Washington, D.C. – A new report from the Center for American Progress by Bob Sussman and Ken Berlin analyzes the provisions of S. 2191, the Lieberman-Warner Climate Security Act of 2008, which seeks to encourage early deployment of carbon capture and storage technology (CCS) at new coal plants. The report focuses on the "bonus allowance program," which would issue free allowances to utilities who build plants with CCS based on the tons of CO2 sequestered. The conclusion: This program would be very costly (between $68 and $110 billion through 2030) but would result in a small number of new plants with CCS (no more than 48 gigawatts by 2030). This is because utilities would receive windfalls far greater than the added costs of CCS itself—up to $4.6 billion for some 1 gigawatt plants.
Despite the windfalls received by utilities, CCS would not in fact be required at any new plant and conventional uncontrolled coal plants could continue to be built.
Sussman and Berlin argue that a better approach is to adopt an emission performance standard for all new coal plants based on the capture potential of the best performing technology, coupled with a program of subsidies that would offset the higher costs of CCS but not provide windfalls to utilities. These subsidies would derive from the revenues from auctioning allowances under Lieberman-Warner, not from bonus allowances. Sussman and Berlin estimate that subsidies which cover the incremental costs of CCS as compared to conventional coal plants would enable construction of 150 gigawatts of new coal capacity by 2030, at a cost of between $28.7 billion and $96 billion, depending on the price of allowances. The emission performance standard would make it unnecessary to pay a premium to utilities to entice them to build CCS plants rather than conventional high-emitting facilities and would accelerate the research and development, demonstration projects, and site testing necessary for early CCS deployment and advances in the technology.
READ THE FULL REPORT: http://americanprogress.org/issues/2008/04/early_deployment.html