Diagram shows carbon capture scenario.
This story is quite stunning, for it appears to pave the way for serious investment in lower carbon power station investments within the US. Yes, that’s right, the US. Here’s the detail;
New York, 15 March: After cancelling eight coal-fired power plants due to environmental concerns, US utility TXU says it will build two coal gasification plants that will capture carbon.
The announcement came from Dallas, Texas-based TXU and Texas Energy Future Holdings Limited Partnership (TEF), which plans to acquire TXU. TEF was formed by private equity firms Kohlberg Kravis Roberts & Co (KKR) and Texas Pacific Group (TPG).
KKR and TPG stunned the environmental and financial worlds in late February when – as part of a planned $45 billion leveraged buyout of TXU – they pledged to cancel eight of 11 standard coal plants the company had planned, reducing the total from 9,000MW to 2,200MW.
That plan had been criticised by large TXU shareholders, including state pension plans, which warned that ignoring the likelihood of US carbon regulation would expose the company to tremendous risk. They suggested coal gasification but TXU executives said the technology was not yet economically viable.
Now TXU and TEF said they “have started the planning process” for two integrated gasification combined cycle (IGCC) plants, which gasify coal, extracting carbon dioxide (CO2) and other pollutants, then burn the gas for power production. The CO2 can be sequestered underground.
Not only does this signal the possibility of the beginnings of a new direction for energy companies taking climate change more seriously within the US, it also shows the importance of venture capital, which often brings with it new ideas and a fresh approach to problem solving. The article also shows that major US shareholders are using their muscle to influence change. Just as interesting, they are using the lawyer angle to drive this change, which is quite often the case within the US. Here it is implied that future laws could make TXU vulnerable if it goes for high carbon technology investments now.
The importance for the two coal gasification plants is the carbon capture technology, which is relatively new. Only one project has the go ahead in the UK so far. More info on carbon capture here.
The source for this article is www.environmental-finance.com, a good site for environment business news.