A new battle could soon be brewing over the future of the coal-fired Four Corners Generating Station near Farmington U.S. .
Photo: The San Juan Generating Station near Farmington. The plant is now closed after efforts to keep it going using carbon capture sequestration technology failed. - Chancey Bush / Journal
It’s the last coal plant still operating in New Mexico, and, until recently, most industry experts and environmental organizations expected the facility to shut down in 2031, when the coal contract and operating agreement among the plant’s five current co-owners come to an end.
But this past spring, the Navajo Transitional Energy Co., or NTEC — which owns a 7% stake in the coal plant — unveiled an agreement with Enchant Energy Corp. to keep Four Corners up and running for many more years through carbon capture and sequestration. The two partners say CCS technology could convert the facility into a clean generating station by trapping and burying most of the plant’s carbon emissions permanently underground.
But it’s a highly-controversial proposal that is not supported by the facility’s four other utility co-owners — including Arizona Public Service, Tucson Electric Power, the Salt River Project and Public Service Co. of New Mexico — who want to abandon the plant in 2031. And it’s opposed outright by most environmental organizations, who question the viability of CCS technology to fully capture carbon emissions, and who generally advocate for the rapid development of renewable resources like solar, wind and battery storage to replace fossil-fuel generation.
The new plan evokes collective déjà vu.
Enchant Energy previously partnered with the City of Farmington to also turn the nearby coal-fired San Juan Generating Station into a CCS facility, igniting a yearslong battle with environmentalists, plus acrimonious negotiations with San Juan’s other utility co-owners, who wanted to shut that plant down.
Enchant lost that battle because Farmington — which owned a 5% stake in San Juan — failed to gain ownership over the facility after the coal contract and operating agreement among the co-owners ended, leading to the plant’s permanent closure last fall. As a result, San Juan became the second of New Mexico’s three aging coal facilities to close, following shutdown of the coal-fired Escalante Generating Station near Grants in 2020.
That leaves only Four Corners standing. And the new Enchant and NTEC effort to use CCS technology to keep it running for many years more will undoubtedly ignite another bitter battle with environmentalists and others if they move forward, said Mike Eisenfeld, energy and climate program manager with the San Juan Citizens Alliance, which spearheaded opposition to Enchant’s previous CCS plan at San Juan.
“The other utilities together own 93% of Four Corners, and they all say they want to exit the plant in 2031,” Eisenfeld told the Journal. “The only way Enchant and NTEC can make their plan work is with massive federal subsidies. It’s a bad investment and a bad deal for the local community.”
Federal funding
In fact, Enchant and NTEC are aggressively seeking federal backing through U.S. Department of Energy programs that aim to invest up to $12 billion in government funding from the 2021 Infrastructure Investment Act to develop and deploy CCS technology across the country. In addition, the Inflation Reduction Act approved last year will offer billions more in tax credits for CCS developers for each ton of CO2 that they successfully capture and sequester underground.
The DOE opened negotiations with NTEC and Enchant last May to potentially award a multi-million dollar government grant to study the logistics for converting Four Corners into a carbon-capture facility, which could potentially lead to DOE financing for the project. It’s one of five projects nationwide — including more CCS conversion proposals for a different coal plant in Wyoming, and for three natural gas plants in other states — that DOE is now considering for grants under a $189 million program to finance Front-End Engineering and Design, or FEED, studies for potential CCS demonstration projects.
All told, the Infrastructure Act earmarked $12 billion for CCS-related investments, including $6.5 billion for technology development, $3.5 billion for demonstration projects, and $2.1 billion to build new pipelines to transport captured CO2 to storage sites and depositories.
That federal funding is feeding an industry scramble across the nation to tap into government money for scores, if not hundreds, of CCS projects to install CCS on power plants like Four Corners, at heavy industrial sites, and even on newly-created “direct air capture” facilities to pull CO2 directly out of the atmosphere.
