FutureGen quote of the day

Sen Kit Bond (R-MO) compared DOE’s change of heart to leaving the project “at the altar choosing three younger, cheaper women.”

Wow. The Energy and Water Appropriations Subcommittee is having a hearing on FutureGen this week. The witnesses are Energy Secretary Samuel Bodman and FutureGen Chairman Paul Thompson. I think this quote indicates that it’s going to be nothing if not entertaining — stay tuned for a first-hand account.

For interested DC readers, the hearing is Thursday at 9:30am at 192 Dirksen Senate Building.

H/T: Shalini.

The future of coal

There is a really interesting discussion about coal going on over at Ryan Avent’s blog, first at this post, and then at this one.  The conversation got spurred by articles in the New York Times and Washington Post.

By the way, the title of this post is pilfered from the MIT study of the same name that came out last year.  It is required reading for anyone interested in this topic.

CCS and the long haul

When carbon capture and sequestration is discussed, the phrase “in perpetuity” tends to come up. This cannot be literal, but what we conceptualize as forever is at least a very long time, and someone needs to be liable (or at least responsible) for potential damages related to geological sequestration (GS).

I recently attended an EPA public workshop on Underground Injection Control (UIC) regulations for carbon sequestration. The Agency is in the midst of writing regs pertaining to GS of carbon, and they were looking for input. It was made perfectly clear that no comments were to be attributed to participants during the main session, so there’s going to be a lot of anonymity in this post.

I went to a breakout session on financial assurance of long-term site care and monitoring (LTCM). Although the discussion was meant to focus on EPA regulations under the Safe Drinking Water Act, it spread to broader themes of long-term liability and responsibility. Specifically, the conversation quickly turned to state indemnification (Note: EPA has no authority under the UIC regime to transfer liability away from the owner/operator of a site; it would take an act of Congress to do so).

The main argument for indemnification in GS is that uncertainty reigns at this point, and the damages associated with a major release or leak are sufficiently large as to deter investment in sites. One of the speakers countered this idea, stating that there are surely some firms that would be willing to take on this liability — it all depends on whom you want in the GS business. In response, a participant memorably noted that to store carbon “in perpetuity”, we need an institution to last as long. He suggested the Catholic Church, as it has significantly split only once in the past 2000 years or so. Joking aside, his point was that corporations are too short-lived to take on liability stretching far into the future. However, he claimed that a nation would be the next-best option.

Indemnification is by no means new to the U.S. government.

Baby steps for CCS demonstration

One of the most frustrating aspects of the DOE-FutureGen-pullout fiasco was that CCS is the sort of large-scale, high-risk technology that needs to be demonstrated. Thus, it’s good to see that Battelle began pumping 10,000 tons of CO2 into a saline aquifer. These underground veins are often touted as a major class of sequestration location for CCS.

“The (saltwater) formations that we’re looking at, there is very little known about them,” said John Litynski, project manager for the Department of Energy. “We’ll get a wealth of information just from doing these small projects.”

It is important to simply begin trying out this technology with CO2 that will otherwise be released into the atmosphere. The information gleaned will inform both investment and regulatory decision-making.

CO2: waste or resource?

At the Congressional hearing on CCS I recently attended, Lawrence Bengal (Director of the Arkansas Oil and Gas Commission) made an interesting point that CO₂ disposal might not be best viewed as a waste management issue, as it is so often framed. Although we are dealing with the storage of an unwanted substance, there are only so many prime locations in which to stash it. Bengal pointed out that there will be competition for the best pore space and that we shouldn’t waste it. I imagine this has to do with parameters such as storage security, ease of access, and location relative to large coal facilities. If so, will prices properly reflect these differences in quality? Even if CO₂ never becomes a viable commodity, should we be looking at the sequestration stage as a resource management problem?

 

CCS on the Hill: FutureGen, Regulation, and Public Perception

I went to a hearing on the Hill last Thursday pertaining to regulatory aspects of carbon capture, transport, and sequestration. The hearings were for the benefit of two bills (S. 2144 and S. 2323) making their way through the Senate Committee on Energy and Natural Resources, but were also conveniently held the day after the DOE announced it was backing out of the FutureGen project (at least in its current manifestation).

Indeed, the big attraction for many in attendance was the presence of James Slutz, Deputy Assistant Secretary in the DOE Office of Natural Gas and Petroleum. In a bold move, he started off asserting that “DOE has assumed the lead in CCS technology”. When pressed by Sen. Barrasso to explain how eroded confidence in public-private partnerships can be rejuvenated after the DOE FutureGen pullout, Slutz simply replied that “when a project doubles in cost, it’s time to rework the agreement”, that the project was “no longer in the interest of the American people”, and that market-based plants would be more successful. Aside from the fact that a large proportion of the cost overruns are related to inflation and delays, this statement also completely ignores the point of public-private demonstration partnerships. There is an enormous amount of risk involved in this type of project and, as such, it would not be viable as a purely private endeavor. FutureGen was not designed to be profitable, it was designed to demonstrate commercial-scale technology.

The joys of public finance - FutureGen edition

Just when it seemed that both parties were hopping on the public clean energy promotion bandwagon, the FutureGen project reminds us just how bad the government is at doing this sort of thing. The Bush-sponsored clean coal project once described by Andrew Revkin as being in “perpetual creep mode” now appears to have completely halted. Whereas the initial plan (and working assumption for the past 4 years) was that the government would pick up almost 75% of the pilot CCS plant’s costs, the DOE announced yesterday that it was “restructuring” its approach, which is government speak for backing out.

