Failing Toward Success: The Mothballing of Petra Nova Carbon Capture Demonstration Project Is a Teachable Moment

August 14, 2020

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How quickly the tides have turned! When the world’s first carbon capture facility on a coal-fired power plant came online in Texas in 2017, it was touted as a big step toward transforming the dirtiest fossil fuel into a low-carbon power resource. Now, it’s been labeled “a nightmare for unsuspecting investors” and a “warning sign” for the industry. What happened?

News broke in late July that the operators of the Petra Nova facility had decided to mothball it. The crash in oil prices had taken away a key source of revenue, the sale of captured carbon dioxide for enhanced oil recovery. Worse news followed when a technical report on the facility’s operation was made public: From 2017 to 2019, Petra Nova had been operational just one out of every three days, and it captured 16 percent less carbon than planned at a high cost (in the view of its critics) of about $60 per metric ton

Yet the energy community should refrain from declaring Petra Nova a failure and from implicating carbon capture, utilization, and storage (CCUS) technology in that narrative. Petra Nova was and is a success, because of what we have learned from it. That is the whole point of building first-of-a-kind demonstration projects and making data from them public. CCUS is likely to be a key technology to bring global carbon emissions to net-zero. If we learn the right lessons from projects like Petra Nova, we will muster the policy support needed to find out if it can get cheaper and better.

Learning Through Demonstration

The technology that Petra Nova demonstrated uses a chemical solvent to capture carbon dioxide, which it makes up about 11.5 percent of the plant’s emissions stream. The solvent is then recycled, while the carbon dioxide is shipped by pipeline to an oil field, where it is pumped underground to enhance production. (Enhanced oil recovery is not necessary from a technological perspective; the carbon dioxide could be sequestered in any suitable geological formation.)

Petra Nova is a complex project that cost about $1 billion and covers eight acres. Technologies on such a scale rarely work right the first time. The main purpose of demonstrating them is to find problems that cannot be discovered at the prototype or pilot stage. These may involve integrating multiple subsystems and components or sorting out managerial and financial issues. If these problems can be characterized and fixed, subsequent versions will have lower costs and better performance, inspiring greater confidence among investors, operators, policymakers, and regulators.

Governments often cost-share demonstration projects with the private sector because their risks are too great for the private sector to take on alone. Petra Nova, for instance, received $190 million from the U.S. Department of Energy (DOE) as well as support from the Japanese government. The public investment is justifiable when the potential payoffs for society of demonstrating new technologies on are high, such as reducing carbon emission and giving rise to new industries.

Judging Petra Nova

Judged from this perspective, Petra Nova was successful. Above all, it facilitated learning. The second-of-a-kind plant that puts its lessons into practice should cost about 30 percent less. Even though Petra Nova experienced a high number of outages, those temporary failures are sources of learning; outages associated with the carbon capture facility declined each year it operated.

Petra Nova should also be judged against the dismal history of similar projects. The FutureGen project in Illinois (2003-2015) was planned, scrapped, reenvisioned, and scrapped again amid managerial issues, unfavorable market conditions, and wavering political interest. Mississippi Power’s Kemper Project (2010-2017) went billions over budget before devolving into a standard natural gas project. The Texas Clean Energy Project (2010-present) lost federal support by failing to obtain its financing quickly enough, and remains in limbo.

Petra Nova was built on time and on budget. And it worked—it captured 92.4 percent of the carbon (exceeding the project’s goal of 90 percent) and stored 99 percent of it in the West Ranch oil field.

Building on Petra Nova

A narrative of failure can chill political interest and stymie technological progress. The solar company Solyndra, which received a DOE loan guarantee, is a case in point: its high-profile bankruptcy in 2011 attracted withering criticism that tempered the ambitions of DOE’s Loan Programs Office for years.

Policymakers should not succumb to a narrative of failure around Petra Nova. CCUS needs more, not less, federal support.

CCUS is an essential technology for decarbonizing the global economy. Post-combustion carbon capture, demonstrated at Petra Nova, can be used to retrofit both coal and natural gas power plants, an important function given that the average natural gas plant in the United States is only 22 years old, and the average coal plant in Asia is just 13 years old. It is also one of the few technologies with the potential to eliminate emissions from hard-to-decarbonize industrial processes such as cement and steel manufacturing. 

However, the world is not on track to deploy CCUS at the levels necessary to avoid the worst effects of climate change. The International Energy Agency’s Sustainable Development Scenario, consistent with limiting global temperature rise to 2 degrees Celsius, calls for increasing the number of power and industrial sector carbon capture projects by a hundredfold from current levels by 2040.

The United States can and should be a world leader in CCUS. It is home to more than half of the industrial-scale projects in the world. The federal government should step up to boost this nascent industry and accelerate demonstration and deployment of this critical technology.

First, Congress should fund more CCUS demonstration projects in collaboration with the private sector to de-risk diverse CCUS technologies and applications, especially natural gas and industrial processes. Second, Congress should invest in developing carbon transportation and sequestration infrastructure that will facilitate easier and cheaper carbon storage. Finally, Congress should drive demand for CCUS with a carbon price that accounts for the societal costs of carbon emissions. The 45Q carbon storage tax incentive, which offers $10-50 per ton CO2 captured, is helping to get the CCUS industry off the ground, but a stronger market signal would drive deployment toward the pace needed to minimize dangerous global warming.

Innovation is messy, but it is necessary to achieve a net-zero emission economy. Policymakers must learn to tolerate temporary failure, which is inherent to the innovation process, in order to achieve long-term success and help industry build upon Petra Nova to create the next bigger, better thing.