CCS: A Race Already Lost?
Originally published March 18, 2014
Carbon capture and storage is the process of capturing waste carbon dioxide from power plants and depositing it underground in a geological formation so it cannot enter the atmosphere. Illustration by Scott Roberts.
Just six years ago carbon capture and sequestration, known as CCS, looked like it could become something of an energy tech star, perhaps the salvation of the country’s coal industry.
Fresh off of the 2008 election, President Barack Obama vowed to create a national cap and trade program to reduce carbon dioxide emissions. Market observers saw growing demand ahead for CCS, a process that captures and compresses carbon dioxide at a power plant and then injects the emissions underground for storage or reuse. The technology’s prospects heightened as Obama channeled $3.4 billion of stimulus money into demonstrating its worth.
Fast forward to today—cap and trade never came to be, and CCS still has not been fully tested on coal-fired plants. The technology is no longer viewed as the white horse that will save the struggling coal industry; unfortunately it appears to be the only horse in the stable.
What’s Changed? Unable to convince Congress to adopt cap and trade, the Obama administration is instead creating rules under the Clean Air Act that place restrictions on CO2 emissions. The first set of rules, re-proposed in September by the Environmental Protection Agency, apply to new plants—those not yet in operation. A newly proposed plant must now adhere to a 1,100 pounds per megawatt-hour limit. Most new coal plants emit about 1,950 pounds per megawatt-hour.
Industry observers say only CCS technology reduces emissions that profoundly. So the question becomes: Will CCS be ready for use by new coal power plants?
EPA Administrator Gina McCarthy has publicly expressed confidence that the technology will be ready six years from now. Others are skeptical. Yes, CCS may work in laboratories or on a small scale, they say. And carbon dioxide can clearly be captured at small scale on industrial facilities where the CO2 is used in food or chemical processing, but not permanently stored. But the United States has yet to demonstrate that the technology works on large, commercial coal-fired power plants.
“What you hear a lot is that people have been capturing CO2 for decades for industrial processes, and this application is no different,” said J. Edward Cichanowicz, an engineering consultant, who has worked in developing environmental controls extensively and testified before federal lawmakers on CCS technology.
In truth, he said, CCS for coal-fired plants differs from its industrial counterpart in design and output. And the stakes are higher to get it right for the power industry. A malfunctioning CCS system at an industrial facility might interrupt manufacturing at that site. But a power plant down because of failure to capture or store CO2 underground can mean energy price spikes or even a blackout.
To prove that CCS works on large-scale coal-fired plants, the power industry, in partnership with federal and state governments, have funded five demonstration projects. Only one is near completion. The other four still need financing. Three others were planned but canceled by the developers because of regulatory and financial uncertainty, according to a September 2013 Congressional Research Service report, “Carbon Capture and Sequestration: Research, Development, and Demonstration at the U.S. Department of Energy.”
“The private industry people have to come up with the lion’s share of the funding. That’s one of the major hurdles for these projects—securing the financing,” said Tom Sarkus, a division director at DOE’s National Energy Technology Laboratory.
Integrated gasification combined cycle demonstrations. Of the five demonstration projects, three of the projects use IGCC—integrated gasification combined cycle—a comparatively new power plant technology that some engineers believe lends itself better to carbon capture than combustion methods, Sarkus said. The gases are pressurized so the CO2 is more readily removed by the special chemicals developed for such scrubbing.
Of the IGCC projects, Southern Co.’s Mississippi plant is the farthest along in development. NETL expects the plant to begin operating later this year. It will capture the carbon and then sell it for use by oil fields in what is known as enhanced oil recovery, a process of pumping the carbon dioxide into reservoirs to improve oil yields. This approach offers a revenue stream for a CCS plant.
Two other IGCC projects, Summit Texas Clean Energy and Hydrogen Energy California, are still working on obtaining financing. Like the Southern Co. project, they plan to sell their carbon dioxide output for enhanced oil recovery. They will produce not only electricity, but also urea, a chemical compound often used in fertilizer.
NRG Energy’s W.A. Parish Generating Station and FutureGen 2.0 differ from the first three in that they use combustion technologies, not gasification. NRG Energy’s project also is significant because of its size—it will be the largest demonstration in the United States to date of the combustion technology on an existing power plant. So it will address a major criticism of CCS testing so far—that what works for a small power plant does not necessarily translate to a large one. W.A. Parish’s capacity is 250-MW, the magic number for scale, according to David Knox, NRG energy spokesman.
“It takes a lot of science and engineering to get it up to 250 MW. Once you get it up to 250 MW, you only have to add capacity. This is the size you need to demonstrate that the technology works at scale,” Knox said.
NRG Energy is completing financing agreements with partners and hopes to break ground later this year.
