Opinion: EPA Acknowledges CCS Potential but Fails to Create Right Investment Incentives
In general, when discussing global progress on climate change the ideas often floated with respect to the structure of regulating carbon emissions from fossil fuel-fired power generation have two starting points: They either propose a carbon tax on emissions (e.g. Australia before July 1, 2014) – meaning that a price is basically set for the extraction as well as the burning of fossil fuels – or they set the level of admissible emissions (e.g. EU). The latter allows for knowing the actual level of carbon emissions in advance. Good news, you think? In the recently unveiled Clean Power Plan the EPA proposes carbon pollution emission guidelines for existing stationary sources mandating US power plants to reduce GHG emissions 30 per cent by 2030 relative to their 2005 baseline. Thus, the EPA went with setting the level of emissions in advance.
What that, however, means is it only slows the effects of climate change – nothing more. A reduced volume of greenhouse gases will continue to be emitted into the atmosphere on top of the historical levels of carbon emissions already in the atmosphere. From a rational point of view, this seems unavoidable if one cherishes the blessings of modern life and technology. This is not to say that mankind should sit still and wait for the man-made environmental doomsday.
The regulation of fossil fuel-fired power generation is logically, economically and politically linked to further improvement and/or development of scalable renewable power sources to add to a diversified 21st century energy mix. However, governments need to additionally promote the right, already existing technologies – such as carbon capture and storage/sequestration (CCS) – with real potential to have a positive impact on the global climate and, above all, fund further R&D and/or incentivize investment in these technologies – just like what is being done with respect to renewables. The current policy could be described as ‘half measures’ – i.e. not adequate if one is serious about climate and sustainable energy policy – and only creates a caste-like system where coal suddenly happens to find itself at the bottom.
In this context, Myles Allen – Professor of Geosystem Science in the School of Geography and the Environment and Department of Physics (University of Oxford) – wrote in an opinion piece in the New York Times:
“If all we had to do to solve the problem of climate change were to reduce the flow of greenhouse gases into the atmosphere to a sustainable level, then a cap and trade regime, or simply putting a price on carbon, would indeed be a good way to start. But it isn’t.
The risk of dangerous climate change is overwhelmingly determined by the cumulative stock of carbon emissions over all time, not the rate of flow in any given decade. Carbon pricing and cap and trade are a great way of slowing down the rate at which we burn fossil carbon, but burning carbon slower won’t make a blind bit of difference if we still burn too much in the end.”
Therefore, Professor Allen advocates for the admittedly still expensive but seemingly undervalued carbon capture technology: “[T]here are proven ways of extracting fossil energy without polluting the atmosphere: you have to capture the carbon dioxide it generates, or an equivalent amount from elsewhere, and dispose of it by re-injecting underground or even “re-mineralizing” – turning it back into rock. (…) Ultimately, the only way we will solve climate change is by making carbon capture mandatory. (…) It would be much safer to phase it in gradually by requiring the [the entire] fossil fuel industry to start sequestering a fraction of the carbon they extract right away.”
It must be assumed that the EPA – and by extension the Obama administration – are well aware of the technical potential of CCS as is reflected in the recently unveiled Clean Power Plan:
“The EPA also examined application of CCS technology at existing EGUs. CCS offers the technical potential for CO2 emission reductions of over 90 percent, or smaller percentages in partial applications. In the recently proposed Carbon Pollution Standards for new fossil fuel-fired EGUs (79 FR 1430), we found that partial CCS was adequately demonstrated for new fossil fuel-fired steam EGUs and integrated gasification combined cycle (IGCC) units. We also found that for these new units the costs were not unreasonable, either for individual units or on a national basis, and we proposed to find that application of partial CCS is the BSER. However, application of CCS at existing units would entail additional considerations beyond those at issue for new units. Specifically, the cost of integrating a retrofit CCS system into an existing facility would be expected to be substantial, and some existing EGUs might have space limitations and thus might not be able to accommodate the expansion needed to install CCS. Further, the aggregated costs of applying CCS as a component of the BSER for the large number of existing fossil fuel-fired steam EGUs would be substantial and would be expected to affect the cost and potentially the supply of electricity on a national basis. For these reasons, although some individual facilities may find implementation of CCS to be a viable CO2 mitigation option in their particular circumstances, the EPA is not proposing (…) CCS as a component of the BSER for existing EGUs in this rulemaking.”
Regarding CCS, in this statement two problems with the EPA’s / Obama administration’s overall regulatory policy proposal surface. First, given that the technical potential of CCS is known and given the overall atmospheric carbon context, it is not sufficient to only propose it in rules for governing new, e.g. coal, plants.
Unsurprisingly, utilities will be very hesitant to build new coal-fired plants in the current coal-hostile political climate. Therefore, a promising climate change mitigating technology would remain underutilized. Second, it would amount to sheer utopian thinking to expect the percentage of US coal-fired power generation to eventually go to zero – being replaced in full by renewables and gas-fired power generation. Consequently, all existing power plants should be required to bury underground a certain percentage of the carbon they extract in the name of global climate.
However, the initial costs of CCS would have to be shared in a private-public partnership in order to develop the technology further and make it economically viable for more retrofits. Take the development of renewables as an example. So, where is the incentive structure / funding in order to spur further development and widespread application of CCS technology across the US?
The following graphic shows CCS projects in Australia. According to the Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC), the Australian Government has also begun a process for permitting offshore CO2 storage.
CCS Projects in Australia
|Breaking Energy provides access to news, analysis, thought leadership, reference materials and discussions about the day’s most important energy market trends. Breaking Energy participants stay ahead of breaking news, participate in high-profile events and enjoy access to the central hub of the industry community as it transforms in response to fast-moving changes in energy politics and regulation, deals with financial challenges and leads technological advances.|
Roman Kilisek is a Global Energy & Natural Resources Analyst and a contributor at Breaking Energy. His writing and research focuses on global energy policy, energy infrastructure and trade, commodities, mining, global political risk and macroeconomics. He likes to draw on scenario development and analysis. He has a Master of Arts degree in international relations and diplomacy from Seton Hall ...
Other Posts by Roman Kilisek
What are the emerging energy and utility trends?
Learn more in an exclusive, free ebook:
"The Future of Energy and Utilities: An IBM Point of View."
|More coming soon...|
The Energy Collective
- Rod Adams
- Scott Edward Anderson
- Charles Barton
- Barry Brook
- Steven Cohen
- Dick DeBlasio
- Senator Pete Domenici
- Simon Donner
- Big Gav
- Michael Giberson
- Kirsty Gogan
- James Greenberger
- Lou Grinzo
- Jesse Grossman
- Tyler Hamilton
- Christine Hertzog
- David Hone
- Gary Hunt
- Jesse Jenkins
- Sonita Lontoh
- Rebecca Lutzy
- Jesse Parent
- Jim Pierobon
- Vicky Portwain
- Willem Post
- Tom Raftery
- Joseph Romm
- Robert Stavins
- Robert Stowe
- Geoffrey Styles
- Alex Trembath
- Gernot Wagner
- Dan Yurman