Tamar Hallerman
GHG Monitor
7/3/13
The Department of Energy unveiled a new draft loan guarantee solicitation this week, seeking public and stakeholder comment on language that will eventually govern the allocation of up to $8 billion in new loan guarantee authority for “innovative and advanced fossil energy projects and facilities that substantially reduce greenhouse gas and other air pollution,” including carbon capture and storage, chemical looping and advanced coal technologies. The draft solicitation, which is open for public comment until early September, will focus on backing fossil technologies that are new or “significantly improved,” but not yet commercial.
DOE said it would focus its efforts on four technology areas that include:
- Carbon Capture—“new or improved technology that captures and removes CO2 for permanent storage in underground formations or through beneficial reuse,” according to a DOE fact sheet, including technologies that capture carbon from flue gas from traditional coal or gas generation, effluent streams from industrial processing facilities and syngas from coal gasification or fuel reforming processes;
- Low-Carbon Power Systems—novel processes that generate fossil-based electricity and do not require traditional gas separation technology but can “seamlessly integrate with CO2 storage or beneficial reuse” like oxy-combustion, chemical looping processes, hydrogen-based fuel cells and similar technologies;
- Efficiency Improvements—projects that incorporate technologies to increase efficiencies and “substantially reduce” greenhouse gas emissions associated with fossil fuel supply and use, including high-efficiency distributed fossil power systems, combined heat and power and waste heat recovery on industrial facilities; and
- Advanced Resource Development and Extraction—In an effort to try and cut down on upstream greenhouse gas emissions, focus on technologies like novel oil and gas drilling stimulation and completion technologies, dry fracking, coal-bed methane recovery, underground coal gasification and methane emissions capture from energy production, transmission, or distribution.
Energy Secretary Ernest Moniz told reporters July 2 that DOE plans to issue a final solicitation for the new batch of loan guarantees by this fall. “Coal and other fossil fuels still provide 80 percent of our energy … and it will be a major part of our energy future for decades,” he said. “Any serious effort to protect our kids from the worst effects of climate change must also include developing, demonstrating and deploying technologies to use our fossil resources as cleanly as possible.” he said.
Guarantees Under Section 1703
Moniz said the loans are based on existing or remaining authorities under DOE’s Section 1703 Loan Guarantee Program, which was established under the 2005 Energy Policy Act. The program has to date committed more than $34 billion for clean energy projects utilizing technologies like wind, solar, nuclear and thermal energy storage, but no funding has been allocated to any CCS projects. DOE issued a narrower solicitation for coal gasification projects with CCS in 2008, which received eight applications, according to the Department’s website, but many quickly dropped out and none were finalized under the program.
DOE Loan Program Office Executive Director Peter Davidson said the new solicitation was designed to be much broader in order to attract interest. “There’s been an expansion of the types of projects that can apply, which we think will have a different impact on the front-end,” he told reporters. He said DOE has also modernized many of its application efforts for new loan guarantees. “The field is open for coal-based proposals, but we’re going across the board,” Moniz added.
Stakeholders Split on Impact of Loan Guarantees
The $8 billion in loan guarantee authority for fossil plants was announced by President Obama last week as part of a suite of executive-level actions intended to address climate change that do not require Congressional approval. But in interviews with GHG Monitor following the President’s June 25 speech at Georgetown University, CCS stakeholders appeared split about how much new loan guarantee authority could truly incentivize new RD&D. Some said federal investment in large, individual projects was not the most effective approach in moving the field forward and instead called for larger annual budget allocations for federal R&D efforts. Meanwhile, others said that any public help is welcome, and could help spur some new RD&D as part of a suite of incentives large-scale CCS projects could use to reach deployment.
Moniz this week defended DOE’s loan guarantee program as a way to drive deployment of fledging technologies like CCS. “If you take something like carbon capture and sequestration, it’s clear that cost reduction is a major factor for having this technology come in at scale. Today, the capture processes used for coal plants are, frankly, rather expensive. They weren’t developed for this purpose, and so here, as [part] of this solicitation, we’re looking at new ways of burning coal such that they would facilitate great cost reduction. If that happens, this could have a tremendous scaling opportunity to reduce CO2 emissions,” he said.
