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Can This North Dakota Co-Op Prove the Potential of Carbon Capture and Storage?



By Frank Jossi

March 30, 2020 - Project Tundra represents a potential harbinger for the technology that could extend the viability of coal power.

In a tiny North Dakota town, a small electric cooperative utility has proposed the largest carbon capture project ever built to store emissions from a 1970s-era lignite coal plant.

The proposal comes after a legacy of failed carbon sequestration attempts at other power plants around the country and despite a $1.3 billion price tag.

Carbon capture and storage advocates say Project Tundra will be different and represents an important harbinger of how coal can continue to coexist in an electric grid still requiring baseline power, especially in rural areas with thin renewable energy assets and brutal weather. Beyond simply burying carbon in caverns, capture advocates foresee a world where sequestered emissions from industrial plants become a commodity for sale to customers in need of it for their own production.

They believe a new tax credit, still muddled in regulatory inertia, could jumpstart an international trend toward using carbon sequestration to reduce global emissions. And they are hoping tax credits will increase significantly as part of the Trump administration’s coronavirus stimulus package.

Grand Forks-based Minnkota Power Cooperative plans to capture 90% of carbon emissions from the 455-megawatt unit at Milton R. Young Station in the tiny city of Center. The nonprofit generation and transmission cooperative believe the development will potentially extend the life of the plant another 25 years. About half the co-op’s load serves customers in Minnesota.

The plan calls for carbon to be pumped into an underground geologic storage area on land underneath the lignite mine that supplies coal to the plant. Although the system will bury carbon from just one of the two units at the plant, the sheer size could make it a potential case study and a road map for other coal-base facilities. It is nearly twice the size of the largest carbon capture project completed, the 240-megawatt Petra Nova plant southwest of Houston, Texas.

“It really is an exciting project,” said Stacey Dahl, Minnkota senior manager of external affairs. “It’s a scale up from Petra Nova and it will show how to utilize this technology on lignite coal.”

The project even caught the attention of the Republican-led Minnesota Senate, which proposed a comprehensive energy bill that includes a provision allowing any plant that captures 80% of emissions to be labeled “carbon-free.” The Minnesota Environmental Partnership and several other groups have come out against the Senate legislation in its entirety.

The concept of carbon capture being part of a global solution for climate change has increased dramatically. The 2018 Intergovernmental Panel on Climate Change report cited carbon capture as an important tool for reducing emissions to avoid temperature rises above 1.5 degrees Celsius. Models show a significant increase in carbon capture will be needed, bolstered by technology that not just captures emissions but pulls carbon out of the atmosphere.

At least 30% of greenhouse gases come from industry and there’s no sure technological bet renewable energy can fill their power needs. The International Energy Agency suggests carbon capture can reduce emissions by nearly 15% by 2050 as a part of the “all of above” strategy of climate mitigation.

Project Tundra and carbon sequestration still face long odds despite growing interest. A survey of the nation’s 10 largest power utilities in 2018 by Reuters showed just two had plans to invest in carbon capture and storage facilities. The Department of Energy’s advanced fossil energy research program revealed that just three of the nine projects funded from 2010 to 2017 remained active. 

Today two carbon capture projects are attached to power plants in North America: Petra Nova and the SaskPower Boundary Dam Power Station in Canada. Another capture project by the Southern Company in Kemper, Mississippi, was tarnished by allegations of fraud and mismanagement after going $4 billion over its projected budget. The Kemper plant used natural gas and planned to add power by burning lignite coal widely available in the region.

A New York Times investigation, combined with huge financial losses, led the company to ditch the “clean coal” project and instead opt to continue burning natural gas for electricity.

Gas capture critics such as Greenpeace see carbon capture and storage as continuing reliance on fossil fuels since many initial non-power plant projects augment oil extraction through a process called “enhanced oil recovery.” The environmental group argues the process allows recovery of oil that may have stayed in the ground and new coal combustion required to operate the capture system.

Tapping U.S. Energy Information Administration 2015 data and giving it a favorable slant, Greenpeace found new electricity generated by carbon capture and storage, or CCS, would cost 40% more than solar photovoltaic, 125% more than wind and 260% more than geothermal.

