What the EPA Rules Mean for Carbon Capture and Storageby ENGO NETWORK GUEST AUTHOR on 08/24/15
This is a cross-post from C2ES, originally published August 19, 2015. The author is Solutions Fellow Patrick Falwell, with C2ES.
In its final rules for limiting carbon dioxide emissions from new and existing power plants, EPA recognized the importance of carbon capture and storage technologies to achieving U.S. carbon reduction goals.
New coal-fired power plants will likely need to capture some portion of potential emissions to meet final federal standards for emissions. While not required, existing coal and natural gas power plants may pursue carbon capture and storage
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(CCS) to meet state emissions targets under the final Clean Power Plan.
However, a regulatory requirement for CCS does not guarantee the development of commercial-scale projects, and additional work will be needed to address the economic barriers to CCS.
In the rule covering new power plants, EPA confirmed its original finding that CCS is technically available and feasible to implement. EPA’s final rule set an emissions standard of 1,400 pounds of carbon dioxide (CO2) per megawatt-hour (MWh) of electricity generated. This is less stringent than the 1,100 lbs CO2/MWh limit originally proposed. But given that the most efficient coal plant without CCS is still likely to emit around 1,700 lbs CO2/MWh, adopting CCS is likely required.
EPA justified its conclusion by citing the experience to date in deploying CCS technology. This includes the successful launch of the world’s first commercial-scale CCS power plant by SaskPower in Saskatchewan in 2014, two commercial-scale projects under construction in the United States in Mississippi and Texas, a variety of CCS projects at industrial facilities, and numerous demonstration-scale CCS projects. In addition, EPA noted that Linde and BASF offer a performance guarantee for their joint carbon capture technology and that other well-established companies actively market CCS technology and express confidence in the technology’s ability to perform well.
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Despite EPA’s confidence in CCS’s availability, it does not foresee new coal plants, with or without CCS, going forward between now and 2020. The ability of low-cost natural gas and renewables to meet new demand for electricity or replace retiring power plant capacity has and will likely continue to eliminate the need for new coal capacity. In the event that new coal capacity becomes necessary, the rule makes sure that CCS is used to reduce potential CO2 emissions.
Overall, EPA’s power plant rules provide regulatory context for CCS, but CCS remains a relatively expensive option in the power sector. Like with any other emerging technology, the cost of carbon capture will come down over time through the repeated deployment of commercial-scale projects that can provide insights into how costs can be reduced. SaskPower estimates it could build its next CCS power project at 30 percent less expense, with even greater cost reductions for the project after that. In addition, the ability to sell captured CO2 for utilization in opportunities like enhanced oil recovery (EOR) creates revenue to offset the cost and risk of investing in CCS. Most of the existing or under-construction CCS projects take or intend to take advantage of EOR.
Given that coal and natural gas are expected to continue to be a major source of energy in the United States and globally for years to come, investing in CCS and getting more commercial-scale projects under development should be a priority.