AEP Puts Carbon Capture on Hold, Citing Climate Policy Uncertainty

The company, one of the nation's biggest emitters of CO2, ended its agreement today with the U.S. DOE to commercialize CCS technology

AEP generating station in Conesville
AEP generating station in Conesville,Ohio/Credit: PoweredbyLycoming, flickr

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American Electric Power Co Inc. said on Thursday it was putting on hold plans to commercialize carbon dioxide capture and storage technology (CCS), ending an agreement with the U.S. Department of Energy.

The company, one of the biggest emitters of carbon dioxide in the United States, cited uncertainties over U.S. climate policy and a weak economy as contributors to its decision.

“We are placing the project on hold until economic and policy conditions create a viable path forward,” Michael Morris, AEP chairman and chief executive, said in a release.

In 2009, the department had picked AEP to receive funding of up to $334 million to help pay for the installation of a commercial-scale carbon capture and storage system at AEP’s Mountaineer coal-fueled plant in New Haven, West Virginia.

The system was designed to capture at least 90 percent of the carbon dioxide from 235 megawatts of the 1,300-MW plant.

The CO2, about 1.5 million metric tons per year, would be treated and compressed, then injected into rock formations for permanent storage about 1.5 miles below the surface.

Plans were for the project — with funds coming from the government’s Clean Coal Power Initiative — to be completed in four phases, with commercial operation starting in 2015.

No Regulatory Approval

“The commercialization of this technology is vital if owners of coal-fueled generation are to comply with potential future climate regulations without prematurely retiring efficient, cost-effective generating capacity,” Morris said.

“But as a regulated utility, it is impossible to gain regulatory approval to recover our share of the costs for validating and deploying the technology without federal requirements to reduce greenhouse gas emissions already in place.”

AEP told the Department of Energy that the company would complete the first phase of the project — including front-end engineering and design, and development of an environmental impact statement — but not move to the second phase.

AEP and partner Alstom of France began testing, or validating, the technology in October 2009 at Mountaineer.

Validation ended as planned in May after meeting project goals. Between October 2009 and May 2011, the carbon capture and storage system captured more than 50,000 metric tons of CO2 and permanently stored more than 37,000 metric tons.

AEP’s stock slipped 17 cents or about 0.4 percent on Thursday morning, while the S&P Utilities index gained almost 0.2 percent.