“If it could work scientifically and politically, according to cost estimates from its proponents, CCS still would be the most expensive method for avoiding future CO2 pollution from electricity production,” Greenpeace concluded.

Stanford University civil and environmental engineering professor Mark Z. Jacobson also produced a study revealing that a carbon capture plant stored less than 11% of emissions. The problem stems from uncaptured emissions from natural gas used to power the capture equipment.

Financing carbon capture and storage projects remains daunting. Minnkota, a cooperative, will have to recruit companies with a huge appetite for tax breaks. Congress passed a revamped tax credit called “45Q” to incent carbon capture investment that carbon capture boosters say will jumpstart the industry.

The tax credit gives investors $50 for each ton of carbon stored, and $35 a ton for carbon used for enhanced oil recovery and a variety of other applications. The IRS released guidelines in February and continues to add more clarification, two years after 45Q passed. Whether such a small utility can raise such big bucks remains a question even Dahl struggles to answer.

Industry backers, however, say the number of projects grows. The Global CCS Institute reports globally 19 carbon capture installations operate, four have begun construction and 28 are in various stages. The market extends well beyond utilities to cement, steel and ethanol plants, which have fewer options for decarbonization outside of sequestration, the institute noted in its annual report.

For now, power plant projects such as Project Tundra remain rare, though commercial carbon capture in other industries has started decades ago, although a significant number of those facilities serve natural gas processing plants.

The most compelling argument for carbon capture remains the reality that coal isn’t going anywhere in many parts of the world and will continue to be a major source of electricity for decades to come, said Brad Crabtree, vice president of the Great Plains Institute and the leader of the Carbon Capture Coalition. He’s among a growing cadre of clean energy advocates who believe without carbon capture there’s no possible path to substantial progress on reducing greenhouse gas emissions.

But all proponents agree that, to have any environmental impact, plenty of Project Tundras have to be built to reach climate goals outlined in the Paris Agreement. The Global CCS Institute suggests carbon capture installations need to increase 100%, to more than 2,000 facilities, by 2040.

Despite the challenges, carbon capture and storage has attracted an interesting constellation of bedfellows. A recent gathering in St. Paul sponsored by the Carbon Capture Coalition brought together supporters, among them clean energy organizations, unions, government agencies, power companies and businesses.

Great Plains Institute, a clean energy organization, sponsors the coalition and one of the speakers at the event was Michael Noble, executive director of Fresh Energy, publisher of Energy News Network. Nationally several clean energy and environmental groups supported the coalition’s efforts to gain a significant tax break for capture projects.

Presenters such as Carbon Capture Coalition policy and member relations manager Jessie Stolark spoke of a new carbon economy where capture technology could be attached to power, cement and steel plants — all industries where decarbonization will be difficult. “The technology works, it’s proven and effective,” she said. “But people are just understanding the potential for their states and regions.”

Carbon capture has caught the attention of Congress, which has become a bit of a lifeboat for the coal industry. A recently introduced federal energy bill by House Republicans sought to make 45Q permanent because the current tax credit expires in just a few years.

Crabtree said Project Tundra’s importance cannot be underestimated. Carbon capture has to grow beyond the two commercial scale power plants now using it to convince utilities, investors and governments that the technology holds promise.

The importance of any new carbon capture and storage project goes beyond just the borders of North America and Europe. China, India and other Asian countries have made huge bets on coal and built dozens of plants. China has nine CCS projects in various stages of development, with just one of them operational as of last year, according to the EU Observer.

“If we don’t have a retrofit solution we have very little prospect for controlling CO2 emissions in these emerging economies, and that CO2 alone from these countries would be enough to swamp any efforts in North America, Europe and Japan to reduce carbon emissions,” he said.

China and other developing countries model at least some of their energy investments on what they see in Europe and the United States, Crabtree said. When wind and solar began growing significantly a decade ago, China began building more wind and solar farms, he said.

“They are now the largest renewable energy producers in the world,” Crabtree said. If the United States begins more carbon capture and storage, projects the Chinese will follow suit because they have already studied carbon storage for more than a decade and sent people to the U.S. to learn about how to do it. “We have to lead by example,” he said. “We can’t tell others to do it when we aren’t doing it in our country.”

