Tenaska on Monday signed an agreement with the Environmental Defense Fund (EDF) to limit water use and capture at least 85% of carbon dioxide produced by a proposed advanced coal plant under development near Sweetwater, Texas, if the environmental group drops legal opposition to the plant.

Under the agreement, the Nebraska-based company will also contract for delivery and sequestration of the gas captured at the $3.5 billion Tenaska Trailblazer Energy Center to third parties authorized by Texas and federal law to inject the gas into approved geologic formations. In addition, it agreed to limit water use to 2,000 acre-feet per year.

EDF agreed, meanwhile, to withdraw from the contested case hearing and not to protest Tenaska’s draft air quality permits issued by the Texas Commission on Environmental Quality. If Tenaska fulfilled the deal, EDF said it would not seek to delay the granting of any future air quality permits required for the Trailblazer Energy Center and would not assist others who might seek to do so.

"The era of building traditional coal plants without carbon capture and storage is over," said Jim Marston, EDF national energy program director, at a press conference on Monday. “This groundbreaking agreement addresses carbon as well as water, a scarce resource in that region. Tenaska is to be commended for ending business-as-usual coal-fired power production.”

Dr. Greg Kunkel, Tenaska vice president of environmental affairs, told reporters that Tenaska had deemed it shortsighted to build new coal-fired generation without answering the carbon question. “Our philosophy hasn’t changed. If anything, our strategy in developing large-scale carbon capture has been reinforced since the U.S. Environmental Protection Agency has officially recognized CO2 as a pollutant,” he said.

Tenaska expects to obtain a final air permit later this year and to begin construction in 2011 once financing is obtained. Construction is expected to take five years.

If built, the 600-MW Trailblazer Energy Center could be one of the first commercial coal-fired power plants in the nation to capture at least 85% of its carbon emissions for geologic storage. Captured gas would be sent to the nearby Permian Basin oil fields for use in enhanced oil recovery.

The project will also use dry cooling technology, which uses air to cool water and steam rather than evaporating water. Because dry cooling substantially reduces evaporation, the consumption of water is reduced by more than 90% when compared to traditional "wet cooling" methods.

Sources: Tenaska, EDF