Carbon capture and storage offers the promise of slashing carbon emissions from coal-fired power plants, and has been touted by some in the electricity industry as part of a basket of “clean coal” technologies that will dramatically reduce the fuel’s environmental impact and provide a lifeline to the U.S. coal sector. Yet CCS is the only clean coal technology that has yet to prove feasible at a scale, and existing CCS projects are few and far between.
Kleinman Center for Energy Policy senior fellow John Quigley takes a look at efforts to reduce the technology’s cost and the relative lack of government support to date for CCS. Quigley also discusses CCS’s environmental promise and whether it can be deployed in time to make a positive climate impact.
Andy Stone: Hello and welcome to the Energy Policy Now Podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone. In early April, the CEO of U.S. coal company, Cloud Peak Energy wrote a letter to President Trump urging him to support the development of clean coal technologies that would lower emissions from the burning of coal. The letter included an appeal to remain a party to the Paris Climate Accord, though, with more modest climate protection goals.
The letter came with some of the coal industry of frame support for clean coal and a continuing role for the U.S. under the Paris Agreement, as a way for the president to deliver on his promise to revive the coal industry. Nevertheless, the technology that would reduce coal’s greenhouse emissions called carbon capture and storage has yet to be shown practical at a scale that would make a difference for the climate. Here to explore clean coal and the political and economic debates that surround it is today’s guest Kleinman Center Senior Fellow John Quigley. John, welcome to the podcast.
John Quigley: Great to be back. Thanks.
Stone: John has occupied the top energy and environmental posts in Pennsylvania, including Secretary of the Pennsylvania Department of Environmental Protection and Secretary of the Department of Conservation and Natural Resources. He also past Mayor of Hazleton, a Pennsylvania coal town that has yet to economically recover from the anthracite coal industries decline in the 1950s.
He also led some of the nation’s most advanced work on carbon capture and storage under former Pennsylvania Governor Ed Rendell. So John, to get started here, clean coal actually encompasses a number of technologies. Can you parse these out for us and clarify what the focus is on specifically today?
Quigley: Sure. Well, first burning coal to generate electricity is an extremely dirty way to create power. Coal combustion releases immense amounts of air pollution, nitrogen oxide, sulfur dioxide, mercury, which happens to be a neurotoxin, and particulate matter. And all that pollution harms human health, water quality, and ecosystems. And, of course, the immense amount of carbon dioxide that’s emitted in coal combustion is definitely a principal driver of climate disruption.
So the term clean coal came into use to describe efforts, largely driven by the federal Clean Air Act and federal regulations, to reduce all that pollution with the exception in the early years, and until very recently, of CO2 pollution. A lot of folks in the clean coal crowd, I’ll call it that, have pushed the fiction that coal was already clean. Just drive along the Pennsylvania turnpike and look at the billboards and you’ll see. And I’ll give you an example, the American Coalition for Clean Coal Electricity sites a long list of 16 clean coal technologies on our website. Things like scrubbers and catalytic converters, baghouses, sorbets different kinds of boilers and fuel processing. And this equipment is installed in fired power plants to reduce or remove NOx, SOx, particulate matter, and mercury.
And so all of these technologies, except carbon capture and storage, are in routine use today as a result of federal clean air regulations. So I think it’s a little bit ironic, but fair, to say that the industry has had a history of fighting against the regulatory requirements to deploy these technologies. But now that they’re in use, the coal industry says, see, you look at all this great clean coal technology we’re using, coal’s already clean. That’s not the case, it’s far from the truth, especially from a climate perspective, but it is kind of an amazing bit of chutzpah.
But clean coal, to get to your question, Andy, is from a climate perspective, we’d define it as coal fired power plants that employ carbon capture and storage, commonly referred to as CCS. And again, that’s the only technology on this American Coalition for Clean Coal Electricity’s website that isn’t in regular use. There’s also another technology that I think would qualify to a limited extent, carbon capture and utilization and we can talk about that. But carbon capture technologies capture the CO2 that’s emitted from these plants and either store it safely underground or use the captured CO2 for a beneficial purpose like enhanced oil recovery. CCS technologies have the potential at least to reduce carbon dioxide emissions from these plants by about 90%, but they are not in, they’re not being deployed at scale. And certainly at the level we really need to have an impact the climate.
