New coal plant CCS could be required under CO2 proposal, Bernstein says

Greenhouse gas (GHG) rules being drafted by the Obama administration for new power generation could still effectively require any new coal plants to capture and store carbon dioxide (CO2), according to Bernstein Research

The Environmental Protection Agency (EPA) has yet to publish the revised greenhouse rule for power plants following President Obama’s June 25 address on climate change. But according to the Wall Street Journal and other sources, the latest version of the proposal would still make it impossible for conventional coal plants to comply, said Bernstein Senior Analyst Hugh Wynne.

“If true, the only fossil fueled plants that could comply with the new standards, other than combined cycle gas turbine plants, are coal fired power plants equipped with carbon capture and sequestration technology capable of reducing the CO2 emissions from the combustion of coal by ~60%,” Wynne wrote in a Sept. 12 assessment.

The administration would reportedly set new limits for CO2 from new coal plants at 1,100 lbs/MWh. The limit for new gas plants would be unchanged, from the original proposal, at 1,000 lbs/MWh.

“Even the most efficient coal-fired steam turbine generators than have been into service over the last five years have had average CO2 emissions rates of 1,900 lbs./MWh,” Wynne wrote in the analysis.

“Technologies to capture and sequester CO2 from coal fired power plants at this rate are available, but are very expensive,” the analyst said. Southern (NYSE:SO)’s Kemper County integrated coal gasification and combined cycle (IGCC) plant, for example, is capable of capturing some 65% of the CO2 emissions of its coal feedstock.

Based on Southern’s most recent disclosures as to cost of its Kemper facility, however, we calculate the construction cost of the project to be some $6,300 per kW of installed capacity. By comparison, a conventional pulverized coal plant, which burns the coal in a boiler to produce steam and drive a steam turbine generator, is estimated to cost roughly $2,900/kW, or less than half the capital cost of an IGCC, according to the Bernstein analysis.

Bernstein Research estimates that coal only accounts for 9% of planned capacity additions that expected to enter service between 2014 and 2018. These are projects either in construction or advanced development, the firm said, adding that compares to 54% for natural gas.

“Much of this planned coal-fired generation capacity, moreover, may be exempted from the EPA’s New Source Performance Standards for CO2,” Wynne said in the analysis.

Of more interest to investors in the power sector the rule proposal being developed by EPA regarding greenhouse emissions from the existing power fleet. It is believed the rule for existing plants will at least leave the door open for “use of market-based instruments” – such as the new CO2 trading program in California or the Regional Greenhouse Gas Initiative (RGGI) in the Northeast, according to Bernstein.

EPA had originally proposed the new plant regulations, known as New Source Performance Standards or NSPS, in March of 2012. However, the EPA failed to finalize the proposed NSPS within the 12-month window stipulated by the Clean Air Act.

Bernstein Research is affiliated with Sanford C. Bernstein & Co.

         

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.