Carbon capture and sequestration program of the U.S. Department of Energy
The U.S. Department of Energy Carbon Capture and Sequestration (CCS) program has had three main elements:
- core research and development, consisting of laboratory and pilot-scale research for developing new technologies and systems for greenhouse gas mitigation;
- demonstration and deployment, consisting of demonstration projects to test the viability of large-scale CCS technologies using regional partnerships; and
- support for the DOE FutureGen project.
FutureGen was a 10-year initiative to build a near-zero emissions integrated carbon sequestration and hydrogen production power plant. DOE announced on January 30, 2008, that the focus for FutureGen would shift away from its original concept, a decision that sparked some controversy and led to efforts to restore funding for a near zero emission plant or plants (see below).
According to DOE, the overall goal of the CCS program is to develop, by 2012, systems that will achieve 90% capture of CO2 at less than a 10% increase in the cost of energy services and retain 99% storage permanence. The research aspect of the DOE program includes a combination of cost-shared projects, industry-led development projects, research grants, and research at the National Energy Technology Laboratory. The program investigates five focus areas: (1) CO2 capture; (2) carbon storage; (3) monitoring, mitigation, and verification; (4) work on non-CO2 greenhouse gases; and (5) advancing breakthrough technologies.
After the 2007 DOE roadmap and program plan was made available, Congress passed the Energy Independence and Security Act of 2007 (P.L. 110-140), which authorized an expansion of the DOE carbon sequestration research and development program and increased its emphasis on large-scale underground injection and storage experiments in geologic reservoirs. The American Recovery and Reinvestment Act (ARRA) of 2009 provides up to $3.4 billion for CCS-related activities at DOE through FY2010, which will likely alter DOE’s CCS program priorities over that time frame, although which specific projects and programs will receive funding is not clear.
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DOE CCS Research and Development Funding through FY 2008
The U.S. federal government has recognized the potential need for CCS technology—as part of broader efforts to address greenhouse-gas induced climate change—since at least 1997, when DOE spent approximately $1 million for the entire CCS program. DOE spending on the CCS program has increased over the 11-year period to its highest amount in FY2008 of $118.9 million. (Note the the Fiscal Year of the U.S. Federal government runs from October 1 of the prior calendar year to September 31 of the specified year). If DOE spending for FutureGen is included, together with carbon-capture technology investments through the Innovations for Existing Plants (IEP) and theAdvanced Integrated Gasification Combined Cycle(AIGCC) programs (also within the DOE Office of Fossil Energy), then CCS spending at DOE would equal nearly $283 million for FY2008. If the Bush Administration’s budget request for FY2009 were fully funded, then overall spending for CCS R&D could equal $414 million, a 46% increase over FY2008 spending levels. As noted above, funding provided under ARRA will likely increase funding for CCS-related programs dramatically above FY2008 levels.
?Loan Guarentees and Tax Credits
Appropriations represent one mechanism for funding carbon capture technology R&D; others include loan guarantees and tax credits, both of which are available under current law. Loan guarantee incentives that could be applied to CCS are authorized under Title XVII of the Energy Policy Act of 2005 (EPAct2005, P.L. 109-58). Title XVII of EPAct2005 (42 U.S.C. 16511-16514) authorizes the Secretary of Energy to make loan guarantees for projects that, among other purposes, avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases. The Consolidated Appropriations Act for FY2008 (P.L. 110-161) provided loan guarantees authorized by EPAct2005 for coal-based power generation and industrial gasification activities that incorporate CCS, as well as for advanced coal gasification. The explanatory statement accompanying P.L. 110-161 directed allocation of $6 billion in loan guarantees for retrofitted and new facilities that incorporate CCS or other beneficial uses of carbon.
Title XIII of EPAct2005 provides for tax credits that can be used for Integrated Gasification Combined Cycle (IGCC) projects and for projects that use other advanced coal-based generation technologies (ACBGT). For these types of projects, the aggregate credits available total up to $1.3 billion: $800 million for IGCC projects, and $500 million for ACBGT projects. Qualifying projects under Title XIII of EPAct2005 are not limited to technologies that employ carbon capture technologies, but the Secretary of the Treasury is directed to give high priority to projects that include greenhouse gas capture capability. Under the same title of EPAct2005, certain projects employing gasification technology would be eligible to receive up to $650 million in tax credits, and these projects would also receive high priority from the Secretary of the Treasury if they include greenhouse gas capture technology.
(Under Title XIII of EPAct2005, gasification technology means any process that converts a solid or liquid product from coal, petroleum residue, biomass, or other materials, which are recovered for their energy or feedstock value, into a synthesis gas (composed primarily of carbon monoxide and hydrogen) for direct use in the production of energy or for subsequent conversion to another product.)
Regional Carbon Sequestration Partnerships
Beginning in 2003, DOE created seven regional carbon sequestration partnerships to identify opportunities for carbon sequestration field tests in the United States and Canada:
- Midwest Regional Carbon Sequestration Partnership;
- Midwest (Illinois Basin) Geologic Sequestration Consortium;
- Southeast Regional Carbon Sequestration Partnership;
- Southwest Regional Carbon Sequestration Partnership;
- West Coast Regional Carbon Sequestration Partnership;
- Big Sky Regional Carbon Sequestration Partnership; and
- Plains CO2 Reduction Partnership
The regional partnerships program is being implemented in a three-phase overlapping approach: (1) characterization phase (from FY2003 to FY2005); (2) validation phase (from FY2005 to FY2009); and (3) deployment phase (from FY2008 to FY2017). The third phase, deployment, is intended to demonstrate large-volume, prolonged injection and CO2 storage in a wide variety of geologic formations. According to DOE, this phase is to address the practical aspects of large-scale operations, with an aim toward producing the results necessary for commercial CCS activities to move forward. On November 17, 2008, DOE announced it was awarding the seventh, and last, award for the large-scale carbon sequestration projects under phase three.67 DOE has now awarded funds totaling $457.6 million (an average of $65 million per project) to conduct a variety of large-scale injection tests over several years. In addition to DOE funding, each partnership also contributes funds ranging from 21% to over 50% of the total project costs.
