Abby L. Harvey
GHG Monitor
5/9/2014
PITTSBURGH, Pa.— Natural gas with carbon capture and sequestration is a viable, cost-effective option moving into a low-carbon future, John Thompson, Director of the Fossil Transition Project with the Clear Air Task Force, said here last week at this year’s Annual CCUS conference. In his plenary address, Thompson argued not only that natural gas-CCS is low-cost, but that it is the lowest cost low-carbon option for the United States. “It has several advantages; one of them is capital risk to investors. It’s very, very favorable. For about the capital that you need to build a natural gas plant with full carbon capture, it’s about the same price as building the same sized uncontrolled coal plant,” he said. “Unlike the variable low-cost, low-carbon resources such wind, these natural gas CCUS plants don’t have hidden and high system integration costs.”
Comparing the overall cost of natural gas-CCS to the costs of alternate forms of low-carbon energy production, specifically wind, Thompson said that while the capital cost of construction can sometime woo investors, the hidden costs of integration tell a different tale. “Using levelized cost to compare power technologies has some serious limits and I think they’re impacting on the choices we’re making in this country. First, variable energy sources like wind have hidden and substantial integration costs … Secondly the wind production tax credit is worth about $22 /MWh and it’s often not shown in these comparisons, in fact it’s buried. It’s not shown, that’s already being factored in and that’s one of the reasons wind is [projected at such a low cost].” Some of these hidden integration costs, Thompson said, include profile costs, balancing costs and grid costs.
Natural gas-CCS cannot alone meet the goals of a low-carbon future, but can play a critical and undervalued role, Thompson said. “Renewables are important also, but if we don’t have a low-carbon backbone to utilize, then we’re not fully utilizing the best of all the technologies that we have. The implication on this is that without CCS and nuclear the grid is going to require radical transformations over the next three decades that in my view are as unlikely as they are costly,” he said.
EPA Regulations Will Drive CCS Development
Making what Thompson acknowledged to be an unpopular statement, he praised the Environmental Protection Agency’s proposed New Source Performance Standards, which would largely mandate the use of CCS for new coal-fired power plants. “I think they’re great for coal and I think they’re good for gas. I think that what will happen is that over the next eight or so years the New Source Performance Standards will be revised and they will capture gas as part of the requirements. This is what I think is important to understand about New Source Performance Standards that I don’t hear talked about much: They are a beginning, not an end point,” he said. “These regulations evolve. They set a floor, not a ceiling for emissions. Right now under the EPA proposal, new coal plants will be required to do basically 50 percent reductions in emissions, and they include that CCS is a best system of emissions reduction for coal plants. They don’t conclude that for gas plants, but what I would say to folks about those regulations is a couple of things. One is that, as I said earlier, every eight years they have to be revised and I fully expect that the next revision will capture gas plants and the second thing that I would also say to my friends in the coal industry who really think of this as the death of their industry, is that these regulations are incredibly flexible. It’s only a 50 percent reduction and you have up to seven years to meet that requirement. In my view, the flexibility makes this a very economic regulation. They are not the end of coal in my view; it’s the beginning of CCS.”
