The UK government today announced a second competition to build a full-scale commercial power plant employing carbon capture and storage (CCS) technology after the first round failed in 2011.
CCS remains central to policymakers' dreams for limiting greenhouse emissions at an acceptable political and economic cost. But the timetable for building a full-scale commercial plant using the technology has slipped badly, and the goal remains as far away as ever.
There is a growing gulf between the soaring rhetoric and political imperative to make CCS work and the messy technical and commercial reality on the ground.
Last month the US Environmental Protection Agency (EPA) proposed new regulations that would effectively make CCS compulsory for all new coal-fired power plants built after 2013/2014.
EPA's new source performance standards (NSPS) for power plants would cap emissions at 1,000 pounds of carbon dioxide (CO2) per megawatt hour (lbs/MWh). At the moment the most modern coal-fired plants using supercritical combustion can achieve only 1,800 lbs/MWh.
In the United Kingdom, any new coal-fired power plants must use CCS technology for at least some of their output, and the technology must be retrofitted to their full generating capacity by 2025.
CCS is a strategic priority. According to the International Energy Agency, successful deployment would cut the worldwide cost of meeting climate change targets by 70 per cent.
Coal accounts for such a large share of fossil fuel reserves that it will be impossible to replace by cleaner burning natural gas or renewable energy from wind or solar in the foreseeable future.
In 2007, the European Union committed itself to provide financial incentives for the construction of up to 12 demonstration CCS plants by 2015. In 2008, energy ministers from the G8 announced they would "strongly support" the launch of 20 large-scale CCS demonstration projects by 2010.
Britain has allocated as much as 1 billion pounds of government support to help with the cost of building a 300 MW coal-fired plant using CCS by 2014, with uncosted promises to support three more commercial scale projects later.
The initial billion pounds of funding is so important that it has survived the government's austerity program. Following the collapse of the first round of CCS projects, the government has indicated the funding will remain available for a second round launched overnight.
By 2050, Britain is supposed to generate almost one-third of its power requirements from gas and coal-fired plants employing CCS, according to one government projection cited in a recent report by the National Audit Office. ("Carbon Capture and Storage: lessons from the competition for the first UK demonstration", March 2012)
The US Department of Energy (DOE) has made millions of dollars available for demonstration projects for each of the components of CCS (capture, transport and storage), including a fully integrated project called "FutureGen" in Illinois.
So how many full-scale power plants with CCS have been built so far? Zero.
Various power plants have introduced small-scale units to capture a small fraction of their emissions. But no significant power plant is operating CCS on anything like 100 per cent of its emissions.
Britain's first round CCS project, which attracted expressions of interest from nine firms, collapsed when the government ended negotiations with the last remaining bidder in October 2011 after it proved impossible to achieve agreement on commercial terms.
In the United States, plans to build an advanced coal-fired power plant employing integrated gasification and combined cycle (IGCC) technology coupled with CCS were originally conceived in 2005.
FutureGen would have gasified coal into a mix of carbon monoxide, hydrogen, carbon dioxide and water vapour. The carbon monoxide and hydrogen would have been burned to drive a primary gas turbine, and waste heat in the exhaust gases would then have been used to raise steam and to power a secondary steam turbine.
Carbon dioxide produced at the gasification stage would have been captured and injected into underground rock formations (saline aquifers or depleted gas/oil fields).
By 2010, however, it had become clear that the project was not feasible, so it was reinvented in a less ambitious form.
"FutureGen 2.0" ditches the complicated proposals for gasification and combined cycle technology. Instead the project will upgrade an existing power plant with "oxy-combustion" technology that burns coal in a mix of carbon dioxide and oxygen rather than air to produce a concentrated stream of CO2 for removal and storage.
Proponents of CCS point out that each of the components (capture, transport, storage) is a relatively proven and mature technology.
The US Department of Energy is supporting existing CO2 injection projects at 10 locations worldwide including Norway, Algeria, Canada, China and Australia.
According to the EPA, the United States already has more than 3,600 miles of pipelines transporting 50 million metric tonnes of carbon dioxide for industrial use and for injection into depleted oil fields as part of enhanced oil recovery (EOR) projects.
But scaling up these small-scale applications to the size needed for a modern power plant and linking them up with the complex technology required for gasification, or even a supercritical coal-fired plant, has proved immensely complicated and highly risky.
Britain's project fell apart because it proved too expensive but also because the government and project developers could not agree on who should be responsible for the various risks.
By October 2010, 12 months before the project finally collapsed, it was already clear there was a big funding gap between the 1 billion pounds the government had budgeted and the 1.9 billion which it estimated the project would need.
Subsequent engineering studies cut the cost to 1.3-1.5 billion, and the government and the bidders identified a further 252 million pounds of "aspirational savings", which might have cut the project's cost to 1.1 billion, but in the end even that was still deemed over budget, according to the National Audit Office report.
The project developers and the government could not agree on who would be responsible for the risk of CO2 escaping from underground storage (raising safety issues and the need to buy permits to cover fugitive emissions).
Nor would the developers accept taking full responsibility for "change of law risks" (including laws unrelated to the project such as corporation tax and employment laws).
One major problem was that CCS would initially be trialled on only a small part of the upgraded power plant. The remainder of the power plant would eventually need to be retrofitted or upgraded to CCS to comply with the 2025 deadline for all new plants to have full CCS capability.
The first round CCS projects were exposed to enormous uncertainty about the outlook for coal-fired generation (the cost of carbon permits, carbon floor prices and the relative cost of coal and gas) as well as other parts of the regulatory regime. In the end, the costs associated with these risks proved too high.
In the United States, American Electric Power announced in July 2011 that it was deferring an ambitious demonstration project to retrofit one its existing power plants with large-scale CCS because power market regulators would not allow it to recover the cost from its customers unless and until CCS became compulsory.
The EPA's proposed regulations on new plant emissions contain a summary of operating or planned CCS projects. But existing projects are small, and the large ones, such as Southern Company's planned 582 MW IGCC Ratcliffe Plant, are not scheduled to enter service until 2014.
Policymakers have not even begun to address the challenges posed by the injection of hundreds of millions of tonnes of CO2 per year into aquifers and geologic formations. Large-scale injection poses many of the same safety and regulatory challenges as hydraulic fracturing, including seismic activity and the need to prevent fugitive emissions.
For all its proponents like to present CCS as a well understood technology, it has not been proven on anything like the required scale. That would matter less if politicians had not already gambled it can be made to work in a short space of time.
This article was originally published by Reuters. Republished with permission.