Stone: It’s interesting, you bring up this fact that carbon capture and storage, CCS, is the one technology that actually can make an impact on the climate. It hasn’t really been deployed yet. Yet, President Trump mentioned clean coal frequently as a candidate and has brought up clean coal again as president. So, what’s his view?
Quigley: Well, it’s hard to say what the president’s view is to really get the specifics. The president has promised to bring back coal and that frankly is something that defies the laws of economics right now because cheap natural gas and renewables are out competing coal in the marketplace. The president’s approach to helping coal appears to be based on getting rid of a slew of protections for air quality and climate. They’ve already moved to scrap the Clean Power Plan and there’s talk of repealing ozone pollution protections.
So it appears to be a deregulatory approach rather than a technology focus. We really aren’t seeing much attention specifically on CCS from the White House yet. They’re still denying the reality of climate change. So why embrace a technology that’s designed to combat it? What we are seeing is attention from the coal industry on CCS to try to influence the president’s policies. I think the industry is finally coming around to the inevitable fact that they have to get serious about climate disruption if the industry is going to have a future.
Now, if CCS and CCUS can be deployed at scale, and that is on a vastly larger scale than currently, I think coal could potentially have a future in our energy mix. I also think it’s important to note that it isn’t just about coal. If we’re going to keep global temperature rise below 1.5 degrees Celsius, or even the very problematic two and a half or two degrees Celsius, that was originally the international consensus, CCS is going to have to be applied to natural gas fired power plants as well. If they’re also going to have a future in our energy mix.
So for both coal and natural gas that cleaning up their act from a climate perspective and continuing to do so regarding other air pollutants is, I think, their only path to survival. It’s our path and their path, I think, to sustainability. And that will take a hefty injection of politics to develop the public policies and the funding that’s needed to make that a reality.
Stone: So CCS isn’t just about the coal industry. It’s about any fossil industry, any industry that has carbon emissions as a result of its operations.
Quigley: Exactly. When you look at the Paris accord and all of the commentary and analysis that has come out of that, it is very clear that the original international consensus of two degrees Celsius, global average temperature rise ,is not safe. We need to keep temperature rise to no more than 1.5 degrees Celsius. And in order to do that, you will have to have carbon capture technology on every fossil fuel plant and a whole host of industrial processes as well.
Stone: Well, I don’t think anybody would argue that clean coal in whatever form is a bad thing. In Washington, there has been bipartisan support, President Obama, I think it was in 2010 actually kind of launched an initiative to work on CCS specifically. So both sides of the aisle are behind it but why is it such a charged topic right now?
Quigley: Well, it’s, I think a function of the fact that all things climate have become even more politically charged. It was not a clear path in any event, but certainly since November and the presidential election, it’s gotten a lot worse. So on one hand you have climate change deniers, and frankly, some of those are in the White House. There are deniers in Congress, in state houses, even here in Pennsylvania, and certainly in company boardrooms.
On the other hand, you have folks in the environmental community who see coal as a villain that has to be eliminated at all costs. And like so many other environmental policy debates, the perfect becomes the enemy of the good. Some folks can’t abide efforts that would reduce coal emissions by 90%, because that would allow coal to continue to be burned. And that’s just anathema to these folks. They prefer the purity of a totally renewable energy economy, but we need to get there by 2050. And that is, at a minimum, a very daunting if not impossible challenge. So the issue of clean coal is definitely highly charged politically, and that is likely to continue.
Stone: And coal and going away anytime soon, it looks like.
