Carbon Capture Takes Another Hit

The Obama administration’s pledge of $1 billion for construction of a major commercial scale power plant carbon capture project in Illinois, dubbed FutureGen 2.0, took another hit today with announcement of the economic failure of yet another in a series of European carbon capture projects subsidized by the European Commission. Illinois’ FutureGen 2.0 is a proposed a network of pipelines to deliver the sequestered carbon dioxide to a repository in Mattoon, where it would be stored underground, along with emissions from other plants in the region should the commercial scale carbon capture technology prove successful.

The 2.0 version of FutureGen is a scaled down version of an earlier, more ambitious project which began as planned construction of a ground up new 275 megawatt clean coal power generation facility in Mattoon, under the Bush administration. When the estimated $950 million price tag for the coal gasification facility more than doubled as construction estimates were finalized, FutureGen was revised to version 2.0 - revamping Ameren Corporation’s 200 megawatt Meredosia coal fired power facility with advanced combustion techniques, a new boiler, and an air separation unit to capture 90% of the carbon dioxide emissions.

The fourth hit in three months to carbon capture construction in the European Union came today with announcement of the financial failure and anticipated bankruptcy sale of Powerfuel plc’s proposed carbon capture facility at its 900 megawatt coal fired Hatfield power plant in South Yorkshire. Netherlands based accounting and consulting firm KPMG has been appointed administrator for the Powerfuel project. According to KPMG’s Richard Fleming, the Hatfield carbon capture development falls $1 billion short of capital investment needed, despite European Commission grants of $275 million in subsidies for the project.

Last October, Germany’s energy giant E.ON announced it was terminating development plans for carbon capture and sequestration on a commercial scale at its billion and a half megawatt coal fired power plant in Kingsnorth, U.K. That news was followed swiftly in November by announcement that both commercial backers bowed out of Finland’s carbon capture project at Meri Pori, and Royal Dutch Shell’s termination of plans for an underground carbon dioxide storage facility at Barendrecht.

Despite Powerfuel’s status as the only UK licensee for commercial scale carbon capture technology trials, and projections by UK’s Department on Energy and Climate Change that that carbon capture and sequestration is one of the cheapest forms of low carbon energy production, KPMG’s Fleming described the reasons for the financial failure of the Hatfield project: “Developing low-carbon energy generation requires a large amount of capital up front, and the CCS development falls $1 billion short of the investment needed to build the plant. … The substantial funding gap has not been addressed in the past 12 months, and accordingly the project has stalled.”

In light of this series of dramatic failures of carbon capture projects overseas, the silence from both Springfield and Washington about the prospects of completion for FutureGen 2.0 is deafening.

Europe’s Failures Jeopardize Illinois Carbon Capture Project

Reversals of fortune as far away as Finland could jeopardize the future of Illinois’ FutureGen 2.0 project, to which the Obama administration pledged $1 billion in stimulus funds as recently as last August. FutureGen 2.0 began as planned construction of a ground up new 275 megawatt clean coal power generation facility in Mattoon, under the Bush administration. When the estimated price tag for the coal gasification plant of $950 million more than doubled as construction estimates were finalized, FutureGen 2.0 was revised to revamping Ameren Corporation’s 200 megawatt Meredosia coal fired power facility with advanced combustion techniques, a new boiler, and an air separation unit to capture 90% of the carbon dioxide emissions.

Babcock & Wilcox and a group of energy companies proposed a network of pipelines to deliver the sequestered carbon dioxide to a repository in Mattoon, where it would be stored underground, along with emissions from other plants in the region should the commercial scale carbon capture technology prove successful. Now, the failure of two proposed European commercial scale carbon capture power plant projects suggests the Meredosia project may never come off the drawing boards.

Finland’s Fortum Oyj and its partner Teollisuuden Voima Oyj have both backed out of a proposed 565 megawatt carbon capture project at Meri Pori, Finland, because they say the project presents too many technological and financial risks. Also this month, Royal Dutch Shell dropped a proposal for piping carbon dioxide emissions from its Rotterdam area Pernis refinery to a proposed underground storage facility beneath the small village of Barendrecht in The Netherlands. Citing three years of delays and “the complete lack of local support,” Dutch Minister of Economic Affairs Maxime Verhagen announced scrapping of the Barendrecht carbon capture and storage facility.

