Biden's power plant rule could help revive an old idea about how to fight climate change

The Environmental Protection Agency’s new rule on power plants relies heavily on an old idea that’s getting a new push — capturing planet-warming carbon pollution before it enters the atmosphere.

But questions remain about whether the technology can be deployed quickly and affordably enough at the nation’s thousands of coal- and gas-burning plants. Carbon capture ran into hurdles and huge cost overruns when power plants tried to use it during the past two decades. And capturing CO2 from plants burning natural gas — a growing part of the electricity mix — poses higher cost challenges than many other pollution sources.

Even so, the International Energy Agency said last month that deployment of the technology worldwide needs to increase fourfold over current plans to reach climate goals.

Unless the technology is deployed during the next 30 to 50 years, “we don’t have a shot at meeting climate targets because we’re not going to stop using fossil fuels globally,” said Charles McConnell, who used to run the Department of Energy's Office of Fossil Energy in the Obama administration.

But many environmentalists are skeptical about the technology, saying federal incentives for carbon capture are simply handouts to the same fossil fuel industry that deceived the public on climate change. They want the Biden administration to phase out fossil fuels instead.

Here are seven questions answered on carbon capture and power plants — where the technology has been and where it’s headed.

What is carbon capture? And why are people talking about it now?

The technology, known as carbon capture and sequestration or CCS, exists in various forms. Typically it involves using chemicals to strip carbon dioxide out of the emissions stream of a smokestack or factory.

An even more nascent version, called direct air capture, involves pulling the greenhouse gas from the air.

People in the field sometimes use the term CCUS, or carbon capture, utilization and sequestration. In this variant, the captured carbon dioxide is put to other uses, such as assisting in extracting crude oil or manufacturing products, rather than just being stored. These uses can provide an additional revenue stream to build carbon capture projects.

As for why the concept is getting so much attention now, the main answer is that the world is running short on time and options for slowing the Earth’s warming.

Researchers say the U.S. and other industrialized countries aren’t switching away from fossil fuels rapidly enough to reduce the amount of CO2 entering the atmosphere to safe levels. So technological fixes such as carbon capture — once dismissed by industry and greens alike — are getting a new look.

Has anyone ever used carbon capture on power plants?

Yes. But only sparingly.

In fact, only one power plant in the world is using carbon capture at scale: the Boundary Dam Power Station near Estevan in Saskatchewan, Canada — just over the North Dakota border. Operating since 2014, it captures up to 90 percent of CO2 emitted from a coal plant, according to its operators.

In the U.S., only one power plant has ever captured carbon dioxide at scale: the W.A. Parish Generating Station near Houston, which is the site of the Petra Nova project. The carbon capture technology at Petra Nova, bolstered by nearly $200 million in federal money, grabbed coal-produced CO2 and piped it to an oil field to be used for crude oil production.

In 2020, NRG Energy, a partner on the project alongside JX Nippon Oil & Gas Exploration Corp., shut down Petra Nova, citing a pandemic-related plummet in oil prices.

But now, NRG is talking about bringing it back online.

An NRG spokesperson, Ann Duhon, told POLITICO’s E&E News in late April that the unit hosting the carbon capture technology is set to restart by the end of June after completing repairs. Spokespeople for JX Nippon, a Japanese firm, did not respond to multiple requests for comment.

According to the Global CCS Institute, a project called Huaneng Longdong CCS in China is under construction at a power plant and scheduled to be operational this year. In a recent study, the institute said it is “widely anticipated to be the world’s largest coal power CCUS project.”

Otherwise, the U.S. has more than a dozen proposed carbon capture projects at power plants — including several with a target start date before 2030 — but none have moved to construction, according to the institute.

Many other attempts in the U.S. to install carbon capture in the power sector failed in the past 15 years, dating back to a 2011 project by American Electric Power Co. in West Virginia called Mountaineer that sought to capture CO2 from a large coal plant.

Other failed projects include Southern Co.’s Kemper project, the Texas Clean Energy Project and FutureGen 2.0, which envisioned a low-emissions large coal plant in Illinois. Many of the initial CCS proposals on power plants were funded by the 2009 stimulus law.

Why has it been so difficult?

The reason for this project graveyard is relatively simple: CCS is expensive, and the federal government does not regulate or impose a price on greenhouse gas emissions, experts say.

“For a long time, it was a difficult industry because you were capturing something that was free to emit. It is always more expensive to capture CO2 than release it,” said Adam Goff, senior vice president for strategy at 8 Rivers Capital, a developer of CCS technologies. “There wasn’t really a business case.”

Now, though, companies are pledging to eliminate their net greenhouse gas emissions in the coming decades, and Biden’s climate law is offering tens of billions of dollars in incentives for companies that adopt the capture and storage technology. And Thursday’s EPA rule offers yet another push.

“If you think back to 2014, 2015, it wasn’t the world we are in today where you have net-zero commitments, where you have tax credits and a big push to decarbonize,” Goff said before the rule’s release.

Top Biden administration officials say federal support has been far too small to spur new projects, although they say the Inflation Reduction Act passed last year could help change that.

That law increased the value of the main CCS tax credit, which now amounts to $85 for each metric ton of carbon dioxide captured from power plants or industrial facilities and stored in geological formations. That’s up from the previous $50 per metric ton.

For companies that want to capture carbon and use it for oil production or other industrial applications, the credit provides $60 per metric ton, up from $35. Direct air capture projects can get up to $180 per metric ton.

