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Thursday, February 13, 2014

Early CCS projects face high electricity costs; networks, EOR vital

The wholesale cost of electricity produced by the first US coal-burning power plants that employ carbon capture and storage (CCS) technology will be 70 to 80 percent higher than plants without CCS, an Energy Department official has said, demonstrating the obvious reason why Federal government assistance is needed to support early deployment of CCS and bring the essential technology to scale.

Julio Friedmann, Deputy Assistant Secretary for Clean Coal, Office of Fossil Energy at the US Department of Energy – a friend and an energy expert whom I’ve had the pleasure of interacting with during my days in Pennsylvania state service and afterward - testified at a Congressional hearing that as the technology advances and scale of deployment increases, costs to install the equipment can be cut in half. 

A substantial portion of incremental costs of the technology can also be recovered, Friedmann said, by selling the captured carbon dioxide for enhanced oil recovery. The first CCS-equipped US power plant, in Kemper, Mississippi, is scheduled to come on-line later this year.  The Kemper plant received $270 million in Federal support. It's expected to capture about 3.5 million tons of CO2 annually - about 65% of its carbon emissions - and will sell it to oil companies for EOR.

The challenge of obtaining economies of scale and dealing with the costs for transmission of captured CO2 either for EOR or storage can be at least partially solved by adopting the Pennsylvania model of CCS networks.  And the opportunity to increase oil production - and gas production - makes a business case, as I’ve suggested, for oil and gas companies to champion CCS development in a world that must inevitably (but not soon enough) be carbon-constrained.

Networks and EOR are the wedges that are needed to drive early CCS development and deployment.  CCS for natgas electricity generation offers a path for near-zero carbon electricity while – if we’re smartbuilding a short bridge to a renewable energy future.

Will the US - and the rest of the world - get CCS right, in time?

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