Pipe Dreams: Fourth in a continuing series on whether capturing carbon is a climate solution or a dangerous distraction.
Wyoming has bet its future on carbon capture technology.
The state has poured money into research on how to remove carbon dioxide from industrial emissions, and what to do with the gas once it has been captured. State lawmakers have passed laws to encourage carbon capture and regulations to govern it.
As many other states and nations have tried to wean themselves off fossil fuels, Wyoming has done the opposite: In 2020, Gov. Mark Gordon signed a law—the first in the nation—that requires electrical utilities to generate some of their power from coal plants fitted with carbon capture equipment.
Wyoming produces 40 percent of the nation’s coal, and relies on fossil fuels to generate nearly 60 percent of state and local revenues. The goal has been to find a way for the coal industry to thrive even as the nation reduces greenhouse gas emissions.
But two years later, Wyoming may be no closer to willing this coal-friendly climate solution into being. In March, the utilities covered by the law submitted filings to regulators saying that carbon capture was not economically feasible. Retrofitting their plants would cost hundreds of millions of dollars, at the least, they said, forcing them to raise customers’ electricity bills.
Beyond that, the filings said operating carbon capture equipment could spike water use at the coal plants and increase emissions of some air pollutants, as well as solid and liquid waste.
Energy companies, labor unions and each of the last four presidential administrations have held out carbon capture and storage as a technology that could help the nation reduce greenhouse gas emissions while continuing to burn fossil fuels. The technology has played an important role in the Biden administration’s climate policy.
Last year’s infrastructure bill included more than $12 billion to help pull carbon dioxide from smokestack emissions and straight from the atmosphere. Some states have also joined in: California recently said it will rely partly on carbon capture to meet its climate targets, though primarily in the industrial sector rather than for electrical generation.
Nowhere is the support as strong as in Wyoming, which is an ideal testing ground. The state has abundant coal reserves and the right geology to store captured carbon dioxide. Perhaps most importantly, the technology has the unequivocal backing of political leaders, who have stated their intention to use carbon capture to protect their coal industry.
“We put all our eggs in one basket,” said Dan Zwonitzer, who sponsored the 2020 carbon capture bill. “We champion coal. And so if we’re going to do that, we’ve got to find ways to make sure it can carry us into the future. And I think CCUS is a way that we need to find,” he said, using an acronym for carbon capture, utilization and storage.
Yet so far, the technology has failed to catch on commercially there or elsewhere. And many economists and policy experts say it is unlikely to play a significant role in helping eliminate emissions from the power sector.
“There are so many other cheaper and cleaner ways to decarbonize electricity that I don’t see carbon capture as likely to have a big role,” said Dan Cohan, an associate professor of environmental engineering at Rice University. “The economics just don’t make sense.”
Some carbon capture companies have disputed the negative conclusions of the two Wyoming utilities, Rocky Mountain Power and Black Hills Energy, that submitted the filings. Other supporters of the technology say the analysis is sound, but that the world will need carbon capture on coal plants to meet climate goals, and that the federal government should bear the costs.
But the Wyoming filings make clear that even with conditions primed in favor of the technology, the utilities would rather convert their coal plants to burn natural gas, or simply close them down, than install carbon capture equipment. And even Zwonitzer concedes that the 2020 bill he sponsored is far from achieving its goal.
“We are not where we thought we’d be three years ago,” he said, “and I’m not sure where we’re going over the next year.”
Wyoming’s Climate Plan
In October of 2019, PacifiCorp, which owns Rocky Mountain Power, accelerated the timeline for closing four units at two of its Wyoming coal plants. The nation’s coal production was continuing to slide, and states were passing bills aiming to speed their transitions off fossil fuel power.
“We thought, ‘OK, that’s one way for a state to do it,’” said Randall Luthi, chief energy adviser to Gov. Gordon. But the problem wasn’t really coal, Luthi said. The problem was the emissions released by its combustion, “So how do you burn coal and not release CO2?”
