The coal industry is banking on America's first commercial-scale carbon capture and storage (CCS) project, set to be built in West Virginia, to jump-start commercialization of the technology and make it more affordable.

But the project is far from being a sure thing.

The failure last year to legislate a carbon cap on U.S. power plants and direct proceeds from a price on emissions to projects like this one has left a gaping hole in needed financing. The utility planning the $670 million CCS addition to its 1,300-megawatt Mountaineer coal plant in New Haven, W.Va., has yet to find the funds from another source — despite hefty support from a federal program.

American Electric Power (AEP) says that regulators in Virginia and West Virginia are reluctant to charge ratepayers for costs related to the project because of continued policy uncertainty in Congress. 

"So far, [regulators] have not been willing to support cost recovery for CCS ahead of a federal mandate to cut carbon emissions from power plants," Melissa McHenry, an AEP spokesperson, told SolveClimate News via email.

Deploying this first plant will take more money, she said, and this will have to come from Washington or the states.  "The biggest challenge for moving forward with CCS will be the ability to get financial support for advancing the technology — either from the federal government or from state utility commissions."

Most analysts agree that to promote a surge of investment in CCS from public and private sectors, a federal law to limit emissions is needed that would set a price on carbon emissions.

A report released last year by President Obama's Interagency Task Force on CCS made this point clear: "A carbon price is critical" for "widespread cost-effective deployment of CCS."

AEP: CCS Needed to Tackle Climate Change

America's fleet of roughly 1,500 coal plants produces nearly 2 billion tons of carbon dioxide per year and accounts for about 30 percent of total U.S. emissions.

AEP is the biggest U.S. electricity generator and the largest consumer of coal in the nation, burning some 77 million short tons of the fossil fuel per year.

Appalachian Power (APCo), an AEP subsidiary based in Charleston, W.Va., distributes power from the  30-year-old Mountaineer plant.

The parent utility's 235-megawatt CCS project would deploy experimental technology from France's Alstom SA that would use a chilled ammonia solution to absorb about 90 percent of the carbon dioxide the facility releases. The solution would be pressurized and heated, then compressed and piped 1.5 miles into deep saline aquifers below the site.

Last October, AEP's 20-megawatt demonstration became the first in the country to inject a portion of a coal plant's carbon emissions underground.

Columbus-based Battelle, the world's largest independent research institute, first evaluated the geology of the Mountaineer site in 2002. Today Battelle uses live monitoring wells to track the carbon underground and check for signs of ground water contamination, carbon dioxide leakage and microseismic activity.

Carbon emissions from the coal plant will be injected into layers of sandstone and dolomite running about 7,800 feet and 8,300 feet below the coal plant, respectively, with thousands of feet of cap rock forming a barrier above them. Local water tables lie a couple hundred feet below the surface.

"Our goal in advancing CCS technology has always been to allow continued use of coal for electricity generation in the United States with less environmental impact," McHenry of AEP said. "We need to advance CCS to allow the continued use of this vast domestic energy resource both to ensure continued energy diversity and energy security.

"More important," she continued, "if we are going to address global climate change in any meaningful way, we will have to develop technologies that will capture carbon dioxide from existing coal-fueled power plants as there are still many coal plants being built in many parts of the world — particularly in China and India."

'Difficult to Move Forward' Without More Money

The U.S. Department of Energy has awarded the project $335 million in stimulus dollars from a $3.4 billion CCS fund, and the Australia-based Global CCS Institute has offered more than $4 million to support the initial installation phase.

AEP shareholders invested around $70 million in the 20-megawatt demonstration project. Germany's RWE AG and the Palo Alto, Calif.-based Electric Power Research Institute are also partners in the project.

The Obama administration is aiming to have viable CCS applications for coal plants by 2020, based on the recommendations of the president's interagency task force.

However, McHenry said AEP needs more funding to be able to begin commercial-scale CCS operations at the Mountaineer plant by 2015.

"It will be difficult to move forward with the commercial-scale project without additional funding from the government or other partners," she said, though AEP is determined to see the project through.