Carbon Capture and Sequestration Is Needed and Improving Despite Kemper Project Shutdown

Ed note: An expert panel took on the topic of CCS and its current status, issues, and needs at an RFF workshop on May 24. Watch video or download presentations from the event.

If the world wants to reduce carbon dioxide (CO2) emissions and take advantage of cheap coal, carbon capture and sequestration (CCS) needs to be part of the solution, according to the International Energy Agency and others. The challenge to making that a reality is one of price—not feasibility and safety. In the United States, environmental and energy policy NGOs, unions, project developers, industrial suppliers of CO2, technology vendors, ethanol producers, electric utilities, oil and gas producers, and coal companies, among others, are jointly urging and supporting federal financial support for CCS.

The world has been storing large quantities of CO2 underground for over 20 years in the North Sea and for over 40 years via enhanced oil recovery (EOR) in Texas and New Mexico. Across the globe, 26 large-scale CCS projects are in operation or under construction, with the United States having the most projects in number and volume. The recent shutdown of the pre-combustion CO2 capture project in Kemper County, Mississippi, should not be seen as a sign of things to come—CCS technology is proven.

Experience in operational projects—such as the NRG Energy PetroNova project in Texas, the Weyburn EOR project in Canada, and the pre-combustion capture of CO2 at the Great Plains Synfuels Plant in North Dakota—has demonstrated CCS and the security of CO2 storage underground. The United States and the world have many decades’ worth of geological storage capacity for CO2 in depleted oil reservoirs and other deep geological formations.

There are many ways to separate and capture CO2 from gases released from power plants or industrial processes (such as the production of ethanol or fertilizer). Several are being demonstrated in the United States, with projects underway in Texas, Kansas, and Illinois involving Air Products, Coffeyville Gassification, and Archer Daniels Midland, for example. Currently, the three most common approaches employed at power plants include the following:

• post-combustion CO2 capture, used at Sask Power’s Boundary Dam power plant in Canada and the Petra Nova power plant, which started up earlier this year on time and on budget;
• oxy-combustion CO2 capture, demonstrated at large pilot plants such as Vattenfall’s Schwarze Pumpe Station in Germany; and
• pre-combustion CO2 capture, widely deployed commercially for capture in industry today.

The Kemper power plant in Mississippi would have used an advanced pre-combustion process with lignite, but the challenges of new technologies and a lower-than-anticipated price for natural gas caused estimated costs to become unacceptably high. To date, too few facilities have been built and tested for this approach in the power sector for learning to bring costs down.  Kemper reminds us that the road to technological innovation can be a bumpy one.

To improve CCS economics going forward, significant regulatory incentives will be needed (such as pricing carbon) and/or government funding for research and development or subsidizing CCS pilots, financing investment in CO2 transportation infrastructure, and proving the capability of particular storage resources.   

New plants using current CCS technology and assuming no ability to sell the captured CO2 are estimated to cause large increases in electricity generation costs. These increases can vary from about an additional $20–$50 per MWh (2013$) for a natural gas combined-cycle plant (with a levelized cost of electricity of about $64 per MWh) to an additional $30–$70 per MWh for a supercritical pulverized coal plant (with a levelized cost of electricity of about $70 per MWh)—with the added cost for an integrated gasification combined cycle plant being midway between those values. These costs include compression but do not include transportation and storage, which represent about 20 percent of the overall cost of CCS. In all cases, the overall cost of CCS and effect on electricity prices can be reduced significantly if the captured CO2 is sold for use in EOR.

Second generation technologies—which are being developed—will improve CCS economics, and could have 25–30 percent lower capital cost and 20–30 percent lower operating costs if current R&D goals are met. But these would not be ready for use at scale until 2025. Because capture accounts for most of the total cost of CCS, this is where substantial cost-reduction efforts are needed. 

Without cost-effective CCS technology, the Intergovernmental Panel on Climate Change estimates that the overall costs to keep CO2 emissions low enough to limit future warming to the international goal of 2°C would be about 140 percent higher. 

For the United States and the world to capitalize on this reasonably priced means of reducing CO2 emissions, legislation is needed to provide federal financial support—specifically designed to promote further development of CCS technologies. Draft bills recently proposed in the Senate and House aim to do this, but the details and ultimate outcomes of those proposals remain to be seen.