Canadian energy firms TransAlta, Capital Power, and Enbridge last week scrapped plans for the much-watched Project Pioneer, a joint effort the companies were to undertake with the Canadian federal government and Province of Alberta to demonstrate commercial-scale viability of carbon capture and storage technology (CCS).
The C$1.4 billion (US$1.42 billion) Pioneer Project would have captured a megaton of carbon dioxide emissions every year for a decade from TransAlta’s Keephills 3 coal-fired power plant in Alberta, and was due to be complete by 2015.
According to the Project Pioneer website, the companies determined that, “although the technology works and capital costs were in-line with expectations, the market for carbon sales and the price of emissions reductions were insufficient to allow the project to proceed.” The decision to shelve the project was reached after a front-end engineering and design (FEED) study was conducted—the first step and an essential part of a project to prove the technical and economic feasibility of any technology before making any major capital commitments.
“Our decision was essentially based on the fact that we could not see a way to make the economics of our CCS project work as we originally intended,” said Don Wharton, vice-president of policy and sustainability at TransAlta. The companies had counted on the development of pure carbon markets, or a government-implemented emissions trading program, neither of which materialized.
Canada’s federal government is instead finalizing rules that could force utilities to shutter coal-fired facilities approaching the end of their 45-year life spans, or the end of their power purchase agreement, if that were later. The so-called “cap and close” regulation would prohibit companies from making investments to extend the lives of those plants unless greenhouse gas (GHG) emission levels could be reduced to those of natural gas combined cycle plants. Projects completed before 2014 would be allowed to operate until the end of their economic lives, under the rule.
TransAlta was to receive C$779 million in federal and provincial funding over 15 years for the CCS project as part of strategies by Ottawa and Alberta to reduce carbon emissions. More than $430 million of that money came from Alberta.
“While we are disappointed that Project Pioneer will not go ahead, we now know the technology works and we still believe there is a future for CCS,” said TransAlta CEO Dawn Farrell.
“Our government continues to invest in a number of projects that are advancing across the country and we will continue research and development with governments, industry and academia to help advance carbon capture and storage technologies,” Federal Natural Resources Minister Joe Oliver said in a statement.
Project Pioneer is just the latest of a string of CCS project casualties. Last December, Swedish firm Vattenfall cancelled the high-profile Jänschwalde project, a $2 billion CCS demonstration project that it had planned to build and begin operating by 2015 in the German federal state of Brandenburg.
Earlier in the year, as Basin Electric announced that the cost and timing of a proposed CCS project at its Antelope Valley Station in North Dakota had caused the plant’s directors to table the project indefinitely, German utility RWE halted work on an integrated gasification combined cycle plant with CCS in Hürth, citing a lack of an “adequate legal basis and promotion of acceptance of the CCS technology by policy makers.”
In October, the UK pulled funding for a postcombustion CCS project being built at the 2,400-MW Longannet power station in Fife, Scotland, by ScottishPower, UK grid operator National Grid, and oil company Shell. And in July, American Electric Power shelved its $668 million CCS project at its 1,300-MW Mountaineer Plant in New Haven, W.Va.—a project that had just completed validation—citing uncertain U.S. climate policy and a weak economy.
Even the U.S. Department of Energy’s FutureGen 2.0 oxy-combustion project now hangs in limbo after Ameren Energy Resources in November pulled out of the venture spearheaded by the FutureGen Alliance. The alliance is negotiating an option to buy portions of Ameren’s Meredosia Energy Center in Illinois to continue development of that project.
Sources: POWERnews, Project Pioneer