The world must have carbon capture and storage (CCS) technology to address climate concerns, but commercializing CCS will require a level playing field, an industry advisory council appointed by the Department of Energy (DOE) underscores in a new white paper.
The report released by the National Coal Council (NCC) on Nov. 10 responds to a Sept. 18–request by Energy Secretary Ernest Moniz asking the group for its recommendations on incentives and policies that can be employed to level the playing field for the deployment of CCS.
Moniz also asked the NCC for recommendations to remove regulatory obstacles, address market failures, adjust tax policies, and use “time-limited subsidies” to expedite deployment of CCS. Moniz wanted the report completed before the COP21 meeting in Paris this December.
According to the NCC, recent environmental rules finalized by the Environmental Protection Agency (EPA) and other federal policies have “severely tilted the energy playing field.” At the same time, existing incentives for CCS are “simply too small” to bridge the chasm between the cost and risk of “promising but immature CCS technologies and other technology alternatives,” it said.
Commercial CCS deployment has lagged, owing to insufficient government support and incentives, the report says. “Without commercial-scale deployment, developers have no history to understand technical risks, frequency and duration of down time, and other critical factors that become known only with operation,” it adds.
The report cites a breaking news story that POWER‘s Editor Gail Reitenbach published on Oct. 30 revealing problems at the world’s first and only operating commercial-scale power plant with CCS.
The group points out that enacted renewable tax credits spurred the rapid deployment growth and cost reduction of solar and wind power. CCS, too, has received tax credits and other incentives, but not nearly to the same extent as renewables.
Among recommendations made by cross-functional experts within the NCC’s working groups are that financial incentives must be substantially increased and broadened to include incentives available to other clean energy sources. These include up-front incentives that reduce risk to capital and operating incentives to assure a long-term revenue stream.
The NCC recommends the establishment of a “contracts for differences” structure—similar to that used in the UK—under which developers propose a menu of incentives to be provided by the government for competitively selected projects. It also urges the DOE to pick up a larger portion of costs in grants to address higher CCS project costs.
On the regulatory front, the NCC calls on the DOE to develop a “first-of-its-kind regulatory (FOAK) blueprint” to remove barriers to construction and development of projects with CCS. The blueprint would streamline siting and permitting and address Clean Air Act New Source Review barriers. It would also ease burdens faced by enhanced oil recovery operators under the Clean Power Plan.
All of this should be done with a national objective that at least 5 GW to 10 GW of commercial-scale projects should be in operation or in the development stage by 2025, the NCC said. And to achieve this, DOE must act as a “catalyst” for new commercial demonstration projects. “Such projects must commence immediately,” it said.
Meanwhile, the report suggests that the DOE must have a plan to fund 25–50 MW of second-generation carbon capture technology demonstrations in the U.S. by 2020.
Finally, the NCC calls on the DOE to make it clear that CCS has a place in a renewables-heavy future. “DOE needs to assure that U.S. and global policy makers and others to firmly understand both that fossil fuels will be used in coming decades to a greater extent than today, and that there is a resulting need for CCS,” it said.
The 1984-chartered NCC serves as an advisory group to the Secretary of Energy, providing advice and recommendations to the DOE’s head on general policy matters relating to coal and the industry. It does not engage in lobbying, it says, even though its members—who are appointed by the Energy Secretary—represent all segments of coal interests, and the council is entirely supported by voluntary contributions from NCC members.
The report released this week is co-authored by staff at law firm Hunton & Williams, but assorted industry stakeholders—including frequent POWER contributor Jason Makansi—are listed as part of the advisory group and review team.
This week, another pivotal report compiled by the Electric Power Research Institute (EPRI) was also released, which concludes that some coal plants can meet emissions limits specified in the EPA’s Clean Power Plan without relying on CCS. However, EPRI says that those plants will need cutting-edge technology to improve efficiency.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)