September 27, 2022 - If a power company installed a carbon capture facility at a coal plant, the company would likely run it more often in order to maximize revenue from the 45Q tax credit.

In a filing submitted to the Wyoming Public Service Commission, Pacificorp explained that its initial assessment of carbon capture “assumed the units would be base-load (annual capacity factor of 85 percent) and may therefore not always be dispatched economically.” The filing was part of Pacificorp’s response to a Wyoming law that seeks to compel investor-owned utilities in the state to consider coal carbon capture projects instead of closing coal plants.

Similarly, Enchant Energy’s proposal to build a carbon capture at the San Juan Generating Station in New Mexico expects to run the coal plant more often. The company’s pre-feasibility study for the carbon capture project assumes an 85% capacity factor, up from 64% over the last three years. Nationally, coal plants averaged a 49% capacity factor in 2021.

Mike Eisenfeld with the San Juan Citizens Alliance said that Enchant Energy’s coal carbon capture proposal in New Mexico is “pushing this as a CO2 manufacturing facility,” generating emissions just to bury them.”

Increasing coal plant operations to boost 45Q tax revenue would increase impacts from mining and burning coal, many of which are not addressed by carbon capture. Some impacts, such as from coal ash waste and coal mining, are actually worsened significantly when a coal plant installs carbon capture technology, because coal carbon capture projects use more coal to generate the same amount of electricity. Those impacts can include local water pollution impacts, as well as the greenhouse gas emissions associated with mining; a report from the Institute for Energy Economics and Financial Analysis found that methane emissions from mining the coal used at the San Juan Generating Station account for a significant portion of lifecycle emissions.

Those pollution risks, and the stronger rules expected next year from the US Environmental Protection Agency to reduce air and water pollution from power plants, could dissuade coal plant operators from pursuing carbon capture projects, despite the increased carbon capture subsidies and weakened guardrails in the Inflation Reduction Act.

An executive of PNM, which operates the San Juan Generating Station, pointed to environmental rules when he explained the company’s decision to replace the coal plant with clean energy, instead of attempting to retrofit it with carbon capture:

At the end of the day, this technology would cost well over $1.5 billion, would need 80% more water than what we currently use, and would need 25% of the power it generates to be fed back into the operation to run the machinery. We simply cannot see environmental regulation sustaining these federal subsidies over the decades needed to recover the billion dollar investment.

PNM will close the San Juan Generating Station this week. But the prospect of higher carbon capture subsidies mean that the future of the coal plant is unclear; Enchant Energy and Farmington Electric Utility continue to try and take over the power plant, and last week announced a legal challenge seeking to force PNM to transfer ownership.