Juice: Sequestration Frustration

By Published On: July 20, 2012

From genetic engineering to pumping captured carbon dioxide into the ground, technology moves far quicker than law and public policy. The latest example is the proposed $5 billion Hydrogen Energy California complex, which is stretching the gap between the fossil fuel industry’s technological and legal prowess and the state’s public clean energy policy goals. Boston-based SCS Energy’s Hydrogen Energy California--known as HECA--is on a fast track for licensing as a power plant by the California Energy Commission. By amalgamating a number of separate systems into a new technological constellation, SCS Energy has found the economic sweet spot for so-called “clean coal” power. The proposed facility would sit on 450 acres of west Kern County farmland amid cotton and alfalfa fields. It is set to produce 300 MW of power for the grid. Its primary value, however, is far from that of a typical power plant. The proposed project’s real value added appears to come from producing carbon dioxide. That’s because Occidental Petroleum--known as Oxy--plans to use the CO2 to recover more oil from the nearby Elk Hills Oil Field. Meanwhile, the development also would produce a number of nitrogen-based chemicals used in fertilizer, pollution control devices, and manufacturing. It’s dubious at best that the facility actually would advance the state’s greenhouse gas reduction policy goals. California is trying to clean up smog and put a stop to global warming by effectively eliminating use of fossil fuel in cars by 2050, installing 12,000 MW of distributed renewable energy systems by 2020, producing a third of its power from renewable sources by that same year, and cutting greenhouse gases 80 percent by 2050. State leaders keep calling on the rest of the world to follow. HECA is about to strain their credibility in doing so. That’s because the proposed facility is not the same as substituting solar, wind, or geothermal power for existing fossil fuel plants and using some of the output to run emissions free electric cars. This competing, truly renewable technological constellation brings a net reduction in air pollution, as well as greenhouse gases. So how is it that this project seemingly is on the express track for Energy Commission approval in less than a year? Equally important, how come the state is dishing out ratepayer subsidies to the proposal’s proponent, plus all but politically mandating a market for its power? The California Public Utilities Commission already has ordered the state’s investor-owned utilities to negotiate for power purchase agreements with the developer, plus authorized Southern California Edison to spend $30 million of ratepayer money for studies related to the project. The CPUC maintains the plant is integral to meeting the state’s clean energy goals. At the federal level, the Department of Energy has committed $408 million to the project under its clean coal program. That action came under President Obama, whose administration wants to reduce greenhouse gases. Simply put, state and federal laws are not equipped to deal with the proposed facility’s combination of technologies. If all the plant did was produce power and sequester carbon dioxide in the ground without bringing up oil that’s otherwise locked in place, it would help the state and federal government meet their clean energy goals. HECA wouldn’t be economical, though, except with even more public subsidies. But, at least if subsidized, it would be plausible to argue that public policy goals are being advanced Instead with this project greenhouse gases from burning extra oil would almost erase those sequestered. Ninety percent of the carbon dioxide produced by the proposed project--equal to 3 million tons/year--would be captured and injected into the oil field, where it ostensibly would be trapped in rock forever. On the flip side, burning the additional oil produced by injecting the gas would release 2.58 million tons of carbon dioxide/year based on U.S. Environmental Protection Agency data. The Energy Commission thinks this doesn’t matter, although it would not be legally prohibited from analyzing the emissions from ultimately burning the oil in its review of the project. In a statement, the commission said its “staff does not anticipate analyzing potential impacts from use of the oil produced by Elk Hills because there are too many variables involved and any evaluation of impacts with and without the produced oil would be too speculative to provide the decision makers and the public with any useful information.” That’s in sharp contrast to the California Air Resources Board, which fretted about whether coal-fired or natural gas-fired power was used in making ethanol in the Midwest destined for California when it set the state’s low carbon fuel standard. The Air Board also looked at how use of corn once served as food, but now used as fuel, might reverberate through the world’s food system, causing Brazilians to burn down more forest for farmland to make up for the lost crop. At HECA, throw in what the proposed project emits that’s not captured--about 333,000 tons/year--plus greenhouse gas emissions from using the fertilizer it produces and this project looks to be carbon neutral, neither reducing or increasing greenhouse gas emissions on a net basis. Because of this, the development is the perfect foil for funneling California ratepayer money to the oil and coal industries even though state policies specifically seek to gradually phase them out. The problem is there are no laws to expressly prevent the likes of HECA from getting a license to build in California. Effectively, the project has found a loophole big enough to drive a coal train through. Unless that loophole is closed or there is some expansive interpretation of state law, regulators effectively have to say yes to such projects, despite that their chief purpose is to keep the coal and oil industries alive. That’s why the law needs to be changed. Granted, that’s a tall order in the oil- and coal- dominated Congress, but it shouldn’t be as much of a problem in California. Basically, all the Legislature has to do is ban utility purchases of power from clean coal plants where carbon dioxide is used to boost oil output, just like it already requires utilities not to renew their power purchase agreements with out-of-state coal power plant operators once they expire. If lawmakers can’t do that, at least they should ban the CPUC from mandating utilities to negotiate power agreements with developers of such projects and prohibit regulators from ordering use of ratepayer money for their development. As new technologies emerge, laws need to be changed to keep the state pointed ahead toward its policy goals unless the goals themselves are changed. And California laws should make sure the state puts ratepayer money where its mouth is. The alternative is what’s about to become a policy “Oxy” moron.

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