POWER December 2020 - 32

CARBON CAPTURE
Leveraging the Latest Carbon
Capture, Utilization, and Storage
Technologies to Transform
Emissions into Profit
There is significant governmental support for the development of carbon capture,
utilization, and storage technologies. Understanding options and taking advantage
of opportunities could help maintain a plant's economic viability and extend its
usable life for years to come.
Stephanie Villarreal, PE
F
or owners and operators of coal- and
gas-fired power plants, sustaining
business as usual in the future will
require facing the ever-changing landscape
of regulations, taxes, and renewable
energy requirements head-on. If
such factors go unaddressed, systematic
plant retirements become all but inevitable
in the decades ahead. As environmental
regulations shift and renewable energy
becomes more cost-effective to generate
and store, successful operation of these
plants will require owners and operators
to seek out new ways to comply-including
reducing carbon dioxide (CO2
) emissions
by deploying carbon capture, utilization,
and storage (CCUS) technology.
Bolstered by U.S. Department of Energy
(DOE), state, and academic support-
and spurred by federal legislation and
state mandates-CCUS technologies
are quickly becoming a prime option for
preventing up to 90% of CO2
plant emissions
from entering the atmosphere
while concurrently turning a profit. Understanding
how these systems work,
as well as the economic challenges associated
with the sequestration of CO2
can help plants comply with new regulations
and, in turn, extend operations for
years to come.
Robust Federal Backing
To jump-start the commercialization of
CCUS technologies, in September 2019
the DOE awarded $110 million in federal
funding for carbon capture research
and development projects. Half of the
recently awarded funding is earmarked
for projects designed to accelerate the
progression of existing carbon capture
technologies, and the development and
32
refinement of new innovations. By empowering
a variety of large-scale carbon
capture, utilization, and storage pilot and
demonstration projects, the DOE expects
to build the knowledge base needed to
test and further prove these technologies
at commercial scale (Figure 1).
While DOE funding is limited to addressing
solely front-end engineering
expenses, carbon capture investors can
recoup additional costs through a performance-based
federal tax credit program.
Originally enacted by Congress in 2010,
Section 45Q of the U.S. tax code incentivizes
the construction and deployment
of carbon capture and sequestration projects.
The credits are currently applicable
to CO2
captured and stored for 12 years
after the project is placed in service.
To help bridge cost gaps on inaugural
projects and attract additional investment,
Congress lowered the threshold for 45Q
eligibility in 2018, while also increasing
the value of the credits awarded. Today,
utilities and their investors are eligible
for tax credits of $35 per metric ton for
enhanced oil recovery (EOR) and $50 per
metric ton for geological sequestration.
The 45Q tax credits make implementation
of CCUS technology a more economically
attractive proposition for utilities,
while not limiting the industry with a tax
credit cap. The only catch: To be eligible
for compensation, construction of these
projects must commence by Jan. 1, 2024.
Setting CCUS Projects in Motion
When installing carbon capture systems,
utilities must consider how they will
dispose of and benefit from the large
amounts of captured CO2
most salient factor to weigh when making
these decisions. The cost to transport
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1. The Petra Nova project successfully retrofit
carbon capture technology onto a unit at
the coal-fired W.A. Parish Generating Station
located southwest of Houston, Texas. The
U.S. Department of Energy (DOE) and National
Energy Technology Laboratory provided
financial and project management support for
the Petra Nova project, which is owned and
operated by NRG Energy Inc. and JX Nippon
Oil and Gas Exploration Corp. Source: DOE
excess gas is substantial, power plants
need to be relatively close to the end
storage reservoir for CCUS deployment
to make economic sense. Today, there
are two predominant storage strategies.
EOR Supplementation. One option
is to sell byproduct CO2
to the oil industry
for EOR. Oil companies rely on natural
CO2
sources found underground to
extract additional crude oil from existing
oil fields. Power plants that sell captured
CO2
to an EOR off-taker have the potential
to supplement their operations with
45Q revenue.
However, the potential supply of sellgreatly
exceeds likely demand
able CO2
from EOR utilization. This option is also
highly dependent on the plant's proximity
to CO2
pipelines with sufficient capacity
. Location is the
to transport the captured gas. Plants located
near oil fields are likely in a better
position to market their captured carbon
POWER | December 2020
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POWER December 2020

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