Abby L. Harvey
GHG Monitor
8/28/2015
It is unlikely any new coal-fired power plants will be built under the Environmental Protection Agency’s recently finalized New Source Performance Standards, which mandate the use of partial carbon capture and storage on any such facilities. While the reason for the hard stop in coal development is debated, with some blaming overregulation while others cite low natural gas prices, it is clear that if carbon capture utilization and storage is to advance it will be in the form of retrofits to existing plants.
The rule, which was finalized Aug. 3, as proposed required that individual new-build coal units would have to cap emissions at between 1,000 and 1,100 pounds of CO2/MWh using partial carbon capture. The final rule eased this requirement to 1,400 pounds of CO2/MWh, but kept the partial CCS requirement.
“After consideration of a wide range of comments, technical input received on the availability, technical feasibility, and cost of CCS implementation, and publicly available information about projects that are implementing or planning to implement CCS, the EPA confirms its proposed determination that CCS technology is available and technically feasible to implement at fossil fuel-fired steam generating units,” according to the final rule.
However, EPA’s justification of CCS as a viable technology means little if no new coal plants are built. The industry is trending toward the increased use of natural gas due in part to its low cost.
“I would agree with people in industry who think that nobody’s going to build a plant with CCS because I don’t think that anybody is going to build any coal plants as long as gas prices are as low as they are,” John Thompson, director of the Fossil Transition Project with the nongovernmental Clean Air Task Force, told GHG Monitor this week.
Natural gas costs aside, the new EPA regulation adds one more item to the natural gas pro column, former Assistant Energy Secretary for Fossil Energy Chuck McConnell told GHG Monitor last week. Building natural gas generation involves less risk, McConnell said – investing in a new-build coal-fired power plant with CCS would require the use of unproven technology, whereas the technology needed for a new natural gas plant is proven.
“In any project, especially where financing is required, bankers or even shareholders … are looking for proven guarantees around performance. The fact of the matter is CCS and CCUS, while showing a tremendous amount of progress, looking to have an incredible amount of potential, [do not] have the guarantees, the wraps, the performance, that often is required with technology that is proven and that technology providers then can stand behind to provide performance guarantees, in the absence of that, anyone installing CCUS is going to be taking a risk,” McConnell said.
McConnell, however, does not subscribe to the notion that natural gas prices alone are responsible for the halt in new-build coal. “I believe [the administration] would like to see everyone make the transition over to gas and tell everybody that the reason the coal guys moved to gas was simply because of economics, that’s not the case, that’s not true,” McConnell said.
CCS Innovation to Rely on Retrofits
With the likelihood of any new coal generation being built dwindling, CCS innovation will have to occur in the form of retrofit, the men said, which will likely be driven by utilization opportunities for CO2. “I think, in the case of facilities that happen to have access, ready access, to oil fields and oil-based geology, the retrofit logic makes perfect sense to me. If you can, much like the NRG project at Parish, you can put retrofit technology on the back end of that plant and have the potential to generate revenue from the CO2 that you’re going to be capturing and providing to an enhanced oil recovery process and then can pursue CCUS from that, I think it’s very, very likely that that can have a lot of positive impact,” McConnell said.
NRG’s Petra Nova project at W.A. Parish, which broke ground in September 2014, will capture approximately 1.6 million tons of CO2 annually from an approximately 240 megawatt (MW) slipstream of flue gas from W.A. Parish Unit 8. This equates to a 90 percent capture rate. The project stands to be the world’s largest post-combustion carbon capture facility installed on an existing coal plant. The CO2 captured will be transported roughly 80 miles via pipeline to the West Ranch oil field, which NRG has purchased a stake in. There it is expected that the CO2, which will be used for enhanced oil recovery, will enable the procurement of approximately 60 million barrels of oil.
Retrofits have the added benefit of lower construction costs, as adding on technology is far less expensive that building from the ground up, Thompson said. “I think that because existing coal plants already have been paid down, and all you’re looking at is an incremental investment in capture equipment that there is potentially a lot of retrofits,” he said. “Depending on the price of oil and depending on incentives, depending on the shadow price of CO2, but it seems likely to us that there’s going to be a lot more CCS than what the agency thought was going to occur.”
Opportunity in CCS on Natural Gas
While it might be likely that no coal-fueled plants will be built moving forward, CCS will eventually need to be transitioned to natural gas as well. Natural gas carbon emissions are much lower than coal but are still detrimental to a low-carbon future. “I would argue that this rule on the whole is not the end of coal, it’s the beginning of CCS and it’s going to start with coal. It will continue with natural gas over time,” Thompson said, later stating that “as gas prices stay low, the ability to have a baseload option that runs 24/7, a gas plant with CCS EOR, I believe that’s going to be cheapest low-carbon electricity option in many parts of the country.”
