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This $1.65 Billion Carbon Sequestration Project Means We're Doing It Wrong

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Coal power just can't catch a break.

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But even with successful operations, it's likely that the FutureGen Alliance invested in the wrong CCS technology.

Capture vs. storage

A simple breakdown of the costs highlights some red flags for any hopes at replicating FutureGen 2.0. The project will cost a total of $1.65 billion, but $1.2 billion (73%) will be spent on pipeline infrastructure and geological storage. Pipelines and storage facilities may be fixed costs, but they're prohibitively expensive and unfeasible for many geographies. (There are a handful of geological formations perfectly suited for large-scale carbon sequestration scattered across the globe, including one in northern Illinois , but major infrastructure investments will be required for widespread utilization.)

The remaining $450 million (27%) will be spent on carbon capture technology developed by Babcock & Wilcox and Air Liquide. That's still relatively expensive equipment for a 229 MW power plant, but, as with any emerging technology, the cost of carbon capture systems will probably fall over time. Designs will be improved and new catalysts will be invented, especially considering that governments and companies around the globe are fiercely competing to become leaders in the new industry. The technology used by Babcock & Wilcox is called oxy-combustion , which alters the air in a coal-fired boiler to make the CO2 easier to separate.

Image source: Babcock & Wilcox.

However you view the costs, it will take a very long time to achieve payback for a project that doesn't monetize captured CO2 because it was piped underground and forgotten about. What if the FutureGen Alliance could instead invest in technologies that converted it into a revenue stream?

A better carbon sequestration option

Consider how the economics of CCS deployment change if captured CO2 is monetized. Rather than spending hundreds of millions (or $1.2 billion) on pipelines to an underground storage site, money could be invested into equipment that converts CO2 into valuable chemicals. Many waste carbon manufacturing platforms are being developed and commercialized as you read these words -- platforms capable of turning CO2 into sugars, fuels, flavors, commodity chemicals, and more.

It's still carbon sequestration, but rather than being stored underground, CO2 would be stored in useful things such as transportation fuels, car tires, and ice cream flavoring.

For instance, start-up Liquid Light is developing a technology that can convert industrial CO2 into over 60 chemicals, with ethylene glycol being the first commercial target. The economics of production change drastically when producing the chemical from waste CO2 instead of petroleum, its typical feedstock. Consider two scenarios for producing 1 metric ton of ethylene glycol, which sells for $700 to $1,400 depending on geography.

Costs Petroleum or Natural Gas Carbon Dioxide
Feedstock Cost $600 to $1,100 $125
Feedstock Cost As% of Selling Price 80% to 86% 9% to 18%

Source: Liquid Light.

It may sound ridiculous at first, but coal power plants of the future may need to diversify into chemical manufacturing to reduce their carbon footprint. If the FutureGen Alliance truly wants to save the future of coal, then it would be wise to consider a broader range of carbon sequestration options.

What does it mean for investors?

The good news is that we'll learn a good deal about the potential of carbon capture technology (the first step of CCS) through FutureGen 2.0, despite the project's high overall cost. But if avoiding CO2 emissions from industrial operations is the goal of CCS, then we should be a little more open-minded about the available carbon sequestration options. While CCS is still in its infancy -- meaning costs will come down as the technology improves -- much of the costs of current strategies are unavoidable. In other words, we're doing it wrong.

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The article This $1.65 Billion Carbon Sequestration Project Means We're Doing It Wrong originally appeared on Fool.com.

Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio , CAPS page , or previous writing for The Motley Fool, and follow him on Twitter to keep up with developments in the synthetic biology field.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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