A project that was supposed to prove the Environmental Protection Agency’s rules for new coal plants can work has suffered a serious setback.
The Texas Clean Energy Project has just lost the buyer of its electricity, a possible death blow to a project already beset by problems.
At the end of last year, Texas utility CPS Energy pulled out of a 25-year agreement to buy power from the Texas Clean Energy Project. The project, run by Summit Power Group, is one of four coal projects in development using carbon capture and sequestration (CCS) technology that the EPA cited to justify its commercial viability.
CPS Energy, however, may not see the project in the same light as the EPA. The utility ended its agreement to buy power from the Texas Clean Energy Project, saying that with “abundant supplies of natural gas below our feet and prices for natural gas remaining moderate, the economics of energy produced from coal generation with carbon-capture have changed.”
“The prudent option was to allow our agreement with Summit to end, while we consider the possibility of an updated [purchase power agreement] with the Texas Clean Energy Project in the future,” the utility added.
Summit Energy told The Daily Caller News Foundation that they feel confident that a new agreement would be signed soon and to check back in the next week or two. The company also said that it was rising Texas labor costs that have caused the power agreement to expire, not a lack of faith in the project.
“What has delayed us past 12/31/13 when the PPA expired is rising Texas labor costs, which have been fueled by the oil and gas boom here,” Summit spokeswoman Laura Miller told TheDCNF in an email. “There are lots of big infrastructure projects going on all over the state, especially in the Gulf, and not enough skilled laborers to do them all.”
This runs contrary to the reason CPS Energy gave for pulling out of the project — competition from cheap, abundant natural gas and continued project delays. CPS said, “The project has continued to experience delays … and the energy landscape has changed.”
“CPS Energy extended Summit’s deadlines for milestones three times, understanding that power plant construction does not always follow a precise timeline,” the utility added.
CPS, however, is in talks to possibly renew its power agreement with Summit, a company spokeswoman told TheDCNF, but there is currently no timetable for that decision to be made.
The Texas Clean Energy Project received $450 million from the Energy Department’s Clean Coal Power Initiative. The project was originally projected to cost $2.5 billion and was supposed to provide a 200 megawatt power source for CPS Energy.
The Environmental Protection Agency published its carbon dioxide emissions limits for new power plants in the Federal Register last week. The EPA took 110 days to publish their power plant rule which would effectively ban new coal-fired power plants unless they use CCS technology.
CCS technology involves separating and capturing carbon dioxide when burning coal, or other fossil fuels. The captured carbon is then stored underground to mitigate its impact on global warming, or it can be sold to oil and gas companies for enhanced oil recovery. The Obama administration has endorsed the sale of captured carbon for oil operations.
“Today we are producing with CO2 [enhanced oil recovery] 300,000 barrels per day of oil,” said Energy Secretary Ernest Moniz. “This is not so small.”
“We’re going to go to low carbon,” Moniz added. “But we think all the fuels—with enough investment—are going to have a place in that low-carbon world.”
The coal industry, on the other hand, argues CCS is not proven technology. In fact, the EPA’s own regulatory analysis does not cite any commercial-scale power plants using CCS that are currently in operation. Instead, the agency cited three U.S. plants under construction or in the planning phase, all of which are being funded with taxpayer dollars. The EPA also cited one Canadian government-backed CCS plant under construction.
Republican lawmakers have pointed out that using taxpayer funded projects as proof that a technology has been commercially proven violates the Energy Policy Act of 2005.
“In typical EPA fashion, they’re putting the cart before the horse to advance their environmental policy agenda,” said Louisiana Republican Sen. David Vitter. “They’re moving forward with a controversial rule to regulate carbon based on technology that isn’t commercially available. Not only is this wrongheaded, it’s beyond the scope of their legal authority.”
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