Cost Analysis of Carbon Capture and Sequestration from U.S. Natural Gas-Fired Power Plants

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Abstract

Despite increasing efforts to decarbonize the power sector, the utilization of natural gas-fired power plants is anticipated to continue. This study models existing solvent-based carbon capture technologies on natural gas-fired power plants, using site-specific emissions and regionally defined cost parameters to calculate the cost of CO₂ avoided for two scenarios: delivery to and injection within reliable sequestration sites, and delivery and injection for the purpose of CO₂-enhanced oil recovery (EOR). Despite the application of credits from the existing federal tax code 45Q, a minimum incentive gap of roughly $38/tCO₂ remains for the geologic sequestration of CO₂ and $56/tCO₂ for CO₂-EOR (before consideration of revenue generated from delivered CO₂ contracts). At full escalation of 45Q, delivered CO₂ costs from this sector for geologic sequestration could reach as low as $22/tCO₂. However, given the capital investment required in the near-term, it would be beneficial if the credit provided the greatest economic benefit early on and decreasing over time as deployment continues to ramp up. Additionally, due to the high qualifying limit of 45Q for the power sector, e.g., 500 ktCO₂/yr, the tax credit incentivizes the capture of roughly 397 MtCO₂/yr at a 90% capture efficiency or 75% of the emissions in this sector, with missed opportunities equating to roughly 118 MtCO₂. Advancing the scale of carbon capture and sequestration (CCS) will require both technological advances in the capture technology, cost reductions through the leveraging of existing infrastructure, and increased policy incentives in terms of cost along with the reduction of qualifying limits.

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