A report published by UK-based think tank Global Warming Policy Foundation (GWPF) and authored by Professor Gordon Hughes, economics professor at the University of Edinburgh and former advisor to the World Bank, argues that the economics of CCS, especially for coal, don’t make sense today, and are unlikely to start doing so in the future.
As gloomy portents go, they don’t come much gloomier for ‘clean coal’ than recent developments at the Kemper County energy facility in Mississippi. The 524MW power plant, which has been under construction by Southern Company subsidiary Mississippi Power and its partners since 2010, aimed to gasify cheap, locally mined brown coal using proprietary technology, capture around 65% of the resulting syngas’s CO2 content and pipe it to nearby oil production sites for enhanced oil recovery operations.
For years the Kemper project has been seen as the US’s flagship clean coal project, facilitating a more environmentally responsible means of unlocking abundant local reserves of highly polluting lignite, while demonstrating the viable economics of carbon capture and storage (CCS) at the large, commercial scale.
CCS and the clean coal concept took on a new importance for the US coal industry a few years ago, when the Obama administration proposed carbon emissions standards for new coal-fired plants that would essentially make CCS mandatory to meet the new requirements. While the Trump administration is in the process of unravelling these standards, President Trump himself has regularly cited clean coal as a key justification for his support of the fossil fuel industries.
“There is a thing called clean coal,” Trump said during the second presidential debate in October last year. “Coal will last for a thousand years in this country.”
Kemper power plant: decline and fall
So, when Mississippi Power announced in June this year that the Kemper project was finally giving up on its coal gasification work, switching instead to permanent natural gas operations, it was a stinging blow to the prospects of coal plants backed by CCS in the US and elsewhere. Rather than standing as a working advertisement for clean coal, Kemper has left more doubt than ever that it is more than a complex, costly solution for which the market is unwilling to pay.
The announcement came days after the Mississippi Public Service Commission put pressure on the project partners to abandon Kemper’s lignite coal section, and the companies acknowledged that the suspension of work was “the appropriate step to manage costs given the economics of the project”. And what were those economics? The coal gasification element of the plant’s construction caused a litany of delays and cost increases, which collectively took the project’s price tag to around $7.5bn – $4bn over budget – and pushed it three years behind schedule.
The eventual decision to suspend work on Kemper’s coal gasification units came as little to surprise to anyone who had been keeping up with the progress of the project, which has looked increasingly like a financial black hole for the last several years. Budget blowouts and delays have been a regular part of the project since construction started, and allegations of chronic mismanagement have dogged Southern Company and Mississippi Power.
A 2016 investigation by the Washington Post, which included interviews with whistle-blower Brett Wingo, revealed accusations that Kemper’s owners had consistently underestimated the remaining work schedule and understated rising costs, and noted only 15% of the plant had been designed when construction started. Engineers reportedly complained regularly of poor-quality work on the gasification units as a result of schedule pressure, including “leaking gaskets, cracked ductwork, and pipes missing inspection records, valves and supports”. One anecdote involved an outdoor exhaust pipe that had been found glowing red “because 1,400° gases were redirected through it”.
Now that work has been suspended on the project, key questions remain about the billions of dollars in cost overruns and where the bill should fall for the failed project’s $20m-a-month delays.
Kemper: not necessarily a death knell for clean coal
It’s clear that the Kemper project was plagued by issues, some of which may only become clear in the coming months and years, but which were separate to the CCS processes planned for the plant. Poor project management and a host of Kemper-specific issues shouldn’t necessarily sour a whole concept, and Southern Company’s proprietary transport integrated gasification (TRIG) coal gasification method, reportedly the cause of most of the project’s snags, was a complex system untested at this scale.
“They went from the pilot plant level to 600MW,” said Massachusetts Institute of Technology research engineer and CCS expert Howard Herzog in a June interview with E&E News. “People at the time thought they were way too ambitious. And it’s been proven out.”
Other projects, meanwhile, have made a better case for coal-fired generation with CCS integration. The Petra Nova project in Texas has successfully retrofitted CCS equipment on to the coal-fired WA Parish Generating Station virtually on-time and on-budget, officially beginning operations in April this year. The $1bn project has not employed coal gasification technology, opting for a more mature post-combustion carbon capture process using pulverised coal.
Petra Nova shows an operationally viable route to CCS for existing coal plants, rather than new facilities of the kind that aren’t really being built in developed countries anymore. Petra Nova “demonstrates that clean coal technologies can have a meaningful and positive impact on the Nation’s energy security and economic growth”, said Secretary of Energy Rick Perry at a visit to the facility in April.
However, the fact that a technology is technically feasible doesn’t necessarily mean that it makes economic sense. One of Kemper’s big selling points was that its TRIG process is able to gasify cheap, low-grade lignite coal would make it financially viable, as well as an attractive technology to export to lignite-rich countries such as India and China, which are also two of the main sources of demand for new coal-fired plants. Kemper’s flaws have likely scotched those technology export plans, while also serving as an active disincentive to invest in this kind of gasifier-based pre-combustion carbon capture technology.
Left behind: wider concerns for CCS
It’s another blow for a technology that is looking increasingly disadvantaged in the modern energy market. The rise of intermittent renewable energy technologies and a surge of inexpensive natural gas has changed the energy landscape and raised questions over whether clean coal, and CCS more broadly, has been left behind.
A new report published by UK-based think tank Global Warming Policy Foundation (GWFP) and authored by Professor Gordon Hughes, economics professor at the University of Edinburgh and former advisor to the World Bank, argues that the economics of CCS, especially for coal, don’t make sense today, and are unlikely to start doing so in the future.
Increasing renewables penetration means that there’s now less demand in developed countries for baseload fossil fuel plants; they are now required more often to back up intermittent clean energy generation, meaning they will operate at lower load factors and need to ramp up and down as required. This situation favours flexible gas plants over coal facilities in general, and also means that plants with CCS installed won’t be able to rely on constant operations to pay back large capital costs.
“Periods when renewable generation is low must be covered by generating plant that can respond quickly and operate economically at load factors of less than 50%,” reads the GWPF’s report. “Coal plants with CCS cannot meet this requirement.”
And CCS price tags remain high, with low general investment – both public and private – slowing the process of driving down technology costs. “[Nth-of-a-kind cost analyses for CCS] grossly underestimate the likely costs of carbon capture over the next 20-30 years,” argues the report. “Even if the learning rate was as high as is assumed, a cumulative investment of $500bn-$600bn in coal power plants with carbon capture and $300bn in gas plants with carbon capture would be required to bring costs down to the NOAK levels reported. There is little likelihood that OECD countries will be willing to commit the funds required.”
Even in the US, where the Trump administration has signalled greater support for the coal industry and where the president himself regularly namechecks clean coal, it looks like any helping hand won’t extend to actually footing the bill for any major CCS research. In May, the government proposed cutting the budget of the Office of Fossil Energy, which funds CCS research, as well as jettisoning a loan facility for private-sector CCS developers.