“No, I have to do this my way. You tell me what you know, and I’ll confirm. I’ll keep you in the right direction if I can, but that’s all. Just… follow the money.”

- Deep Throat to Bob Woodward, All The President’s Men (1976).

Yesterday’s post at MasterResource presented seven areas where the American Clean Energy and Security Act of 2009 (H.R. 2454, aka Waxman-Markey) bribed segments of the electric utility industry into support. So it should come as no surprise that there are specific companies and technologies that are well positioned to gain quick, big bucks by its legislative requirements should climate legislation become law  in its current form.

I have discussed carbon legislation with many of these companies that publicly declare their concern about anthropogenic climate change yet privately see this as the greatest money-making opportunity of their lifetimes. The Bootleggers and Baptist model of government intervention is in clear evidence. Adam Smith must be turning over in his grave given the enormous “invisible handout” that Waxman–Markey provides to a select few in the electricity generation market.

Five Link Chain

In “Federal Actions Will Greatly Affect the Viability of Carbon Capture and Storage as a Key Mitigation Option,” released September 30, 2008, the GAO found that a key technological barrier to carbon capture and storage (CCS) deployment was a lack of experience in capturing significant amounts of CO2 from commercial-scale power plants. The significant cost of retrofitting existing plants, which it deemed “the single-largest source of CO2 emissions in the U.S.,” also hampered deployment. The GAO also found that both the EPA and DOE had yet to comprehensively tackle the full range of issues that would require resolution for large-scale deployment. The GAO was spot-on in their conclusions.

The development of alternative CCS technologies designed to retrofit existing coal-fired plants must at some point converge into a commercially reliable supply chain consisting of five separate, equally important and interdependent steps: capture, compression, transportation and pumping, injection into geologic structures, and long-term storage and monitoring of CO₂ sites. Each of these technologies can be likened to an individual link in a chain.

The many hands that wrote H.R. 2454 forgot that the entire CCS process is only as strong as the chain’s weakest link. The failure of one technology to mature coincident with the other technologies necessarily causes a chain failure. Given that a 500-MW coal-fired plant produces about 3.5 million tons of CO₂ per year, the complexities of such an operation on a national level for hundreds of coal-fired plants defies description.

A Washington Times article in January that pointed out that H.R. 2454 includes an exemption for plants that are now under construction and pointed specifically at Duke Energy’s Cliffside Plant and Edwardsport IGCC project in Indiana. The Washington Times also noted that Duke had a strong role in shaping H.R. 2454 because it helped draft the US-CAP blueprint that provided the basis for H.R. 2454 cap-and-trade system design.

US-CAP counts General Electric and Conoco Phillips (which together account for over 90% of the IGCC project designs in the U.S.), major coal-fired utility Duke Energy, one of the nation’s largest nuclear utilities Exelon, and the three largest equipment manufacturers in the power generation space with GE, Siemens and Alstom, among their membership

Focus on “Capture” Technologies

In this post, we examine only the “post-combustion capture” link of the CO₂ supply chain. It’s an appropriate place to begin given that many vendors and utilities are hyper-focused on this first, very capital-intensive (expensive) link.

Another important point: Each of the carbon-capture processes described is a proprietary technology. There are many competitive advantages for a particular utility to develop an early relationship with a specific vendor, including joint ownership of the intellectual property and the technical knowledge base that is developed during pilot testing. These early relationships will form an insurmountable obstacle to later equipment-vendor market entrants and other utilities that don’t have the financial wherewithal or support of their state’s utility commission to spend the tens of millions of dollars for a long-term pilot test. That market lead will only lengthen with the financial benefits that will flow to early adopters as described in my earlier post. Expect to see a large number of licensing and cross-licensing relationships between vendors and utilities in the future when (if) CO₂ capture technologies mature. One utility co-owning technology and licensing it to others is an untapped revenue stream that several utilities are now exploring.