Luthi spoke with lawmakers, regulators and energy companies and the result was House Bill 200. The law required the state’s utilities to generate a portion of their power from coal plants fitted with carbon capture equipment, and directed state regulators to come up with the details. The final rules direct utilities to submit plans for producing at least 20 percent of their power with coal plants fitted with carbon capture technology by 2030, unless the companies can demonstrate that doing so is not feasible.
“This is the Wyoming climate change plan, essentially,” said Shannon Anderson, staff attorney at the Powder River Basin Resource Council, a Wyoming environmental group. She said the law has put the state in a bind and may force costs onto its residents and businesses in the form of higher electric bills.
Zwonitzer, the bill’s sponsor, said the state had no choice.
“We’ve gotten so Republican that even mentioning a tax increase will get you thrown out of office,” said Zwonitzer, who is a Republican. “There are no other revenue sources really outside of taxation on either our people or our minerals. So we’re currently trying to figure out how to keep taxing our minerals.”
While carbon capture has not yet worked commercially, Zwonitzer said, maybe it could if the state forced utilities to adopt it. “It’s almost mandatory for us to find a way to do this,” he said.
Not Feasible ‘At This Time’
When the law passed in 2020, the potential impact on residents or utilities was speculative. The March filings made them real.
Black Hills Energy said that building carbon capture operations on two of its coal units would cost about $506 million and $474 million, respectively. The second figure represents three times what it cost to build one of the coal generation units in the first place, the filing said. If the costs were borne by ratepayers, that would mean an increase of as much as 16 percent, or $25 per month, for the average residential customer. The operations would also siphon off more than a third of the units’ electrical output, Black Hills said, so it would have to build additional generation or have customers reduce their consumption.
Black Hills also said the carbon capture operations “may have an impact on ambient air quality in the area,” because they have the potential to increase the emissions of certain pollutants. The increased demand for water, “would apply stress on existing aquifers in the area,” the company wrote.
Rocky Mountain Power, the other utility, said in the filing, “There is not a portfolio standard that is economically feasible at this time.”
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Both Black Hills and Rocky Mountain Power determined that the best carbon capture technology was a version that used an “amine-based solvent.” As they break down, these solvents can form toxic carcinogens, according to the Environmental Defense Fund. Last month, the advocacy group submitted comments to the White House Council on Environmental Quality warning that the release of these chemicals “may pose serious hazards to workers and the public near capture facilities,” but that the risks were not well understood.
“A lot of folks think about carbon capture as a way to address the environmental impacts of the coal industry, but honestly, what these filings show is that it just creates environmental problems,” Anderson said.
However, Michael Nasi, a partner at the Texas law firm Jackson Walker who has represented coal and utility interests, said the filings by Rocky Mountain Power and Black Hills failed to recognize the economic potential for carbon capture operations.
Nasi was among those who Luthi consulted when drafting the 2020 bill. He is a strong advocate for carbon capture, and he represented NRG Energy when it built the nation’s only commercial-scale carbon capture operation at a U.S. coal plant outside Houston. The operation, called Petra Nova, ran for about three years before it ceased capturing carbon dioxide in 2020.
In Wyoming, Nasi has been representing a small energy company called Glenrock Energy that has been trying to build a carbon capture project at one of Rocky Mountain Power’s coal plants. Glenrock wants to use the captured carbon dioxide to squeeze oil out of a nearby depleted petroleum reservoir through a practice called “enhanced oil recovery.”
“They don’t see it for what it really is,” Nasi said of the utilities. “It’s very similar to basically a large industrial customer that instead of building widgets, makes carbon, and that carbon can be sold into the oil market with a bunch of very thirsty enhanced oil recovery projects that can use the CO2.”
Glenrock would pay for the carbon capture equipment, Nasi said, using its own financing. Ratepayers would not have to cover the costs. This is the model that Petra Nova used.
