With coal on the decline, for political, economic and technical reasons, the argument for CCS in the power sector is weaker than ever before.
Coal’s days are numbered and carbon capture and storage (CCS) isn’t coming to save it. A November 2018 report by the Institute for Energy Economics and Financial Analysis (IEEFA) – “Holy Grail of Carbon Capture Continues to Elude Coal Industry” – shows that after more than a decade of effort and billions in public support, CCS has failed to advance much beyond the wishful thinking stage.
At the same time, coal’s market share has declined as dramatically lower prices for renewable energy have made it increasingly difficult to compete in power markets across the globe. With coal increasingly in the rearview mirror in many countries, and the road ahead paved with wind turbines and solar panels, technologies like CCS are little more than a dead end for the climate.
Ten years ago, governments around the world were rushing to make CCS a reality to keep coal alive in a carbon-constrained world. A big push was underway in Europe, the US, and Australia for governments to provide funding and policy support for the technology. At the time, CCS wasn’t yet viable and was very costly.
Governments needed to step in, the argument went, and give CCS a boost. Countries had no choice but to support the technology if they wanted to tackle climate change, proponents argued, because coal would continue to dominate the power sector for years to come. The promise from industry and CCS advocates was that if governments covered the cost of demonstrating CCS, and enacted enabling legislative frameworks, industry could commercialize the technology. In Europe, this conversation centered on the CCS Directive and an appeal for funding to support 10–12 demonstration projects, which would be operational by 2015.
A little more than 10 years later, coal is on the decline in many parts of the world and renewables are on the rise. And despite billions of dollars of public support, CCS remains unproven at the commercial scale and extraordinarily expensive. After passing the CCS Directive (2009/31/EC) and spending almost €600 million, Europe has zero CCS demonstration plants.
IEEFA’s report tracks four of CCS’s highest profile failures in North America: Saskatchewan Power’s Boundary Dam Power Station (Canada), NRG’s Petra Nova project (Texas), Southern Co.’s Kemper plant (Mississippi), and Duke Energy’s Edwardsport plant (Indiana). The report’s lead author, David Schlissel, says that what these four projects have in common is “their dismal performance”. He characterizes the report’s findings “as a cautionary tale for any country considering broad adoption of CCS for coal”.
Only two of the four projects profiled in the report are operational CCS facilities: Boundary Dam Power Station and Petra Nova. The report characterizes both as expensive demonstration projects. Boundary Dam is a post-combustion retrofit of a single coal-fired unit. Plagued by operational problems and cost overruns, the total cost of the project now stands at €980 million (US$1.1billion). The Petra Nova project, which cost about €890 million (US$1 billion), is only managing to capture one-third of the flue gas from one of the four coal-fired units at the power station. Both projects rely on revenues obtained from selling captured CO2 from enhanced oil recovery operations, which significantly undercuts (if not entirely negates) the emissions avoided from the capture operations.
The Kemper project, as described by the report, “is the poster child for projects gone wrong”. Kemper was slated to be a first-of-its-kind integrated gasification and combined cycle (IGCC) coal plant with a pre-combustion capture system. Initially estimated to cost $3 billion, the price tag for the 830 MW facility ballooned to $7.5 billion before being cancelled in 2017.
Kemper’s poorly conceived project design meant the power station likely never would have been economic; simply running the project’s coal gasification and carbon capture systems would have consumed 30 per cent (250 MW) of the power station’s gross output. The economic effects of Kemper as a failed CCS experiment will, unfortunately, be felt in Mississippi for years to come as that state’s electricity ratepayers will be covering a portion of the project’s cost due to the regulated nature of the electricity market.
Similar to Kemper, the Edwardsport plant was originally proposed as an IGCC coal-fired power plant with pre-combustion capture technology. However, after completing the plant in 2013, the power station’s owners announced they would not install capture technology because it was too expensive. Even without capture technology, the power station has had issues and is operational only 57 per cent of the time. The power station’s costs are also extremely high. Factoring in construction costs of $3.5 billion for 618 MW of capacity, the all-in cost of the electricity from Edwardsport averages $140.84/MWh. This is more than four times the average price of power in the local market and does not include any costs for carbon capture, transport, or storage.
The IEEFA report also discusses a critical aspect of CCS that receives scant attention: the pipeline infrastructure needed to compress, transport, and inject captured CO2. Assuming the cost and technical barriers associated with commercializing carbon capture technology were overcome, the infrastructure needed to move and inject captured CO2 is, in and of itself, a substantial and costly barrier to the deployment of CCS. In the US, a pipeline network equal in size to the country’s existing oil and gas pipeline system would be needed. Permitting, building, and financing such a network from scratch would be expensive and take years. The report notes there has been essentially no progress on CCS infrastructure issues over the last decade.
While CCS has largely been at a standstill for the past decade, the energy transition away from fossil fuels is well underway thanks to competitively priced renewable energy; in some places, technologies like wind and solar are even cheaper than new natural-gas-fired power stations. The economic argument for renewable energy, perhaps more than anything else, means CCS has no role to play in the power sector as it will never be able to out-compete zero-carbon renewable energy technologies on price.
Alongside economics, political commitments have further decreased reliance on coal in favor of renewable energy. Countries such as France, Denmark, Finland, Sweden, Italy, Portugal, and the United Kingdom have committed to phase coal out altogether while others have set ambitious renewable energy targets that leave little to no room for fossil fuels in the power sector. An increasing number of corporations are powering their operations with 100 percent renewable energy, further squeezing coal out of power markets in the US, Europe, and elsewhere.
With coal on the decline, for both political and economic reasons, the argument for CCS in the power sector is weaker than ever before. Spending billions more and another decade to advance a technology for a power sector which has the potential to be carbon-free without it, makes little sense. Nevertheless, some governments remain fixated on CCS and many continue to spend taxpayer money to support it.
In the eyes of some, CCS also remains a potential solution for industrial sector emissions and essential to so-called negative emission strategies (think: bioenergy with CCS or BECCS). The latter has gained substantial attention since the Paris Agreement increased the ambition on climate change by setting a long-term goal of limiting global average temperature increase to “well below” 2°C above pre-industrial levels and pursue efforts to limit the increase to 1.5°C. These applications of CCS, however, face many of the same challenges as CCS in relation to coal-fired power plants.
With the renewed attention to CCS post-Paris Agreement, there is a risk of history repeating itself if the lessons learned in trying to make it work for coal are forgotten or ignored. As the IEEFA report demonstrates, CCS “remains unproven at full commercial scale, it is wildly expensive, [and] there are serious questions regarding after-capture transport, injection and storage of the captured CO2 and – most important – more reliable and far cheaper power-generation options exist”.
Emily Rochon
She is a Brussels-based Lawyer (US qualified) and Energy Consultant and lead author of Greenpeace International’s 2008 report on CCS – False Hope: Why carbon capture and storage won’t save the climate?