Quigley: No, it’s not. When you look at the realities of our energy mix, renewables currently provide about 5% of our total electricity supply. Coal is still around 30% and it is going to be immensely difficult to change that calculation by the time we need to change it i.e., by 2050. Renewables will not be able to scale up that fast. And that inevitably implies that there is going to be some continued use of coal for the foreseeable future.
Stone: So looking at an ideal, what does the coal industry see as the upside of CCS, assuming it’s workable?
Quigley: Well, the upside, in a carbon constrained world, is that coal would continue to be viable as part of our energy mix. Some of the downsides of that is that this technology currently is very expensive. It can add up to 40% of the cost of electricity coming out of a CCS equip plant, and it just about doubles the capital cost.
So it’s, it’s a daunting undertaking in terms of the economics and in terms of finance, but if we are going to be serious about not frying the planet by the middle of this century, CCS is going to be mandatory. And I think there are some folks in the electric power industry, and even in the coal industry that are starting to come around to that realization.
Stone: Looking at the current status of the technology itself. It’s not a very positive track record, at least here in the United States. Most recently, there’s Kemper Clean Coal Plant in Mississippi, which is, I believe, $4 billion over budget. Some other examples are over budget or canceled. Where do we stand in terms of getting the technology ready and economic?
Quigley: Well, I think the first thing that we all need to understand is the technologies along the CCS chain are known. They’ve been in operation in various industries for decades, but unfortunately not at the right scale, at relatively small scale. Projects injecting captured carbon dioxide for enhanced oil recovery have been operating in the United States since the early 1970s. Ironic, they mostly use naturally occurring CO2, that it’s extracted from the ground and pumped back in elsewhere.
In fact, in 2014, the last numbers that I could dig up, a CO2 enhanced oil recovery represented about 5% of all domestic oil production in the United States. That’s over 300 million barrels a day. In addition, there’s over 4,600 miles of CO2 pipeline, transporting about 70 million metric tons per year of CO2, so that the technology is understood and in use in industry. But unfortunately, as I said, apart from EOR, the technologies have not been put together at all.
Stone: [EOR] enhanced oil recovery, right?
Quigley: Yes, enhanced oil recovery. But apart from enhanced oil recovery, the technologies haven’t been put together at an industrial scale that to process the amount of CO2 that would be coming off a coal fired power plant, we just haven’t seen that.
So there are some, some definite challenges. There are logistical challenges in terms of acquiring storage space. I haven’t seen much really discussed about that hurdle and we encounter that in the work that we’ll talk about here in Pennsylvania. And it might be that we haven’t heard a lot about the logistics of acquiring storage space, because most projects were still small scale. You know, a million tons a year is probably 10 to 20% of even a fair to middling coal fire power plant. Getting to the 90% capture is definitely a step change in terms of the spatial requirements.
But all in all, the real focus on CCS and the challenge to CCS right now, is the one of cost and a finance. As I said, CCS can add about 40%, at least 40%. And in some plants, more than that, quite a bit more to the cost of electricity, it doubles your capital costs. But there are a lot of folks that have been observing the evolution. And I think it’s been a slow evolution of this technology.
And one example is Julio Freedman, who was the chief CCS expert in President Obama’s administration. And he’s now at Lawrence Livermore National Lab in California. And he recently observed that there really isn’t any mechanism right now in the world today that allows companies to recover an investment in a CCS plant. He pointed out that for example, in 2014, the United States spent about $44 billion on production tax credits for wind power, just wind power, but nothing on CCS. And over the last decade, the world has spent about $2 trillion backing renewable energy projects, but only about $20 billion across CCS.
Stone: Surprising, given all the talk.
Quigley: Exactly. It’s been more talk than action. So the challenges that I think we face right now are commercial. They’re certainly not technical. We need continued technological advance to drive down the costs of the technology, but we also need the market mechanisms to support the investments at the level that they’re required in CCS plants. And that is going to require government support for both research and deployment but also for funding support and the policy supports, critically, the policy supports that are going to be needed to make investments in CCS plants viable.
