DOE’S WOOD: CBO REPORT ‘UNDERESTIMATES’ GOVERNMENT’S CCS PROGRAM

Tamar Hallerman
GHG Monitor
07/13/12

A recent Congressional Budget Office report that questions the trajectory of the Department of Energy’s investments in carbon capture and storage technologies “underestimates” the Office of Fossil Energy’s CCS program, according to DOE Deputy Assistant Secretary for Clean Coal Jim Wood. In an interview earlier this week with GHG Monitor, Wood said the report in particular does not fully take into account the knowledge and technologies that could emerge from FE’s large-scale demonstration program, which is currently funding five power generation and three industrial capture projects. “I think the report underestimates what we’re doing at FE by a lot,” Wood said. “There’s a lot of speculation in there and a lot of analysis of costs and contributions from DOE without a lot of explaining the complexity of the program here.”

The analysis, released late last month, concludes that despite $6.9 billion to date in funding, DOE’s CCS program is not likely to advance the widespread deployment of the technology unless Congress puts a price on carbon. “DOE’s present funding for CCS would allow the United States to build only a small number of demonstration plants, which are unlikely to be sufficient to reduce costs through [the learning-by-doing process],” the analysis says. CBO estimates that DOE will need to put in place roughly 200 GW of coal capacity with CCS—about two-thirds of the country’s currently operating coal fleet—in order to reach FE’s goal of reducing the levelized cost of electricity from post-combustion retrofits to no more than 35 percent above the cost of that generated from traditional coal plants. Wood said he is “fairly convinced” that DOE’s demonstration projects, particularly for power generation, will work at capacities and reliabilities that are “satisfactory” for the power industry.

Wood said that beyond the 35 percent goal for retrofits, CBO underplays FE’s goal of demonstrating the integration of the full value chain of CO2 capture, transport and storage components. “I think what the CBO report fails to mention is how these projects are intended to work—demonstrating that the capture technologies and the disposal or utilization of CO2 is in fact practicable and can be done with a high degree of reliability. Or if it can’t, what are the things that we need to work on? We’re also trying to understand what the environmental performance of each one of these systems is and whether or not the costs and schedules are reasonable and estimated correctly,” Wood said, adding: “Yes, these projects are going to cost money, but they’re also going to work and they will lead us to places that maybe we haven’t envisioned yet.” He said that many of the second generation carbon capture technologies being tested now in FE’s R&D program like chemical looping could bring significant efficiencies to the field, adding that past spending has helped hone in on promising technologies such as those.

Wood Refutes CBO’s Suggestion to Cut Off All Funding

In its report, CBO offers several policy approaches for members of Congress moving forward on CCS, one of which includes reducing or eliminating all new funding to CCS and instead relying on other countries like China and India to develop and lower the costs for CCS technologies. Wood said it would be a mistake to give up the U.S.’ leadership status in the field by following that approach. “There’s a lot of bad thought in that,” he said. “The hope of the world is that we’re going to be able to demonstrate something [within DOE’s program] that we’ll be able to learn from, so it’s erroneous to say that we should just cut off everything, because today the United States is seen as a world leader.” Wood said that if the U.S. pulls back on its commitment to CCS, few other countries would be in the position to pick up the pieces. “If tomorrow the U.S. says that it’s not going to spend any money on that right now, I think that most of the rest of the world would say something along the lines of ‘well, if the U.S. isn’t doing anything, why would we do it?’ I’d be a little worried about that.” He added that most private sector entrepreneurship in the field would die if the government walks back its CCS investment now.

Wood said that for now it is important to let the R&D work and demonstration testing that have already been funded unfold to see what surfaces in terms of results. “I think it’s not unreasonable to say that for now let’s just see what happens,” he said.