the feedstocks (Zimmermann et al., 2020). H2 is a major feedstock when it comes to CO2 utilization, as various processes depend on H2 and CO2 (like methanol, synthesized natural gas, Fischer Tropsch fuels, DME…). In this work, green H2 is assumed to be generated through water electrolysis with the energy supplied from renewable sources (Figure 1b). This pathway is chosen since the aim is to reduce CO2 through CCUS and green H2 ensures that this goal is achieved. Hence, the cost of H2 depends on the sizes of the electrolysis unit, the RE generation unit, and H2 storage unit. Due to the temporal variations in the renewable 584 energy sources, the sizing of the different components would depend on the time-based profile of renewable energy generation. The RE generation unit is sized so that H2 supply to the utilization process, whether directly from the electrolyzer or from the storage, meets the H2 requirements of the process throughout the operating period. The electrolyzer and the storage units are sized based on the maximum achieved operational loads. The price of H2 can be determined based on the cost of the components, the price of H2O required, and the profits from selling pure O2. The economics of the sink process are characterized by the CO2 breakeven cost which can be calculated as shown in Eq(2). After that, the MAC of the different CCUS options can be determined as presented by Eq(3). breakeven cost = profit from selling the product − cost of utilization process − cost of (2) = − breakeven cost of utilization (or storage)CO fixation efficiency in the sink − secondary CO emissions from capture (3) (a) (b) (c) Figure 2: Mini-MAC of (a) the RES options, (b) the CCUS options, and (c) the integrated system The MAC and CO2 reduction potential of the different CCUS options corresponding to the various combinations between the sources and the sinks are determined as shown by Lameh et al. (2021) (Figure 2b). The second step of this approach is combining the mini-MAC profiles for the CCUS and RES options to analyze the cost and the CO2 reduction potential of the integrated system (Figure 2c). Knowing the abatement costs of all the options, the different pathways are represented on a mini-MAC curve in increasing cost order to prioritize the cheapest options. CO2 reduction via CCUS is constrained by the availability of the captured emissions and the capacity of the considered utilization and storage options. CO2 reduction via RE options is constrained by the capacity of the RE technologies and the power demand. Analyzing the integrated mini- MAC curve allows the identification of the layout of the integrated system with reduced CO2 emissions (Figure 3). Figure 3: The integrated system with low CO2 emissions as determined from the integrated mini-MAC curve 3. Case study The described methodology is applied to a system consisting of CO2 emitting sources which data (Table 1) is obtained based on the case of Qatar. The high purity sources include the processes in which CO2 is captured and emitted in high concentrations, and the corresponding emissions flowrate is based on the operation of GTL and LNG plants (Alfadala and El-Halwagi, 2017). Qatar is a major natural gas (NG) producer, and NG combustion is the main source of energy for industrial heating and power production. The emissions flow rate for the NG combustion is based on the heat requirements of the different industrial plants operating in Qatar. The emissions flow rate from the NG power plant is based on the power demand covered by the existing power plants (Kahramaa, 2018). CO2 capture costs and secondary emissions are based on Metz et al. (2005), Leeson et al. (2017), and von der Assen et al. (2016). The data for the considered sinks is obtained from 585 different techno-economic studies for the utilization of CO2 with H2 to produce methanol (Pérez-Fortes et al., 2016), synthesized natural gas – SNG (Chauvy et al., 2021), and Fischer Tropsch fuels – FT fuels (Zang et al., 2021). The costs of the processes, the direct and indirect CO2 emissions, and the CO2 and H2 requirements are obtained from the mentioned studies. Solar energy is considered as the RE option where power is generated through photovoltaic (PV) modules. The hourly solar power generation data (kW/kWp) is determined from the PVGIS model (PVGIS, 2016) assuming 14 % losses in the system. The costs of the PV- module, the electrolyzer, and the H2 storage are determined based on IRENA (2020) and Nordin and Rahman (2019). The sizing of the PV system, the electrolyzer, and the H2 storage for each of the considered sinks is performed as discussed in section 2, and the CO2 breakeven costs are determined accordingly (Eq(2)). The costs of enhanced oil recovery (EOR) and CO2 storage are based on Hepburn et al. (2019) and GCCSI (2011). The data used for the different sinks processes is shown in Table 2. Table 1: Data collected for the CO2 sources Sources Emissions Flowrate (tCO2/y) Capture Cost ($/tCO2- captured) Secondary CO2 (tCO2/tCO2- captured) High Purity Sources 8.3 4.7 0.06 NG Combustion 54.1 34.6 0.24 NG Power Plant 25.4 34.6 0.24 Cement 2.21 60 0.24 Table 2: Data collected for CO2 utilization and storage options Sinks H2 Intake (tH2/tProduct) CO2 Intake (tCO2/tProduct) CO2 Breakeven Cost ($/CO2) Capacity (tCO2/y) Fixation Efficiency EOR NA NA 45 0.75 100 % Methanol 0.2 1.46 -380 1.46 91 % Methane 0.45 2.41 -852 10 98 % FT Fuels 0.635 6.8 -394 6.82 43 % Storage NA NA -20 10 100 % For designing the RES, solar energy is considered through PV modules and lithium-ion battery energy storage system (BESS). The hourly profile of the power load throughout a conventional year is determined based on Kahramaa (2018). The solar power generation is determined from the PVGIS model (PVGIS, 2016) based on the location of Qatar and assuming 14 % losses in the system. The capital cost of PV is 715 $/kWp and the operation and maintenance (O&M) costs are assumed to be 10 $/kWp/y (IRENA, 2020). The BESS has a capital cost of 400 $/kWh, an O&M cost of 4 $/kWh/y, and 2,000 full life cycles (Mongird et al., 2020). The first step of the methodology is applied for the collected data to obtain the CO2 break even costs (Table 2) and the mini-MAC profiles for the different RES and CCUS pathways. Figure 4 shows the separate profiles of the mini- MAC obtained for the RES and CCUS options. (a) (b) Figure 4: The minimum marginal abatement cost (mini-MAC) curves for (a) RES and (b) CCUS options The results show a slight opportunity of profiting from CO2 reduction through utilization of high purity emissions in EOR. The profitable CO2 reduction is around 0.71 MtCO2/y. Such profit can be used to fund the storage of CO2 from high purity sources resulting in a cost-neutral CO2 reduction of 1.85 MtCO2/y. The implementation of PV is competitive compared to CO2 capture and storage from NG combustion, having similar MAC and CO2 reduction potential. However, the cost of RES rises when BESS is required to cover further electricity demand. Nonetheless, the RES option remains much cheaper than the expensive utilization options of CO2 (methanol, SNG, and FT fuels). 586 (a) (b) Figure 5: (a) Integrated mini-MAC profile and (b) the cost of CO2 reduction The mini-MAC profile of the integrated CO2 reduction system is shown in Figure 5a. The integrated profile is obtained by combining the MAC and CO2 reduction potential of both RES and CCUS options, ensuring that the cheapest options are prioritized. Analyzing the profile allows the determination of the cost of CO2 reduction (Figure 5b) and the design of the system (the capturing sources, the implemented sinks, and the implemented power options) which achieves a set CO2 reduction target (Figure 6). The results show that up to 19.5 % of the considered CO2 emissions (17.5 MtCO2/y) can be reduced through implementing solar power from PV (without the need for storage), and allocating CO2 from high purity sources and natural gas combustion to EOR and storage. Such pathways result in an average CO2 reduction cost of 45 $/tCO2. Further CO2 reduction requires the implementation of more expensive options such as electricity storage and CO2 utilization to produce chemicals and fuels. Solar energy has the potential of replacing natural gas power through combining PV with BESS. The required capacities of PV and BESS are 34 GWp and 132 GWh. The integrated system with CCUS (considering EOR and storage) can reduce up to 33.8 MtCO2/y at an average cost of 261 $/tCO2. The implementation of all the considered options requires full replacement of natural gas power, capturing CO2 from high purity sources and natural gas combustion, and operating all the sinks at their full capacities. This allows achieving a CO2 reduction target of 48.3 % of the considered emissions at a high average cost reaching 488 $/tCO2. The high costs associated with the introduction of BESS and CO2 utilization (methanol, SNG, FT-fuels) are attributed to the high costs of energy storage and H2 production and storage. Hence, major breakthroughs are required to reduce the costs of these technologies to make the economic reduction of CO2 possible at reasonable prices. Figure 6: Different designs for the CO2 reduction system corresponding to different levels of CO2 reduction 4. Conclusion This work proposed a novel high-level cost analysis method for CO2 reduction pathways that is able to account for the effect of the intermittency of the renewable energy sources and the temporal variations in the demand for power on the economic and environmental performances of RES and CCUS options. The method was applied to a case study to demonstrate the significant insights that can be determined. It was shown that for the case of Qatar, solar power and CO2 capture, utilization in EOR, and sequestration can play a key role in an economic CO2 reduction. Such pathways can reduce up to 17.5 MtCO2/y with an average cost of 45 $/tCO2. Further CO2 reduction can be achieved by introducing battery storage (up to 33.8 MtCO2/y) and CO2 utilization for chemicals production (up to 43.5 MtCO2/y); however, the average cost of CO2 reduction would rise significantly to 261 $/tCO2 and to 488 $/tCO2. Future work will further analyse the sensitivity of the CO2 reduction price relative to the expected reductions in costs associated with the improvement of the existing technologies. 587 References Al-Mohannadi D. M., Kwak G., Linke P., 2020, Identification of optimal transitions towards climate footprint reduction targets using a linear multi-period carbon integration approach, Computers and Chemical Engineering, 140, 106907. Alfadala H. E., El-Halwagi M. 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