The U.S. Environmental Protection Agency’s pending proposal to limit CO2 emissions from new coal-fired power plants to the level of gas-fired plants will tend to stifle technology innovation related to CO2 capture and sequestration (CCS), not encourage it.
Mark McCullough, Executive Vice President of Generation at American Electric Power (NYSE: AEP), made that point in his prepared testimony for a March 5 hearing in Congress. A subcommittee of the House and Energy Commerce Committee held a hearing on the importance of fuel diversity to power generation.
AEP has long maintained that the Clean Air Act (CAA) is not a practical or cost-effective way to limit greenhouse gas (GHG) emissions and any system to regulate GHG emissions should be developed by Congress, McCullough wrote. “To this end, we have supported over the past decade ambitious federal legislation to reduce GHG emissions on an economy-wide basis through flexible market-based mechanisms. Although not enacted into law, these bills would have established a declining economy-wide cap on GHG emissions and achieved substantial GHG emissions reductions in an efficient and cost-effective manner through an emissions trading system.”
In the absence of federal legislation to reduce GHG emissions, EPA has begun to regulate GHG emissions using its existing CAA authorities. The EPA has already established a rule requiring new and modified major stationary sources to obtain pre-construction permits and install “best available control technologies” for their GHG emissions under the New Source Review (NSR) provisions of the CAA. In April 2012, EPA proposed a New Source Performance Standard (NSPS) for CO2 emissions from new electric generating units (EGUs) under Section 111(b) of the CAA.
“Both of these existing regulatory programs are based on a framework that was never intended to apply to GHG emissions from stationary sources,” McCullough noted. “Both programs impose source-specific emissions control requirements that lack the kind of flexibility that would encourage widespread, cost-effective implementation of a broad suite of emission reduction techniques and technologies.”
Concerns regarding the relationship of global climate change and GHG emissions present a totally different set of issues than the localized ones that the CAA was designed to address, he added. “As such, regulation of GHGs under the existing CAA authorities is likely to be ill-designed, inflexible, and significantly more costly than a more flexible approach, while doing little to address the global issue of climate change,” McCullough wrote. “In short, this approach is very expensive and provides little impact on global GHGs. Therefore, if this nation wants to move forward with effective GHG regulatory programs, congressional action is necessary to provide the tools required to ensure flexible, cost-effective regulation of GHG emissions on an economy-wide basis.”
EPA itself acknowledges that its April 2012 proposal will not alter current plans for new generating facilities by noting that the proposal merely reinforces what the market currently encourages and what EPA assumes will continue in the future – that in an era of very low natural gas prices and abundant shale gas reserves, the logical fuel of choice is natural gas, McCullough said. “But the proposal treats current market conditions as if they are reliable constants in the future. History tells us a very different story; that fuel diversity is a critical component of stable energy costs, and that relying on a single fuel creates significant vulnerability to major fluctuations in market prices.”
AEP believes that EPA’s proposed rule is unlawful, based on faulty information, and would hinder the very efforts to develop clean coal technology that Congress, EPA, and AEP have worked so long and so hard to further. “AEP is particularly concerned that the proposed rule will likely impede the development of CCS technology and hinder the progress that will be needed for coal to continue to play a vital role in America’s energy policy,” McCullough said.
CCS technology development somewhat mired at the starting line
One issue related to development of new CCS technology is the definition of a “commercially available” technology. These are technologies that can be purchased from a vendor, have been proven at commercial scale on a representative application, and are offered with robust guarantees on performance and reliability.
“Vendors cannot provide meaningful guarantees without extensive testing at representative scale,” McCullough said. “Based on this point of reference, no commercially available technologies for the capture of CO2 from coal-based power plants exist today. The Department of Energy’s Major CCS Demonstration program currently includes twelve projects that propose to demonstrate CO2 capture along with some form of storage and/or utilization of the captured CO2. If this were a list of twelve successfully completed projects, then it could certainly be argued that the technologies are ready for commercial deployment. However, not one of the projects has been completed, and in fact, none have even commenced operation. Most are no more developed than the work on paper required for conception of the project. Moreover, some that had previously been included on DOE’s list have been cancelled or delayed indefinitely. From a global perspective, the United States leads all others in work completed and proposed for future CCS projects. But today, the technologies to capture and sequester CO2 are not commercially available, domestically or otherwise.”
