In his first public appearance as energy secretary at an NRG Energy coal plant outside Houston in April, Rick Perry said he was witnessing the future of fossil fuels, proclaiming, “The solution to many of the challenges we have in the world today are displayed behind me.”
NRG’s Petra Nova facility, which began operations in January, represents the first commercial-scale system to remove carbon dioxide from emissions of a coal-fired power plant, a major milestone for a coal industry fighting to survive in a low-carbon world. The carbon capture system, however, was also hugely expensive, costing $1 billion and relying on almost $200 million in clean energy grants from the Obama administration.
As governments worldwide begin to set limits on greenhouse gases, the coal industry is looking to carbon capture to reduce carbon emissions that are far higher than other fossil fuels.
But even as Perry and other officials trumpet “clean coal” as the way of the future, the Trump administration has signaled it plans to slash funding for commercializing the technology, preferring to roll back environmental and power market rules they say put coal-fired power plants at a disadvantage to wind, solar and other fuels
But some within the coal industry argue the strategy is short-sighted.
In a letter to the White House last month, Colin Marshall, CEO of Cloud Peak Energy, one of the country’s largest coal companies, said that power utilities remained reluctant to invest in new coal plants despite the administration’s efforts to reduce regulation. He urged Trump to support carbon capture technology, including “robust funding” for the Energy Department’s projects.
“If Trump is going to unlock our domestic energy resources, I don’t know how he’s going to do it without this kind of policy support.” said Jeff Erikson, general manager for North America at the Global CCS Institute, a trade group whose membership includes Peabody Energy, Occidental Petroleum and Exxon Mobil.
Clean power plan in doubt
Almost all of the coal consumed in this country goes to power generation. The share of American electricity from coal plants, however, has fallen from more than 50 percent in 2001 to 33 percent in 2015, according to the Energy Department.
Trump has taken steps to repeal environmental protections like Obama’s Clean Power Plan, which would have required states to cut carbon emissions by 30 percent on average, shuttering many coal plants. Last month, Perry wrote a memo ordering the Energy Department to undertake a two-month study into “the extent to which continued regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement” of coal and nuclear plants.
Trump has “already come back and changed the direction of the Obama administration,” said Frank Maisano, a partner with the law firm Bracewell. “Coal plants that would certainly have been closed will likely not be pressured to be closed.”
At the Department of Energy, officials in the Office of Fossil Energy said they are being advised to focus on researching new technologies, leaving the task of commercial development to the energy industry itself.
That is a shift from the how the department operated under both presidents Barack Obama and George W. Bush, who used federal funding to speed new energy technologies like wind turbines and hydrogen cells to market faster than the private sector could deliver on its own.
The shift is part of a Trump proposal to slash more than $3 billion from the Energy Department’s budget — an 18 percent cut that does not include its nuclear weapons program. But without government funding, many carbon capture projects under consideration in the United States are likely not to get built, said Chris Smith, a former assistant secretary for fossil energy at the Energy Department during the Obama administration.
“These technologies still need some work. There’s still research that needs to be done to bring the costs down,” he said. Coal and power industries “don’t have the technological sophistication or the capital or the bandwidth to do this work.”
For now, carbon capture remains hugely expensive. Southern Co. has gone $4 billion over budget on its Kemper Project carbon capture facility in Mississippi.
And while Petra Nova has found a customer for its carbon dioxide at a nearby oil field, where it will be used to increase production, markets for carbon dioxide remain limited, experts say.
Ultimately, if carbon capture were to take hold, most of the carbon likely would have to be pumped underground to prevent it from getting into the atmosphere.
Paris climate accord
Still, climate experts and the International Energy Agency say the technology is essential if the world is going to meet the goal agreed to by world leaders in Paris in 2015, to stop the earth’s temperature from rising more than 2 degrees Celsius.
Coal industry executives are focusing their lobbying efforts on expanding and extending the tax credit for clean coal projects that capture carbon dioxide that can be used in oil production. That tax credit could run out as early as next year, and advocates worry the lack of support from the White House is hurting momentum for legislation, which in the past has attracted bipartisan support.
“Oil and gas producing states have all been calling for the administration to support these tax credits,” said Brad Crabtree, vice president for fossil energy at the think tank Great Plains Institute.
“Secretary Perry has said positive things, but in terms of actual proposals on how they plan to advance this technology for the future of the coal industry, we’re still waiting.”
U.S. is the leader
Right now, the United States is considered the global leader on carbon capture technology, between the Petra Nova facility and Kemper, which is expected to be fully operational before the end of the year.
But the Trump administration’s indication that it will put a halt to using government funding to commercialize carbon capture has led some in the Energy Department to worry it could open the door for the Chinese to surpass the United States as the leading force in a carbon capture industry expected to grow exponentially in the years ahead.
The Chinese government has already announced seven commercial-scale carbon capture projects, the first of which is under construction and should be completed next year, said Julio Friedmann, senior adviser for energy innovation at Lawrence Livermore National Lab in California.
“China does things fast, and they spend real money,” he said. “They’ve made a substantial long-term investment in technology they can sell around the world.”