DOE: Major CCS project ‘not financially attractive’

Source: By Miranda Willson, E&E News reporter • Posted: Monday, October 26, 2020

High operating and capital costs could make carbon capture, utilization and storage “not financially attractive” at a large coal plant visited by Energy Secretary Dan Brouillette this month, according to a Department of Energy analysis recently made public.

DOE Assistant Secretary for Fossil Energy Steven Winberg told congressional lawmakers last year the department was hoping to demonstrate CCUS at the Colstrip power plant in Montana (Energywire, May 20, 2019). The price tag of the project was not immediately clear.

According to the report, which was conducted by DOE and Leonardo Technologies Inc., capturing and compressing 63% of carbon dioxide from each of the Colstrip units to support advanced oil recovery would cost more than $1.3 billion. Annual operating costs at Colstrip could come in at about $108 million, the report said.

“The techno-economic assessment of CO2 capture for CO2-[enhanced oil recovery] found that due to significant capital, operating and infrastructure costs, this option may not be financially attractive,” the report said.

Completed in May 2018 at the request of Gov. Steve Bullock (D), the analysis assessed strategies for reducing emissions and improving efficiencies at Colstrip, one of the largest and most polluting coal-fired power plants in the West.

The Montana Environmental Information Center obtained the report this month through a Freedom of Information Act request, said Anne Hedges, deputy director of MEIC. Its findings were first reported last week by the Billings Gazette.

DOE has been exploring “options” for Colstrip for years, as reflected by the report, a department spokesperson said. These efforts have included CCUS research and development projects to improve its economic viability and federal tax credits under Section 45Q, which supports carbon capture projects.

“Funds for assessments and R&D are typically made available through open competition. Congress has not made funds available for cost-sharing capital retrofit projects in recent years. If Congress did, Colstrip could compete for those funds,” DOE said.

Jointly owned by six utility and energy companies, Colstrip faces an uncertain future as some of its owners intend to exit the power plant and two of its four operating units shut down this year. Washington state and Oregon, which currently accept coal from Colstrip, have also passed laws to phase out coal use this decade.

Local and state politicians — including Bullock and Sen. Steve Daines (R-Mont.), who are neck and neck in a closely watched Senate race — have said CCUS could keep Colstrip alive, preserving jobs and tax revenue. During a debate last month, Bullock called carbon capture “part of the overall discussion” about the facility (E&E Daily, Oct. 12).

‘Stop the charade’

The DOE analysis, however, shows that CCUS might not be able to save Colstrip from eventually closing, Hedges said.

“I just want politicians to stop the charade,” she said. “I want an honest discussion about what happens after Colstrip closes, instead of pretending like there’s some Hail Mary pass that’s viable.”

Advancing and developing CCUS technologies in Montana could reduce its costs while bringing environmental and economic benefits to communities in the state, said Marissa Perry, communications director for the governor. Bullock is leading those efforts through the Governors’ Partnership for Carbon Capture and by exploring opportunities to test and deploy the technology at Colstrip, Perry said.

“If Montana is able to lead in the development of this infrastructure, it can serve to be an asset attracting other businesses seeking to locate in areas where reliable, affordable and low-emissions power are drivers of their competitive advantage, while also helping support communities facing transitions,” she said in a statement.

While the cost estimates in DOE’s report account for the 45Q tax credits and the estimated price of CCUS in 2018, they did not acknowledge the possibility of additional funding, said Katie Schoettler, spokesperson for Daines. The senator has been advocating to reduce the costs of CCUS and develop pilot programs that could be funded in part by DOE, she said.

“That’s also why Senator Daines brought DOE Secretary out to Colstrip to see the importance of this firsthand,” Schoettler said in an email, referring to Brouillette’s October visit to the plant and the nearby Rosebud mine.

There is bipartisan support to invest in CCUS and build additional carbon capture demonstration projects, said Conor Bernstein, spokesperson for the National Mining Association.

“Any globally replicable emissions-reductions strategy requires technology solutions that work with the energy infrastructure and fuels the world uses and will continue to use,” Bernstein said in an email.

But with more utilities and energy companies finding that coal-fired power plants are more expensive to operate than wind and solar resources, it’s clear that installing CCUS infrastructure would further drive up coal’s costs, said Joe Smyth, research and communications manager at the Energy and Policy Institute, a watchdog group that supports clean energy. Although politicians may see CCUS as a tool to save coal plants and associated jobs, they should be honest about the changing energy landscape, Smyth said.

“Even though it’s probably hard to hear, communities connected to these coal plants deserve honesty about the changing economics of operating coal plants and what it means for their future,” he said. “It means the coal plants are going to shut down.”