Abby L. Harvey
GHG Monitor
10/31/2014
Legal challenges from environmental groups, like the Sierra Club and its Beyond Coal Campaign, have become commonplace for carbon capture and storage projects nationwide and while these suits are generally more likely to challenge permitting as opposed to the actual CCS portion of a plant, the deployment of the technology may be at risk for becoming collateral damage. “We’re not seeing lots of direct legal action on the CCS portions. Just sort of the whole legal environment for building anything new is challenging and that, of course, impacts CCS and adding that to any commercial application," Pamela Tomski, Senior Advisor for Policy and Regulatory for The Americas with Global CCS Institute, told GHG Monitor. “It’s the collateral damage; it’s the delays in scheduling and timelines that are significantly impacting these projects.”
These lawsuits have come to be expected in the industry, Tomski said. "I don’t think it should be dismissed. I think project developers are recognizing that this is a cost to doing business, that this is a process that impacts project schedules and timelines more than anything and then of course, time is money,” she said. “All of these little cuts if you will, impact the ability for project developers to successfully implement and so sure it has an impact. Is it the thing that’s going to bring a project down? Not necessarily because other factors come into play.” Projects such as the Kemper County Energy Facility, Hydrogen Energy California and FutureGen 2.0 have had legal challenges brought against them by the Sierra Club in recent years. Representatives from the Sierra Club did not respond to several requests for comment from GHG Monitor.
TCEP Successfully Avoids Litigation
One outlier, Tomski noted, is Summit Power’s Texas Clean Energy Project located outside of Odesa, Texas. “The Sierra Club did not oppose their permit, has not opposed that project,” Tomski said, a fact she attributed to outreach by TCEP Project Director Laura Miller. “She worked that liaison between the Sierra Club and Summit Power to ensure that as they progressed with their air permit they went unopposed. They had consultations, and that’s a great example of the Sierra Club not opposing a project. Now the counter example would be of course Kemper where you have the Sierra Club every step of the way challenging the project,” Tomski said.
Prior to joining Summit, Miller served as the Mayor of Dallas, during which time she played a large role in a statewide challenge to a plan by Dallas Based-TXU Energy to build 11 unabated pulverized coal plants in the state. That challenge resulted in a company buyout and the cancelation of eight of those plants. “I wasn’t against coal,” Miller wrote in a recent Op-Ed piece published in Cornerstone Magazine in August. “I was against using coal if it wasn’t in the cleanest manner possible. When I left public office in 2007, I was asked by several environmental groups if I would go around the country teaching other mayors how to fight dirty coal plants. My response was that it would take forever, only defeat one project at a time, and be an uphill battle in states like Texas (where citizens, not project developers, had the burden in permit hearings to prove that a project wasn’t using the best technology available). Why not build the cleanest plant in the world, thus raising the bar forever on the standard for using coal? The Clean Air Task Force promptly introduced me to Summit Power Group.” Miller and the Clean Air Task Force declined to comment to GHG Monitor.
TCEP will be a 400MW coal integrated gasification combined cycle facility that will incorporate carbon capture and storage. The project, when completed, will capture 90 percent of its carbon dioxide emissions, which will be used for enhanced oil recovery in the West Texas Permian Basin. The project is funded, in part, by a $450 million award by the Department of Energy’s Clean Coal Power Initiative. The plant would be one of the first to use a poly-generation business model, which allows the plant to produce and sell electricity, and provide captured CO2 for enhanced oil recovery, urea fertilizer and other chemicals for multiple revenue streams. The project is currently awaiting financial closing, which is expected to be achieved by June 2015.
