CONSOL EXEC: CCS WILL NOT FLOURISH UNDER EPA’S PERFORMANCE STANDARDS

Farris Willingham
GHG Monitor
06/22/12

Carbon capture and storage likely will not benefit much from the Environmental Protection Agency’s recently-proposed performance standards for new fossil fuel-fired power plants despite a provision meant to incentivize use of the technology, CONSOL Energy Vice President Steve Winberg told House lawmakers this week. During a June 19 House Energy and Commerce subcommittee hearing, Winberg, who also serves as chairman of the board of the FutureGen Alliance, said that utilities will likely choose to invest in other technologies to comply with the rulemaking given that CCS is not projected to be commercially available for at least another decade. “Unfortunately, CCS is not yet commercially available,” he said in his testimony before the panel. “We are 10 to 15 years away from when CCS suppliers can be able to provide guarantees, and that assumes we have a significant funding available to commercialize CCS—something we do not currently have.” Winberg said that because of the way EPA’s performance standard is designed, even utilities that are enthusiastic about CCS will likely pursue alternatives given the proposed compliance timeline.

Proposed in late March, EPA’s New Source Performance Standards set a limit on the amount of carbon dioxide that can be emitted by new fossil fuel-fired units larger than 25 MW. The proposal calls for an emissions limit of 1,000 pounds of CO2 per megawatt hour—similar to the emissions rate of an uncontrolled natural gas combined cycle unit—and would essentially bar any unmitigated coal units from being built. Instead, utilities must switch to natural gas or install CCS technology in order to comply, EPA said. In order to incentivize CCS, EPA said operators could choose to average the emissions of a unit over a 30-year period. Under that pathway, operators could build a new unmitigated coal unit and emit up to 1,800 lbs CO2/MWh during the first decade of operation and later add CCS and emit less—roughly 600 lbs CO2/MWh—for the remaining 20 years, as long as the emissions average 1,000 lbs of CO2 over the 30-year period. At the time of the rule’s release, EPA Administrator Lisa Jackson said that the averaging pathway would allow for CCS technology to be commercialized so that utilities could install it as a way to comply with the standard. “CCS is on the path to being viable,” Jackson said at the time. “It is being permitted and built and demonstrated today, and it will become increasingly used.”

Winberg, though, said that even with the 30-year averaging provision, power producers will not want to pursue CCS under the current rule. “In practical terms, this means that a power producer would have to begin installing CCS in year five to be ready by year 11,” he said. “Power producers will not make a multibillion dollar bet that in five years CCS technology providers will offer commercial guarantees.” He added: “In effect, what EPA’s rule does is eliminate any new coal for years to come because EPA is requiring new coal-fueled power plants to meet a natural gas equivalent CO2 standard before CCS is commercially available.” Without guarantees from CCS technology suppliers, utilities will not be able to get approved for financing from state public utilities, and without that power companies will not build units with CCS, he said.

NRDC’s Doniger Says Guarantees Are There

David Doniger, the policy director of the Natural Resources Defense Council’s climate and clean air program, disagreed about the state of CCS technology. He said in his testimony that CCS is currently technically feasible and that some equipment manufacturers do provide guarantees for their capture technologies. “Siemens and other companies do provide guarantees for the performance of their equipment related to carbon capture and storage,” he said. He pointed to several large-scale full value-chain CCS projects moving forward—including Mississippi Power’s Kemper County plant, Summit Power Group’s Texas Clean Energy Project and SCS Energy’s Hydrogen Energy California (HECA) project—as evidence of that trend. “This is something that can be done now,” Doniger concluded. He added: “NRDC agrees that carbon capture and storage-equipped plants are technically feasible today and can meet the proposed standard,” he said. “We support provisions that EPA has included to facilitate construction of those plants.”

Republicans Continue Opposition

Throughout the hearing, Republicans on the panel continued to criticize the performance standards as indicative of the Obama Administration’s “war on coal.” “It does seem to be an EPA-fulfilled prophecy that no new coal plants will be built in this country. On our current path, it appears to be this administration’s fulfilled prophecy that electricity prices are going to go up. It’s simply not acceptable,” Subcommittee Chairman Ed Whitfield (R-Ky.) said. “I think we have an obligational responsibility to work tirelessly with our colleagues to stop these policies that destroy jobs and will increase consumer electricity prices, particularly at this time in our nation’s history when we’re trying to stimulate our economy.” During his questioning of Donger, who said he did not believe that there is a “war on coal,” Rep. David McKinley (R-W.Va.) said that remarks from Administration officials indicate that the opposite is true. “When the president comes out and says, ‘I’m going to bankrupt any new coal-fired powerhouse,’ when Steven Chu says that coal is his worst nightmare, when the vice president says that they’re not going to support clean-coal technology, there will not be clean coal, when the president slashes the funding for a national energy technology lab for its work in clean-coal technology by 41 percent,” he said. “I’m astounded that you can sit there and say there’s no war on coal.”

Democrats on the committee said that EPA opponents are cultivating a “false choice” between clean air and a healthy economy. “Today’s hearing continues a concerted effort by those in the majority party to weaken the authority of the EPA and to de-legitimize the agency’s regulation as unnecessary job killers, and an attempt to counteract all the various respected, peer-reviewed studies that show that the environmental protection industry actually creates jobs and stimulates the economy, as well as leading healthier and more productive constituencies,” Subcommittee Chairman Bobby Rush (D-Ill.) said. “Today we will hear more tall tales that attempt to debunk these facts and lead us to believe that any policy that regulates greenhouse gases will automatically lead to the increased job losses. However, it is extremely important for all of us to remember that just because some or a few industry sources tell us that regulating greenhouse gases will be costly and will yield little- to-no benefit does not make it true.”