AEP last decade had begun the process of moving one CCS technology to commercial scale at the Mountaineer CCS Demonstration Project, sited at a coal-fired power plant in West Virginia, but the lack of an adequate funding mechanism resulted in the company placing a scale-up of the pilot-scale project on hold. Even if AEP’s project had remained on schedule, the CCS technology, like other first-of-a-kind projects, would have been installed without any commercial guarantees from vendors and would have run the risk of not continuously or reliably achieving high CO2 capture levels, McCullough noted.
With the suspension of the AEP project at Mountaineer and as similar DOE projects are delayed or discontinued, the date for commercial readiness of CCS technology continues to move further out. “A reasonable estimate for commercial availability, based on the current state of technology development, is at least ten years away, and this is assuming that current financial and regulatory barriers to demonstration projects are expeditiously removed,” McCullough added. “Without a clear path forward, we will remain, perhaps indefinitely, ten years or more from commercialization of CO2 capture technology.”
The path to CCS commercialization is also filled with significant regulatory and legal barriers. These include issues related to the ownership of, acquisition of, and/or access to underground pore space for CO2 storage, as well as issues surrounding long-term liability and stewardship of geologically stored CO2. The removal of these barriers in many cases will most likely be through the development of state legislation and regulatory programs. Efforts at the state and federal level are underway, but significant challenges remain before these and other legal and regulatory issues will be sufficiently resolved to support the commercialization of CCS on coal-based generation, McCullough pointed out.
FEPA has proposed an alternative compliance option that will not help coal-fueled EGUs achieve the proposed CO2 performance standard. “EPA’s averaging approach will not work without much greater certainty pertaining to CCS cost and technology,” McCullough noted. “In fact, this alternative compliance option does nothing to ensure the demonstration and deployment of CCS technologies. As just discussed, CCS is not yet commercially demonstrated for large-scale commercial applications and the high cost of the CCS technology effectively precludes its commercial deployment, even if the technology was ready. As a result, there are many technical, economic, and legal risks with CCS technology that must be addressed before an EGU developer would consider investing in a new multi-billion dollar plant. These risks will not be taken if the new plant might have to cease operation after ten years if CCS cannot achieve a regulatory standard developed without any real-world data. Without much greater certainty on the timing and success of CCS commercialization efforts, such risk simply will not be acceptable and will effectively preclude the development of any new generation technology that must rely on CCS to operate.”
Chemical looping cited as a possible technology game changer
Substantial “game changing” innovations for CCS cost and performance will require the integration of new CCS technologies with advanced next generation coal-based systems, such as advanced IGCC, oxycombustion, and chemical looping combustion or gasification, McCullough added. As a result, EPA’s proposed rule is likely to delay for many years the development of CCS technology because new coal-fueled generation will not be built and, without the development of such new coal-based units in the future, the incentive to invest in and advance CCS technology will be greatly diminished.
While innovation at the laboratory and pilot-scale level is thriving across the U.S., new coal-fueled power projects are not advancing to the large scale demonstration phase due to the high cost of these projects, McCullough said. To remedy this problem, the federal government must step in and take a strong leadership role in making revolutionary technologies a commercial reality for the future, he added. The Coal Utilization Research Council-Electric Power Research Institute Roadmap lays out a plan to enable the needed innovative technology development utilizing annual budgets no greater than those appropriated to the DOE Fossil Energy clean coal programs over the past couple years, he said.
One excellent example of innovation is chemical looping technology. Chemical looping is not a carbon capture technology, nor is it a combustion technology. In one application of chemical looping, coal undergoes a flameless chemical reaction with a metal oxide, known as an oxygen carrier. The oxide reacts with the carbon in the coal to produce a pure stream of CO2 while the chemical energy in the coal is transferred to the oxygen-depleted (reduced) metal. The CO2 can be compressed and sequestered, or utilized for another purpose.
The reduced metal is then sent to an oxidation reactor, where air is introduced to provide the oxygen needed to re-form the metal oxide, generating large amounts of heat. That heat can be used to produce steam for use in the power generating cycle. The metal oxide that exits the oxidation reaction is “looped” back to react again with more coal and the cycle repeats. The Ohio State University and Alstom are global leaders in this promising new technology, McCullough noted.