OBAMA’S FY14 BUDGET TO INCLUDE $25M PRIZE FOR NGCC PLANT WITH CCS

Tamar Hallerman
GHG Monitor
3/22/13

The President’s upcoming Fiscal Year 2014 budget request will establish a new $25 million prize for the first natural gas combined cycle (NGCC) plant to integrate carbon capture and storage technology, the White House announced. In a fact sheet released ahead of President Obama’s visit to Argonne National Laboratory March 15, the White House briefly noted that its FY2014 request to Congress, expected to be submitted the week of April 8, will create the new competition and will also include $375 million for programs that aim to produce “cleaner energy from fossil fuels,” including “significant” funding for ‘clean coal’ technologies.

The White House said the President’s upcoming budget will also direct the Department of Interior to boost “responsible” energy project development on federal lands by increasing funding for energy programs by roughly 20 percent and streamlining the system for oil and gas permitting to reduce approval times. It said the FY2014 proposal would also call for Congress to make renewable energy production tax credits permanent and refundable, to end roughly $4 billion in annual subsidies for oil and gas companies and to double electricity generation from renewables by the end of the decade. The broad policy priorities were published ahead of Obama’s visit to Argonne, where he renewed his call for Congress to create an energy security trust that would use $2 billion in revenues from federal oil and gas royalties over the next decade to fund R&D work into alternative fuels. The energy priorities provide a peek into the President’s budget request, which is nearly two months behind schedule.

CCS Prizes Have Been Floated Before

This is not the first time the government has proposed a prize related to the development of CCS technology. The Senate Energy and Natural Resources Committee passed a bipartisan bill in 2011 that would have offered $10 million to the first researchers to successfully develop bench- and demonstration-scale air capture technologies to remove CO2 directly from the atmosphere. However, that measure was never considered by the full Senate. Broader CCS competitions have also been sponsored by the European Commission and the U.K. governments in recent years, but both efforts have been plagued with uncertainty and delays throughout the vetting process.

Meanwhile, the private sector has also tried developing similar incentives. The Denver-based electric utility Tri-State Generation and Transmission Association announced in May that it was raising money for a $10 million prize with the X Prize Foundation for “breakthrough” carbon capture and utilization technologies. The Foundation’s website, though, still lists that effort as under development.

Prize Could Bring Visibility, But Maybe Not Enough

Some CCS stakeholders said the White House prize would bring some publicity to CCS that could be beneficial. “I would imagine any incentive via a noteworthy prize would bring some recognition that developing an NGCC plant with CCS could be done … the prize would certainly bring the winner some recognition as the first to put CCS on NGCC, and could well position that winner, if it was a vendor or technology developer, in markets where carbon emissions frameworks exist,” said Vic Der, the Global CCS Institute’s general manager for North America.

While CCS advocates have long advocated for any method to bring large-scale projects online, some said that the prize approach might not provide enough support. “Prizes cut both ways. On the one hand, they generate buzz and publicity. On the other hand, no one in industry starts or sustains this work because of a mere $25 million prize,” John Thompson, director of the Coal Transition Project at the Clean Air Task Force, told GHG Monitor. “If the President is serious about NGCC-CCS, he should also focus on the substance that drives CCS on natural gas—incentives for enhanced oil recovery, performance standards that signal that this technology will be needed sooner rather than later for power plants, encouraging states to rate-base the first NGCC-CCUS plants, making NGCC-CCUS plants eligible for some of the low-carbon incentives available to other technologies.” Thompson noted that some NGCC with CCS technologies are already being developed on a commercial-scale by companies like Summit Power Group and Linde.

DOE Demos Have Focused on CCS for Coal

The competition marks one of the first times the Obama Administration has moved to incentivize the capture of emissions from natural gas plants. While the Department of Energy’s CCS demonstration program includes some large-scale projects that produce synthetic gas or capture CO2 from gas processing facilities, there are currently no large-scale projects in the works that incorporate capture technology onto more efficient NGCC plants. International NGOs have long argued that countries must eventually move to put CCS on their gas fleets if they want to limit global temperature increases to 2 degrees Celsius. “Between now and 2030, world fossil use for power is projected to almost double. Without CCS on both gas and coal, it’s ‘game over’ on climate change,” Thompson and Camilla Svendsen Skriung of the Norwegian Zero Emission Resource Organization wrote in a November blog post.

The U.K. seems to be moving a bit quicker in that respect. A natural gas-CCS retrofit in Scotland was selected by the British government to move forward with front-end engineering and design work in the country’s £1 billion ($1.52 billion) CCS demonstration competition this week. Earlier this year, members of the opposition party in the U.K. Parliament introduced an amendment to a major electricity market reform bill that would have set a tighter emissions performance standard for power generators that would all but require CCS technology to be installed on all fossil generation, including natural gas and coal. However, that amendment was recently removed due to lack of adequate support.