FutureGen
On February 27, 2003, President Bush proposed a 10-year, $1 billion project to build a coal-fired power plant that integrates carbon sequestration and hydrogen production while producing 275 megawatts of electricity, enough to power about 150,000 average U.S. homes. As originally conceived, the plant would have been a coal-gasification facility and would have produced and sequestered between 1 and 2 MtCO2 annually. On January 30, 2008, DOE announced that it was “restructuring” the FutureGen program away from a single, state-of-the-art “living laboratory” of integrated R&D technologies—a single plant—to instead pursue a new strategy of multiple commercial demonstration projects.69 In the restructured program, DOE would support up to two or three demonstration projects of at least 300 megawatts and that would sequester at least 1 MtCO2 per year.
In its budget justification for FY2009, DOE cited “new market realities” for its decision, namely rising material and labor costs for new power plants, and the need to demonstrate commercial viability of Integrated Gasification Combined Cycle (IGCC) power plants with CCS. The
budget justification also noted that a number of states are making approval of new power plants contingent on provisions to control CO2 emissions, further underscoring the need to demonstrate commercial viability of a new generation of coal-based power systems, according to DOE. For FY2009, DOE requested $156 million for the restructured program, and specified that the federal cost-share would only cover the CCS portions of the demonstration projects, not the entire power system.
Prior to DOE’s announced restructuring of the program, the FutureGen Alliance—an industry consortium of 13 companies—announced on December 18, 2007, that it had selected Mattoon, IL, as the host site from a set of four finalists (Mattoon, IL; Tuscola, IL; Heart of Brazos (near Jewett, TX); and Odessa, TX.) In its January 30, 2008, announcement, DOE stated that the four finalist locations may be eligible to host an IGCC plant with CCS under the new program.
In the debate leading up to enactment of ARRA, the Senate amendment to H.R. 1 (known as the Collins-Nelson amendment) contained language under Fossil Energy Research and Development that made $2 billion “available for one or more near zero emissions powerplant(s).” Some observers noted that the language may refer to a plant or plants similar to the original conception for FutureGen, although the Senate amendment did not refer either to FutureGen or to a specific location where the plant would be built. The language referring to zero-emissions power plant(s) was removed in conference and is not included in the conference report to accompany P.L. 111-5
(ARRA).
The American Recovery and Reinvestment Act (ARRA) of 2009
Funding for carbon capture and sequestration technology may increase substantially as a result of enactment of ARRA (P.L. 111-5). In the compromise legislation considered in conference on February 11, 2009, the conferees agreed to provide $3.4 billion through FY2010 for fossil energy research and development. Of that amount, $1.52 billion would be made available for a competitive solicitation for industrial carbon capture and energy efficiency improvement projects, according to the explanatory statement accompanying the legislation. This provision likely refers to a program for large scale demonstration projects that capture CO2 from a range of industrial sources. A small portion of the $1.52 billion would be allocated for developing innovative concepts for reusing CO2, according to the explanatory statement. Of the remaining $1.88 billion, $1 billion would be available for fossil energy research and development programs. The explanatory statement does not specify which program or programs would receive funding, however, or how the $1 billion would be allocated. Of the remaining $880 million, the conferees agreed to allocate $800 million to the DOE Clean Coal Power Initiative Round III solicitations, which specifically target coal-based systems that capture and sequester, or reuse, CO2 emissions. Lastly, $50 million would be allocated for site characterization activities in geologic formations (for the storage component of CCS activities), $20 million for geologic sequestration training and research, and $10 million for unspecified program activities.
If the bulk of the $3.4 billion agreed to by conferees for fossil energy research and development is used for CCS activities, it would represent a substantial infusion of funding compared to current spending levels. It would also be a large and rapid increase in funding over what DOE spent on CCS cumulatively over the 11 years between FY1997 through FY2007 (slightly less than $500 million). Moreover, the bulk of DOE’s CCS program would shift to the capture component of CCS, unless funding for the storage component increases commensurately in annual appropriations. The large and rapid increase in funding, compared to the magnitude and pace of previous CCS spending, may raise questions about how efficiently the new funding could be used to spur innovation for carbon capture technology.
Further Reading
- DOE Carbon Sequestration Technology Roadmap and Program Plan 2007 (accessed September 4, 2009)
- CCS research and development program line item in the DOE budget (part of the Office of Fossil Energy), U.S. Department of Energy, FY2009 Congressional Budget Request, Volume 7, DOE/CF-030 (Washington, DC, February 2008).
- Committee print of the House Committee on Appropriations, Consolidated Appropriations Act, 2008, H.R. 2764/P.L. 110-161
- DOE Carbon Sequestration Regional Partnerships
- DOE Carbon Sequestration Technology Roadmap and Program Plan 2007,
- DOE award of $66.9 million to the Big Sky Carbon Sequestration Partnership.
- [DOE Announces Restructured FutureGen Approach to Demonstrate Carbon Capture and Storage Technology at Multiple Clean Coal Plants]
Note: The first version this article was drawn from Carbon Capture and Sequestration by Peter Folger, Congressional Research Service, February 23, 2009.
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