Saskatchewan Rough Ride

Canada scores first in the clean-coal game. But it will be a tough and expensive act to follow.

Photo via Flickr - SaskPower
Photo via Flickr - SaskPower

On Thursday, a coal-fired plant in Saskatchewan, Canada, will become the first large, commercial-scale power plant to successfully capture the bulk of its carbon emissions. But the billion-dollar project also highlights just how tough it will be to turn dirty coal into any sort of clean-energy solution at the global level.

The 110-megawatt unit at the Boundary Dam plant operated by Canadian utility SaskPower burns regular coal. But instead of spewing climate-changing carbon into the atmosphere, some 90 percent of emissions will be captured before going up the smokestack. Boundary Dam will capture annually about 1 million tons of carbon dioxide, which SaskPower will pump into nearby oil fields to kick-start production, turning waste into a moneymaking product.

Boundary Dam is far from the first plant to attempt capturing emissions. Using different technology, Mississippi’s Kemper plant should be operational early next year. Texas has similar plans. A dozen other projects are underway around the world, with more than a score in development. But the Canadian plant is the first large one to flip the switch.

Finding a way to clean up coal-fired power plants is crucial to the world’s ability to fend off the worst effects of climate change. Maria van der Hoeven, executive director of the International Energy Agency, called the Boundary Dam launch a "momentous point" in the development of carbon capture and storage technology, which she said is "essential" if the world is to cope with the effects of burning fossil fuels.

Much of the developing world, especially China and India but also Southeast Asia, is still looking to coal to power economic development. India’s environment minister made clear in September that economics trump rising greenhouse gas emissions and that India will use coal power to fuel a more prosperous future. "What cuts?" he asked in an interview with the New York Times regarding curbing emissions.

China uses as much coal as the rest of the world combined. Despite plans to rely less on coal in response to domestic smog protests, China’s economy will remain coal-based for decades.

Even rich countries, such as the United States and Germany, still rely on coal for more than one-third of their electricity. In both countries, coal’s resurgence has bumped up greenhouse gas emissions.

Unfortunately, Boundary Dam and similar projects don’t provide a ready-made template for the rest of the world to follow. And that’s largely because of economics and geology.

Coal is still the world’s main fuel for electricity generation because it is cheap. Natural gas, nuclear power, and renewable energy all cost more to generate a kilowatt-hour of energy than the crumbly, black chunks that fueled the Industrial Revolution.

But carbon capture and storage is an expensive investment. The clean-coal unit at Boundary Dam cost $1.2 billion, or a whopping $11 million for each megawatt of power capacity installed (it’s a 110 megawatt plant.) Outlays at Southern Company’s Kemper plant have more than doubled since the project began; today, at $5.6 billion, or $9.6 million per megawatt, it is one of the most expensive power plants ever built. In contrast, Southern Company’s much-touted nuclear plant in Georgia — the first new generator of nuclear power in the United States in three decades — is expected to cost less than $5 million per megawatt, or $10 billion in all.

In general, coal-fired electricity from a plant equipped with carbon capture and storage could cost consumers 80 percent more than electricity from an old-fashioned plant.

In theory, there are two ways around carbon capture’s lousy economics: Put a price tag on pollution, especially greenhouse gas emissions, or find a way to make a buck off the carbon dioxide stripped out of the smokestack.

There are problems with both. Capturing the carbon emissions from a coal plant, such as Boundary Dam, costs on the order of $90 per ton of carbon dioxide. Yet nowhere in the world does carbon dioxide cost anything like $90 a ton.

Carbon prices in the European Union, which has the longest-established carbon-trading program, are around $7 a ton. China, which has a spate of regional pilot programs running ahead of a planned 2016 national cap-and-trade program, has carbon prices of about $5 a ton. Even modest proposals for straight carbon taxes, such as those that pop up from time to time in the United States, fall far short of the prices needed to make carbon capture a no-brainer.

If the price on carbon pollution rises significantly, then carbon capture and storage will be an easier proposition. But as long as the penalty for spewing carbon into the atmosphere costs less than it does to trap, it’s a tough sell economically.

Boundary Dam will sell most of the carbon dioxide it traps to a Canadian oil company, which will then inject the liquefied gas deep into oil reservoirs, coaxing stubborn bits of oil to come to the surface. Known as "enhanced oil recovery," it’s the seemingly win-win solution preferred by the coal plants in Mississippi, Texas, and most other places too.

That works fine — as long as the coal plant is reasonably close to an old oil field, as is the case with the most advanced U.S. projects. The Middle East, too, has plenty of appetite for using coal’s byproduct to juice more oil production. It’s less of an option for countries such as India.

But the bigger question, as the International Energy Agency has noted, is that the environmental benefits of capturing carbon depends on what happens to the carbon after that. Simply pumping it underground into massive caverns may not make much economic sense, but at least the carbon is trapped. Using it to get more oil, which is then burned, helps bottom lines but undercuts the entire effort as it just leads to different fossil fuel emissions.

Keith Johnson is a senior staff writer at Foreign Policy. Twitter: @KFJ_FP

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