What a clean electricity payment plan for gas, CCS means

Natural gas could still be considered a clean energy source under House Democrats’ $ 150 billion clean electricity proposal, but only with the widespread adoption of technologies such as capture and carbon storage, analysts say.

Yesterday, the House Energy and Commerce committee put forward plans for a Clean Electricity Performance Program (CEPP), which would be implemented by the Department of Energy. According to the Chamber’s proposal, the CEPP would provide subsidies to electricity providers that would increase the amount of clean electricity they supply to customers by at least 4% compared to the previous year (Energy wire, September 10).

Although the CEPP under study does not prohibit the use of any source of electricity, it defines clean electricity as output with a carbon intensity of less than 0.1 metric tonnes of carbon dioxide equivalent per megawatt hour, which effectively excludes natural gas on its own.

However, gas producers could get around this problem by blending low carbon fuels such as hydrogen or biomethane, while natural gas plants would need to be equipped with carbon capture and storage (CCS) technology. ) to meet the standard, the experts said.

“It’s not necessarily a gas killer, but it’s a 1970s gas killer, like we did 40 years ago,” said Michael Webber, professor of energy resources at the University. from Texas to Austin, on the proposal.

But the ability to use natural gas while meeting the House standard could face cost and scale issues, and Webber said he expects the language to do the trick. subject of considerable negotiations between the House and the Senate.

Senator Joe Manchin (DW.Va.)Daily E&E, September 13).

Senator Tina Smith (D-Minn.), Who proposed a clean electricity standard that would pass through the Senate, where Democrats cannot waste a single vote, said she plans to work with fellow Senate colleagues and Manchin “to ensure the Clean Electricity Plan helps deploy all the technologies needed for a clean, affordable and reliable grid, including renewables, fossil fuels with carbon capture and storage, and nuclear.

During yesterday’s debate in the House of Commons Energy and Trade Committee, some Democrats rebuffed Republican criticism that the proposal would put fossil fuels out of service.

Under the House plan, electricity providers who increase their share of “clean electricity” by 4% would receive $ 150 for “each megawatt hour above 1.5% of clean energy production. the previous year, ”according to an Energy and Commerce fact sheet. Committee. Suppliers unable to meet this target would have to pay $ 40 per megawatt hour based on their lack of clean energy.

“We don’t ban; we are moving to cleaner fuels in a neutral manner at the source, ”said Rep. Diana DeGette (D-Colo.).

But some Republicans outside of Congress have said that while the gas could meet the CEPP standard with assistive technology, other provisions of the House plan would affect the industry, including a proposed methane royalty.

“If you look at the total sum, it’s clear gas is not their friend,” said Tom Pyle, who oversaw the transition from former President Trump to the Department of Energy and is now chairman of the American Energy Alliance, referring to Democrats.

Pyle noted that the push comes as California said five temporary gas-fired generators are needed to bolster the state’s grid. This product they [Democrats] need to save the energy sources they prefer, they just assume [the industry] will find a way to keep doing it, ”he said.

He warned that there might be a breakeven point where it would not make economic sense to continue to develop the gas.

“The cumulative impacts of the proposals would mean that gas would not have the capacity to play a big role,” he said.

Getting the gas up to the standard on a large scale would be no easy feat: in the world, there is currently only one carbon capture project in operation at a power plant – at the coal-fired plant. from Boundary Dam in Canada.

Still, carbon capture is popular with Democrats and Republicans in Congress, and Biden has appointed key carbon capture advocates to the most senior positions in the Energy Department (Energy wire, September 3).

The CEPP standard could provide a “test” for the oil and gas industry’s stated enthusiasm for carbon capture, said Andrew Logan, senior director of oil and gas at the nonprofit finance organization. sustainable Ceres.

Another problem, Logan said, is how natural gas producers might incentivize utilities to build carbon capture projects in power plants “if utilities can instead choose from other technologies to low carbon emissions that do not require the large capital investment ‘necessary for carbon capture.

“Even if there is progress on CCS… I think this new standard would stimulate enough investment in clean energy alternatives, that I think we would see the role of natural gas diminish, no matter what.” , Logan said. “I think the question becomes, ‘Does natural gas have a role in a post-2030 world or not?’ And if so, that role will have to come with CCS. ”

Lobbying frenzy

During a visit to the National Renewable Energy Laboratory yesterday, President Biden called on Congress to pass the climate change provisions, arguing that the United States does not have much time to deal with the crisis.

“The need is there. We’re not much over 10 years old – for real, ”Biden told NREL Flatirons Campus in Arvada, Colorado.

He was joined by Energy Secretary Jennifer Granholm, whose department would manage CEPP, and said he saw climate change as an opportunity to create jobs.

Asked by reporters if he would sign a reconciliation package with less climate action, Biden said: “I am for more climate action.”

In the meantime, the CEPP is creating a lobbying frenzy, highlighting the political challenges facing the president.

Congress should include a stricter carbon intensity standard to ensure gas works are not eligible for payment under CEPP, said Steve Clemmer, director of energy research for the Union of Concerned Scientists . The bill is also expected to adopt language ensuring that “upstream” emissions of methane, which are released during drilling and transporting gas, are counted as emissions from a power plant, he said.

The Union of Concerned Scientists has conducted research showing that carbon capture is more effective in other industries, such as steel manufacturing.

“It’s more expensive to deploy in the electricity sector compared to other alternatives” like wind and solar power, he said.

Representatives of the country’s major oil and gas trading groups opposed the concept of CEPP.

“We agree on the need for continued emission reductions in the electricity sector, but as structured, CEPP does not recognize the essential role of natural gas in maintaining grid reliability and complementing variable renewable energy production, not to mention driving further emission reductions by moving the dirtier ones. fuels, ”said Dustin Meyer, vice president of natural gas markets at the American Petroleum Institute, in a statement.

“Instead of a sectoral approach, API urges Congress to pursue an economy-wide market-based carbon price as the most effective policy path to reduce emissions,” Meyer continued. .

“Any serious attempt to reduce emissions from the electricity sector must recognize natural gas and natural gas infrastructure as key components of a cleaner energy future,” said a spokesperson for Interstate Natural Gas Association of America.

Journalist Mike Lee contributed.

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About Matthew R. Dailey

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