“Petra Nova was an oil project that had a very successful CCS demonstration built within it,” Nasi said.
That dependence on oil brought its own risks, however. It was the pandemic crash in oil prices, NRG said, that prompted it to halt operations in 2020. The carbon capture project has not restarted.
Nasi suggested a number of changes to the Wyoming legislation that remained in the final version, according to emails provided to Inside Climate News by the Energy and Policy Institute, a nonprofit watchdog group. The changes accelerated the timeline for when utilities would have to install carbon capture equipment, moving the date to 2030 from 2040, and requiring the public service commission to come up with interim targets.
Nasi told Inside Climate News that the changes provided “adequate urgency” by forcing the utilities to move faster.
Black Hills declined to comment on the filings because they are part of an open docket with the public service commission.
PacifiCorp spokesman David Eskelsen said the company has not considered carbon capture to be viable in its own planning “due to the high capital cost.”
Still, both companies said in the filings that they would continue to pursue installing carbon capture equipment at their plants, as directed by state law. Black Hills said it would seek federal funding from the Energy Department. Rocky Mountain Power asked regulators to approve a $3.1 million annual surcharge on customers to fund the ongoing study.
‘A Huge Burden to Bear’
Many independent experts have already arrived at the conclusion that the prospects for coal with carbon capture in the U.S. power sector are dim. John Thompson, technology and markets director of the environmental organization Clean Air Task Force, doesn’t disagree, but he said he thinks the technology holds great promise in Asia, and that Wyoming could serve as a test case. Thompson’s group is one of a few environmental nonprofits advocating for federal spending on carbon capture for this reason.
Thompson pointed to data from the International Energy Agency showing that, as of 2020, the majority of China’s coal emissions came from plants that were less than 10 years old. China’s coal emissions are greater than all the greenhouse gas emissions produced in the United States and they hit their highest level last year.
“I just don’t see how we solve the climate problem without carbon capture on coal,” Thompson said. “And if we don’t solve it in China, it’s game over on climate, it really is.”
Thompson said fitting carbon capture technology onto Wyoming coal plants could help demonstrate a technology that could be deployed on a vast scale in China and other parts of Asia. But, he said, he’d want to see some changes to what the utilities are considering. He noted that the filings consider systems that would capture 90 percent of the emissions from the coal plants, while that figure should be at least 95 percent. He also said they should pursue a different “dry-cooling” technology that would dramatically cut water use. Both changes would increase the costs of construction.
But Ian Lange, an economist at the Colorado School of Mines who has served on the White House Council of Economic Advisers and studied carbon capture, said he is skeptical that the economics will be much different in Asia. In the United States and Europe, he said, governments and utilities have spent years and billions of dollars trying to make the economic model work, and “it basically didn’t.”
Wyoming will be the latest trial. The state law included provisions that give the utilities options to delay or possibly avoid installing carbon capture equipment, as long as they can convince regulators that doing so would not be feasible.
Anderson, with the Powder River Basin Resource Council, said the public service commission should step in now to halt the process and prevent the utilities from raising rates for further study.
“Wyoming legislators made a policy choice to do something that none of the other states have done, probably would never do, and Wyoming customers have to bear the costs,” she said. “It’s a huge burden to bear.”
Zwonitzer, the bill’s sponsor, insisted that any costs would be manageable. He said the state now has to wait for regulators to respond to the filings before determining what comes next. But he said Wyoming has little choice but to continue pursuing carbon capture technology.
“Am I gung-ho about it still? No. But do I think we have a couple of years to keep pushing the envelope and see where we end up? Yes,” he said. “I think one day we’re going to wake up in Wyoming and coal will be gone and our economy will be devastated. So it’s my hope that my state and our consumers are OK with paying.”
Wyoming residents are just beginning to get a sense of what that might cost.
This story has been updated to change the description of Glenrock Energy from an oil company to an energy company, given its investments in technology unrelated to oil and gas.