But even before Trump has taken office, the Energy Department announced Wednesday that it was conditionally prepared to guarantee as much as $2 billion in loans to the Lake Charles Methanol project, which represents a different variant on carbon capture and storage. In this case it isn’t stripping carbon out of the coal-burning process, but rather out of petroleum coke or “petcoke,” a remnant of oil refining that is often exported out of the United States and burned in other countries.
The Lake Charles Methanol project, based in Louisiana, plans to use gasification technology to turn petcoke into syngas and then from there produce the industrial chemical methanol, along with hydrogen. Another byproduct of this process is carbon dioxide. Then it will sell all three products — methanol and hydrogen industrially, and the carbon dioxide to be pumped to oil fields in Texas, where it could be used to help recover additional oil from the ground. The carbon dioxide is expected to be able to unlock about 4.5 million barrels of oil per year, the company says.
The carbon dioxide would remain in the earth, and at very large volumes — the project is expected to store 4.2 million tons of carbon dioxide per year, which is larger than most other industrial scale carbon capture and storage projects that have been either proposed or realized so far.
“Essentially what we’re doing is decarbonizing oil,” said Hunter Johnston, an attorney with Steptoe and Johnson who represents Lake Charles Methanol. “We’re lowering the carbon impact of oil, because we’re taking a part of the refining process that would otherwise be associated with CO2 emissions and we’re capturing that to produce more oil. So there’s this huge benefit of domestic production as a result while improving the environment.”
Carbon capture technologies have in fact been applied to multiple industrial applications, not just in the power sector. They’ve been used to remove carbon dioxide from the process of making ethanol, steel, and fertilizer, to name a few.
“With power, CCS is one of the options, there’s also renewable energy and nuclear energy,” said Kurt Waltzer, managing director of the Clean Air Task Force, an environmental group that supports CCS. “But for the industrial sources, in many cases, CCS is really our current best option to reduce emissions. So getting more industrial CCS projects up and running sets an important precedent.”
Granted, CCS — and this project in particular — has not won full assent in the environmental community. “While there is still time, we fully intend to push back and make sure that taxpayers aren’t left on the hook for another fossil-friendly boondoggle,” said Lukas Ross, campaigner on climate change and energy for Friends of the Earth, in a statement.
The agreement from the Energy Department is “conditional” which means that Lake Charles Methanol has to comply with a number of terms before the loan guarantee will become available. Under the agreement, the Energy Department would guarantee as much as $ 2 billion in loans, allowing for lower borrowing costs for the plant, but the company still must raise an additional $ 1.8 billion in equity.
Waltzer said what’s really important in the coming years will not just be this individual project, but whether Congress passes bipartisan legislation, sponsored by Sens. Heidi Heitkamp (D-N.D.) and Sheldon Whitehouse (D-R.I.), to increase incentives in the tax code for companies to store carbon beneath the ground.
“We really need a policy that will drive many projects, help us build up the infrastructure, help us reduce the cost,” said Waltzer, “so it can be used not just in the U.S. but around the world.”