Together with the Inflation Reduction Act, or IRA, tax credits, the federal effort constitutes an unprecedented government investment that’s igniting industry interest across the board, said Bob Balch, director of the Petroleum Recovery Research Center at the New Mexico Institute for Mining and Technology in Socorro.
NM Tech is the principal coordinator for DOE-funded efforts in New Mexico and 12 other western states to identify long-term underground CO2 storage sites for captured carbon. NM Tech helps investors to test those sites, and to develop monitoring, reporting and verification plans needed for federal permits to bring them into commercial operation.
That includes one underground storage site in San Juan County near the Four Corners plant that NM Tech has been working to develop for the past four years.
“The IRA tax credits in particular make investments in these projects very attractive by bringing down the costs through direct assistance that will last for years,” Balch told the Journal. “People are now very interested in pursuing it.”
Indeed, the U.S. Environmental Protection Agency, which oversees permitting for geological storage sites, has received more than 100 applications nationwide for new well permits. Taken together, those permit proposals reflect efforts to create a countrywide chain of CO2 storage sites that could eventually sequester billions of tons of annual carbon emissions.
And, apart from applying CCS to power plants and industrial sites, direct air capture, or DAC, is gaining momentum as well. The DOE awarded $1.2 billion in August for two novel DAC projects in Texas and Louisiana to directly pull carbon out of the atmosphere that will either be permanently sequestered underground, or used for industrial processes like chemical production. Those two DOE-funded initiatives — which together could capture some 2 million tons of ambient CO2 annually — are part of a new DOE “DAC hubs program” that aims to kick-start a nationwide network of direct-air carbon-removal sites.
The DOE opened negotiations in August for potential funding with developers to study 19 more DAC hubs in 13 different states, including one each in Colorado and Arizona.
NM Tech is now working with developers for the Arizona site, which, if funded, could send captured carbon to the New Mexico injection well that the university is helping to develop.
“NM Tech is part of the Arizona project, and some of the Arizona carbon may end up in the Four Corners at our storage site,” Balch told the Journal.
Hydrogen, CCS intertwined
Federal support for hydrogen development is also contributing to CCS deployment. That’s because nearly all hydrogen today is produced by pulling hydrogen molecules out of the methane contained in natural gas in a chemical process that emits substantial CO2, which developers plan to mitigate with carbon capture and sequestration technology.
The infrastructure law provides $8 billion in federal support to build new hydrogen hubs, or industry clusters, around the country. And, on Oct. 13, the DOE announced $7 billion in grants to help finance seven different hubs encompassing 16 states, most of which will produce hydrogen from natural gas using CCS.
New Mexico didn’t receive any DOE hub money. But one project by Tallgrass Energy — which New Mexico included in a hydrogen-hub proposal to the DOE — aims to convert the shuttered Escalante coal plant near Grants into a natural-gas-based hydrogen production facility. Tallgrass wants to restart that generating plant, using hydrogen instead of coal to run the turbines.
It plans to trap carbon emissions with CCS technology and ship the CO2 to the Four Corners for underground burial, likely at the same storage site that NM Tech is helping to develop.
The DOE awarded a $17.5 million grant in 2020 to evaluate that injection well as a CO2 storage site for Enchant Energy’s plan to convert the San Juan coal plant into a CCS facility. But when the Enchant plan crumbled last year, NM Tech continued its work on the well site.
“After Enchant Energy left, we joined up with Tallgrass,” Balch said. “So the CO2 from Escalante may end up there.”
Even without hydrogen-hub funding, Tallgrass still expects to pursue the Escalante plant conversion, relying in large part on the IRA tax credits for both hydrogen production and carbon sequestration to make the project economically viable.
The IRA allows hydrogen developers to receive up to $3 dollars in tax credits for every kilogram of hydrogen they produce, depending on how efficiently they capture CO2 emissions in the process. In addition, the Inflation Reduction Act substantially increased an existing tax credit for carbon sequestration, from $50 for each ton of sequestered CO2 previously to $85 per ton now.
