Retrofitting Montana's largest coal-fired power plant to reduce greenhouse gas emissions would cost at least $1.2 billion, but that price tag could be at least partially offset by selling captured carbon dioxide for use in oil fields, federal officials said Wednesday.
Senior U.S. Department of Energy representatives presented the agency's analysis of reducing emissions from the Colstrip plant at the request of Gov. Steve Bullock.
Colstrip is the state's main human-caused source of carbon dioxide pollution, a major contributor to climate change.
Bullock, a Democrat, is up for re-election in November. He's faced a barrage of Republican criticism for not doing enough to protect the aging plant, as a shift toward natural gas and more stringent pollution regulations have battered the coal industry.
"We need to be saying, what can we do to find solutions?" Bullock said to utility and mining executives gathered at the governor's office in Helena to hear the Energy Department findings. "Those discussions only become more urgent given recent developments at Colstrip."
The plant in 2014 emitted about 16.5 million tons of carbon dioxide — two-thirds of the state's reported total, according to the Environmental Protection Agency.
Two of Colstrip's four electricity-generating units will close by 2022 under a legal settlement reached last month between the plant's owners and environmentalists.
Retrofits on the remaining two units would reduce emissions between 30 percent and 47 percent, at a cost of $1.2 billion to $1.4 billion, said Angelos Kokkinos, the Energy Department's director of advanced energy systems.
Putting the captured carbon dioxide to use — by pumping the gas into underground crude oil reserves to boost production — would bring in revenues of $3 billion to $4.4 billion over 25 years, Kokkinos said.
The revenue figures are based on projected demands for carbon dioxide with oil selling for about $106 a barrel. That's more than double the current price.
The figures also fail to account for increased operating expenses.
The merits of carbon capture technology are questionable, said Karl Cates, of the Institute for Energy Economics and Financial Analysis.
"We see carbon-capture research mostly as a source of money for a number of taxpayer-funded research programs, including — maybe especially — at the University of Wyoming," Cates said. "These programs have borne no practical advances even after decades of work. Notably, the coal industry itself has invested very little of its own money in these research projects."
Now bankrupt, Peabody Energy contributed $2 million to the University of Wyoming's clean energy lab, which is named after Peabody, but only after the state invested $76 million.
Carbon capture projects at other power plants have meant higher electric bills for, utility ratepayers, Cates said. Southern Co.’s ratepayer-subsidized Kemper experiment at a Mississippi power plant is two years behind schedule and $4 billion over budget according to a New York Times report. AEP, an Ohio-based utility, canceled its carbon capture experiment in Huntington, W.Va., in 2012, after concluding that the technology was commercially unviable.
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After spending $1 billion, the federal government ended its FutureGen project in Illinois in 2015. There are several other examples.
At Gov. Bullock's event Wednesday, Colin Marshall, president of Cloud Peak Energy, which operates Montana's largest coal mine, said it was encouraging to see federal energy officials identify a technology that would reduce emissions while retaining jobs.
State Sen. Duane Ankney, R-Colstrip, said he’s glad he’s finally hearing discussions about keeping plants open rather than closing them.
“We have got to keep these plants running,” he said. “This has never been a real effort. It’s always been a sideline, a side show. We have to make it our goal to make this go, but it will take an effort.”
But a spokesman for Bullock's challenger, Bozeman businessman Greg Gianforte, said Wednesday's presentation appeared to be "another desperate campaign stunt" from the governor.
"Ultimately, we need to block Obama's (clean power plan) and other efforts to shut down Colstrip," Gianforte spokesman Aaron Flint said. "We ought to be looking at all options, including carbon capture."
The Department of Energy also analyzed potential emission reductions at Colstrip through improved plant efficiency and using natural gas or biomass as supplementary fuels.
Using natural gas would yield the greatest benefits, reducing emissions by 13 percent, according to Kokkinos. But that also would require a new pipeline to be built.
Improving plant efficiencies or using biomass fuels would result in at most a 3 percent drop in emissions, he said.
DOE told those gathered it has loan programs meant to help fund these types of projects, which typically lenders are less likely to finance because they use new or emerging technologies. Colstrip would need to complete a feasibility study and engineering study before considering applying for any loans.
Mark McCall, executive director of the Energy Department's Loan Office Programs, said there’s about $8 billion left in a program to help pay for adding carbon capture technology to plants like Colstrip.
DOE funds these types of projects with the goal of creating industry-wide standards that will cost less in the future.
“They prove out technology and get costs down and then it rolls out,” McCall said. “That is a key point of this program.”
Projects that are eligible can receive up to 80 percent of the total cost through program loans. Capture projects, typically brought to DOE by a private company, must have 35 percent equity.
The DOE’s rollout of its white paper marks a new policy push toward funding research for carbon capture, saying that the nation and world can’t meet its electricity demands without coal-fired electricity and that if reliance on plants like the ones at Colstrip continue, emissions must be reduced through capture.