Stone: Now, I just wanted to take a step back for just a moment. You mentioned infrastructure challenges, and I wanted to ask you something in regards to you need to have a place to store this carbon that’s been captured. Does that mean that coal fire power plants, for example, that may not be close to an oil well, or a natural gas reservoir, may not even be you know, might not have any chance of using CCS cause there’s nowhere to put the carbon?
Quigley: Well, the conventional wisdom, and I’ll call it that, has always been that you need to find storage in close to any emitting facility. But when you look at the scale that’s going to be required to deploy this technology, it is highly unlikely that you’re going to find an appropriate geologic reservoir underneath every site. So that’s why in 2008, nine years ago, the Rendell administration did, I think, some of the most ambitious and forward-looking work on carbon capture and storage, literally in the world. And we looked at the feasibility and we were helped significantly by the Clinton Climate Initiative by President Clinton’s foundation.
We looked at the idea of retrofitting five coal fired power plants, and then connecting all of those plants to a CO2 pipeline, and then finding a centralized geologic storage facility. The idea there was to capture economies of scale, share infrastructure, and have a centralized location that would overall reduce costs and at a pre-feasibility study level, our analysis of that network concept suggested that it was significantly more cost effective, significantly cheaper than any CCS project that was proposed anywhere in the world at that time. We need to create the same kinds of pipeline networks and storage facilities that can connect emitters that don’t have suitable geology beneath them.
Stone: Do you see on the horizon a time at which there may be some type of critical mass for this, or it might accelerate?
Quigley: That’s hard to say, Andy and I’ll explain why. When you look at any international scenario about the number of facilities that are needed and how to get CCS at scale, even in the two degree centigrade scenario, International Energy Agency and others were calling for the deployment of over 4,000 CCS facilities worldwide. Currently we’re at 16 on the ground and 22 planned. A total of 38. 38 is a lot short of 4,000. So we are not making progress. And in fact, just last year, the International Energy Agency said that CCS will not be optional if we are to meet the requirements of the Paris Agreement.
So CCS is mandatory. And to the extent that governments around the world led, I would hope, by the United States, can come to that conclusion. We have to very quickly develop the policy supports, the market supports, the financial mechanisms to drive this technology. And as I pointed out at the top of the show, that there’s at least one coal company executive that is urging President Trump to become that leader, to take the lead in aggressively developing the policies and aggressively deploying the technology.
We need that leadership, whether it’s going to come from the United States or from another country is certainly unclear at this point. One of the reasons that we pursued idea of carbon sequestration networks in Pennsylvania is that we thought not only was there an opportunity to change the game in terms of deploying this technology, but it was an economic development opportunity. We wanted Pennsylvania to be the home for this technology, to be the home for the research and development jobs. We certainly have the infrastructure, for example, here at Penn, the immense intellectual capital in the Commonwealth. And we wanted it to be the home for the manufacturing jobs, for these, for this technology and these whole suites of technologies. There’s an immense economic development play if CCS is going to get the scale, as it has to. Somebody is going to be the beneficiary of that employment opportunity. And we wanted it to be Pennsylvania.
Stone: I guess that’s how it ties into Paris, stay in the game for this global market potentially.
Quigley: If you sit on the policy sidelines, you also sit on the economic development and business sidelines, and there’s not a country on Earth that can afford to do that, especially in the United States.
Stone: Okay. So where’s the funding for CCS going to come from?
Quigley: I make three points. First is that so far, no country in the world, especially the United States, has demonstrated the willingness that’s needed to adopt the policies, invest the amount of public dollars that are needed to scale this technology. But just in April of 2017, there was bipartisan legislation introduced in the United States Senate, a bill called the Carbon Capture Improvement Act. The bill is intended anyway to accelerate the deployment of carbon capture technologies at both power plants and industrial facilities. It has broad support from industry, from labor organizations, from NGOs, environmental groups.
