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More Scrutiny of US CCS Projects Needed

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NRG Energy just sold its 50 percent stake in the world’s largest carbon capture plant for only roughly $3.6 million, less than a half-percent of the Texas project’s roughly $1 billion construction costs. The sale leaves JX Nippon Oil & Gas Exploration Corp as the sole owner of the 240-MW coal-fired Petra Nova power plant.

S&P Global Market Intelligence described the deal as “a setback for supporters of carbon-capture projects at existing fossil fuel plants.”

The US Department of Energy (DoE) sank $195 million into the carbon capture and storage (CCS) plant, hoping to demonstrate the potential for the technology to counteract greenhouse gas emissions of coal plants. The NRG fire sale of its half of the project is a declaration that the taxpayer investment was a technological failure and a financial loss.

The US government needs to ask hard questions about investing more taxpayer dollars in CCS for coal plants. The CCS technology used in the Petra Nova project was not new. The DoE called it “proven”, but it did not work as well as promised. Other CCS projects attempted at power plants have failed as well.

The Petra Nova facility began operations in 2017. The CCS equipment was installed to capture CO2 from a slipstream of the WA Parish Unit 8’s flue gas. The captured CO2 travelled via 80 miles of pipeline to an oilfield near Houston for use in enhanced oil recovery (EOR) operations to increase extraction. Petra Nova’s target CCS capture rate was 90 percent. NRG claims it met the target.

But Petra Nova’s owners have never provided the actual data behind that claim. Emissions data for Parish Unit 8 reported to the EPA suggests the actual CO2 capture rate was substantially lower than 90 percent, perhaps as low as 65 percent to 70 percent. And the average capture rate does not include emissions from the gas-fired combustion turbine used to power the facility. Adding those emissions lowers the overall on-site capture rate to perhaps as low as 55 percent to 58 percent.

Petra Nova was also expected to be in operation some 85 percent of the time, but failed to meet its target because of a large number of technical problems leading to substantial downtime —not just in the CCS facility and in Parish Unit 8, but also in the CO2 pipeline and the oilfield where the captured CO2 was injected. Similar problems can be expected to affect any carbon capture project, especially at an ageing coal plant.

The unit was taken offline in May 2020 and remains down. JX Nippon now says it anticipates bringing Petra Nova back online in the second quarter of 2023 but has not provided an exact schedule or cost estimate.

Methane emissions from the mining of coal, which have received too little attention to date, also weren’t reported. Using the coal-fired San Juan Generating Station as an example, IEEFA found that even if a CCS system could achieve a 95 percent capture rate from the plant—which based on IEEFA’s research is not at all likely—taking the coal mining methane emissions into account would drop the actual capture rate to 72 percent.

IEEFA observed in a 2020 report that NRG Energy recorded three impairment charges related to the plant and to Petra Nova Parish Holdings, a subsidiary. The charges, recorded in 2016, 2017 and 2019, totalled $310 million. NRG Energy had written off essentially all its investment in the project. This is striking, given that Petra Nova not only benefited from the US Energy Department’s $195 million grant but also had received $250 million in concessionary lending from the Japan Bank for International Cooperation (JBIC) and Mizuho Bank, Ltd.

The actual costs of carbon capture at Petra Nova have never been officially released. At a June 2020 webinar, an assistant DoE secretary for fossil energy said that the cost of carbon capture would need to drop by half, to $30 per metric ton, to be commercially viable. Since Petra Nova was the department’s flagship carbon capture project at the time, the comment may be an indication that the cost of carbon capture may have been $60 per ton, but it is not clear. Also, the figure did not include the costs to compress the CO2 for pipeline transport, or the pipeline transport and underground injection costs.

Southern Co.’s Kemper CCS project was designed to gasify lignite (a soft coal formed from peat) and capture the carbon before combustion. The cost initially was estimated at $3 billion, but ballooned to $7.5 billion. Also, the project’s coal gasification process did not operate reliably during pre-operational testing, and the CCS capture portion of the project was scrapped. The unit now runs solely on natural gas with no CO2 controls.

IEEFA’s recent review of carbon capture efforts in other countries found similar problems abound. It concluded that using carbon capture to extend the life of fossil fuels power plants is a significant financial and technical risk.

The US government must sharply scrutinize all claims made by applicants for federal dollars to promote CCS technology. IEEFA research indicates that the technology is far from proven.

Given the amount of funds involved and the exposure of taxpayer dollars to risk, the US government must implement robust due diligence and get beyond the advertising hype to the actual facts about carbon capture technology. It should not tolerate any more wasteful Petra Nova debacles.

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