DOE Sank Billions of Fossil Energy R&D Dollars in CCS Projects. Most Failed.

  • Oct 09, 2018
  • Power Magazine

Nearly half of the $2.66 billion spent by the U.S. Department of Energy (DOE) since 2010 to develop advanced fossil energy technologies was dedicated to nine carbon capture and storage (CCS) demonstration projects—but only three were active at the end of 2017, and only one was at a power plant.

In a report prepared for the Senate Energy and Natural Resources that was released on October 1, the Government Accountability Office (GAO) says that the DOE provided $2.66 billion in funding or obligations to 794 fossil energy research and development (R&D) projects. Of the total $2.66 billion it spent since 2010 (the year that the DOE’s current data management system came into use), about $1.12 billion was provided—in amounts ranging from $13 million to $284 million—to nine “later-stage, large demonstration projects that were to assess the readiness for commercial viability of CCS technologies.” Six of these projects used coal, and the other three used methane, ethanol, and pet coke. Industry paid an additional $610 million in cost-share for these projects, the GAO found.

But out of these nine projects, the DOE withdrew its support for four projects (costing the DOE $475 million):

Two large demonstrations associated with FutureGen 2.0, which it began in 2011 and scrapped in 2015, after the DOE spent $200 million. “DOE directed the suspension of FutureGen 2.0 project development activities in February 2015 because DOE concluded that there was insufficient time to complete the projects before the closure of the Recovery Act appropriations account on September 30, 2015,” the report notes.

Hydrogen Energy California, a proposed integrated gasification combined cycle (IGCC) plant and fertilizer plant with CCS, which was abandoned in July 2015, after the DOE spent $154 million. The project faced a number of challenges, “such as obtaining permits, planning a railroad extension, and securing additional financing sources for construction,” DOE officials told the GAO.

Summit Texas Clean Energy, another IGCC project with CCS in Penwell, Texas, but which was officially dead in 2017, after the withdrew its support, despite $120 million in DOE funding.

The DOE said the project failed to achieve the technical objectives specified under the DOE award and had not secured financing for the project. In 2016, the DOE Office of Inspector General issued a report about its viability, the GAO noted, and a full audit report issued later in 2018 expressed concerns about the DOE’s management of its financial aspects.

Two other projects were withdrawn by the recipient (costing the DOE $30 million):

American Electric Power’s Mountaineer project to capture CO2 from a coal plant near New Haven, West Virginia. AEP froze the project in 2011 for uncertainty in U.S. climate policy and the weak economy. The DOE provided $17 million.

Lecadia Energy’s CO2 capture from a pet coke-to-chemicals gasification plant in Lake Charles, Louisiana. The DOE provided $13 million.

The DOE said that these six projects did not reach completion due to several factors, “such as a lack of technical progress, or changes in the relative prices of coal and natural gas that made the projects economically unviable.”

Distribution of Department of Energy (DOE) Funding for Advanced Fossil Energy Research and Development (R&D) Projects that Started from Fiscal Years 2010 through 2017 Source: GAO

Only three major projects—just one of which was at a power plant—remained active at the end of FY2017 and cost the DOE a combined $615 million:

Petra Nova (POWER’s 2017 Plant of the Year), a project that began capturing 90% of CO2 emitted from a flue gas stream from NRG Energy’s 3.7-GW W.A. Parish power plant in Texas in November 2016.  The DOE, which will be involved in the project until December 2019, provided $190 million between 2010 and 2017. “While the economics of carbon capture and Petra Nova remain challenging, the plant is running as designed and has captured more than two million tons of CO2,” NRG spokesperson David Knox told POWER on October 9.

The project remains only one of two power-related operational CCS projects in the world. The second is Boundary Dam in Canada (POWER’s 2015 Plant of the Year). Southern Co.’s Kemper County, Mississippi, IGCC project would have been the third, but it was scrapped in June 2017 days before it was slated to go in-service after delays prompted cost overruns that put the total project price tag at $7.5 billion. According to the GAO, Kemper’s fate appears expected. “It is not unusual for projects in the demonstration phase of the R&D process to experience higher-than-anticipated costs, delays, and other challenges,” it said.

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