Taking a step backward in the campaign to clean up coal's image, American Electric Power (AEP) said Thursday it is terminating its agreement with the U.S. Department of Energy (DOE) and placing its plans to advance carbon dioxide (CO2) capture and storage (CCS) technology to a commercial coal-fueled power plant on hold, citing the uncertain status of U.S. climate policy and the continued weak economy.
AEP was selected in 2009 by the DOE to receive funding of up to $334 million through the Clean Coal Power Initiative to pay part of the costs for installation of a commercial-scale CCS system at AEP's Mountaineer coal-fueled power plant in New Haven, WV. The system was to capture at least 90% of the CO2 from 235 MW of the plant's 1,300 MW of capacity. The captured CO2, approximately 1.5 million metric tons per year, would have been treated and compressed, then injected into suitable geologic formations for permanent storage approximately 1.5 miles below the surface.
"We are placing the project on hold until economic and policy conditions create a viable path forward," said AEP CEO Michael G. Morris. "With the help of Alstom, the Department of Energy and other partners, we have advanced CCS technology more than any other power generator with our successful two-year project to validate the technology. But at this time it doesn't make economic sense to continue work on the commercial-scale CCS project beyond the current engineering phase."
Morris added that coal-fueled generators are currently in a "classic 'which comes first?' situation" where technology advancements and capital outlays do battle with uncertain regulatory timelines. "The commercialization of this technology is vital if owners of coal-fueled generation are to comply with potential future climate regulations without prematurely retiring efficient, cost-effective generating capacity," he said. "But as a regulated utility, it is impossible to gain regulatory approval to recover our share of the costs for validating and deploying the technology without federal requirements to reduce greenhouse gas emissions already in place. The uncertainty also makes it difficult to attract partners to help fund the industry's share."
Plans were for the project to be completed in four phases, with the system to begin commercial operation in 2015. AEP has informed the DOE that it will complete the first phase of the project (front-end engineering and design, development of an environmental impact statement and development of a detailed Phase II and Phase III schedule) but will not move to the second phase.
DOE's share of the cost for completion of the first phase is expected to be approximately $16 million, half the expenses that qualify under the federal agreement.
In October 2009 AEP and partner Alstom began operating a smaller-scale validation of the technology at the Mountaineer Plant, the first fully-integrated capture and storage facility in the world. That system captured up to 90% of the CO2 from a slipstream of flue gas equivalent to 20 MW of generating capacity and injected it into suitable geologic formations for permanent storage approximately 1.5 miles below the surface.
The validation project, which received no federal funds, was closed as planned in May after meeting project goals, AEP said. Between October 2009 and May 2011, the life of the validation project, the CCS system operated more than 6,500 hours, captured more than 50,000 metric tons of CO2 and permanently stored more than 37,000 metric tons of CO2.
"The lessons we learned from the validation project were incorporated into the Phase I engineering for the commercial-scale project," Morris added.
While the regulatory landscape is uncertain, it does appear that some rules working through the pipeline could force coal-fueled power generators to tighten emissions. In a move that may work in the favor of natural gas interests, the Environmental Protection Agency (EPA) last week finalized Clean Air Act protections "that will slash hundreds of thousands of tons of smokestack emissions."
The Cross-State Air Pollution Rule (CSAPR) would improve air quality by cutting sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions that contribute to pollution problems when they drift into other states, EPA said. By 2014, the rule and other state and EPA actions would reduce SO2 emissions by 73% and NOx emissions by 54% compared with 2005 levels (see Daily GPI, July 8).
Following the Clean Air Act's "Good Neighbor" mandate to limit interstate air pollution, the rule will help states that are struggling to protect air quality from pollution emitted outside their borders, EPA said. The rule, which replaces EPA's 2005 Clean Air Interstate Act, requires 27 eastern states to significantly improve air quality by reducing power plant emissions that contribute to pollution in other states.
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