Remarks of Assistant Secretary for Fossil Energy Steven Winberg as prepared at the United States Energy Association’s (USEA) Carbon Capture, Utilization, and Storage (CCUS) Roadshow in Washington, D.C. on January 28, 2020.
Good morning and welcome to the CCUS Roadshow.
Today’s event is the first in a series of day-long programs on Carbon Capture, Utilization, and Storage that will take place in six different cities across the country. During today’s program – and in subsequent ones – we’ll hear from leading experts on CCUS who’ll provide their insights and the lay of the land for these critical clean energy technologies.
I’m honored to open today’s program, and I want to start by thanking Barry Worthington and his staff at USEA for developing the roadshow – and for their continued commitment to advancing CCUS. I also want to thank all of those who will moderate the sessions – including Chuck McConnell, who was one of my predecessors as DOE’s Assistant Secretary for Fossil Energy.
Thanks also go to those who will provide presentations throughout the day.
Finally, thanks to all of you for being here today.
A couple of weeks ago, we celebrated the third anniversary of a major watershed in the development of CCUS.
On January 10, 2017, NRG Energy and JX Nippon Oil & Gas Exploration Corporation began operation of the DOE-supported Petra Nova project in Houston – which, by the way, came in on-budget and on-schedule.
Petra Nova is the world’s largest post-combustion carbon capture system, and it’s designed to capture approximately 90 percent of the CO2 from a 240-megawatt flue gas slipstream from a coal power plant – which represents 1.6 million tons of CO2 per year. The captured CO2 is transported via an 80-mile dedicated pipeline to a mature oil field, where the CO2 is used in enhanced oil recovery – or EOR – to boost oil production.
So far, Petra Nova has captured nearly 4 million short (US) tons of CO2, and the oil field has produced over 4.2 million barrels of oil through EOR.
So, Petra Nova is an amazing success and it highlights two important facts about CCUS. The first thing – if anyone still has any doubts, Petra Nova shows conclusively that CCUS works.
Petra Nova also underscores the importance of collaboration – between industry partners and between the private and public sectors – to developing and deploying CCUS systems.
But, as amazing as it is, Petra Nova isn’t the end of the story. It’s critical that we keep moving forward on CCUS. There are more chapters to be written on CCUS – and the fact is, we have to write them.
And, it’s not just me, DOE, or the presenters here today saying that. The International Energy Agency says that CCUS is the most important means we have to reduce carbon emissions.
What makes their assessment more powerful is that the IEA has prioritized renewable energy when it comes to clean energy technology development. But they recognize that fossil energy – both coal and natural gas – will continue to play a vital role in global power generation, and that CCUS offers the only realistic option to meet international climate targets.
Meanwhile, the UN’s Intergovernmental Panel on Climate Change notes that, without CCUS, it will be more than twice as expensive to achieve the CO2 levels needed to meet its climate target.
So, let me just note, that no matter where you are on the spectrum of the climate issue, the fact is that fossil-fueled power plants will have to operate with lower CO2 emissions. And the only viable path to getting there is to commercialize and deploy CCUS technologies.
As you know, DOE’s Office of Fossil Energy and our National Energy Technology Laboratory have been at the forefront of CCUS development for three decades. You’ll hear more about our R&D later in the program, but I’d like to give you a high-level overview of what we’re doing to advance CCUS.
Through 2019, the Trump Administration invested $400 million in CCUS R&D. And last month, Congress provided us with another roughly $220 million to advance those technologies.
Working with our partners in industry and at some of the country’s leading universities and research institutions, we’re funding more than 100 R&D projects to address the technical challenges to CCUS commercialization. We’ve moved a number of cutting-edge technologies to market and three of our major CCUS projects are operating commercially right now. I already talked about Petra Nova. The other two are industrial projects.
The ADM project at an ethanol plant in Illinois began commercial operations in 2017 and they are storing their CO2 in a deep saline formation called the Mount Simon Sandstone Reservoir. So far, they’ve captured and stored around 1.5 MMT of CO2.
The Air Products project began operations in 2013. To date, they’ve captured over 5 MMT of CO2 from methane reformers at a petrochemical plant in Texas. The CO2 is being piped to oil fields about 100 miles away, where they’re using it for EOR.
And, of course, we continue to work with our international partners to advance CCUS globally.
So, we’ve had some impressive successes and Congress continues to support the work we’re doing on CCUS. And that’s as important as ever, because there are still some technical hurdles to commercializing these technologies – the most significant being the costs associated with carbon capture.
