AT THE MAJOR CCS PROJECTS: HECA, TAYLORVILLE, KEMPER

Tamar Hallerman
GHG Monitor
05/04/12

AT HECA: SCS RESUBMITS PERMIT APPLICATION

SCS Energy submitted an amended permit application for its Hydrogen Energy California (HECA) carbon capture and storage project to the California Energy Commission and the Department of Energy this week,. The submission now restarts the regulatory review process for the project, which switched owners and direction over the last year.

HECA received an initial permit to move forward under previous owners BP and Rio Tinto, but SCS said it resubmitted its application in order to reflect several of the major changes it approved since formally taking over the southern California project last summer. While SCS decided to move forward on previous plans to build a new Integrated Gasification Combined Cycle plant that would convert petroleum coke to hydrogen to produce electricity, over the last year the power producer has also spearhead several major design changes to the project, most notably adding a poly-generation component to the value chain.

In additional to producing roughly 300 MW of electricity, SCS said it would use some of the hydrogen produced at the plant to produce urea fertilizer and several other saleable products. SCS said it would also capture 3 million tons of CO2 emitted annually from the plant for use in a nearby oilfield for enhanced oil recovery operations. SCS also decided to pursue a ‘dispatchability’ component for HECA, which allows a portion of the electricity produced at the plant to be ramped up as needed in order to meet seasonal electricity demand. SCS said the modified design would help improve HECA’s overall economic viability while still meeting environmental standards.

Building on Previous Permit

SCS Energy CEO James Croyle said this week that the company used HECA’s previous air permit as a foundation while compiling information for the project’s new application. “We had the benefit of the permit application that BP and Rio Tinto had submitted,” he said in remarks at the Eleventh Annual Carbon Capture, Utilization and Sequestration Conference this week in Pittsburgh. “The amended application went in [May 2] and we’re looking forward to construction in probably the second quarter of 2013 and beginning operation in early 2017.” The $3.9 billion project is slated for a site 25 miles west of Bakersfield. It received $408 million in federal funding from the third round of DOE’s Clean Coal Power Initiative program.

AT TAYLORVILLE: TENASKA RECEIVES FINAL AIR PERMIT

The Illinois Environmental Protection Agency (IEPA) issued Tenaska Energy the final air permit needed for its embattled Taylorville Energy Center (TEC) this week but omitted carbon capture as part of its final standard. IEPA issued an amended prevention of significant deterioration (PSD) air quality permit for the 602 MW Center this week, allowing plans for the new-build $3.5 billion Integration Gasification Combined Cycle plant to move forward. The permit requires strict cuts to sulfur dioxide and nitrogen oxide emissions, but does not require carbon capture technology to be installed on the ‘hybrid’ facility, which consists of both a natural gas power block and a gasification island that converts coal to substitute natural gas. The permit mandates that the gas power block limit emissions to 827 lbs/MWh but leaves the gasification island without an emissions cap. In its explanation of the rulemaking, IEPA said it did not include a limit on greenhouse gas emissions because the requirement would be too difficult to enforce and inconsistent with the state’s best available control technology determination.

In an interview this week with GHG, Tenaska Vice President of Environmental Affairs Greg Kunkel said that the company requested in April that the state require a 90 percent capture rate for the island’s emissions, which would have cut roughly half of the plant’s overall emissions. Tenaska had reapplied for a PSD permit in 2009 after it significantly modified TEC from its initial project design, which was also an IGCC plant but did not include a capture component. “All of this required us to go back, revisit the entire design and re-permit the whole facility,” Kunkel said. “The whole reason we proposed to change our permit was to incorporate these capture pieces of equipment.” Even without a requirement from the IEPA, Tenaska must still meet a 50 percent capture requirement due to TEC’s involvement with DOE’s loan guarantee program.

Environmental Groups Criticize Determination

Environmental groups in the state criticized the IEPA for not requiring the plant to capture CO2 emissions from the gasification island. “We’re disappointed. Illinois EPA didn’t properly evaluate [the best available control technology] in this case,” John Thompson, director of the Fossil Transition Project at the Clean Air Task Force, told GHG. “The final permit should have reflected CCS.” Thompson filed comments to the IEPA earlier this year criticizing a similar conclusion in the agency’s draft air permit for the project, which did not include a requirement to capture or limit CO2 emissions. Thompson said at the time that the draft permit violated the Clean Air Act and that it set “a terrible precedent that harms CCS deployment nationwide.”

Project Awaits Approval

Even with the final PSD air permit in place, Tenaska still faces the large hurdle of gaining permission to move forward on TEC from the Illinois state legislature, which has come to a near-standstill over the fate of the facility. A similar measure squeaked through the Senate late last year after a handful of failed attempts, but now the measure appears stalled in the Illinois House. The gridlock comes following an intense lobbying effort from the group Stop Tenaska’s Overpriced Power (STOP Coalition). Led by Tenaska competitor Exelon Corp., the STOP Coalition has moved to halt the project by “shedding light on the potentially-disastrous unintended consequences [of the project] to Illinois consumers, the economy and the competitive energy market.”

Kunkel said Tenaska may rethink the project if it does not gain approval in the legislature soon. “We’re really at a critical moment to get this approval, and I think it would be very discouraging if we don’t get this final approval at this point,” he said. “I think we’re there. We really have done and pursued this as far as we could reasonably pursue it. We’re always willing to work with stakeholders in the process to try and satisfy the parties that need to be satisfied, but I think its time to fish or cut bait.”

AT KEMPER: MISSISSIPPI POWER CEO DEFENDS PROJECT COSTS

The CEO of Mississippi Power said this week that critics of the electric utility’s Kemper County carbon capture and storage project have been exaggerating its potential impact on local electricity rates. In remarks on a morning talk show this week in Biloxi, Miss., company CEO Ed Day said claims made by the state chapter of the Sierra Club—the group that petitioned a lawsuit against the project—that the plant’s construction would lead to a 45 percent increase for area ratepayers is incorrect. “We have said all along with the original plans for this project, we think over the next 10 years, rates will go up approximately 30 percent. Looking at the plant and how it is progressing, quite frankly, I think it will be a little less than 30 percent,” Day said.

The remarks were part of a publicity blitz the company has been pursuing in recent weeks following a messy rate recovery case in front of the Mississippi Public Service Commission. After the project was granted $2.88 billion in rate recovery from the Commission in 2010, the Sierra Club sued, culminating in a unanimous state Supreme Court ruling in March that the determined PSC broke state law by not adequately clarifying its rate recovery decision after its initial 2010 ruling. The Mississippi Supreme Court then ordered the PSC to reexamine the rate recovery proposal, which the Commission voted 2-1 to reissue last week. However, the Sierra Club has already appealed the ruling back up to the state’s high court, arguing that the PSC should have opened up the case to new evidence.

The new-build 582 MW Integrated Gasification Combined Cycle plant has been under construction for nearly two years and is expected to come online in 2014 if construction is allowed to move forward uninterrupted. Mississippi Power said it will capture 65 percent of the plant’s CO2 emissions for use in local enhanced oil recovery operations. Mississippi Power said that it has spent $1.1 billion on construction to date and confirmed contracts for an extra $1.5 billion. The project has garnered nearly $700 million in government grants, tax incentives and loan guarantees—including $270 million in funding under the Department of Energy’s Clean Coal Power Initiative. It is the furthest-along large-scale CCS project for power generation in the Department of Energy’s demonstration project portfolio.