Obama Hands Out A $2 Billion Loan To Further His Global Warming Goals
The Obama administration will give $2 billion in loan guarantees to a first-of-a-kind project meant to further the president’s global warming goals in the final weeks before President-elect Donald Trump takes over.
The Department of Energy (DOE) announced Wednesday its support for the Lake Charles Methanol plant. When built, it’ll be the first U.S. facility to turn petroleum coke to methanol, as well as the first such project to use carbon capture technology.
It’s also the first so-called “Advanced Fossil Energy Project” DOE has funded with the $30 billion left in its loan portfolio. This is the same loan program projected to lose $2.1 billion after loaning money to several now-bankrupt green energy companies, like Solyndra.
DOE has solicited fossil fuel projects to fund for years, looking for ways to capture carbon dioxide (CO2) to help meet President Barack Obama’s pledge to the United Nations to cut emissions 26 to 28 percent. DOE says captured CO2 can be used for enhanced oil recovery.
The Louisiana-based Lake Charles facility will capture CO2 from turning petroleum coke, or petcoke, into methanol and piping it to oil fields in southeastern Texas. DOE expects the facility to cut its CO2 emissions 36 percent and create 1,000 construction jobs and 200 permanent jobs. Enhanced oil recovery operations are expected to create 300 jobs.
“The Department leverages its unique technical expertise and rigorous underwriting process when offering loan guarantees to help these types of projects overcome early-stage financial challenges,” Mark McCall, who heads DOE’s loan office, said in a statement.
“DOE’s offer to finance the Lake Charles Methanol project could play a role in helping to bridge the funding gap for CCUS so this technology is financed by private lenders in the future,” McCall said.
For years, DOE has been funding projects to commercializing carbon capture technology. DOE says it’s on the “cusp” of becoming marketable, but so far there are few, if any, commercial projects operating without government subsidies.
DOE’s already taken heat from auditors who questioned the viability of a $1.7 billion loan the agency gave to build a coal plant that uses carbon capture technology.
In May, the DOE’s inspector general issued a report on the Texas Clean Energy Project (TCEP). The IG questioned DOE’s plowing $116 million into the project “without assurances that it would succeed.”
TCEP was estimated to cost $1.9 billion when DOE first loaned it money, but now the project’s costs have doubled to $3.9 billion. TCEP wasn’t even under construction when the IG issued its report.
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