Hopes for U.S. clean coal may rest on costly Mississippi project

[February 12, 2015]  By Rob Nikolewski │ Watchdog.org
 
 And now there is one.
 
 Carbon capture and storage — the hoped-for holy grail for clean coal energy — may be down to its last strike after the U.S. Department of Energy drove a potentially fatal stake through the heart of the FutureGen 2.0 coal plant in Illinois last week, pulling all future federal dollars from the project.

That leaves the United States with just one commercial-scale coal plant using carbon capture and storage on the drawing board — the Kemper County energy facility in Mississippi, run by the Southern Co., the energy giant headquartered in Atlanta.

“This is kind of the last hope for carbon capture, utility-scale stuff, in the U.S.,” said David Kreutzer, Research Fellow in Energy Economics and Climate Change at the Heritage Foundation, a conservative think tank based in Washington, D.C.

Officials at Southern Co. say they are confident the project will be a success, even though Mississippi Power recently estimated the cost for the plant had ballooned from its original estimate of $2.8 billion to $6.2 billion.

“We know it will work,” Mississippi Power President and CEO Ed Holland said Friday in a radio interview. “We just got to take the time to do it the right way and the safe way.”

Holland said the Kemper County plant should be up and running by the end of this year or the beginning of 2016.

“We believe in this project,” Holland said. “We believe it is the right thing to do, not only for our customers but for the state, the United States and the world.”

But the plant, which will burn lignite coal, has critics on both ends of the political spectrum.

While some environmentalists support carbon capture and storage, others are vehemently against it, saying there is no such thing as clean coal.

“We have no time to waste on this dubious technology if we are to avert the most drastic effects of global warming,” Greenpeace International said in 2008.

Fiscal conservatives, meanwhile, pointing to delays and technological challenges, doubt whether the process is worth all the federal spending.

“If I were the energy czar, I’d say what we need is affordable, reliable energy. Let’s work on that,” Kreutzer told Watchdog.org. “Commercialization should be left to the market.”

Others say the skyrocketing costs have unfairly hit ratepayers.

“If it was a great idea they felt was wonderful and has the potential they say it has, they could’ve sold investors on Wall Street on it and not make the people of Mississippi be their bankers,” public service commissioner Brandon Presley told Mississippi Watchdog last July. “This is the largest rate increase in the state of Mississippi history, and this is the largest transfer of wealth from the people to a corporation in the state of Mississippi’s history.”

Carbon capture and storage is a process where carbon dioxide from coal is buried deep into underground rock formations instead of going into the air. The idea is that by using CCS, air pollution issues that have plagued the coal industry since its inception can be mitigated, if not almost entirely reduced.

But the process has been easier said than done.

The FutureGen 2.0 project in Illinois, for example, came at an estimated price tag of $1.65 billion. The federal government agreed to foot $1.1 billion last year, but the Department of Energy announced last week that after spending $200 million, it was bailing out because the project could not be completed by September, when the funding expires.

“In order to best protect taxpayer interests, the Department of Energy has initiated a structured closeout of federal support for the project that will help maximize the value of investments to date while minimizing ongoing risks and further costs,” DOE spokesman Bill Gibbons said in a statement, adding that the agency is still committed to CCS development.

Without federal funding, it looks like the FutureGen 2.0 project — introduced during the George W. Bush administration, then shut down only to be revived during the Obama presidency — is barely breathing.

In 2011, another CCS project was derailed when the American Electric Co. shut down its plans to complete its Mountaineer CCS project in West Virginia after regulators refused to let the company pass on its costs to customers.

That leaves Mississippi’s Kemper County as the only CCS project left in the country.

“If we go through the start-up process, I really don’t have any worries in terms of bringing (the plant) up, to get it to run in the ways we hope it will run,” Holland told the Super Talk Mississippi Radio Network.

The 582-megawatt Kemper County facility is designed to gasify pulverized coal into a mixture of synthetic natural gas and carbon dioxide. The plant will also employ what’s called “enhanced oil recovery” in which CO2 will be injected into old oil fields to help loosen and push up crude. The oil will be pushed out and the CO2 will remain buried.

“Over time, I firmly believe we’ll find other uses for CO2 in addition to enhanced oil recovery,” Holland said. “I think those uses will be many and will be financially lucrative.”

But last week, the Southern Co. announced it will spend at least another $45 million to finish the power plant and take a $70 million pretax loss when it announces its latest quarterly earnings. The project already has received a $250 million grant from the Department of Energy.

In 2013, the Environmental Protection Agency outlined new climate change rules calling on new coal-fired facilities to be 40 percent cleaner than existing plants. The fate of the Kemper project figures to say a lot about the future of the coal industry.

“This was one of the prime examples that the EPA used when they asserted that carbon capture and storage is an economically viable technology,” Kreutzer said in a telephone interview. “Their new standards for coal-fired power plants require this technology … (The Southern Co.) is a big company, they can take a hit but it’s a very costly project, much more costly than they were anticipating. So if this was your idea, yeah, your job is probably on the line.”

[This article courtesy of Watchdog.]