DOE FY 2014 BUDGET REQUEST ‘SHORTCHANGING’ CCS, OBSERVER SAYS

Tamar Hallerman
GHG Monitor
4/26/13

The Department of Energy appears to be “shortchanging” carbon capture and sequestration efforts in its recently released Fiscal Year 2014 budget request, Kurt Waltzer, carbon storage development coordinator at the Clean Air Task Force, told GHG Monitor this week. DOE’s request proposes a 25 percent cut to the Department of Energy’s coal R&D program, while boosting funding for the Department’s Office of Energy Efficiency and Renewable Energy. Within CCS and Power Systems, the proposal recommends gutting the Advanced Energy Systems and Cross-Cutting Research accounts, while shifting emphasis from the Carbon Storage to the Carbon Capture program (see chart).  “It’s important to move forward on commercial-scale demos, but there are a lot of technologies that are still at their early development stages, and we’re not moving forward fast enough on those technologies to drop their costs,” Waltzer said. “By cutting funding to [CCS R&D], we’re stretching out the timeframe for when we can deploy this technology around the world. We’re at a slow walk right now in terms of technology development when we really need to be at a sprint.”

In an interview this week, a DOE Office of Fossil Energy official said the budget request is doing what it can to invest in CCS technologies during a tough fiscal climate. “This country has financial challenges and we really understand that here, so we’re doing what we can to reduce those costs, but at the same time make sure those technologies are available that are needed in the next five or 10 years to keep coal in the mix,” the official said. “Some of these research programs are being slowed down, and in the future we hope to be able and go in as needed and accelerate those down the road. But for right now, we’re focusing very strongly on getting these near-term carbon capture and storage technologies out there so industry can use them.”

DOE Says Clean Coal a Priority

During an April 10 press conference unveiling the FY 2014 request, now-acting Secretary of Energy Dan Poneman said that despite the proposed budget cuts, the Department’s ‘clean coal’ portfolio remains a priority for the Obama Administration. “Our clean coal investments are critically important,” he said at the time. “That’s why we’ve got something like $6 billion deployed in a variety of projects.”

However, as industry observers have gotten the time to pore over the request, some said the Administration’s priorities are clear. “This request speaks for itself. It reflects the priorities of the Administration that wants to emphasize alternative energy and deemphasize legacy energy. You can argue whether that’s prudent, but it’s a fact,” said Robert Gee, a consultant who previously served as DOE Assistant Secretary for Fossil Energy during the Clinton Administration. “Having said that … we have to be doing something to contain and address CO2 emissions from the use of coal. If we don’t prioritize R&D in the United States to mitigate those emissions, we cede that technology leadership role to other countries.”

NGCC-CCS Prize Continues to Garner Attention

Buzz continued to circulate this week around the newly-proposed $25 million inducement prize for the first to develop a commercial natural gas combined cycle plant that also captures and stores at least 75 percent of its CO2 emissions. Gee praised the prize as a way to bring visibility to the technology and the need to limit emissions from gas plant. “It’s a great thing,” Gee said. “It’s a very strong, positive sign that the Administration is forward-leaning.” However, others have been quick to note that the award money is not enough to warrant significant investments in CCS by the private sector—given that new energy technologies often cost hundreds of millions of dollars to develop. Waltzer said a more substantial investment is needed. “We absolutely need natural gas with CCS, but $25 million is not nearly enough money to entice first-of-a-kind CCS projects,” he said. “This is an example of a right priority paired with a lack of adequate funding.” But Gee underscored that the creation of the inducement prize, even though a small investment, is still better than the alternative of no funding. “If it’s a choice between zero and $25 million, I’ll take the $25 million. It’s going to cost a lot more to develop those technologies, but you’ve got to start with something,” he said.  “Overall, it’s a huge step.”

The DOE official said the Office of Fossil Energy proposed the creation of the inducement prize after seeing that industry’s interest in the technology. “We started to notice that certain companies were talking to each other about doing capture on natural gas plants … so we thought that for $25 million, we ought to be able to catalyze that a little bit and give the industry a little bit of a push,” the official said. “It’s a relatively small cost to the government to catalyze something that appears ready to go anyway.” The official added, however, that FE does not have any “hard plans” to create a new program surrounding natural gas capture.

Will CCS R&D See Full Funding?

In light of the proposed funding cuts to coal R&D at the Department, some stakeholders have vowed to commit resources to ensure that the program is fully funded. “The continued development of new coal technology is essential for an American-made, all-of-the-above energy strategy,” NMA Senior Vice President for Government Affairs Rich Nolan said in a statement provided to GHG Monitor. “History has proven that dramatic environmental improvements made in the coal fleet go hand-in-hand with technology advancements. NMA will be working with our strong allies in Congress to fully fund the CCS R&D program.”

Some stakeholders expressed hope that once Congress begins negotiating the details of the FY 2014 appropriations bills, funding for coal R&D will be largely restored eventually, particularly given the influence of coal industry stalwart Rep. Hal Rogers (R-Ky.), the chairman of the House Appropriations Committee. Members of the Senate Energy and Natural Resources Committee last week pressed Poneman on the proposed cuts to Fossil Energy R&D—with Committee Chairman Ron Wyden (D-Ore.) saying that DOE is “playing a bad hand” by proposing cuts to the program—which could indicate an opening for compromise on the program’s funding level. Congress similarly restored funding to the account for FY 2012 after the Administration proposed similar cuts to the coal R&D program in 2011.

Gee said the fact that FE R&D got a more modest budget request this year could mean that it will not be treated as harshly by the funding committees, especially compared to other programs that asked for increases. “These numbers usually get massaged once they have to work out compromises on Capitol Hill between the House Republicans and the Administration,” he said. “At this point, the jury has not come in.”