Plethora of Pilot Plants

The CO₂ post-combustion capture processes are extremely difficult given the very high volumes of low pressure exhaust gas from a plant that contact impurities that can inhibit the chemical processes. The low pressure gas requires significant auxiliary compression load to raise its pressure for processing. Also, once the CO₂ has been removed, it must also be liquefied and compressed to pipeline pressures (up to 2,000 psi) for transportation. Pilot plants are designed to confirm the engineering designs, the effectiveness of the process on a particular stack gas, and to estimate the auxiliary loads required to run the carbon capture process (estimates today run from 20% to 35%) which is another significant drawback to current CCS designs.

In no particular order, here is my top ten most interesting carbon capture projects that are either currently operating, under construction, or under contract. The first five projects are in the U.S. while the second five are in the EU and are generally further along than those in the U.S. (I include the EU projects to show that the major carbon capture vendors are global companies with interests in the U.S.)

You may notice that General Electric is conspicuous by its absence. GE announced an alliance with Schlumberger to “accelerate the use of cleaner coal technology” because of their “geologic storage expertise and capabilities for site selection, characterization and qualification.” However, GE’s expertise is focused more on IGCC technology where the CO₂ separation is part of the syngas production process, a pre-combustion technology. However, GE is the preferred supplier for a majority of the IGCC projects announced in the U.S. to date.

This list is purely coal-fired post-combustion CO₂ capture projects.

1. AEP + Alstom

Paris-based Alstom and American Electric Power (AEP), one of the largest electric utilities in the U.S., have signed an agreement to bring Alstom’s chilled ammonia process for CO₂ capture to full commercial scale by 2011. The project will be implemented in two phases. In phase one, Alstom and AEP will jointly develop a 30-MW (equivalent) product validation plant that will capture more than 100,000 tons of CO₂ per year from the flue gas of AEP’s 1,300-MW Mountaineer Plant in New Haven, West Virginia. Notably, the captured CO₂ will be sequestered in deep saline aquifers at the site. This pilot project is scheduled to start up at the end of 2009 and operate for at least 12 to 18 months.

In phase two, Alstom will design, build, and add the first commercial-scale (up to 200-MW) CO₂ capture system to one of the 450-MW coal-fired units at AEP’s Northeastern Station in Oologah, Oklahoma by late 2011. If the system captures about 1.5 million tons of CO₂ a year, Alstom will consider the accomplishment a successful validation of the chilled ammonia separation technology. The CO₂ captured at Northeastern Station will be used for enhanced oil recovery.

There’s no doubt that Alstom is the big player in the carbon capture market; the company continues to fund an extensive R&D program whose target is to make a CO₂ capture system commercially available before the end of 2011. The evolution of Alstom’s business development plans for its chilled ammonia systems has been transparent from the start:

· A 5-MW (equivalent) pilot plant with EPRI and We Energies.

· A 5-MW demonstration plant for E.ON in Sweden.

· A 40-MW (equivalent) product validation facility for Statoil in Norway, profiled later.

· A 5-MW (equivalent) CO₂-capturing demo plant being built at E.ON’s Karlshamn Power Plant in southern Sweden  

2. Southern Company + MHI + EPRI

A public-private partnership that includes the DOE, Mitsubishi Heavy Industries (MHI), the Electric Power Research Institute (EPRI), and Southern Co., one of the largest electric utilities in the U.S. and generating 68% of their electricity from coal, is planning the largest start-to-end coal-fired demonstration of MHI’s amine solvent carbon capture technology at an existing Alabama coal-fired unit by 2011.

If the project comes to fruition, between 100,000 and 150,000 tons of CO₂ per year—the equivalent of emissions from 25 MW of the plant’s generating capacity—would be captured from Alabama Power’s Plant Barry near Mobile, Ala., Southern Co.
The CO₂ will be supplied to the Department of Energy’s (DOE) Southeast Regional Carbon Sequestration Partnership (SECARB), which will transport it by pipeline from the plant and store it in a deep geologic formation within the area of the Citronelle Oil Field, about 10 miles from the plant, operated by Denbury Resources. The Southern States Energy Board is leading the SECARB effort.