We’re also developing pathways to safely store and to expand the business case for CCUS through enhanced oil recovery and by converting CO2 into valuable commercial products.
So, we began the CCUS effort focused on coal but, as most of you know, we are now actively developing technologies and projects for natural gas and industrial sources.
CCUS is clearly gaining important traction in the oil and gas industry.
And the oil and gas industry is beginning to look very seriously at the environmental and commercial potential of those technologies.
With their capabilities, experience, and resources, the oil and natural gas industry is uniquely positioned to lead CCUS deployment. They’ve developed many of the largest, most complex, and most expensive projects in the world – on-time and on-budget. So, they’re well-positioned to develop and deploy CCUS systems.
CCUS is a natural next big step for the industry. In fact, we’re seeing a global convergence toward CCUS in the coal and oil and gas industries. For example, the Oil and Gas Climate Initiative has been making important investments in CCUS. The Oil and Gas Climate Initiative – a multinational oil and gas industry group – has been making the business case for CCUS. They currently have investments in five CCUS projects and they’re looking to invest in additional projects.
And the National Petroleum Council recently issued a report that highlights the importance of CCUS for the oil and gas industry and lays out a roadmap to achieve at-scale deployment of these technologies.
So, this interest in – and work on – CCUS in the oil and gas industry is extremely encouraging, and I think it could spur broader deployment of these technologies.
CCUS is also applicable beyond the energy sector, to industrial sources of emissions – for example, facilities like cement plants, steel plants, and ethanol plants. And we have a robust industrial CCUS program at DOE, where we’re focusing on applying these technologies to industrial sources. I mentioned a couple of our major industrial CCUS projects earlier.
So, our R&D is moving the ball down the field, but industry still needs a business case to invest in and deploy CCUS. So, as I mentioned, we’re investigating ways to extract an economic benefit or additional value from CO2. Of course, EOR is the most near-term application and could provide a particularly attractive business driver for the oil and gas industry, but we’re also looking into ways we can convert CO2 into building materials, chemicals, and fuels – valuable products that can shore up the business case for CCUS.
Over the last few years, we’ve funded multiple projects at various technology readiness scales to convert CO2 into building materials, chemicals, fuels, plastics, and polymers. And earlier this month, we made available up to $15 million to develop and test CO2 utilization technologies.
By the way, I wanted to mention another important area we’re moving into. Last year we began accelerating our R&D program plan for direct air capture of CO2– or DAC.
While DAC is often described as new technology, the chemistry of capturing CO2 is very similar to what we have been developing over the last 20 years or so, and there are many similarities to our CCUS technology program.
We also have other R&D that can be leveraged for DAC technology development. We’re funding a Carbon Engineering pilot project in Squamish, British Columbia, as well as several projects in materials development through our University alliance and the Small Business Innovation Research program – projects that could provide valuable tools and lessons learned for a Direct Air Capture program.
We’re excited about leveraging our existing R&D and leading the Department’s effort to help develop and deploy direct air capture technologies.
So, we’re seeing some important advances in carbon capture, utilization, and storage R&D. But, in addition to the technology side, we need supportive policies to encourage the kind of investment needed to commercialize CCUS on a broad scale.
The good news is that we’ve seen some encouraging movement on that front. For instance, in 2018 Congress expanded the 45Q tax credit to encourage the deployment of CCUS projects in the United States. The credit amount was increased from $20/metric ton of CO2 up to $50/metric ton for saline storage, and $10/metric ton up to $35/metric ton for EOR or other utilization methods.
Those are hefty increases, and the expansion of 45Q seems to have energized U.S. industry to find business models that can work to stand-up projects. Now, some aspects of 45Q require clarification. The IRS is updating its guidance, and we’ve been engaged with them on this effort.
45Q, as well as some policies adopted by state governments, is generating increased interest in CCUS among utilities and industry, including the oil and gas sectors.
So, we are seeing some progress on the policy and regulatory front. We’re also seeing a lot of creativity in the states, which I know you’ll explore later today.
In the process, we’re gaining clarity on the kinds of policy approaches that can be effective when it comes to commercializing CCUS. And we’re seeing where Federal action is needed and where state responses are more appropriate.
So, a lot of critical work needs to be done to deploy CCUS commercially and on a wide scale. And, as I mentioned earlier, collaboration is critical to doing that. So is getting the word out about where we are and what we need to do to go forward. And that’s why the CCUS Road Show is so important.
So, again, I want to thank USEA for their great work planning this wide outreach to industry, government, and other stakeholders, to engage as many people as possible for this important effort. And I look forward to a successful program today, and to working with you here today to advance CCUS.