File this one under “G” for Good luck with that: ExxonMobil has hooked up with the company FuelCell Energy to build a pilot carbon capture facility at a massive 2.7 gigawatt coal and natural gas power plant near Mobile, Alabama. The project, which also has the backing of the US Energy Department, is aimed at capturing and recirculating carbon dioxide and methane emissions for additional electricity generation at the plant.
That may solve some problems for ExxonMobil over the short term, but it looks like FuelCell is going to be the big winner.
Carbon Capture: Why Bother?
If you’re familiar with the ill-fated FutureGen carbon capture and sequestration project, this project has Loser written all over it.
However, there’s an important difference between this new project and the kind of carbon capture involved in FutureGen.
Last fall, FuelCell Energy nailed one of eight funding blocks provided by the Energy Department to receive funding for advanced technologies that bring down the cost of carbon capture and sequestration.
In partnership with the company AECOM, FuelCell is doing this:
…design, fabricate, and test a small pilot-scale system that incorporates FuelCell Energy’s combined electric power and CO2 separation (CEPACS) system, based on electrochemical membrane (ECM) technology, to separate at least 90 percent of CO2 from a 3 MWe equivalent slipstream of pulverized coal plant flue gas and achieve 95 percent CO2 purity at a cost of $40/tonne of CO2 captured and at a cost of electricity 30 percent less than baseline CO2 capture approaches.
The basic difference is that conventional carbon capture requires energy, which raises costs. The new pilot plant is designed to demonstrate that by reclaiming carbon emissions for energy production, you end up with an economical way to continue burning coal and natural gas.
The new partnership does not appear designed to show that the process is economical once the cost of sequestering the leftover carbon is taken into account, so there’s that. So far the project only involves the conversion end.
Be that as it may, the Energy Department (that’s us taxpayers, btw) is chipping in $15,000,000 for the project. The award calls for another $8,728,906 from other sources, for a total of $23,728,906.
As described by the Energy Department, the award applies only to coal. ExxonMobil’s agreement with FuelCell expands the project to include natural gas (ExxonMobil is widely known for its oil and gas ventures. Coal, not so much).
If the project is a success, the Energy Department anticipates commercial, large scale deployment by 2025.
Carbon Capture: Who Wins?
So…2025? Here’s where things get interesting.
The power plant in question is Southern Company’s James M. Barry Electric Generating Station. It is no stranger to carbon capture projects.
In 2009, the Energy Department earmarked $295 million in funding for a major carbon capture project at the plant, but the company withdrew from that grant program just a couple of months later, apparently concerned over the size of its share of the costs.
The process would have involved something quite different from FuelCell’s technology:
Carbon dioxide is captured using the KM CDR Process® capture technology, developed by Mitsubishi Heavy Industries Ltd. The carbon from a 25-megawatt slip of flue gas reacts with an amine solvent before being captured, isolated and compressed into a liquid, preparing it for pipeline transport.
If ExxonMobil is putting up some Benjamins toward the new project, it’s practically a no-brainer for Southern Company (Southern Company is also involved in at least one other ongoing carbon capture project, though at a small scale).
It’s also a win — at least over the short run — for ExxonMobil. Natural gas has been the main driving force behind the decline of coal in the US. If ExxonMobil can demonstrate a technology that reduces emissions from gas-fired power plants, it will continue to boost its bottom line at the expense of coal.
Don’t Pop That Cork Just Yet
On the other hand, the cost of renewable energy has been dropping rapidly, down to the point where it can compete with both natural gas and coal in some markets.
Industry observers foresee that downward trend continuing into the future.
For that bottom line reason and as a matter of public health, state policymakers are beginning to pressure local utilities to consider wind or solar before they agree to replace aging fossil power plants with new fossil units.
Utilities are also getting pressure from ratepayers and corporate customers to add more renewable energy to their grid mix.
In addition, local communities have been flexing their legal muscles to ban or restrict natural gas fracking, and several states have banned the process outright.
The natural gas industry is also facing the prospect of increased costs related to tighter regulation of wastewater disposal from the operation.
The latest chart from the US Energy Information Agency demonstrates how utility-scale wind and solar are beginning to cut into the natural gas turf:
To be clear, one year does not represent a trend. According to information compiled by EIA, the next couple of years will be relatively good ones for utility-scale natural gas:
That’s not necessarily going to be the case moving forward, though. As of this writing Democratic presidential candidate Hillary Clinton is still on track to win the Oval Office.
If that happens, the fossil industry can look to tighter regulations that reflect the true cost of outdated energy sources. The groundwork is already being laid for new regulations that reduce methane emissions all along the natural gas lifecycle.
Clinton has been criticized for refusing to advocate for a total ban on natural gas fracking, but she has made it clear that the fracking industry can look forward to shrinking under the kind of environmental and public health protections that she supports (as of this writing the presidential race ain’t over yet, so stay tuned).
ExxonMobil has also put itself in a vulnerable spot in terms of shareholder protection, related to the alleged concealment of information on the environmental costs of its operations. A lawsuit brought by New York State Attorney General Eric Schneiderman to force disclosure has been moving through the courts, and last week the state’s Supreme Court agreed that the company must produce documents on climate impacts dating back 40 years.
Meanwhile, assuming ExxonMobil’s legal woes don’t ripple over to the new pilot project, the real winner in all of this is FuelCell. If the pilot plant is a success, the company can look forward to some good years.
Even if new fossil power plants are not constructed in great numbers in the years ahead, there’s always the retrofit market. It will be many years before the last fossil fuel power plant in the US is retired.
It’s also possible that FuelCell can tap into the emissions reduction market in other industrial waste gas sectors, like steelmaking. Capturing and re-using methane emissions from agriculture and municipal wastewater treatment is another promising sector.
Images: Top via FuelCell Energy, others via US EIA.