Is CPS-Summit deal contingent on greenhouse gas performance?

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For Seattle-based Summit Power, capturing its climate-destabilizing carbon dioxide is one thing — consider it an expensive ($2.2 billion expensive) but doable proposition. But whether that CO2 stays in the ground once it has been sold off to oilfield operators to help extract more crude from old wells is another matter. So too is federal policy toward greenhouse gases. Texas has sued the EPA repeatedly to avoid regulating greenhouse gases in the state, and science-challenged Republicans in Congress are still trying to smother the regs out of the federal budget.

Despite the many documented dangers of coal, the feds are desperately trying to keep coal in our power mix. After all, a quarter of the world’s coal is found in the U.S., according to the U.S. Department of Energy. For that reason our continued reliance frequently couched as a matter of national security.

Last year the feds dumped $3.4 billion in stimulus funds into the hunt for cleaner coal options, including a variety of carbon sequestration studies. And much of that has come to Texas.

In Austin, Skyonic Corporation received $25 million to further its exploration into ways to “mineralize” CO2 emissions into a solid that could then be stored above ground, thereby removing the risk of the gases escaping back into the environment; University of Texas at Austin got $5 million to conduct seismic exploration of the Gulf of Mexico as a potential burial ground for CO2; and Sandia Technologies, LLC, got $5 million to explore onshore Texas geologic formations.

The big bucks, however, have gone to existing and planned coal-power plants seeking to capture their CO2.

In Texas, NRG Energy’s coal plant in Thompson outside of Houston, the W.A. Parish plant, got $167 million from the DOE for its carbon-capture efforts. Port Arthur-based Air Products plans to create methanol and sell its CO2 waste to oilfield operators. They got $284 million from the DOE. And now-CPS partner Summit Energy’s planned coal gasification plant got a whooping $350 million for their gasification project. The pricetag on the project has risen in two years from an anticipated $1.75 billion to $2.2 billion.

My one question for CPS Energy regards what happens if the carbon collected by Summit doesn’t stay in the ground — whether through technological failures or changes in political priorities. I put the question to CPS Energy spokesperson Christine Patmon, who was apparently provided a very short script to work off of.

Here’s our exchange:

Patmon: They are going to do carbon capture. That is what we’re calling for; that is what they are going to do.

Me: Yeah. But what if it doesn’t work?

That is their business model. Their business model only works if it works the way it’s lined out.

So, if they can’t fulfill their end of the contract, do we have an out?

That is their business model — their business model — that’s what they’re planning on doing. That’s what we’ve asked of them; that is what they will deliver to us.

I understand they intend to sequester the carbon...

There are no ‘what if’s’ on here. That is what they are going to deliver.

What if they are unable to do it?

That is what our agreement calls for.

So if they can’t keep the carbon in the ground it would be a breach of contract and San Antonio would be freed from our 25-year purchase agreement?

Our agreement calls for them to deliver what they have told us they will deliver. Their business model depends on it. Their business model is only profitable if they do it the way they have outlined it.

And if they are unable?

There is no ‘unable’ in the contract. Their contract calls for what they plan to deliver, what their business model is built around.

So we have an out?

Their business model calls for that. There’s no way they can even operate the plant and be profitable without their business model calling for what they have outlined that they will do.

 

Seemingly the message is: As long as the plant is profitable, and they are able to sell their waste stream to the oilfield operators, we will buy their power — whatever shifting administrations may do regarding greenhouse-gas regulation or the ultimate effectiveness of carbon sequestration. But I thought it best to do my due diligence and reach out to CPS CEO Doyle Beneby directly for clarification. Unfortunately, as of yet, I have not received a call back. I know he’s a busy man.

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