The bill would authorize states to use tax exempt, private activity bonds to help finance the purchase and installation of carbon capture equipment. Basically lower interest rates, longer repayment terms in an attempt to make these projects more financeable and make the economics work better. These kinds of private, tax-free, activity bonds are commonly used in a number of other infrastructure applications like airports, water, and sewer projects. And now there is an effort to allow them to be used for CCS projects.
In addition to that, there are tax credits for using captured CO2 for enhanced oil recovery. So the thought is that probably the leading edge will be to again, create a backend revenue stream, enhanced oil recovery has been the primary target of most of the pilot CCS projects around the world. Basically you can sell the captured CO2 and that would allow theoretically the more experienced to be gained with developing a technology, fine tuning it, helping to drive down the cost curve. And certainly the ambition is for CCS to experience the same kind of cost declines that we’ve seen in renewable energy. The cost of solar power for example, has fallen 70% over the last seven years. We need to get on that kind of a pace and that kind of curve with CCS.
So in my view, proposals like the Carbon Capture Improvement Act are definitely a step in the right direction. We need to have a focused conversation in this country about not only our climate future, but frankly, the industrial future of this country. There’s an opportunity here as well as a challenge and smart public policy will embrace both. And as I mentioned again, at the top of the show, we have the CEO of America’s third largest coal company asking the president to step up on this. So, when you see industry finally getting religion, so to speak, that’s a hopeful development. It’s not sufficient, but it’s at least a step in the right direction.
The problem is we are racing time. We are on a path that would put us on a global temperature rise, far exceeding even two degrees centigrade by the middle of the century. And that is going to have catastrophic effects. We’ve seen it in projections for Pennsylvania. Pennsylvania’s climate is marching slowly southward like Sherman’s army to the sea. By the middle of this century, Philadelphia is going to feel like Richmond, Virginia, and Pittsburgh is going to feel like Washington, DC. Profound changes in ecosystems, weather patterns, profound impacts on key Pennsylvania industries like agriculture, the hardwood products industry, the outdoor recreation industry, as well as public health.
We’re seeing more tropical diseases in this country, the latest threat being Zika. These mosquitoes, shouldn’t be able to thrive in the Pennsylvania that I grew up in, but they can thrive now, at least there is a potential for that. So there is a Pandora’s box that we have opened. We have to figure out a way to get closed and CCS must be a part of that solution. And we need to get about that work as quickly as possible.
Stone: A related question on the economics of the coal industry and CCS, if this becomes viable, in competitive electricity markets, won’t coal fire generation be so expensive, it goes away anyways?
Quigley: Well, that’s a potential. And again, we have to have some sane energy policy, consistent energy policy. We have to level what is currently a very, very tilted playing field. When you look at the billions of dollars of public subsidy for fossil fuels right now. One prime example being the public health costs that are externalized, that there is vastly more support going for fossil fuels right now, then for example, to have renewable energy and certainly compared to energy efficiency.
So we have to get the same energy policy where treat all energy sources the same. In my view, removing all of the subsidies, and then seeing where we stand, requiring for example, both coal and natural gas fired power plants to be equipped with CCS. You’ve got to level the playing field and essentially redesign the way this country generates electricity. And we have to do that globally.
So it’s an immense challenge and it’s an immense and very complicated policy challenge. In today’s marketplace, coal can’t compete. Nuclear can’t compete, but the danger there from a climate standpoint, is nuclear for Pennsylvania is represents about 95% of our carbon free electrons. So if nuclear plants go away and that is the most expensive power, then Pennsylvania’s carbon emissions will rise and we’re already the number two or three state for carbon emissions. We admit about 1% of the planet’s global warming emissions. So there’s a lot riding on the decisions that we make and how we redesign our way of making electricity, our way of fueling our economy, and we need to make some decisions and get on a different path very quickly.
Stone: So, clean coal as it’s being presented is not just about CCS, but it’s about a whole basket of technologies that we spoke about. Do you think you’re going to see a concerted effort from the coal industry beyond this Cloud Peak that we’ve spoken about pushing for CCS?
