With Natural Gas Plentiful and Cheap, Carbon Capture Projects Stumble By MATTHEW L. WALD
nytimes.com
Published: May 18, 2012
WASHINGTON — A federal proposal to ban the construction of coal-fired power plants that release all of their carbon dioxide into the atmosphere would seem to smooth the way for carbon capture, a budding technology that traps the greenhouse gas for storage or other uses.
The proposed Taylorville Energy Center, in the coal fields of Illinois, has hit obstacles over costs.
But even as the Environmental Protection Agency prepares to open hearings on the proposed rule, unveiled in March, industry experts say the persistently low price of natural gas is threatening the viability of the nation’s carbon capture projects.
Natural gas is so cheap and plentiful that utilities have little incentive to build coal-fired plants with the capture technology. And the proposed rule exempts existing coal- and gas-fired plants.
In the tiny universe of American carbon capture projects, the first casualty may be the Taylorville Energy Center, a project in the coal fields of Illinois. The plan was to cook coal into methane, capture the carbon dioxide released in the process, then burn the methane in a conventional natural gas-style power plant.
But Taylorville’s backers, unable to persuade the state legislature to approve the project because of its estimated $3.5 billion price, are considering deferring the coal element and simply building the gas-burning plant for one-third the cost.
“It’s primarily due to the low natural gas prices, and how that affects the political environment,” said Bart Ford, a vice president of Tenaska, the developer. “We’re not changing the nature of the facility, just deferring the synthetic natural gas portion.”
Still, Tenaska is continuing to seek permits to inject carbon dioxide underground at the site, Mr. Ford said. “This allows us to say, we’ll wait until the price impact is lower because the price of natural gas is up,” he said.
Making synthetic natural gas from coal makes economic sense only if the ordinary natural gas that it displaces is more expensive.
The advent of hydraulic fracturing, a drilling method that has opened vast new supplies of natural gas, has helped to keep gas prices low. The industry’s expectation is that the price will rise somewhat from its current depressed level — near $2 per million B.T.U., compared with as much as $14 before the recession — but that it will not recover fully for many years.
Edwardsport, a “capture-ready” Duke Energy coal plant, is scheduled to begin commercial operation this year. The plant, in Edwardsport, Ind., will cook coal into a fuel gas and could be retrofitted to capture carbon dioxide released in that conversion. But Duke, the builder, has no plan to capture the carbon dioxide and no place to sequester it for now. It is exempted from the new rule because construction began five years ago.
The plant cost nearly $3 billion to build, about $1 billion over budget, and carbon capture would cost $380 million, not counting storage.
Only two other major carbon capture projects are on the drawing boards in the United States. Neither is affected directly by low natural gas prices. But the ebbing interest in coal-fired construction may signal that even if the technology works well, there may be few commercial projects where it could be deployed.
One is FutureGen 2.0, a $1.6 billion plan to burn coal in oxygen, generating exhaust gas that is pure carbon dioxide, and pumping it into geologic formations thousands of feet below the earth’s surface.
The Recovery Act of 2009 is covering $1 billion of the cost of the project, which is in Meredosia, Ill. But the project, originally expected to be running by 2015, has run into a variety of bureaucratic problems and is now scheduled to be in service in 2017, barring further delays. An earlier version, FutureGen, was rejected by the Energy Department in 2008 to save money.
The other venture is the Southern Company’s Kemper County project in Mississippi, which will turn coal into a cleaner gas and use it to power a turbine. The captured carbon dioxide is expected to be sold and travel through a pipeline to Texas, where it will be pumped under ground to force oil out of old oil fields, a process known as enhanced oil recovery.
At the moment the market prospects look favorable, given that the price oil drillers will pay for the carbon dioxide depends partly on the price of oil, which is relatively high. But construction is just beginning, so the long-term picture is unclear. The plant is expected to start operating in 2014.
Some in the power industry are debating whether the Obama administration’s carbon regulation will be blocked by Congress or a new administration. Still, the absence of a rule would not change the economic equation discouraging investment in capture technology for coal plants.
Kelly Ziegler, a spokeswoman for the Regional Greenhouse Gas Initiative, a nine-state consortium on the East Coast that seeks to limit carbon dioxide output, said that no regulation was necessary to stop new coal plants. “Natural gas has already done that for you,” she said.
Hearings on the rule are to begin on May 24, and the E.P.A. is taking public comments until June 25. The agency may issue a final rule this year.
A version of this article appeared in print on May 19, 2012, on page B3 of the New York edition with the headline: With Natural Gas Plentiful and Cheap, Carbon Capture Projects Stumble.
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