The CO₂ capture technology to be used in this project, called “KM-CDR,” was jointly developed by MHI and the Kansai Electric Power Co. It deploys an advanced amine-based solvent that reacts readily with CO₂ in flue gas before being separated and compressed so that it is ready for pipeline transport.

The MHI process reportedly offers improved performance and lower cost than other existing capture technologies. The process has been demonstrated at smaller scale at J-POWER’s coal-fired Matsushima Power Station in Nagasaki, Japan, and is currently being deployed commercially on natural gas–fired systems in Malaysia, Japan, India, and Abu Dhabi.

3. First Energy + Powerspan

FirstEnergy Corp commissioned a 1-MW slipstream pilot test at their R.E. Burger Plant in Shadyside, Ohio in December 2008 using ECO₂ technology from Powerspan. The pilot plant is designed to capture 20 tons per day of CO₂ at a 90% capture rate. The pilot system is expected to run through 2009.  

4. E.ON + Siemens

Global energy powerhouse Siemens is developing a post-combustion carbon capture partnership with Powerspan based on their ECO₂ technology.

Siemens is also developing their proprietary POSTCAP Technology, based on solvent amino acid salt formulations, that will be ready for a demonstration project in July 2010. The site is unspecified. Siemens is now starting up a small pilot plant at an E.ON coal plant in Germany testing this technology on a slip stream of only 150 Nm³/hr. Development plans call for the commissioning of a full scale CCS demo plant in 2013.

5. E.ON + MHI

Germany’s E.ON selected a CO₂-capture technology developed by Mitsubishi Heavy Industries (MHI) for its application to the UK government’s CCS demonstration competition. MHI and partner Foster Wheeler Energy will carry out the pre-front-end engineering design of a CO₂ capture plant planned for a 1,600-MW supercritical pressure coal-fired power station slated for E.ON UK’s Kingsnorth Power Station in Kent. E.ON plans to separate, recover, and compress the CO₂ from the coal-fired flue gas and to store it within a depleted gas reservoir in the southern North Sea in collaboration with Tullow Oil plc, a UK oil company.

E.ON subsidiary E.ON U.S. owns Louisville Gas & Electric and Kentucky Utilities Company.

6. Statoil + Alstom

Alstom has signed an EPC contract with Norwegian state-owned energy company StatoilHydro on behalf of the partners of the European CO₂ Technology Centre Mongstad (TCM) for a chilled ammonia (carbonate) CO₂ capture plant at TCM in Norway. The demonstration plant, due to begin operations in 2011, will be the first one of its kind using this technology to treat flue gas from a gas-fired power plant.

StatoilHydro is the operator of the project and has signed the EPC contract on behalf of the TCM’s three partners: Gassnova SF, StatoilHydro ASA, and A/S Norske Shell. Alstom’s chilled ammonia post-combustion technology is expected to capture CO₂ from the flue gases of a combined heat and power plant at Mongstad. It will also treat flue gases from a petroleum processing plant at the nearby Mongstad refinery, which has a CO₂ output equal to that of a coal-fired power plant. The test results will consequently be of relevance to both gas- and coal-fired power plants, according to Alstom.
The demonstration TCM facility at Mongstad is being designed to capture up to 100,000 metric tons of CO₂. Alstom’s chilled ammonia technology will have the capacity to capture 80,000 metric tons per year, the company said. The facility will test amine technology as well as carbonate technology.