FutureGen is perhaps the most well-known of the group because it has been around under various incarnations for about a decade. The Bush administration funded the project in 2003 as an IGCC plant, but abandoned it in 2008 as costs escalated. The Obama administration revived FutureGen, but as a 2.0 version that uses a different technology—oxy-combustion. The plant will burn coal in a mixture of recycled flue gas and oxygen—air with the nitrogen removed. This process creates a highly concentrated carbon dioxide stream that can be purified easily and then transported for storage, NETL’s Sarkus said.
FutureGen will transport the carbon dioxide about 30 miles and inject it into underground saline formations for permanent storage. So FutureGen will not gain revenue from its carbon dioxide recovery, as the enhanced oil recovery projects will. However, FutureGen is important because the United States has far more carbon dioxide than it does oil fields to absorb it.
“If we took all of the CO2 from all of the power plants and other industries across the nation and put them into oil fields, we might have enough economical CO2 storage to last for a decade or so,” NETL’s Sarkus said. “So enhanced oil recovery is a big sink, but it is not enough to take all of the CO2 for the lifetime of all of our coal- and natural-gas-fueled power plants.”
FutureGen may offer the answers to questions about sequestration—but only if the Meredosia, Ill., project actually gets built.
“Nearly 10 years and two restructuring efforts since FutureGen’s inception, the project is still in its early development stages,” said Congressional Research Service in an April 2013 report, “FutureGen: A Brief History and Issues for Congress.”
Its 10-year history has been marked by cost-escalation, according to the report. The Bush administration dropped the project after costs rose from $950 million to $1.8 billion. Obama’s 2.0 version began in 2010 with a $1.3 billion price tag that rose to $1.65 billion.
But Michael Matuszewski, an NETL manager in coal and power R&D, remains confident the pilots now underway will not only demonstrate the worth of the CCS technology in time, but also drive down costs.
“We believe that not only will we have worked out the technical hurdles to get these plants to operate as we expect, in a reliable way. We also believe in 2020 we will have driven down the cost to capture CO2 by 33 percent. That’s the hope. That’s the trajectory. That’s the path we are on now,” he said.
The Future Is Here? Others argue that the need for commercially viable CCS is already here, in essence. To begin operating in the next decade, a coal-fired plant must be under development now, given the long lag time to finance and build a power plant in the United States. The 2020 target—and the lack of demonstrated CCS for large-scale coal plants—puts power plant developers in the position of designing coal-fired plants with technology “that doesn’t exist,” said engineering consultant Cichanowicz.
“This will essentially stop anybody from building a new [coal-fired] power plant. Even if they could convince themselves that it will work, they won’t get financing from a bank,” he said. “There are many people who think that the purpose of this rule is to stop coal because there is no way you are going to build a coal plant with a technology that you can’t prove works.”
Meanwhile aging coal-fired plants continue to announce retirements and the future looks bleak for new development. About 24 GW is set to shut down by next year, a figure that grows to 32 GW by 2021, according to the Brattle Group. A U.S. Energy Information Administration forecast shows only 262 GW of coal-fired capacity in the United States by 2040, down from 310 GW in 2012.
The argument about CCS-readiness may take on legal repercussions as almost inevitable court challenges begin against the EPA rules, said attorney Paul Gutermann, a partner with Akin Gump in Washington, D.C. The challenge may draw upon language in the Energy Policy Act of 2005. The act called for financial assistance to develop certain technologies, but also barred the EPA from using those projects as technology demonstrations. Three of the CCS demonstration plants received such funds, Gutermann said.
Ultimately the CCS dilemma is a market question, one of the chicken and egg, said Howard Herzog, a senior research engineer at the Massachusetts Institute of Technology Energy Initiative, who has been working on CCS for about 25 years.
“In general, there is no real reason to go ahead and put this technology on, at least not on the scale we’re talking about, unless it is responding to climate policy,” Herzog said. “So on the one hand, you have people saying you can’t have climate policy because the technology isn’t ready. On the other hand, why would you expect the technology to be commercial if you don’t have a climate policy to create the markets for it?”
The researchers at NETL have a different perspective. While the industry is eying 2020 as a kind of end-game date, they describe it more as the start, the date the first wave of CCS technologies prove themselves. The agency is advancing what it calls second-generation CCS technologies that it plans to begin demonstrating around 2020. Then it will move into what it calls “high risk/high benefit” transformational CCS technologies, expected to be ready for demonstration around 2030. The transformational technologies are likely to dramatically reduce CCS costs, NETL’s Sarkus said.
“Think back to when Henry Ford created the automobile. We didn’t just declare it done and keep replicating that for a hundred years. We have advanced the technology and brought the price down and the technology has propagated and become much better,” he said.
True, of course, but there was Ford’s Edsel along the way. And for now the power industry remains uncertain about whether CCS will be its Edsel or a best-selling minivan. Meanwhile, for those in the coal business the future approaches at racecar speed.
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