By David Garman and Dan Reicher - 11/16/15 05:30 PM EST
On energy issues, as with so much else, Democrats and Republicans seem to disagree about almost everything these days. Republicans support the Keystone XL pipeline and want to end the ban on crude oil exports, positions that most Democrats oppose. Democrats favor long-term extensions of tax incentives for renewable energy and Environmental Protection Agency regulations on greenhouse gases, positions most Republicans oppose.
Yet, amid the bickering, one of America’s most promising and potentially transformative energy technologies remains a policy and political orphan, even as it demonstrates unique energy, economic and emissions benefits.
For Republicans (and some coal state Democrats), CCS represents a way to more fully utilize America’s vast coal and natural gas reserves while increasing domestic oil production through the use of enhanced oil recovery — a process where the captured CO2 is injected into older oil fields to increase yield at low cost. For Democrats, CCS represents a way to cut CO2 emissions, not only from fossil fuel power plants but also from industrial sources such as oil refineries, cement plants and ethanol facilities.
On the surface, 2015 has been a rough year for CCS. The Department of Energy canceled the CCS pilot FutureGen project and returned more than $1 billion in stimulus funding to the U.S. Treasury from other CCS projects that were not making adequate progress. The Kemper CCS project in Mississippi developed by Southern Co., a large U.S. utility, has suffered significant cost overruns, while Drax, a British power producer, announced that it would end further investment in the United Kingdom’s White Rose CCS project.
Moreover, low oil prices have reduced the value of CO2 in the enhanced oil recovery market, while cheap natural gas and the falling cost of renewable energy have put pressure on power prices.
Nevertheless, some CCS projects are moving ahead. NRG, the nation’s largest independent power producer, is adding CCS to an existing coal-fired power plant in Texas. An estimated 90 percent of the plant’s carbon dioxide emissions will be captured, used for enhanced oil recovery and ultimately sequestered in an oil field 80 miles away. Meanwhile, in Canada, SaskPower’s Boundary Dam CCS project just celebrated its first year of operation and should eventually capture 1 million tons per year of CO2 from a coal-fired power plant for use in the oil fields of southern Saskatchewan. And electricity giant Exelon is partnering with Net Power to build a path-breaking power plant that burns natural gas with pure oxygen to produce high-pressure, supercritical carbon dioxide to drive a combustion turbine and generate power without air emissions.
Importantly, beyond fossil fuel power plants, there is good news on CO2 capture from top industrial emitters, often at relatively low cost. Industrial CCS projects are already operating at a major ethanol plant in Illinois, an oil refinery in Texas and fertilizer facilities in Oklahoma, Kansas and North Dakota. And the Chinese have a parallel effort that is making significant progress with CCS for both industrial and power facilities.
These are the pioneers of a potentially game-changing global enterprise. However, for CCS to reach its extraordinary promise, incentives are needed.
Every major new energy technology has enjoyed substantial government help initially, from solar panels and wind turbines to natural gas fracking, nuclear power plants and biofuels. While many in Congress have an understandable aversion to government support, CCS incentives could actually pay for themselves by driving higher oil production and resulting royalty payments to individuals and governments while also increasing tax revenues to local, state and federal coffers.
Tax credits, private activity bonds and master limited partnerships are some of the incentives that could help bring CCS technology into its own, at low cost relative to many existing energy subsidies. Support is growing. A comprehensive new report on CCS from Brookings Institution scholars David Banks and Tim Boersma released recently urges federal action on these and other incentives. And, as additional CCS projects are built, their construction and operating costs will fall, ending the need for subsidies.
To cut emissions deeply, these projects must go well beyond coal-fired power plants — in the U.S. and globally. At the same time, market applications and uses for CO2 must be expanded, from revitalizing old oil fields today to making plastics, cement and the liquid fuels of tomorrow. Every major climate change scenario that includes the large reductions in CO2 emissions many scientists are calling for assumes that CCS will be widely deployed in the next two decades. Unfortunately, even as major nations are counting on CCS technologies to cut emissions, they have not yet made the required investments.
The U.S. should provide targeted, cost-effective incentives to drive down CCS technology costs and thus eliminate the need for government support over time. Given its many policy benefits, such incentives should be a top priority for the Congress, and candidates of both parties.
Garman, principal and managing partner at Decker Garman Sullivan LLC, was an assistant secretary and undersecretary of Energy in the George W. Bush administration. Reicher, executive director of Stanford’s Steyer-Taylor Center for Energy Policy and Finance, was an assistant secretary of Energy in the Bill ClintonBill ClintonClinton allies see big boost from Brown endorsement Aide: Clinton wasn't close to IT expert who managed server The Hill's 12:30 Report MORE administration. The views expressed here are their own.