BP, Rio Tinto Exit Carbon Capture Project
It takes some creative thinking to make clean technologies profitable. This is a theme that appears again and again in renewable energy stories about everything from algae to solar.
But cleaning up fossil fuels faces the same hurdle. Yesterday, private energy firm SCS Energy said it would take over a major California carbon capture project from mega industrials BP and Rio Tinto.
The Hydrogen Energy California (HECA) project aims to generate hydrogen for electricity production from petroleum coke and coal, while capturing CO2. The captured CO2 would be pumped into the earth as part of a neighboring natural gas project, where it would aid in gas recovery and presumably stay stored underground.
HECA has been backed by BP and Rio Tinto - to the tune of $55 million each - and by the Department of Energy, which supplied $54 million from Recovery Act funds. It is eligible for an additional $354 million in financial assistance in Clean Coal Power Initiative funding.
In total, that would be $514 million for the power plant, which is expected to start generating power in 2016. It is currently in the design and permitting stage. But operating HECA profitably is apparently still a challenge. SCS energy wants to add the capability of producing urea from the facility to create an additional income stream. The urea would be used for fertilizer.
It seems rather clear that without an additional product/revenue stream, this power producer cannot make the finances work. In its written statement about the transfer of ownership, HECA closes with "The approach of producing both electricity and urea helps address the economic challenge of creating a viable business model to cover the high capital costs of the plant and its carbon capture capabilities. "