Last month, Germany’s energy giant E.ON announced it was terminating development plans for carbon capture and sequestration on a commercial scale at its billion and a half megawatt coal fired power plant in Kingsnorth, U.K.

The fact that European technology leaders in industry and government in Finland, Germany, England, and The Netherlands are concluding in rapid succession during the design phase that commercial scale carbon capture and sequestration is not economically viable, combined with Illinois’ own experience of projected cost overruns totaling more than 100% on the original version of FutureGen 2.0, could eventually scotch the Meredosia/Mattoon project, despite political support in both Springfield and Washington, D.C.

Will Power Plant Carbon Capture Costs Prove Prohibitive?

Carbon capture technology for coal fired power plants has been one of the darlings of Congressional committees working on climate change bills during the last year and a half, but panelist comments from industry leaders at the 12th Annual Electric Power Conference and Exhibition suggest that two aspects of carbon capture – cost and facility location – could toss a monkey wrench into the grand legislative plans surrounding this approach to greenhouse gas emission control. A representative of AES Corporation told the conference last week that under cap and trade the carbon dioxide allowances for coal fired electricity cost about $2 per ton. On the other hand, construction of a carbon capture facility adds $37 per ton to the cost of coal fired power, and transportation of CO2 to a storage site could add another$13 per ton, for total carbon capture cost of up to $50 per ton.

Just as the issue of nuclear power spent fuel rod disposal generated the acronym NIMBY, for Not In My Back Yard, conference attendees were busy discussing the new acronyms already in use regarding opponents of carbon capture facility site construction: NUMBY for Not Under My Back Yard; NOPE for Not On Planet Earth; and the new pejorative acronym for environmental activists opposed to carbon burial sites – BANANA, for Build Absolutely Nothing Anywhere Near Anyone. At least the debate is enriching Washington’s alphabet soup.

Boxer Schedules Climate Change Hearings

Senate Environment and Public Works Chair Barbara Boxer has scheduled three days of hearings the last week of October on the Kerry/Boxer version of cap and trade legislation, despite the fact that USEPA has not yet finished its cost analysis of the proposed legislation, and CBO will not score the proposal until after her committee marks up the legislation. Witnesses scheduled at the October 27 hearing include Energy Secretary Steven Chu, Interior Secretary Ken Salazar, Transportation Secretary Ray LaHood, EPA Administrator Lisa Jackson, and FERC Chairman Jon Wellinghoff. Witnesses for the following two days have not yet been announced.

USEAP is analyzing the proposed bill without knowing the details it will include regarding nuclear power production, and without details of a final allocation formula for emission credits. Coal state senators Thomas Carper, Robert Byrd, Arlen Specter, Max Baucus and Mark Werner have expressed satisfaction with the draft bill's treatment of the coal industry, including incentives for construction of a new generation of carbon capturing coal fired power plants.

Will Climate Change Legislation Promote Coal And Nuclear Power To Cut Down Foreign Oil Dependence?

Senators Joe Lieberman, Lindsay Graham and Lamar Alexander are pushing for a far larger role for nuclear power generation and new technology coal fired power plant construction as part of the climate change legislation now moving through Congress at a snail's pace. Alexander is promoting a provision which would call for construction of 100 new nuclear power plants by 2030.

Lieberman echoes Alexander's sentiments. "Without a nuclear title that's stronger than in the House climate change legislation, we're not going to be able to get enough votes to pass climate change." Lieberman, who changed party affiliation from Democrat to Independent last year after campaigning for President Obama, was stripped by his party of his seat on the Senate Environment and Public Works Committee, but he is still actively talking to committee members about developing a bill in the Senate.

Washington State Revamps Climate Change Bill

The House of Representatives in Olympia approved legislation requiring the Department of Ecology to reduce the only coal fired power plant in the state to cut emissions in half by 2025, and mandating other greenhouse gas reduction targets be met by 2020, including cuts in auto emissions and industrial emissions. Environmental groups criticized the House version of the bill for failing to include a carbon cap and trade system.