New Study of Oil Sands and Coal-To-Liquids Finds Much Higher GHG Lifecycles than Conventional Crude
Wednesday, October 8, 2008
Contact: Paul Bledsoe, Director of Communications and Strategy
New Study of Oil Sands and Coal-To-Liquids Finds Much Higher GHG Lifecycles than Conventional Crude
Carbon Capture and Storage Can Lower GHG Levels but not Likely to Reduce Coal-to-Liquids below Conventional Petroleum Emissions
(Washington, D.C.) – A new study sponsored by the National Commission on Energy Policy and conducted by the RAND Corporation finds that fuel-cycle carbon emissions for synthetic motor fuel made from oil sands and coal-to-liquids are substantially higher than for conventional crude oil. The analysis, released today, finds that the use of carbon capture and sequestration can substantially reduce the carbon balance of coal-to-liquids, but that even the maximum theoretical carbon capture and storage will, in the best case, only bring the carbon emissions from coal-to-liquids fuels roughly into line with those of conventional petroleum products.
According to the report, synthetic crude produced from oil sands has full fuel-cycle carbon emissions 10-30% higher than convention crude oil. The carbon balance for coal-to-liquids (CTL) is much higher, with lifecycle emissions more than twice those of conventional fuels, the report finds.
“The analysis shows that total carbon emissions from coal-to-liquids are more than double those of conventional oil,” said Sasha Mackler, Research Director for the National Commission on Energy Policy. “Even with aggressive carbon capture and storage, a technology not yet commercially available, coal-to-liquids emissions will be extremely hard pressed to match the level of existing convention petroleum production.”
The National Commission on Energy Policy (NCEP) commissioned the RAND report in an effort to better understand the full range of options for United States to improve its overall energy and environmental security. Other key findings from the study include:
- Oil sands development is now fully commercialized, with production of 1.3 million barrels per day in 2007 already occurring in Canada, and output expected to grow much higher in coming years;
- The current cost of producing synthetic crude from oil sands ranges between $34-$37 a barrel (all figures in 2005 dollars);
- The cost of CTL production is highly uncertain, and there is currently no commercial CTL production using methods examined by the study, but the study estimates costs for CTL in 2025 of $1.47-$1.76 per gallon diesel equivalent, assuming co-production of electricity which could be sold back to the grid. This figure does not include costs of CCS which would increase fuel costs by as much as 25%. Importantly for purposes of comparison, the study’s projected costs for CTL synthetic diesel are in the range or slightly higher than the Energy Information Administration projected reference case price for conventional diesel fuel in 2025;
- Production of 2 million barrels of synthetic fuels a day from CTL would require an additional 400 million tons of coal per year, or a 35% increase in US coal production (current US annual coal production is about 1.1 billion tons). The US currently consumes roughly 21 million barrels of oil a day;
- First-of-a-kind CTL facility capital costs are estimated to range from $3.1 billion to $3.8 billion without CCS; including CCS raises capital plant costs by approximately $200 million.
- A price on carbon emissions significantly affects the cost competitiveness of CTL technologies because of their high fuel cycle carbon emissions; by contrast, cost competitiveness of oil sands is not strongly affected by policies to constrain carbon unless the price of carbon is extremely high.
- Although oil shale is also a potentially important unconventional fossil-based fuel resource, the study does not address it because fundamental uncertainty continues about the technology that could ultimately be used for large-scale extraction, its costs, and environmental implications.
“The Energy Commission has consistently recommended policies that address climate change and oil security together, recognizing we cannot afford to sacrifice one for the other. While unconventional fossil sources of oil represent an option for diversifying petroleum supplies, it is critical that we understand their true economic and environmental costs,” Mackler said. “We believe the data from this study will help fill in some of the remaining information gaps. In particular, a clearer picture is emerging on the sizeable risks – both to the investor and to the global climate – that are on the line when considering the enormous sums of money and greenhouse gas emissions associated with CTL facilities. Hopefully this assessment provides policymakers with a better sense for how to balance the complex set of challenges and opportunities regarding these fuels.”
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The National Commission on Energy Policy is a project of the Bipartisan Policy Center. For more information on the BPC, please visit: http://www.bipartisanpolicy.org/. For more information on the NCEP research agenda and policy recommendations, please visit: http://www.energycommission.org/.
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