New Rules for Power Plants Could Give Carbon Capture a Boost. Here’s How.

WASHINGTON — The Biden administration’s plan to limit, for the first time, greenhouse gas emissions from existing power plants could hinge on the ability of plant operators to capture carbon dioxide before it is pumped into the atmosphere.

Yet none of the nation’s 3,400 coal- and gas-fired power plants are currently using carbon capture technology in a significant way, raising questions about the viability of that approach.

In the coming weeks, the Environmental Protection Agency is expected to propose strict new limits on emissions from coal- and natural gas-burning power plants, which are responsible for about 25 percent of the country’s greenhouse gases. Those emissions are dangerously heating the planet.

While electric utilities could pursue other strategies to reduce pollution, such as switching to wind or solar power, experts say capturing carbon dioxide and burying it underground might be one of the few options for some large coal and gas plants to keep operating while complying with the new rules.

Carbon capture technology has been around for decades, but electric utilities have struggled with its high cost and complexity. And while some insist that it is an essential tool for solving climate change, major hurdles remain.

Where carbon capture stands today

Carbon capture is already used by a number of industrial facilities, such as ethanol and natural gas processing plants. There are also three coal plants in Maryland, Oklahoma and California that use chemical solvents to trap a tiny fraction of the carbon dioxide coming out of their smokestacks, which they sell to companies that make carbonated beverages, among other customers.

But electric utilities have found it difficult to capture large amounts of the carbon dioxide spewing out of coal- and gas-fired power plants. While the technology is fairly well understood, the price tag can be steep, not least because power plants often need to divert a hefty fraction of their electricity to run the capture devices.

In the 2010s, several early projects partly funded by the federal government were abandoned because of high costs. Only one coal plant in the United States ended up using carbon capture on a large scale: The $1 billion Petra Nova facility in Texas, completed in 2017. It sold the captured carbon dioxide to oil drillers that injected the gas into oil fields to extract more crude. That facility shut down in 2020 when oil prices plummeted, although its owners plan to restart it this year. (There is also one coal plant in Canada that uses carbon capture.)

The biggest hurdle, experts say, is that it’s almost always cheaper to let carbon dioxide waft into the atmosphere than to capture it. Without government limits on pollution or subsidies, utilities are unlikely to go through the trouble.

But last year, that calculus began shifting. Under the Inflation Reduction Act of 2022, Congress increased existing tax credits that are now worth up to $85 for every ton of carbon dioxide that polluters capture and bury underground, up from a maximum of $50 previously.

That has led to growing interest. The owners of at least six coal plants and 14 large gas plants are conducting detailed engineering studies to gauge the economic feasibility of carbon capture and storage. Calpine Corporation, one of the country’s largest generators of electricity from natural gas, is exploring plans to install the technology at four large gas plants in Texas and California.

The federal tax credit on its own won’t be enough to cover the cost of capturing carbon from those gas plants, said Caleb Stephenson, Calpine’s executive vice president of commercial operations. The company is exploring other potential sources of financing so that it can bridge the gap and gain experience driving down costs for future carbon capture projects.

“We’re optimistic about this technology,” Mr. Stephenson said, adding that the electric grids of the future would need some electricity source that can run on demand at all hours to complement intermittent sources like wind and solar power. Carbon capture technology could allow gas-fired plants to provide that service without polluting.

The E.P.A. can’t require that electric utilities use any specific technology to cut emissions. But, in theory, the agency could set limits on greenhouse gases that are so stringent that some coal or gas plants might have to install carbon capture to meet them — or else shut down altogether.

Yet many utilities might still shy away from carbon capture. One recent study by Rhodium Group, an energy research firm, tried to model the potential effects of strict power plant rules and new tax credits. The researchers estimated that only about 20 gigawatts’ worth of coal and gas plants would likely install carbon capture by 2035 — a small fraction of the 700 gigawatts of coal and gas that exists today.

Some utilities might simply find it cheaper to shutter their large coal and gas plants and get more electricity from wind, solar and batteries, which were also heavily subsidized in the new climate law. In other cases, it might prove easier to modify existing gas plants so that they can run entirely on clean hydrogen fuel that doesn’t produce emissions.

“We just don’t see a lot of carbon capture being deployed in the power sector,” said John Larsen, a partner at Rhodium Group. “It’s not because there are big technical barriers, but because there’s so much competition from other sources.”

Of course, those projections could be wrong, Mr. Larsen said. Carbon capture might look like a more attractive option in parts of the country where it is difficult to build new wind and solar power because of a lack of power lines or community opposition. Some promising options for backing up renewable energy, such as advanced batteries, might not pan out. And some states like Wyoming have expressed interest in encouraging their utilities to use carbon capture technology in order to maintain a market for fossil fuels like coal.

Carbon capture would be more likely to be used at industrial facilities, such as at hydrogen or ethanol plants, where it is often technically easier to capture carbon dioxide and there are fewer alternatives for cutting emissions, the Rhodium Group found.

Other big hurdles

Even if new regulations and federal subsidies spur renewed interest in carbon capture, the technology faces other obstacles.

Some critics worry that complicated new carbon capture projects are vulnerable to cost overruns that could cause electricity prices for consumers to spike. The cost of one proposed carbon capture project at a large coal plant in North Dakota, for instance, has jumped to $1.45 billion, up from $1 billion five years ago.

Some environmental groups also oppose carbon capture, arguing that it doesn’t do enough to reduce conventional air pollution from power plants and would do little to address leaks of methane, a potent greenhouse gas, from natural gas wells and pipelines. Critics have also raised questions about whether the technology actually reduces emissions by as much as advertised, noting that Chevron’s carbon capture facility in Australia has fallen far short of expectations.

“The track record has not been good at all, and that’s being charitable,” said David Schlissel, an analyst for the Institute for Energy Economics and Financial Analysis who has criticized carbon capture projects.

There are also some practical hurdles: The United States currently has about 5,000 miles of pipelines to transport carbon dioxide, but it may need more than 30,000 miles if carbon capture technology is widely adopted, according to the Energy Department, and some proposed carbon dioxide pipelines are already facing opposition. And while the United States has enough capacity to store centuries’ worth of emissions underground, the E.P.A. has been slow to approve permits for subterranean wells to store carbon dioxide.

Some power companies question whether the technology is ready for prime time. Southern Company, an electric utility that has been testing carbon capture for natural gas plants at a facility in Alabama, told the E.P.A. last year that the technology needed further improvements to bring down cost and improve reliability.

Others are optimistic.

“Back in the 1970s, when the E.P.A. set rules for sulfur pollution, there were only three plants in the country with sulfur scrubbers,” said Jay Duffy, litigation director at Clean Air Task Force, an environmental advocacy group. “And by the end of the decade they were widespread. You see this dynamic every time a new pollution regulation comes along.”