Challenges at Kemper Result in Large Settlement
Mississippi Power has not had the luck TECP has in avoiding legal challenges and recently came out of a large settlement with the Sierra Club regarding permitting. Once completed, the facility will utilize Mississippi lignite, a low-rank brown coal, to produce electricity. The plant will employ a custom integrated gasification combined cycle (IGCC) system and carbon capture and storage technology to produce electricity from the coal with carbon emissions roughly equal to that of natural gas. The project, which employs several first-of-a-kind technologies, is particularly vulnerable. “Any lawsuits intended to stop or interfere with projects like the Kemper County Energy Facility can hurt progress and growth of technologies like [Transport Integrated Gasification]," Mississippi Power spokeswoman Natalie Campen told GHG Monitor. "But we’re committed to this project and moving forward with this 21st century coal advancement. We believe that it’s going to protect energy price and protect our customers with more stable energy prices and bring environmental advantages like the 65 percent carbon capture."
The Sierra Club lawsuit in question against Mississippi Power challenged the construction permits issued for the Kemper facility. The suit argued that the Certificate of Public Convenience and Necessity issued to Mississippi Power to begin construction on the Kemper plant did not meet the standards of Mississippi state law. The suit was settled in August with Mississippi Power making several changes to its power mix and the Sierra Club agreeing not to formally intervene in any current or future regulatory proceedings for the Kemper plant for three years. As agreed in the settlement, the Sierra Club withdrew three court cases and four regulatory interventions filed with the Mississippi Public Service Commission. “We’re just happy that we were able to reach a settlement and we’re focused on completing the Kemper County facility, bringing it safely on-line to benefit our customers without any distractions from these lawsuits that have been settled,” Campen said.
As agreed to in the settlement, Mississippi Power will make several changes to its energy portfolio, increasing their natural gas use substantially while cutting back on coal use. At Plant Watson in Gulfport, Miss., the use of coal will be ended entirely and the plant’s two remaining coal-fired units will be transitioned to natural gas no later than April 16, 2015, according to a Mississippi Power press release. Two natural gas units at Plant Sweatt in Meridian, Miss. will be retired, and will be repowered with more advanced technology or converted to a non-fossil fuel source by the end of 2018. Coal use will also cease at Plant Greene County in Alabama, and two of the plant’s units will be converted to natural gas by April 16, 2016. Further, Southern Co. will establish a $15 million grant for an energy efficiency and renewable energy program with the Mississippi Gulf Coast Community Foundation.
Legal Challenge Could Derail FutureGen 2.0
Perhaps in the most precarious position currently is the FutureGen 2.0 project under development in Meredosia, Ill. The FutureGen Alliance is currently trying to resolve a challenge by the Sierra Club against the planned first-of-its-kind project. The project is funded in part by American Recovery and Reinvestment Act, funding which holds a spending deadline of September 2015.
That spending deadline, combined with the Sierra Club lawsuit has put the project in a bind. In a Motion to Expedite filed by the alliance with the Illinois Pollution Control Board, the group writes that, “Time is of the essence in this case. One billion dollars ($1B) in contractually-obligated government funding and seven hundred million ($700M) in commercial financing is at stake if this case is not resolved expeditiously. The Sierra Club filed the complaint in this case alleging that Defendants lack permits necessary to begin construction (“Claim”) shortly after the United States District Court for the Central District of Illinois (“U.S. District Court”) dismissed an identical claim. The existence of this baseless Claim impedes the Defendants’ ability to finance and construct the FutureGen 2.0 Project.”
In his own testimony, FutureGen Alliance CEO Ken Humphries writes that “The Project schedule does not allow time for further and extended delays associated with the Claim. To maintain the Project’s schedule and maintain financial viability of the Project, it is critical that the pending Claim be resolved expeditiously. Delay in resolving the Claim risks disruption of the Project schedule such that ARRA funds cannot be spent before the ARRA Spending Deadline. If it appears that sufficient time does not remain to productively spend all or nearly all ARRA funding before the ARRA Spending Deadline-with a portion of the construction funding therefore expiring-mid-construction- USDOE could prevent commencement of construction and direct early termination of the Project.” Due to the pending court decisions, Humphreys declined to comment on the topic.
Once completed, the project will upgrade an existing coal burning power plant near Meredosia, Ill, with oxy-combustion technology which will capture CO2 at a rate of roughly 1.1 million tons annually, according to a FutureGen Alliance fact sheet.
