A significant part of the problem is the federal government's failure to require all power generators to lower their carbon emissions. With such a requirement, AEP and its partners would have a competitive advantage by developing cutting edge technology to reduce carbon emissions from existing coal-fired power plants. That competitive advantage would inspire others to invest in competing CCS and related technologies to lower their carbon emissions as well.
Without such a requirement, however, innovation stops. The industry stays at the lowest common denominator -- i.e., the highest allowable carbon emissions -- to avoid the time and expense of creating new solutions to carbon and other forms of pollution.
Another significant part of the problem is a century-old, state-by-state regulatory structure that does not allow utilities to recover the costs of technologies that reduce carbon emissions. As AEP's Chairman and CEO explains, "We are clearly in a classic 'which comes first?' situation. 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. 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. The uncertainty also makes it difficult to attract partners to help fund the industry's share."
Until this announcement, AEP was working with the U.S. Department of Energy (DOE) and others to install a commercial-scale CCS system at AEP's Mountaineer coal-fueled power plant in West Virginia. The system would have captured at least 90 percent of the carbon dioxide (CO2) from 235 megawatts of the plant's 1,300 megawatts of capacity. The captured CO2, approximately 1.5 million metric tons per year, would have been treated and compressed, then injected into geologic formations for permanent storage approximately 1.5 miles below the surface.
Plans were for the project to be completed in four phases, with the system to begin commercial operation in 2015. AEP has informed the DOE that it will complete the first phase of the project (front-end engineering and design, development of an environmental impact statement and development of a detailed Phase II and Phase III schedule) but will not move to the second phase.
Whether or not CCS is the right technology to reduce carbon emissions is not the point. The point is this: If the government requires utilities to reduce their carbon emissions, it will set off competition between the utilities to come up with the most efficient and cost-effective technology to reduce the emissions. That competition will lead to investments, job creation, and innovation that will make our country a technological leader in carbon reduction technologies. As Germany is demonstrating right now with the healthiest economy and the highest employment rate in modern history, becoming a technology innovator is the way to compete against lower-wage, developing countries.
On the other hand, if the government requires nothing, then the utilities will do nothing. No investment in new technologies. No new jobs for scientists, engineers, and other high paying professionals. No technological advantage over lower-wage, developing countries.
Woodbridge, New Jersey