Trillion dollar industry
CCS supporters say that technology is critical for the U.S. and other countries to reach net-zero carbon emissions by mid-century.
The Minneapolis-based Great Plains Institute — an energy and climate-focused nonprofit that’s leading a national Carbon Capture Coalition — held a three-day conference from Oct. 1-3 at the Tamaya Resort at Santa Ana Pueblo, where CCS advocates gathered to discuss advances in CCS technology development and deployment.
Speakers emphasized the urgency of building a “global carbon management industry” alongside the development of renewable energy like solar, wind and battery storage, which, they said, can’t by themselves offset enough CO2 emissions in the U.S. and elsewhere to contain global warming. They cited studies by the United Nations’ Intergovernmental Panel on Climate Change that call for the capture and removal of up to ten billion tons per year of CO2 by 2050 to limit the worst effects of global warming.
Global Carbon Capture and Storage Institute CEO Jared Daniels said there’s “scientific consensus” that CCS is an “absolute necessity.”
“We need gigaton-scale deployment of carbon capture and sequestration in parallel, and in addition to, all other carbon-reduction tools,” Daniels said in a keynote speech. “…No one has a crystal ball. But we need to capture on an order of 10% to 15% of today’s carbon emissions to get to net zero.”
According to Daniels, some $1 trillion in spending on CCS is needed just in the U.S. over the next several decades.
“That seems like a daunting amount,” Daniels said. “But if the government, financial institutions, nonprofit organizations and industry work together, it’s possible. And that’s what’s needed.”
Despite the challenges, Great Plains Institute CEO Rolf Nordstrom said CCS deployment provides an unprecedented opportunity for nationwide economic development that can preserve current jobs at existing carbon-emitting facilities, while simultaneously creating tens of thousands of new ones as carbon management becomes an industry unto itself.
“We have a monumental opportunity here,” Nordstrom told conference participants. “The next 30 years probably present the biggest opportunity for invention and innovation since the industrial revolution.”
Apart from the deployment of CCS technology itself, the Great Plains Institute says up to 60,000 miles of new pipelines stretching from coast to coast is needed to transport captured carbon from industrial centers and DAC facilities to permanent storage sites. That’s based on a Princeton University study — published in December 2020 and funded in part by the oil industry — which said today’s 5,000-mile CO2 pipeline system must expand to at least 65,000 miles by 2050 to manage a nationwide roll out of CCS technology.
Daniels said the IRA tax incentives for carbon sequestration will make nationwide CCS deployment economically viable, offering the emerging carbon-management industry a “catalytic opportunity.”
Environmental opposition
Despite Daniels’ assertion of “scientific consensus,” there’s a great deal of opposition to CCS technology, which has yet to be proven environmentally effective and economically viable on any commercial or utility-scale project to date.
CCS developers and advocates say they can achieve a 95% carbon-capture rate at power plants and other facilities where CCS is deployed, and the DOE is betting on that promise to justify federal investments in the technology. But no CCS project has ever demonstrated anywhere near that level of CO2 capture, whether on a power plant or industrial site, according to the Institute for Energy Economics and Financial Analysis, or IEEFA — an energy think tank that favors renewable resources.
In fact, a new IEEFA report released in September that studied CO2 capture rates at power plants where the technology has been deployed found that — based on publicly available data — the amount of carbon capture ranged from a low of just 32% on some natural gas facilities to a high of 83% on one coal plant in Texas called Petra Nova. And, even at that Texas facility, the operators had to run a gas-powered generating system to run CCS technology on the coal plant, with no effort to capture any of the CO2 emitted from the gas-based generator.
If those gas-generation emissions are included, it lowers the overall CCS capture rate at Petra Nova to between 65% and 75%, said David Schlissel, IEEFA Director of Resource Planning Analysis and co-author of the September report.
“CCS is still unproven in terms of the proposed capture rates that no project has achieved even in the short-term, let alone the long-term,” Schlissel told the Journal.
