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    Appalachian Power president tells Public Energy Authority that carbon capture has a financial viability problem


    June 29, 2022 - Mike Tony, The Charleston Gazette-Mail, W.Va.

     

      Jun. 29—The head of Appalachian Power has renewed his observation that carbon capture and storage isn't a financially feasible option for the company.

      Appalachian Power president and chief operating officer Chris Beam told West Virginia Public Energy Authority members that carbon capture and storage isn't a financially feasible option for the company at their monthly meeting last week.

      Politicians representing constituencies like West Virginia, where coal still plays a major role in the economy and electric generation, have embraced developing carbon capture, use and storage technologies as a way to keep coal in the energy mix amid the country's shift toward reducing emissions and the rise of renewable resources.

      Carbon capture, use and storage is an umbrella term for technology that removes carbon dioxide from the atmosphere and uses it to create products or store it permanently underground.

      Such technology, which proponents envision as retrofitting commercial power plants to mitigate coal and gas asset emissions, is unproven at commercial scale.

      "Somebody's going to have to try to prove that it works," Beam told the Public Energy Authority.

      That isn't likely to be Appalachian Power because a past carbon capture project at the company's Mountaineer coal-fired power plant in Mason County proved costly, Beam recalled.

      "We lost a lot of money on that project. So we're not willing, I don't think, to take on another one," Beam said.

      The Mountaineer plant was one of the eight coal carbon capture and storage projects the Department of Energy selected for funding. The plant was the site of a carbon capture project from 2009 to 2011.

      Appalachian Power parent company American Electric Power proposed to capture at least 90% of carbon dioxide emitted in a 235-megawatt flue gas stream, including capabilities for permanently injecting carbon dioxide into underground formations near the capture facility, according to a December audit report from the Government Accountability Office, a federal watchdog agency.

      It likely would cost $850 million to $1 billion to build a new project for the same level of carbon capture for 235 megawatts, according to a briefing document that was discussed at a September meeting between U.S. Sen. Joe Manchin, D-W.Va., Beam and Public Service Commission Chairman Charlotte Lane. The document was obtained by the Energy and Policy Institute, a utility watchdog group that supports a transition to renewable energy.

      AEP withdrew from the initiative at the end of the definition phase, citing a lack of legislative and regulatory support for cost recovery that it had anticipated at the time of its original application to the Energy Department and limited support from outside partners, the Government Accountability Office noted.

      "[W]hat we really need is the advancement of the technology. That's what we've been trying to push the government toward is we need to figure out how to make it more efficient so it doesn't use so much energy," Beam told the Public Energy Authority. "And that would solve a lot of that problem."

      Beam said Appalachian Power discovered it couldn't store carbon underground at the Mountaineer plant.

      The nearest geological formation that would allow for long-term storage of carbon in large enough quantities to be feasible is in Illinois, Beam said.

      Interstate pipeline use would be needed to support carbon capture technology since the quantities are too large for trucks to carry, Beam told authority board members.

      Beam said Appalachian Power is "all in" on developing carbon capture technology — if it's more economically feasible than it was for the Mountaineer plant project.

      Outgoing Public Energy Authority chairman and state Department of Commerce Secretary Ed Gaunch noted a bill introduced by Rep. David McKinley, R-W.Va., last year that would require the Department of Energy to establish a net-negative carbon dioxide baseload power commercialization program under which the agency must promote redevelopment of coal-fired plants with technologies that allow them to produce power with net-negative carbon emissions.

      The Net-Negative Baseload Power Act, House Resolution 4891, would set aside $300 million in program grant funding for project concept studies and administrative expenses.

      The bill defines net-negative carbon dioxide emissions projects as those in which carbon emitted by a project are less than the carbon stored by the project.

      Former U.S. Department of Energy Assistant Secretary for Fossil Energy Steven Winberg told the Public Energy Authority at its April meeting that it would cost $30 billion in funding for cost-shared retrofit demonstrations at roughly 10 plants to be converted to net-negative emitters. He argued taxpayer dollars would be the most effective way to prompt engineering and economic studies at coal power plant sites.

      The Public Energy Authority has been hearing presentations from representatives of energy industries and users in its first handful of meetings since it was rebooted by Gov. Jim Justice in August.

      Justice said in August that the authority would aid in "developing the next generation of coal plants," and announced his reactivation of the board at the West Virginia Coal Association's 2021 annual conference. The authority had been dormant the past decade. Since reforming, board members have expressed interest in incorporating carbon capture into the state's energy portfolio.

      Lane has been interested in getting federal funding for carbon capture at the Mountaineer plant. She said she met with Manchin in September to ask him to support funding.

      Federal funding of close to 100% of capital costs would be needed, since the projected level of operating costs for utility customers would be unsustainable, according to the briefing document discussed at their meeting.

      If the entire Mountaineer plant were converted to carbon capture technology, the capital cost could range between $3 billion and $5 billion, and operating costs could jump by 25% to 35%, according to the briefing document.

      Manchin was supportive of federal funding for carbon capture at the Mountaineer plant, but he did not specify an amount, Lane said in an emailed comment provided by commission spokeswoman Susan Small in October.

      Manchin's office did not comment on the meeting with commission and Appalachian Power representatives, responding to a request for comment by highlighting his Energy Infrastructure Act, which served as legislative text for key portions of an infrastructure law approved by Congress in November authorizing more than $12 billion for carbon capture technologies.

      Also backed by McKinley and Sen. Shelley Moore Capito, R-W.Va. and opposed by West Virginia Republican Reps. Alex Mooney and Carol Miller, the infrastructure law enacted in November authorized $3.4 billion over four years for large-scale carbon capture pilot and demonstration projects.

      The Government Accountability Office's December audit report noted that Energy Department investments in 11 carbon capture and storage demonstration projects totaling $1.1 billion since 2009 had resulted in only three operational facilities.

      The office found that coal carbon capture and storage projects were less successful than such projects at industrial facilities like chemical plants.

      Decreased natural gas prices, uncertainty regarding carbon markets, high expected project costs and expiration of funds from a 2009 federal stimulus package lessened the economic viability of coal power plants and, thus, the carbon capture and storage projects, the report says, citing Energy Department officials and project representatives.

      Mike Tony covers energy and the environment. He can be reached

      at 304-348-1236 or mtony@hdmediallc.com. Follow

      @Mike__Tony on Twitter.

      ___

      (c)2022 The Charleston Gazette (Charleston, W.Va.)

      Visit The Charleston Gazette (Charleston, W.Va.) at www.wvgazette.com

      Distributed by Tribune Content Agency, LLC.

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