7. Duke Energy + Unspecified

Duke Energy’s Cliffside coal-fired project was issued an air permit by the North Carolina Department of Environmental and Natural Resources Division for an 800 MW advanced clean-coal power plant, located about 50 miles west of Charlotte. Duke, also one of the largest utilities in the U.S., made headlines when it voluntarily requested higher emission air quality permit standards for the plant than legally required. The original cost of the project was estimated at $1.8 billion which included CCS of 1.8 million tons of CO₂ per year—about half of the total CO₂ production which qualifies the plant under ACES. Completion of the project is scheduled in the 2012 time frame. The carbon capture technology is unspecified although testing of a “chilled ammonia” process is ongoing, which most likely means Alstom will be the supplier. Fully carbon-neutral operations set for 2018.

8. Basin Electric Power Cooperative + PowerSpan

The U.S. Department of Agriculture announced earlier this month it would loan up to $300 million to Basin Electric Power Cooperative’s demonstration project to capture carbon dioxide at its Antelope Valley Station near Beulah, N.D.

The Antelope Valley Station is located adjacent to the Great Plains Synfuels Plant, the only commercial-scale coal gasification plant in the U.S. and what Basin Electric said is home to the largest carbon capture project in the world. More than three million tons of carbon dioxide are captured annually at this plant and piped to Canada for use in enhanced oil recovery.

Basin Electric anticipates that the demonstration project being developed at Antelope Valley would capture about a million tons of CO₂ per year from a portion of the plant’s exhaust stream and send it to oil fields along the pipeline being used by the Synfuels Plant. The carbon capture-portion of the project is estimated to cost about $350 million to $400 million. Along with the USDA’s loan, the consumer-owned regional cooperative on Jan. 15 applied for a $100 million loan under the U.S. Energy Department’s Clean Coal Power Initiative. Basin Electric also anticipates that it will be able to develop revenue from carbon dioxide sales for enhanced oil recovery.

Basin Electric is working with Powerspan Corp., a technology provider, to capture emissions of CO2 from a conventional coal-fired power plant. The technology is now being tested on a pilot basis, and based on results of those tests, would be expanded to a demonstration project at the Antelope Valley Station.

9. Vattenfall + Proprietary Technology

On September 9 last year, Sweden’s Vattenfall inaugurated the world’s first demonstration plant that connects CCS technology in a full-chain working system. The inauguration of the pilot plant at Schwarze Pumpe in Germany, which underwent 10 years of testing, was a milestone that marked its move from the laboratory to reality, Vattenfall said.

Vattenfall spent two and a half years and €70 million ($100.5 million) building the plant alongside the 1,600-MW coal-fired Schwarze Pumpe power plant in north Germany. The pilot plant, which will use oxyfuel technology to capture the CO₂, is expected to consume 12 MW of electricity and 30 MW equivalent of thermal power.

The demonstration will capture up to 100,000 tons of CO₂, compress it, and sequester it about 10,000 feet underground at a depleted gas field in Altmark, some 125 miles from the site. The initial pilot program will run for three years. Thereafter, Vattenfall plans to make the plant available for other tests and hopes it will be in operation for at least 10 years.

10. PGE Elektrownia Belchatow S.A. + Alstom

Alstom and Polish utility PGE Elektrownia Belchatow S.A. and Alstom are jointly developing and implementing a CCS plant at the 4,440-MW Belchatow power plant in Poland—Europe’s largest conventional power station. The plant supplies 20% of the Poland’s electricity needs.

In the first phase of the Polish project, Alstom will design and construct a pilot carbon capture plant at the existing Unit 12 of the coal-fired Belchatow power plant. The company expects the demonstration could capture approximately 100,000 tons per year of CO₂ using Alstom’s advanced amine technology. The pilot will be jointly operated by Alstom and Elektrownia Belchatow and is expected to be operational by mid-2011.

During the second phase, Alstom and PGE plan to build a larger CCS project to capture CO₂ produced by the new 858-MW, lignite-fired unit currently being built by Alstom for Elektrownia Be?chatów that will be in service by 2015.

Conclusion

So there you have it. I would welcome comments to this point identifying any other nuances of H.R. where we might “follow the money” to particular ‘winning’ technologies and companies.