CCS: Ready or Not?

Now that EPA has proposed carbon pollution standards for new coal plants that would end the era of pollution without limits for these monster carbon polluters, coal industry reps are busy proclaiming that cleaning up coal plants is impossible.  They are spinning recent articles in Bloomberg and the Wall Street Journal on cost overruns at a large lignite coal plant now under construction in Kemper County, Mississippi, to argue that EPA’s proposed carbon pollution standards for new coal plants are not technically feasible.

There’s no doubt the Kemper County coal plant is expensive, as is any new coal plant, but that is not a valid basis to attack EPA’s proposal.  EPA’s job under the Clean Air Act is not to accommodate the cheapest power plant, no matter how dirty; its job is to protect public health and the environment by requiring any new coal plants that may be built, to meet fair and reasonable pollution limits.

EPA’s proposed emission limit for new coal is based on the demonstrated capability of systems that capture CO2 from industrial gas streams, with subsequent injection into geologic formations for permanent sequestration from the atmosphere (CCS).  Such systems are not now in full-scale operation at coal-fired power plants, though the technology is used at coal plants to strip off CO2 for sale to food and beverage industry.  The next beer or soft drink you open proves that the technology works to capture CO2 (though you won’t be sequestering it).  CCS is in full-scale use at other large industrial sources where market conditions support its use even in the absence of pollution standards to limit CO2 releases.

Discussion of the Kemper County project confuses three questions about CCS:

  • Is it technically demonstrated;
  • What are the costs for the first full-scale coal plant applications likely to be;
  • What are the typical costs likely to be after engineers have learned from the first plant experiences how to reduce construction and operating costs without reducing reliability?

EPA found that CCS is technically ready for use on any new coal plants that may be built.  EPA’s lengthy regulatory technical support document cites ample industrial experience demonstrating the technology works on a long-term basis.  EPA also cited the Kemper project and several other recent coal plant projects, as evidence that the power industry itself regards CCS as sufficiently demonstrated to include the technology in billion-dollar-plus commercial coal plant projects.  Southern Company, the owner of the Kemper project, agrees that CCS is adequately demonstrated for use.  It has plans to license its CCS system to other power companies and Randall Rush, Southern’s General Manager of Gasification Technology, is quoted as confirming last month at a Washington, DC energy conference, that their CCS system is “technically ready.”

The focus of the recent press articles on Kemper has been on the cost of the project, which has experienced huge overruns.  The spin being put on these stories is that if a project that uses a version of CCS technology (Kemper) is experiencing big cost overruns, that must call into question whether EPA’s new standards can be met. Both the law and sound policy support EPA’s conclusions and nothing in the Kemper project experience undercuts the validity of EPA’s approach, despite industry lobby’s spin mill working overtime to sell a different story.

When EPA cited Kemper as an example of CCS technical readiness, it was not arguing that the Kemper system or the specific Kemper plant is the cheapest way to produce electricity or the cheapest way to make coal power and capture its carbon pollution, or that the Kemper costs will be what future coal plants using CCS will experience.  EPA’s cost calculations for new coal plants using CCS are based on detailed engineering review studies by the Department of Energy (DOE), not on the Kemper project.  Those studies are not based on first-of-a-kind projects like Kemper because that would result in an apples to oranges comparison that would exaggerate the additional costs of building a lower-carbon-polluting coal plant compared to other non-coal base-load alternatives, like nuclear or biomass-based plants.

Kemper is a first-of-a-kind full-scale project for this particular carbon capture system.  Such first-of-a-kind projects nearly always wind up costing a lot more than subsequent projects using the same technology.  The reason is simple: until engineers have actual operating data from the first full-scale example, they approach their job with conservative, defense-in-depth designs.  This approach makes sense but it adds costs, big time.  Once those first units are running, they provide huge amounts of information that engineers use to build the next examples at substantially lower cost.  This is the standard history of industrial technology and this learning-by-doing cost methodology is the basis of the DOE studies that EPA uses to generate the costs of CCS for the new coal plants that would be subject to the standard.

Those cost projections conclude that a new coal plant with CCS will have electricity production costs about 20% higher than other types of plants the industry might build, assuming that no revenues can be generated from the sale of the captured CO2 for use in oil fields.  If the CO2 is sold to oil field operators then the production costs are within plus/minus 5% of the alternative power systems.  The costs to the ultimate electricity customer will be smaller still.  First, because power production costs are typically 60% or less of the delivered electricity.  Second, because any new coal plants will be a small part of the total “rate base” on which customers’ power rates are based.

The real message from the Kemper County project is that building a new coal plant in the US today is a very expensive proposition and there are much better and cleaner options for customers.  The Kemper project is using CCS technology but recent coal plants without CCS systems have run up staggering construction costs.  The 700 MW Longview coal plant in West Virginia cost so much to build that its owners had to file for bankruptcy.  The Spiritwood coal plant in North Dakota would have cost so much to run that its owners put it in mothballs before it ever opened.  The multi-billion dollar Prairie State coal plant in Illinois is running primarily because it managed to saddle a number of gullible communities into captive contracts to buy its power.  The developers of the AMP Ohio coal project tried the same trick but when communities said no thanks, the developers were forced to abandon the project. 

Today, new coal plants are a high cost, high carbon polluting non-answer to America’s power system needs.  Should new coal become economically viable at some point, CCS is a demonstrated technology and its incremental costs are reasonable.  If the underlying coal plant costs are unreasonable, gutting sensible EPA standards would not make them reasonable.  Whatever future new coal plants may have in America, it cannot be built on the backs of our children who will reap the whirlwind of unlimited carbon pollution.