Replacing coal with natural gas will still create more emissions than carbon sequestration, even at a plant that opened when Jimmy Carter was still president and the energy crisis lay in wait. The intermittency of renewable energy requires a backstop of 24/7 carbon-free power source that at this point cannot be replaced by storage, he said.

A range of options will be needed to combat climate change. “We are running out of time to reduce emissions and address the challenges of climate change,” he said. “We have to do it quickly, and we have to have 24/7 carbonless baseline energy.”

Project Tundra

Minnkota serves 11 cooperatives with 135,000 customers in eastern North Dakota and northwestern Minnesota. The utility has invested in renewable energy, buying 457 megawatts of wind energy from NextEra Energy Resources. Building a natural gas plant was considered as an option for replacing coal but Minnkota found the carbon capture system would have half the carbon emissions, Dahl said.

Baseline power remains a necessity in severe climates. “This is our cleanest option,” she said. “We very much value renewable energy but everyone understands the intermittent nature of renewable energy.”

The company “recognizes the CO2 issue and that we’re going to live in a carbon managed future,” Dahl said. “We expect that and that’s why we’re doing this project — to use this technology to have a stable fuel source and deal with the issue of carbon emissions.”

Minnkota hired David Greeson, a consultant who worked on the Petra Nova project outside Houston. The utility NRG and joint venture partner JX Nippon Oil & Gas Exploration, a Japanese energy firm, added $1 billion in carbon capture technology to the states’ large coal plant in 2017. The Japanese government invested $250 million, adding to the $190 million from the Department of Energy.

The plant’s CO2 travels for enhanced oil recovery to a Gulf Coast oil field 82 miles away. The system captures 90% of the CO2 from 240 MW of flue gas, or about a third of the plant’s emissions. The company says it is equivalent to taking 350,000 cars off the road every day.

Petra Nova was built to show carbon capture could work and that carbon from emissions could be injected into wells to drive oil out of remaining wells, Greeson said. The carbon capture portion of the project worked as planned, while the oil side has faltered badly due to market conditions.

The project’s financial backers believed oil would stay above $75 a barrel, enough for them to squeeze out profits. Since the plant opened, shale producers have found techniques to drive down their prices and Saudi Arabia has flooded the market with inexpensive oil. (The coronavirus pandemic added to producers’ woes, with prices plummeting to $21 a barrel.)

The Texas plant captures 1.6 million tons of carbon emissions annually. Since pumping carbon to oil fields requires an energy source, the Petra Nova developers built a combined natural gas cogeneration plant.

The demonstration project did not pipe emissions into the carbon capture system, resulting in 250,000 to 300,000 tons of carbon emissions. It still leaves Petra Nova capturing much more carbon than the smaller cogeneration facility generates, Greeson said, and the entire project, as hoped, has not had any impact on customers’ electricity rates.

Financially, Project Tundra only works if the 45Q tax credit takes off because the nearly $400 million in subsidies Petra Nova enjoyed will not be available, he said. Once the government finalizes financial guidance, he believes the project will secure funding. Over 20 years the Project Tundra will create $3 billion in tax credits, he said.

Minnkota has a few advantages that make it an attractive candidate. The geologic formations available for storing carbon are located on the plant’s property and can absorb 20 years of emissions, he said. Other proposed carbon capture projects sit miles away from any workable formations. “They need pipelines to unlock the potential for their storage,” Greeson said.

The project received $30 million in federal money with help from North Dakota Sen. John Hoeven, a member of the Energy and Natural Resources Committee and a carbon capture advocate. The North Dakota’s Lignite Research Fund advanced Project Tundra $15 million.

An energy and environmental research laboratory at the  University of North Dakota collaborates with Minnkota on developing the system. Two more companies, ALLETE Clean Energy and ALLETE subsidiary BNI Energy are assisting the development. The support leaves Project Tundra much further along than most other carbon capture projects in the U.S., Greeson said.

Clean energy cannot fill the void, he argues. Wind power often stops in subzero so the most likely renewable energy source would be undependable in time of polar vortex temperatures. The plant has relatively new pollution control equipment and operates efficiently.  “If there’s a coal plant you want to see live around 30 years,” Greeson said, “it is this one.”