Quigley: That’s difficult to say when you look at what has been going on so far, and for example, the number of coal industry executives,
Stone: There’s been a confounding of what clean coal is here, right?
Quigley: Absolutely. A conflating and frankly, a very cynical attempt to portray coal as something that isn’t. Right now, coal is burned cleaner than it used to be thanks to federal regulation. But who showed up at the swearing in of the new EPA Administrator, Scott Pruitt, a whole bunch of coal industry executives. And most of the talk has been about rolling back air quality protections, rolling back the Obama ozone standard, eliminating the Clean Power Plan.
So the talk, at least from most in the industry, Cloud Peak being a notable exception, and even they’re not exactly where they need to be. The talk has been about deregulating, removing protections for the environment and public health. That’s not going to solve the climate problem. It’s going to make it vastly worse. So we need to all get on the same page and have an acceptance of the fact that there is a climate challenge that is existential and public policy is going to need to support that. There is no evidence right now outside of a few notable exceptions, like this letter from Cloud Peak, that the coal industry is ready to come to that realization.
Stone: Final question, without U.S. leadership on clean coal, CCS, you mentioned a few minutes ago that the rest of the world has not really done a whole lot of work on this yet. Without U.S. leadership, does the global effort never materialize, or do you see somebody else taking the lead, particularly in China, where they’ve got a lot of coal plants coming on air quality problems?
Quigley: Well, in China and India right now, probably a million people a year die because of air pollution. And those governments have absolutely realized that they have got to do something to reduce air pollution in their countries. And there are some plants, some coal fired power plants in China that have been mothballed or plans canceled. I think the likelihood is that if, well, let’s put it this way. The only hope is that if there is any sanity in any government in the world, somebody is going to step up. Right now, the odds are that it will be, will be the United States, those odds are pretty long.
So I think looking to countries like China and India, would probably be the next most likely candidates. And I’ll say for example, in terms of carbon capture and storage and carbon utilization, China has some incentive. One of the reasons that China has been unable to develop its shale gas resources has been that they are located in arid regions of the country. And there are utilization technologies like CO2 fracking that can replace water and store carbon at the same time. Effectively lowering natural gas’ carbon footprint.
So there are some exciting possibilities, some exciting technologies that are in the development stage and in the early days of marketing. There’s actually a company called Gas Frack, in Pennsylvania, that is trying to market CO2 fracking. Those kinds of efforts for carbon utilization need support. There are efforts like there is an X prize for carbon utilization. There is a $20 million prize that will be awarded in 2020 for a project that will either off-take from a coal or gas plant, and then use the captured carbon for a variety of uses like pharmaceutical manufacturer, cement and concrete manufacturer, low carbon fuels. There are a variety of applications that are being developed to utilize captured carbon.
We’ve got to let a thousand flowers bloom and we need to go quicker on every front. So on the utilization side, nurturing these technologies, on the technology side, driving down the cost of capture technology, on the policy development side, developing the supports that are needed to make all this happen much more quickly.
So the question becomes who is going to be the beneficiary of that from an economic standpoint? Do we want, in this country, for China to be the home for carbon capture and utilization technologies? They’ve already kicked our butts when it comes to solar power. We’ve lost a lot of jobs as a result in this country. So folks have to come around to the realization that protecting the environment and protecting the planet also can have an economic development upside. And do we want those jobs located in China? Do we want them in the United States? I think our path is clear.
Stone: We’ve been talking with John Quigley, former Secretary of the Pennsylvania Department of Environmental Protection, and a Senior Fellow at the Kleinman Center for Energy Policy. John, thanks for talking.
Quigley: Thank you.
Stone: And thanks to our listeners for joining us. At this point, I’d like to ask for your help in getting the word out about Energy Policy Now. If you enjoyed this episode, please give us a positive review and a five star rating on iTunes. And if you have any comments or suggestions regarding this podcast, please write and let us know. Our email address is email@example.com. Have a great day.