Carbon Capture and Storage (CCS): Too Costly for Taxpayers | Taxpayers for Common Sense

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Carbon Capture and Storage (CCS): Too Costly for Taxpayers

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January 18, 2012
Programs: Energy

Carbon capture and storage (CCS), also referred to as carbon capture and sequestration, is the process of separating carbon dioxide (CO2) from fossil fuels, pumping it deep inside the earth, and leaving it stored in underground geologic formations such as exhausted oil and gas fields. The technology is predominantly designed to be used with coal, coal-to-liquid, or natural gas plants to decrease their overall carbon emissions.

While the coal industry touts CCS technology as an efficient way to reduce carbon emissions, carbon capture and storage is not the cure-all solution that industry officials claim. The coal industry is already asking for subsidies to support this expensive and unproven technology. With billions of federal dollars already subsidizing the coal industry itself, taxpayers should not be giving the industry even more money for an expensive, unproven, and not commercially viable technology.

Unworkably Expensive

Building, proving, and implementing CCS technology is prohibitively expensive. The current cost of CCS is $80-$120 per ton of CO2 and is not economically competitive with other methods for reducing carbon emissions such as increased energy efficiency standards. Moreover, a Government Accountability Office (GAO) report revealed that general commercial CCS deployment is and will continue to be barred by technological barriers including “a lack of experience in capturing significant amounts of CO2 from commercial-scale power plants” and “the significant cost of retrofitting existing plants.” Even retrofitting existing coal plants would be very costly, partly due to decreased plant efficiency from increased amounts of energy required to capture CO2. This means burning a larger amount of coal to produce a smaller amount of energy. The GAO also cites regulatory and liability uncertainties surrounding CO2 leakage, which could lead to forest destruction, poisoned water supplies, and other cleanups that could drive up the final price tag. And as the development of FutureGen, a $1.65 billion CCS demonstration plant in Illinois funded mostly by the Department of Energy has illustrated, constant cost increases and overruns are common with new “clean coal” initiatives and will ultimately cripple investment.

Unproven Technology

Carbon capture and storage technology is largely untested and unproven, despite support from the coal industry and federal subsidies intended to accelerate development and construction of CCS-compatible coal plants—in addition to years of marketing the viability of “clean coal” to the general public. Large scale testing of CCS has not been successfully demonstrated. Current carbon capture technology would need to be scaled-up as much as 100 times in order to be workable in commercial power plant.

Sequestering billions of tons of CO2 underground annually could have unintended negative consequences, such as potentially contaminating ground water. Underground geologic formations, such as oil reservoirs, have historically been targeted as sequestration sites throughout the U.S. These sites possess multiple layers of porous rock where compressed CO2 can be injected, as well as a solid, non-porous top layer of rock to prevent any CO2 from escaping. Currently saline reservoirs are also being considered. But according to the GAO, “Although CO2 has been injected in oil reservoirs for decades, saline formations have not been proven safe or permanent.” Additional reports have warned that injecting CO2 into underground saline reservoirs could cause pressure imbalances and rock fractures, releasing additional CO2 into the atmosphere. At this point, CCS technology shows no sign of being cost-efficient and viable on a commercial scale. Until then, it continues to be a risky investment that taxpayers should not be making for a mature coal industry.

Recent Federal Funding

Federal Funding for CCS
Project Amount
FutureGen $1,000,000,000
Five Commercial Demonstrations $1,400,000,000
Five Industrial Demonstrations $1,300,000,000
Innovative CO2 Use $100,000,000
Evaluation of Underground Storage $50,000,000
Workforce Training Grants $20,000,000
Research Funding $400,000,000
Sequestering and Monitoring Techniques $500,000,000
Total Cost $4,770,000,000

Carbon capture and storage has received increased funding in recent years. Over $3.4 billion was designated within the American Recovery and Reinvestment Act (ARRA) for CCS programs such as the DOE’s Clean Coal Power Initiative (CCPI). In August 2010, the FutureGen project was awarded $1 billion of those funds to continue research and development of the CCS facility in Illinois. The Obama Administration proposed $184 million in new funding for CCS research, development, and demonstration in fiscal year 2012, while the House of Representatives has proposed an additional $32 million for fossil research and development.

A 2009 letter from Energy Secretary Chu to energy ministers around the world detailed over $4 billion of federal spending directed toward CCS research and development, which was comprised of almost $3.4 billion in funding from the American Reinvestment and Recovery Act of 2009 and annual appropriations. Moreover, tax incentives have also been made available for CCS. The Emergency Economic Stabilization Act of 2008 added a tax credit for companies that capture and store carbon using, costing taxpayers over $1 billion over the next ten years.

More than $8 billion is currently available for new coal plants incorporating CCS through the existing Department of Energy (DOE) loan guarantee program which allows taxpayer dollars to back these capital-intensive CCS projects. Under Title XVII of the Energy Policy Act of 2005, the DOE can extend billions of dollars to mature industries like coal, even though the program was originally intended to support emerging energy technologies. Currently, a proposed coal-to-liquid plant with plans to use CCS technology in Medicine Bow, Wyoming could receive a loan guarantee for reportedly as much as $1.8 billion.

Clean coal ventures, such as FutureGen and Medicine Bow, have a history and reputation of constant cost increases and failure, and since the loans through Title XVII are guaranteed by the federal government, every project that fails is paid for by taxpayers.

A Risky Investment

The potential liabilities surrounding CCS technology would make any financier nervous, and private utilities have already avoided investment in CCS plants because of the unfeasible risk. Not only would it take massive investments in infrastructure and subsidies to test the commercial viability of CCS, but any consequent clean-up, should leaks or unforeseen accidents occur, would likely be paid for by taxpayers.

In appearance, CCS is portrayed as the silver bullet for the clean energy push in Congress—a technology that utilizes our domestic coal reserves while reducing environmental degradation. But in reality, the development of CCS technologies is fraught with uncertainty and significant liabilities for taxpayers. With so many unknowns, taxpayer dollars should not be supporting a mature coal industry that could easily pay for its own new technologies.

For more information, please visit contact Autumn Hanna at (202) 546-8500 x112 or autumn[at]taxpayer.net.





Filed under: Stop Waste, Cut Subsidies, Eliminate Corporate Welfare

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