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Coal supporters warming up to carbon capture but seeking government's help

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Coal supporters warming up to carbon capture but seeking government's help

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U.S. Sen. Shelley Moore Capito, R-W.Va., speaks at a conference held by the Virginia Coal and Energy Alliance Inc. and the Southern States Energy Board on May 20, 2019.
Source: S&P Global Market Intelligence.

Technology that could capture carbon dioxide emitted by coal plants for use or storage could be a lifeline to pull coal into a "new era" in a lower-carbon energy world, but the expensive technology will likely need the government's help in the form of research and subsidies.

U.S. coal consumption has steeply declined in recent years, in large part due to cheap natural gas and falling renewable energy costs that enabled utilities to cut emissions without significantly increasing their costs of electricity generation. If the coal sector wants a place in a world seeking to constrain emissions of carbon dioxide, it will have to figure out how to deploy carbon capture technologies quickly, a panel of advocates of the technology said at a May 21 event co-hosted by the Virginia Coal and Energy Alliance Inc. and the Southern States Energy Board.

"President [Donald] Trump has vocalized his continued support for coal countless times," said Kenneth Nemeth, executive director and secretary of the Southern States Energy Board. "Now is the time for us — and for the President — to take action through any measure to advance coal technologies and carbon capture. For us to be embarking on coal's new era, we must actively support measures from the administration, [U.S. Department of Energy] and other agencies and the states."

Lou Hrkman, deputy assistant secretary for clean coal and carbon management with the U.S. Department of Energy, said May 20 that the agency spent billions on research and development to advance carbon capture technologies and that economically viable projects are "just over the horizon." However, current projects have proven difficult and expensive. Southern Co., for example, shelved plans for a carbon capture project at a Mississippi coal plant after costs to construct the project ballooned from $2.4 billion to $7.5 billion.

World coal consumption is likely to decline going forward but remains a significant portion of the electricity generation mix through 2050, according to Michael Weiner, director of coalition services for the Carbon Utilization Research Council. Leadership on carbon capture and storage, he added, is the single most important thing the U.S. can do to reduce the impacts of climate change.

"The world and the United States can't simply wish away the use of fossil fuels," Weiner said. "There's a real opportunity here, we can continue to benefit from the affordable and reliable electricity that the existing fleet provides, but we have an opportunity to accelerate the development of new transformational technology like carbon capture that can serve as replacement options for an aging fleet in the next 10 to 12 years."

Weiner acknowledged the technology remains expensive. Because of that, carbon capture advocates are looking to the wind and solar energy sector as models of public financial support leading to the eventual economic viability of a technology.

At the same conference the day before, Sen. Shelley Moore Capito, R-W.Va., touted recent bipartisan efforts aimed at supporting the development of carbon capture by encouraging commercial use of carbon emissions, supporting carbon capture technology, and expediting the permitting process for carbon pipelines to move the captured gas to locations where it can be stored or used. She added that the 45Q tax credit available to carbon capture and storage projects is set to expire in 2024 and needs an extension.

"These are billion-dollar projects. They take a long time to get them on stream," Capito said. "In the United States, we're the leader here to be able to move us forward so we can strike that balance between the economy and the environment."

Without the extension, projects will not have time to do all of the studies and planning necessary to take advantage of the credit, said Brian Hill, an energy finance and infrastructure consultant with the Southern States Energy Board. He also pointed to delays from the U.S. Treasury finalizing the nuances of the rule and the required date for committing to construction as potential issues to moving new projects forward.

"There's got to be an incentive for people to do this and that incentive, whether you like it or not, is somebody making money doing it," Hill said. "There's a lot of work that needs to be done. But what we have to do is we have to start that work now."