Just last month the FutureGen Alliance announced its selection of Mattoon, IL as the site of the the pilot plant. This was the culmination of an enormous amount of planning, research, and negotiation. The DOE’s explanation for it’s decision back out is twofold. First, it says that cost projections for the site were ballooning out of control (shocking). However, Durbin and the industry alliance answered this complaint by offering to to pay 50% of any further cost overruns upfront, and use revenue from the facility to pay back the DOE’s 50% later. Then the DOE announced that it was more than just the cost overruns. Unlike the original plans, which called for the sponsorship of an entire clean coal plant, the government feels that it should only really support the CCS component of the power plant, not the whole thing. This will allow the DOE to take all its eggs out of the Mattoon basket, and sponsor multiple CCS pilots at the same time.

So what the hell happened here? Well it depends on your perspective:

DOE: “This restructured approach allows DOE to maximize the role of private sector innovation, provide a ceiling on federal contributions, and accelerate the Administration’s goal of increasing the use of clean energy technologies to help meet the steadily growing demand for energy while also mitigating greenhouse gas emissions. “

FutureGen Alliance: “We wuz robbed. Everyone’s teaming up to kill coal in America.”

Dick Durbin: “When the city of Mattoon, Illinois, was chosen over possible locations in Texas, the secretary of Energy set out to kill FutureGen.”

Texas: Werd.

Optimist’s View: The government made a rational decision to spend its money more wisely and to diversify its risks.

Cynic’s view: How do you promote CCS without spending government money? Tell a group of investors that you’ll match any money they’ve spent 3 to 1, and then pull out when the project is too far along to simply abandon.

Regardless of which story you buy, the story continues to be “Too much future, too little gen.”

Thanks to Shalini for the pointer and background info.

Comfortably NUMB(y)?

You’ve heard of NIMBYism. While as carbon capture and sequestration becomes technologically and economically viable, keep an eye out for NUMBYism. Not Under My BackYard. Seriously. Daniel had it absolutely right with this earlier post. People talk about CCS like its the holy grail now, but I bet it’ll be Yucca Mountain all over again once siting begins. Stay tuned.

Thanks to Shalini for filling me in on the latest siting lingo.

CCS sentence of the day

Describing FutureGen, an alliance of coal producers, users and government working towards a zero emissions coal power plant, David Hawkins of the Natural Resources Defense Council wrote simply,

“Too much future, too little gen.”

The quote is from a terrific post on DotEarth today by Andrew Revkin. I also really liked this passage,

The Chinese project, called GreenGen, has gained a new partner, Peabody Energy, the world’s largest private coal company (the one battling the governor of Kansas over stalled permits for coal-burning plants)…. You can find Peabody’s announcement of its GreenGen activities on its home page, just to the right of the ticker reeling off 2007 coal sales in tons per second. (It was at 226,861,610 tons around 9:30 this morning; what is it now?)

I actually have something of my own to add on this topic but am late to go check out Critter Cam at the National Geographic. In the meantime definitely check out Revkin’s post for yourself.

Celebrate clean coal, come on!

I’d just like to point out that last night’s Democratic debate was sponsored by the coal industry. That might help explain this exchange:

WOLF BLITZER: All right, Senator, until there’s some new technological breakthrough, as you would hope and all of us would hope, where do you send the [nuclear] waste?

BARACK OBAMA: Well, right now, it is on-site in many situations. And that is not the optimal situation, Wolf. But don’t keep on assuming that we can’t do something. I mean, this is about the third time where you said, assuming we can’t do it, what’s our option?

BLITZER: Well, until we can…

OBAMA: But — but — but I’m running for president because I think we can do it. I reject the notion that we can’t meet our energy challenges.

BLITZER: All right.

OBAMA: We can, if we’ve got bold leadership in the White House that is saying we are going to do something about climate change, we are going to develop renewable energy sources. That’s what I intend to do as president.

BLITZER: Let…

OBAMA: And we shouldn’t, you know, be pessimistic about the future of America.

Nuclear is dangerous? Renewables are an audacious pipe dream? In such dire times, to whom can the American people possibly turn?

Taking off my foil hat for a second, I’d say the “highlight” of the evening was a clean coal commercial set to “Celebration” by Kool and the Gang. I’m considering advocating an immediate $500/ton carbon tax just so I never have to see that ad again.

Obama and King Coal

The tar sands article I just posted about also briefly mentioned the Coal-to-Liquid Fuel Promotion Act, introduced earlier this year by Jim Bunning and Barack Obama. This act would provide tax subsidies and loan guarantees for plants to invest in CTL. I knew that Obama was big on coal (he’s from Illinois), but I had forgotten about this specific bill when I posted on the energy platforms of the 08 front runners. While I’m all for letting the market decide which fuels we use once carbon restrictions are in place, subsidizing CTL now is insane. Especially given that there is still tremendous uncertainty as to if and where we’ll be able to capture and store carbon.

For me, this bill significantly undermines Obama’s green credentials. To steal a phrase from former Canadian Environmental Minister Charles Caccia, pledging to fight global warming on the one hand while subsidizing CTL on the other is “attempting to ride two horses galloping in opposite directions.”