Still, some experts say the Biden administration hasn’t delivered the proper assurances to the fossil fuel sector that it will be able to sell enough electricity produced from natural gas and coal equipped with capture technology. Some fossil fuel supporters fear that the Biden administration — or a future administration — will impose policies to phase out fossil fuels completely, leaving companies with stranded CCS infrastructure.

Meanwhile, an academic paper authored by a political staffer at the Department of Energy earlier this year has caused a stir by calling for an “extremely cautious” regulatory approach to CCS projects.

“Particularly given long lead times, limited experience, and the potential for CCS projects to crowd or defer more effective alternatives, regulators should be extremely cautious about power sector CCS proposals,” wrote Emily Grubert, who was deputy assistant secretary at DOE’s Office of Fossil Energy and Carbon Management before taking on a faculty position at the University of Notre Dame last year.

What makes it so expensive?

The challenge for carbon capture developers has been that capturing the CO2 is just the start of the costs. Then comes the expense of transporting the greenhouse gas — typically through a pipeline — to wherever it will be either stored or used. In the power sector, many utilities have cheaper options for electricity.

The Petra Nova project ran up a roughly $1 billion tab, including nearly $200 million in federal money. The Kemper project’s cost projection skyrocketed to $7.5 billion before the plant switched to natural gas without carbon capture, according to one analysis.

In another example, former DOE official McConnell said a carbon capture network in the Gulf Coast would cost $100 billion to develop, “if not $200 [billion] to $300 billion when it’s all done” over 20 to 30 years.

“That money’s not going to come from DOE or the federal government,” said McConnell, who is now executive director of the University of Houston’s Center for Carbon Management in Energy. “It’s going to come from private industry that’s continuing to build out.”

Meanwhile, the Energy Department is moving forward with CCS funding authorized by the 2021 infrastructure law. Its Office of Clean Energy Demonstrations is accepting applications for $2.5 billion in grants to boost CCS deployment at both power plants and in the industrial sector. That funding is aiming to help underwrite new research and development that could bring costs down substantially.

Experts say it’s not a question of whether the technology will work on power plants, but of the financial and regulatory incentives.

“We’re not fusion, right. We’re not seeking fundamental breakthroughs in whether this works,” Goff of 8 Rivers Capital said.

“It’s very much a thing that we know how to do,” he added.

He and others point to the long use of CCS in industries like fertilizer production and natural gas processing, where it is cheaper to capture carbon than in a power plant. In those industries, some companies have been using the technology since the 1980s.

Can you use carbon capture with gas-burning plants, not just coal?

Yes, but it’s typically more expensive.

Carbon dioxide is far more concentrated in ethanol and coal than natural gas, so gas offers less potential revenue from CO2 capture than those other fuels. The same is true with industries like fertilizer production.

“The more concentrated the CO2 is, the less it costs to capture it,” said Crabtree of the Office of Fossil Energy and Carbon Management. John Thompson, director for technology and markets at the environmental organization Clean Air Task Force, said the credit of $85 per metric ton in the Inflation Reduction Act “is kind of at the lower end of [the capture costs for] gas plants, for many gas plants, and enough for some coal plants.”

According to the International Energy Agency, the cost of capturing carbon from power generation can range from roughly $50 to $100 per metric ton — meaning the Inflation Reduction Act’s incentives would go further with some proposals than others.

Will EPA’s new rule spur wider use?

It’s unclear. But top EPA officials think so.

In the rule unveiled early Thursday, the agency determined that carbon capture represents a “best system of emissions reduction,” which means it’s been adequately proven.

“EPA has been doing this for the past 50 years when you have a control technology that’s validated,” McConnell said. “That’s like the scrubbers and the baghouses” and other technologies that EPA has previously mandated to lessen air pollution, he said.

Bolstered by the climate law’s tax credits, EPA officials say power companies could, in fact, make money by installing carbon capture.

“We actually end up seeing, on that typical unit with the tax credits, a negative cost,” one EPA official, who was not authorized to provide their name on the record, told reporters Wednesday.

Where would all the carbon go?

For now, the vast majority of captured carbon is used for oil production because it provides a financial incentive for use of the greenhouse gas. That has been a source of controversy, because the oil then releases carbon dioxide when it’s burned.

Victoria Bogdan Tejeda, an attorney with an environmental group called the Center for Biological Diversity, said in comments on the EPA rule that the process “perpetuates fossil fuel use and in turn, adds to the climate crisis.”

But under the EPA’s new rule, the carbon captured from power plants could not be used to extract more fossil fuels.

Some industries, such as the carbonated beverage sector, purchase and use CO2 in production. But challenges would arise in getting those industries to use large amounts of captured CO2 from power plants, including transporting the greenhouse gas through pipelines. Proposed CO2 pipelines in the Midwest — although tied to ethanol — have faced opposition from landowners and critics of eminent domain.

Meanwhile, to tackle climate change, the Biden administration and private sector are eyeing permanent geologic storage for the captured carbon. That faces obstacles, too. Besides the need to transport the gas, some research has raised concerns about whether large volumes of injected CO2 could trigger earthquakes. Some people also don’t want these storage sites near their communities.

Carbon capture supporters say underground injection of carbon dioxide has been tested for more than a half-century. A DOE-backed project in Illinois, for instance, injected large amounts of captured carbon dioxide underground from an ethanol plant into geological formations.

Some states, unhappy with EPA’s pace in approving carbon dioxide injection wells, are pushing for a prime role in issuing permits for these projects.

This month, EPA proposed to approve Louisiana’s bid for regulatory primacy over CO2 injection wells in the state. North Dakota and Wyoming already have such a role.

Jean Chemnick contributed to this report.