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A Carbon Capture and Storage Breakthrough

Carbon capture and storage (CCS) has long been weighed down by exorbitant costs, making it an industry that’s been stuck on the launch pad for more than a decade…despite spending $20 billion on technology.

Now, U.S. utilities could be required to install CCS technology in all newly built, coal-fired power plants, according to a proposed rule from the Environmental Protection Agency (EPA).

The EPA says it can be done, but not without federal funding it seems…

There may be hope coming from north of the border, though.

Canada’s SaskPower opened the world’s first large-scale, coal-fired power plant equipped with CCS technology.

The Latest and Greatest

The new $1.5-billion power plant is owned by the provincial government and has been hailed as a turning point in the utility industry.

The new technology will trap about 90% of the plant’s annual emissions. That totals about one million metric tons of carbon dioxide (CO2), which is the equivalent of taking 250,000 cars off of the road.

That’s the capture part. For storage, the plant has two options.

Some of the captured CO2 will be sent via pipeline to nearby oil fields to boost production – a method called enhanced oil recovery (EOR), which is used in the United States too, particularly in Texas.

The remaining CO2 will be stored underground.

SaskPower confidently says that it has already learned from its experience, and will be able to build a second CCS coal power plant for less money than this first project.

However, the SaskPower plant received C$240 million of funding from the government, causing many to continue to question the economic viability of CCS technology.

The Practical Factors

South of the border, utilities are cautious but pushing forward.

Two flagship projects are in the works, with a little help from government funds.

The first is led by Southern Company (SO). It’s pressing ahead with CCS technology in conjunction with the engineering and construction firm KBR, Inc. (KBR).

The utility is constructing the first large-scale, commercial, CCS-using coal power plant in the United States, right in Kemper County, Mississippi.

The price tag is a bit steep at $5.5 billion, which is more than twice as much as the original estimate of $2.4 billion. The plant is scheduled to open in May 2015 after some lengthy delays.

It will capture 65% or 3.5 million tons of the carbon emissions produced by the plant. And, like the SaskPower plant, some of the CO2 will be piped to oil fields for EOR.

As with Canada’s project, Southern Company is receiving government aid – a $270-million grant from the Department of Energy and $133 million in investment tax credits from the IRS.

The second (and smaller) project is a joint venture between NRG Energy (NRG) and Japan’s JX Nippon Oil & Gas.

An existing, high-polluting plant near Houston will be fitted with CCS technology for a meager $1 billion. The new system is scheduled to start up at the beginning of 2016.

This project is using a combination of Japanese-made CCS equipment and technology from the engineering giant Fluor (FLR).

It received $250 million in backing from Japanese government agencies, and it’s designed to capture 90% of the CO2 emissions.

So, Can It Be Done?

The EPA says that the technology is viable, but it also admits that installing CCS technology into a new power plant could increase capital costs by 35%.

Despite SaskPower’s “breakthrough,” utilities aren’t ready to take the plunge.

Some are even challenging the EPA-proposed CCS mandate on new coal-fired power plants in court.

The interesting twist here, as pointed out by Brian Potts in The Wall Street Journal in May, is that under Section 111 of the Clean Air Act, the EPA cannot regulate greenhouse-gas emissions from existing power plants until it has regulations in place for new power plants.

Maybe that means our power will stay on this winter when the polar vortex hits…

And “the chase” continues,

Tim Maverick

Tim Maverick

, Senior Correspondent

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