Carbon Capture, Storage Too Expensive, Commercial Outlook Dim, CBO Says

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Carbon capture and storage (CCS) is still too expensive to be commercially viable, and federal efforts to reduce the cost have not yet been fruitful, according to a report released by the Congressional Budget Office June 28.

Congress has provided $6.9 billion in funding to the Energy Department since 2005 to develop and demonstrate the commercial potential of carbon capture and storage, but the efforts have not brought the cost of the technology down significantly enough to make it economically viable, according to the report, Federal Efforts to Reduce the Cost of Capturing and Storing Carbon Dioxide. CBO prepared the report at the request of the Senate Energy and Natural Resources Committee.

CCS is the practice of trapping emissions from burning coal, compressing them into a fluid, and storing it deep underground. The Obama administration said it is on track to complete six CCS demonstration projects by 2016 and has said the technology will be commercially viable within 10 years.

But making the technology economically viable would require a large investment in installing carbon capture and storage systems at new or existing power plants, and such an investment seems unlikely, CBO found.

“In the absence of a significant technological breakthrough, it seems clear that a large amount of new CCS capacity … would be needed to reduce costs substantially,” CBO said. “Such an investment seems unlikely in the foreseeable future and it might not occur even if the technology became more competitive economically.”

Unlikely Without Federal Policy

Producing energy at coal-fired plants using carbon capture and storage technology is estimated to cost about 75 percent more than producing electricity at conventional coal-fired plants, CBO said.

Utilities would need to create more than 200 gigawatts of coal-fired generating capacity with carbon capture and storage, or two-thirds of the total current coal-powered generating capacity in the United States, to make electricity cost only 35 percent more than electricity from traditional coal.

The cost would drop as the technology became more widely available and equipment manufacturers and construction companies gained experience manufacturing and installing the systems.

But even if the cost declined, electricity generated from coal-fired plants with CCS would not be competitive with electricity from traditional coal-fired plants unless the federal government set policies restricting emissions or putting a price on carbon, CBO found. Under current laws and policies, utilities are unlikely to invest in carbon capture and storage for many decades, CBO said.

EPA Proposal Pushes Carbon Capture

EPA proposed a rule in April that would set the first carbon dioxide emissions limits on power plants. Existing coal-fired power plants would be able to meet the proposed requirements by installing CCS equipment, according to EPA. But the power industry has argued that the technology is not commercially viable.

And even if the price of carbon capture and storage technologies drops, coal-fired plants with CCS would still have to compete with nuclear power, wind, biomass, other renewables, and natural gas, all of which produce little or zero emissions, CBO said.

To make carbon capture more cost-competitive, CBO suggested that the government could take the following actions:

• redirect funding that is going toward CCS demonstration projects to research and development,

• impose costs, such as a carbon tax, on electricity users whose generation releases greenhouse gases,

• experiment with different types of subsidies that would provide more incentive for private-sector investments in CCS, and

• reduce or eliminate future spending for CCS, leaving investment in carbon capture and storage development mostly to countries like China and India, whose demands for electricity are increasing at a faster rate than the U.S. demand.

 

By Avery Fellow  


The CBO report, Federal Efforts to Reduce the Cost of Capturing and Storing Carbon Dioxide, is available at http://1.usa.gov/QuMsHc.