With the deployment of large-scale carbon capture and sequestration (CCS) projects in the U.S. facing a tipping point, two leading Democrats in the U.S. House of Representatives want a hearing on where CCS development stands today.
On May 4, House Energy and Commerce Committee Ranking Member Henry Waxman, D-Calif., and Energy and Power Subcommittee Ranking Member Bobby Rush, D-Ill., sent a letter to Energy and Commerce Committee Chairman Fred Upton, R-Mich., and Energy and Power Subcommittee Chairman Ed Whitfield, R-Ky., requesting a hearing on new information on the potential role of CCS to control carbon pollution and to provide for the clean use of coal in the future.
“Over the past few Congresses, the Committee has held numerous hearings on technology to capture and sequester carbon pollution from power plants,” the letter noted. “A reason for focus on this clean energy technology is that many have seen it as an essential technology for retaining the use of coal as a fuel in the future, while preventing catastrophic climate change. Recent developments on carbon capture and sequestration (CCS) have implications for its viability and expansion, yet the Committee has held neither briefings nor hearings on these developments. Therefore, we are writing to request that you hold a hearing on this issue.”
The two Democrats pointed out that the U.S. Department of Energy recently released its new North American Carbon Storage Atlas, detailing the geography and suitability of large areas of potential storage sites. The report found that there is more than 500 years of CO2 storage capacity throughout the U.S., Canada, and Mexico.
The Obama Administration has supported the development of this clean energy technology through incentives and policy development. That support includes more than $1bn in assistance for carbon capture projects, like the FutureGen 2.0 coal repowering project in Illinois, NRG Energy’s (NYSE: NRG) demonstration project in Texas, and Summit Power Group’s Texas Clean Energy coal gasification project in Texas. The President also convened a CCS task force, led by the DOE and EPA, which reported on ways to facilitate the deployment of this technology.
There is also increasing awareness that carbon captured from power plants can be put to valuable use in enhanced oil recovery (EOR) projects, the Democrats wrote. For example, the Texas Clean Energy Project aims to capture 90% of the CO2 its coal turbines emit and use that gas to enhance production in nearby oil fields. NRG’s carbon capture project in Texas also plans to use its captured CO2 in nearby EOR operations.
What the letter didn’t get into is that some U.S. power generators are unsure how to proceed right now on CCS projects outside of Texas, where the economics of oil recovery create a strong demand for CO2, because there is no federal CO2-control standard, though the U.S. Environmental Protection Agency is proposing one for new power plants only. Whether that proposed rule, if made final, will survive a probable legal challenge is a question mark that it is likely to be there for several years to come.
A prime example of that uncertainty is American Electric Power’s (NYSE: AEP) decision announced in July 2011 to shelve a scale-up of a small CCS demonstration at its Mountaineer coal plant in West Virginia. “We are placing the project on hold until economic and policy conditions create a viable path forward,” said Michael Morris, AEP Chairman and CEO, in the July 2011 announcement. “With the help of Alstom, the Department of Energy and other partners, we have advanced CCS technology. … But at this time it doesn’t make economic sense to continue work on the commercial-scale CCS project beyond the current engineering phase.”
In March 2010, NRG was selected by DOE to receive up to $167m to build a 60 MW-equivalent carbon capture demonstration unit at the W. A. Parish plant in Texas. In the first half of 2011, an application was submitted to and approved by the DOE to conduct a front-end engineering study for an up-to 250 MW sized project, which would allow for larger volumes of CO2 production, leading to increased oil production. To further the project’s enhanced oil recovery operations, in October 2011, Petra Nova acquired a 50% interest in Texas Coastal Ventures LLC, which owns a 100% working interest in the West Ranch oil field in Jackson County, Tex.