Tenaska, Inc., one of the largest independent power producers in the United States, announced its intention to build a conventional coal-fueled electric generating facility located just east of Sweetwater, Texas, about 150 west of Dallas/Fort Worth. The Tenaska plant is noteworthy for two reasons.

• First, it is designed to capture 85% to 90% of the CO2 it produces and to use it for enhanced oil recovery efforts.
• Second, it does not propose to use integrated gasification combined cycle (IGCC) technology to recover carbon.

Tenaska hopes to begin construction in 2009 and commence commercial operation in 2014.

The new plant will be a conventional pulverized coal-fueled unit utilizing supercritical steam generating technology to burn low-sulfur, sub-bituminous Powder River Basin coal. Tenaska has not yet determined the precise carbon capture technology it will employ, but intends to capture and process CO2 and deliver it by pipeline to Permian Basin oil fields. There, it will inject the CO2 into underground formations to enhance oil recovery efforts, which will result long term CO2 storage deep below the surface.

Tenaska contends that this conventional pulverized coal plant is a technology superior to IGCC for reasons related to the type of coal burned, geographic conditions at the proposed site, and diversity of the technology employed at its plant. Tenaska indicates that IGCC works best with low moisture, high BTU, bituminous eastern coal, while the higher moisture, lower BTU Powder River Basin coal is better suited for pulverized coal technology. Tenaska also contends that IGCC technology works best at elevations closer to sea level; the proposed site for its new plant is at a higher elevation.

A potential side benefit of this project is that, if additional transmission infrastructure is needed for this project, the transmissions upgrades could provide necessary infrastructure for local wind power producers as well.

A final noteworthy aspect is that Tenaska is expecting this plant to qualify as an Advanced Clean Energy Project. This Texas program provides significant financial incentives to projects that include CO2 capture and meet emissions standards for mercury, nitrogen oxides and sulfur dioxide. Federal clean coal incentives would also be important to the economics of the project.

Hat tip: Colin Campbell, RTP Environmental Associates

For further information about this topic, please contact Akin Gump.

This post is the second part of a two part series analyzing challenges to coal-fired power plant permits under federal statutes.

Challenges to coal-fired power plants under the National Environmental Policy Act (NEPA) may not be as standard as those under the Clean Air Act, but their impact will be no less substantial. Lawsuits challenging permitting of coal-fired power plants under NEPA will, by their very nature, be limited because NEPA challenges require a “major” federal action that significantly affects the quality of the human environment – for example, a funding decision or a permit approval. While the cases may impact a small number of coal-fired power plants, the outcomes will have far-reaching consequences on any private project with greenhouse gas (GHG) emissions that requires federal approvals.

To date, there have been only two lawsuits filed challenging coal-fired power plant approvals under NEPA. Both cases involve loans and other approvals provided by the Rural Utilities Service (RUS), a Depression-era agency created to bring electricity to farming communities. The Sierra Club and local environmental groups argue that RUS’ Environmental Impact Statement (EIS) for the Highwood generating plant near Great Falls, Montana, failed to disclose the project’s carbon emissions and discuss the impacts of those emissions on climate change.

The second case, which involves the Sunflower Electric Corporation’s proposed expansion of its facility in Holcomb, Kansas, alleges failure to undertake an EIS to analyze global warming impacts (among other things), prior to approving alleged construction loans and other financing at the site. The Sunflower case – which also is in litigation over the Kansas Department of Health and Environment’s rejection of its permit on global warming grounds – involves a limited federal handle and defendants certainly will raise objections to Sierra Club’s characterization of RUS’ approvals as a “major” federal action.

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For further information about this topic, please contact Akin Gump.

The Environmental Protection Agency’s Environmental Appeals Board (EAB) declined to hear a Clean Air Act (CAA) challenge to a permit issued for construction of a coal-fired electric generating plant near Springfield, Illinois, on grounds the petitioners failed to properly raise their climate change arguments during public comment on the draft permit. Although the EAB did not reach the merits of the petitioners’ argument that the failure to include Best Available Control Technology (BACT) for CO2 violates the CAA, the Board did note that the issue “remains a matter of considerable dispute.”

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For further information about this topic, please contact Akin Gump.

Yesterday the Department of Energy announced it was officially ending its support for FutureGen, a $1.8 billion program to develop a coal-fired power plant able to sequester carbon emissions below ground.

Rather than focusing on one plant in Illinois, the department now says it will fund a number of projects at plants throughout the country, with the government agreeing to pay for carbon sequestration but leaving power generation costs to utilities.

This opens up the carbon sequestration project to competition, once again allowing companies to make their case for inclusion in the program.  The Department of Energy is seeking input by March 3, which DOE indicated will help determine how many locations are funded.  The department announced its objective to have new facilities operating by 2015.

For further information about this topic, please contact Akin Gump.