Another coal plant demonstration project in Canada called Boundary Damn that’s been operating for over a decade has only achieved an average carbon-capture rate of between 60% and 65%, said IEEFA energy analyst Dennis Wamsted.
“Boundary Damn has had plenty of time to work out the kinks,” Wamsted told the Journal. “If it can’t do better after 10-plus years of operating, the bet is it will never get to the promised 90% to 95% capture rate…IEEFA has researched CCS at power plants for over five years now and it’s never performed up to expectations.”
Advocates say technology improvements will lead to much higher capture rates over time as investment in CCS development and deployment ramps up, especially if the technology is applied to natural gas plants and other industrial processes rather than coal facilities. That’s because carbon capture is much more difficult and expensive on coal plants compared with natural gas-based generation and industrial production, where carbon emissions tend to be much more concentrated and easier to trap.
But many environmentalists see that as an expensive, risky investment that will waste time in the midst of today’s climate crisis. Federal and private money would be better spent on aggressive renewable development, Schlissel said.
“We’re facing a crisis today,” he said. “Pursuing these technologies will only prolong coal and other carbon-emitting generation. We can’t pretend like we can keep burning fossil fuels as usual.”
In that regard, many environmental organizations see CCS as a “greenwashing” ploy by the fossil fuel industry to perpetuate oil and gas production — and even coal-based generation — well into the future. Indeed, the federal tax incentives for carbon sequestration have basically turned a waste product into a bankable commodity that’s attracted major investments by some of the world’s largest oil companies, such as Exxon, according to an extensive report last May by Washington, D.C.-based Politico, which conducted a three-month investigation.
Exxon unveiled a new, “Low Carbon Solutions” business segment in 2021 that the company now says can capture 9 million tons of CO2 per year, representing a fifth of today’s total carbon-capture capacity, according to Politico. In fact, earlier this year, Exxon’s Low Carbon Solutions leader, Dan Ammann, told investors that the company’s carbon-capture business could eventually become “quite possibly larger than Exxon’s base business is today.”
Ammann also told Politico that the Inflation Reduction Act helped move carbon capture projects in general “off the PowerPoint and into the real world.”
Local community pushback
Not all environmental groups agree on CCS deployment, with some mainstream organizations like the Environmental Defense Fund, or EDF, tentatively supporting its development, depending on where and how its deployed.
Modeling by the International Energy Agency, Princeton University and others show that carbon capture and sequestration will be needed to reach net-zero by 2050, EDF Director and Senior Attorney Adam Peltz said.
“It does seem like some, and possibly a lot, of CCS will be needed,” Peltz told the Journal. “The first 80%, say, could be achieved through renewable development, energy efficiency and other carbon-reduction measures. But we may need it to go from that to zero.”
That includes DAC technology to directly pull CO2 out of the air.
“There’s not many ways to lower CO2 in the atmosphere to deal with historical emissions, but this is one of them,” Peltz said. “And you can site those facilities right next to storage sites to avoid building CO2 pipelines, which are a real red flag.”
But any CCS development — including pipeline construction and operation — must be carefully vetted to protect public health with direct input from local communities, many of which fear potential accidents from CO2 pipelines and impacts from geological storage sites that could contaminate underground water resources, induce seismic activity, and possibly leak carbon back into the atmosphere, Peltz said.
In local communities like the Four Corners, environmental organizations and grassroots groups expect to aggressively push back against CCS development, including Enchant Energy’s plan to turn the Four Corners Generating Station into a CCS facility, and Tallgrass Energy’s project to convert the Escalante coal plant into a hydrogen production plant, said Mike Eisenfeld of the San Juan Citizens Alliance.
“We’ve worked hard up here to transition away from fossil fuels to renewable resources, and we don’t want to move backwards,” Eisenfeld told the Journal. “We’ll actively oppose those CCS plans in all state and federal permitting processes that both Enchant Energy and Tallgrass will face. The Enchants of the world are promoting a false conception in local communities that these projects provide a climate solution, and it isn’t true.”
source: abqjournal.com
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