In June, American Electric Power suspended its work on the world’s largest test of carbon capture and storage at a power plant in West Virginia, citing lack of regulatory certainty. At the successful conclusion of a two year validation phase, American Electric Power is indefinitely delaying the next step, commercial scale demonstration. The U.S. Department of Energy was set to fund half of the $668 million of the commercialization cost and American Electric Power planned to raise its half by increasing electricity rates. Regulators rejected the rate increases, and given the ever-receding prospect of a price on carbon in the United States, the power company judged the costs of proceeding too high.
American Electric Power is hardly alone in finding that investment in carbon capture and storage is not worth the risk. Indeed such false starts are to be expected with any new technology. Given trends in energy demand and emissions, however, testing the potential of carbon capture and storage is a matter of some urgency. Globally, and particularly in the United States, public policy is proceeding as though it resided on a far distant planet, one without an atmospheric CO2 problem.
Carbon capture and storage is important because theoretically it could allow for continued use of fossil fuels for energy without climate-damaging emissions. The International Energy Agency projects that under current policy, energy sector CO2 emissions will double between 2007 and 2050; to achieve stabilization at 450 ppm (parts per million of CO2 in the atmosphere), they must instead decline by half over that period. In this 450 scenario, carbon capture and storage supplies 19 percent of the abatement in energy emissions in 2050, with 55 percent of that coming from power plants. This implies the capture of 9 gigatonnes of CO2 annually in by 2050. Currently, about 10 megatonnes/year are captured and stored worldwide.
This scenario also includes 100 integrated, commercial scale, operational carbon capture and storage plants in 2020. In real life in 2011, there are currently four such projects globally, and none at power plants. Mountaineer was one of six projects in the United States to receive a total of $3 billion in funding from the stimulus package through the Department of Energy’s Clean Coal Power Initiative. Three are still in operation and three have been discontinued.
The fate of the Mountaineer project reflects the difficulty of sustaining private investment in development of a product (captured and stored carbon emissions) for which there is no market. American Electric Power has been a strong advocate of cap and trade, which would create such a market. This is a sensible strategy for the largest operator of coal-fired generation in the United States, and their efforts have insured that utilities made out quite well in the cap and trade schemes included in legislation to date. However, the company’s profit imperative was bound to assert itself when carbon constraints failed to materialize. Subsidies help, but will only get you so far.
On the governing side, the record of U.S. Sen. Jay Rockefeller, D-WV, embodies the paralysis of American climate politics. He has publicly acknowledged climate change science, and strongly supports carbon capture and storage, a potential source of economic activity in his poor, coal-dependent state. However, he has consistently opposed actual regulation of CO2 emissions. In 2009, he rejected the Kerry-Boxer bill, because it did not provide adequate support for carbon capture and storage. More recently, he has proposed legislation that would bar the EPA from regulating greenhouse gas emissions for two years, to allow more time for carbon capture and storage technology to be proven. In contrast to many who oppose climate legislation, Rockefeller has publicly accepted climate science, but is apparently angling to get as much as he can for his state before facing the climate problem.
This is but one example of why climate change is the biggest collective action problem the world has ever faced. Breaking the problem down into sectors, technologies or gases has recently gained currency as a potential way forward for mitigating CO2 emissions. In the coming months, this blog will look closely at the opportunities and challenges of such an approach.