Bloomberg News

Capturing Carbon Seen Adding as Much as 80% to Electricity Costs

February 11, 2014

Capturing carbon from coal-burning power plants would increase the cost of electricity at those facilities by as much as 80 percent, more than utilities would get by selling the carbon, an Energy Department official said.

Julio Friedmann, the deputy assistant secretary of the Energy Department, told a congressional hearing today that his office is working to develop joint carbon-capture projects with utilities. As the technology advances, costs to install the equipment can be cut in half, he said.

“We cannot attract private investment in the first plant, absent government support,” Friedmann told a panel of the House Energy and Commerce committee. “We need second-generation large pilot projects” to bring down costs, he said.

The viability and cost of adding carbon-capture equipment has gained attention because the Environmental Protection Agency has proposed requiring all new coal plants to trap some carbon-dioxide emissions. Critics say that technology isn’t commercially available.

“We still don’t have a replicable model,” Louisiana Republican Representative Steve Scalise said. “Consumers are concerned about whether or not that’s going to increase their electricity rates.”

Friedmann said the first carbon-capture plants will increase the cost of building and operating a plant by 70 percent to 80 percent for wholesale electricity rates. Those plants can recoup about half the cost by selling the carbon dioxide.

Southern Plant

Costs for the technology could be cut in half in the next decade, and plants that capture some, though not all, of the carbon can lower their costs, he said.

The Energy Department provided $270 million to Southern Co. (SO:US) for its carbon-capture plant in Kemper County, Mississippi. Southern will sell the carbon dioxide it captures to oil drillers, who use it to boost production in old oil fields.

Once that plant starts operating this year, it will take two or three years to determine if it can be replicated.

“Kemper has a special place in our hearts,” Friedmann said. The company has plans for future plants that would use similar technology, he said.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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