In a Bid to Save Its Coal Industry, Wyoming Has Become a Test Case for Carbon Capture, but Utilities are Balking at the Pricetag

Wyoming has put its future on carbon capture technology.

The state has spent money on research to determine how to remove industrial carbon dioxide and what to do after it is captured. State lawmakers have passed laws that encourage carbon capture as well as regulations to govern it. 

Wyoming, like many other states and countries, has decided to abandon fossil fuels. Mark Gordon signed a law—the first in the nation—that requires electrical utilities to generate some of their power from coal plants fitted with carbon capture equipment. 

Wyoming produces 40 percent of the nation’s coal, and relies on fossil fuels to generate nearly 60 percent of state and local revenues. The goal was to ensure that the coal industry can thrive while the nation reduces its greenhouse gas emissions.

Two years later, Wyoming may not be ready to accept this coal-friendly climate solution. The utilities that are covered by the law filed filings to regulators in March stating that carbon capture was not economically possible. Retrofitting their plants would cost hundreds of millions of dollars, at the least, they said, forcing them to raise customers’ electricity bills.

The filings also stated that carbon capture equipment could cause an increase in water consumption at coal plants as well as an increase in emissions of air pollutants and solid waste.

The nation’s last four presidential administrations, as well as energy companies and labor unions, have all supported carbon capture and storage as a technology that could reduce greenhouse gas emissions and continue to burn fossil fuels. The technology has played an important role in the Biden administration’s climate policy. 

Last year’s infrastructure bill included more than $12 billion to help pull carbon dioxide from smokestack emissions and straight from the atmosphere. Some states joined the ranks: California recently announced that it will use carbon capture to help meet its climate targets. However, it will be primarily relying on industrial production.

Wyoming is an ideal test ground, with its strong support. The state has ample coal reserves and the right geology in order to store carbon dioxide. Most importantly, the technology is supported by political leaders who have declared their intent to use carbon capture to safeguard their coal industry.

“We put all our eggs in one basket,” said Dan Zwonitzer, who sponsored the 2020 carbon capture bill. “We champion coal. And so if we’re going to do that, we’ve got to find ways to make sure it can carry us into the future. And I think CCUS is a way that we need to find,” he said, using an acronym for carbon capture, utilization and storage.

Some carbon capture companies have disputed negative conclusions made by the Wyoming utilities Rocky Mountain Power and Black Hills Energy. Other supporters of the technology disagree with the analysis, but believe that the world will require carbon capture on coal plants to meet its climate goals. They should also bear the costs.

The Wyoming filings show that even with favorable conditions, utilities would prefer to convert their coal plants into natural gas burners or close them down than install carbon capture equipment. Zwonitzer admits that the 2020 bill he sponsored was far from achieving its goal.

“We are not where we thought we’d be three years ago,” he said, “and I’m not sure where we’re going over the next year.”

Wyoming’s Climate Plan

PacifiCorp (which owns Rocky Mountain Power) accelerated the timeline to close four units at its Wyoming coal plant. The nation’s coal production was continuing to slide, and states were passing bills aiming to speed their transitions off fossil fuel power.

“We thought, ‘OK, that’s one way for a state to do it,’” said Randall Luthi, chief energy adviser to Gov. Gordon. But the problem wasn’t really coal, Luthi said. The problem was the emissions released by its combustion, “So how do you burn coal and not release CO2?”

Luthi met with legislators, regulators, and energy companies to produce House Bill 200. The law required the state’s utilities to generate a portion of their power from coal plants fitted with carbon capture equipment, and directed state regulators to come up with the details. The final rules require utilities submit plans to produce at most 20 percent of their electricity with coal plants equipped with carbon-capture technology by 2030, unless they can demonstrate otherwise.

“This is the Wyoming climate change plan, essentially,” said Shannon Anderson, staff attorney at the Powder River Basin Resource Council, a Wyoming environmental group. She stated that the law has placed the state in a difficult position and could force residents and businesses to pay higher electricity bills.

Zwonitzer, the bill’s sponsor, said the state had no choice.

“We’ve gotten so Republican that even mentioning a tax increase will get you thrown out of office,” said Zwonitzer, who is a Republican. “There are no other revenue sources really outside of taxation on either our people or our minerals. So we’re currently trying to figure out how to keep taxing our minerals.”

Zwonitzer said that carbon capture hasn’t yet been commercially successful, but that it could if the government forced utilities to adopt it. “It’s almost mandatory for us to find a way to do this,” he said.

Not Feasible ‘At This Time’

The law was passed in 2020. However, it was not clear what the potential effects would have on residents or utilities. They became real after the March filings.

Black Hills Energy claimed that the cost of carbon capture operations on its two coal units would be approximately $506 million and $474 millions, respectively. According to the filing, the second figure is three times the cost of building one of the coal-generation units. The ratepayers would have to bear the cost of the increase, which could result in a rise of up to 16 percent or $25 per month for an average residential customer. The operations would also siphon off more than a third of the units’ electrical output, Black Hills said, so it would have to build additional generation or have customers reduce their consumption.

Black Hills also said the carbon capture operations “may have an impact on ambient air quality in the area,” because they have the potential to increase the emissions of certain pollutants. The increased demand for water, “would apply stress on existing aquifers in the area,”  the company wrote.

Rocky Mountain Power, the other utility, said in the filing, “There is not a portfolio standard that is economically feasible at this time.”

Both Black Hills and Rocky Mountain Power determined that the best carbon capture technology was a version that used an “amine-based solvent.” As they break down, these solvents can form toxic carcinogens, according to the Environmental Defense Fund. Last month, the advocacy group submitted comments to the White House Council on Environmental Quality warning that the release of these chemicals “may pose serious hazards to workers and the public near capture facilities,” but that the risks were not well understood. 

“A lot of folks think about carbon capture as a way to address the environmental impacts of the coal industry, but honestly, what these filings show is that it just creates environmental problems,” Anderson said.

Michael Nasi (a Texas lawyer who has represented utilities and coal interests) said that the Rocky Mountain Power filings and Black Hills’s filings did not recognize the economic potential of carbon capture operations. 

Luthi had Nasi consult when drafting the 2020 legislation. He is a strong advocate for carbon capture, and he represented NRG Energy when it built the nation’s only commercial-scale carbon capture operation at a U.S. coal plant outside Houston. Petra Nova was a three-year-old operation that stopped capturing carbon dioxide in 2020.

In Wyoming, Nasi has been representing a small oil company called Glenrock Energy that has been trying to build a carbon capture project at one of Rocky Mountain Power’s coal plants. Glenrock wants to use the captured carbon dioxide to squeeze oil out of a nearby depleted petroleum reservoir through a practice called “enhanced oil recovery.”

“They don’t see it for what it really is,” Nasi said of the utilities. “It’s very similar to basically a large industrial customer that instead of building widgets, makes carbon, and that carbon can be sold into the oil market with a bunch of very thirsty enhanced oil recovery projects that can use the CO2.”

Glenrock would finance the carbon capture equipment using its own financing, Nasi stated. The cost of the equipment would not be covered by ratepayers. This is the model Petra Nova used.

“Petra Nova was an oil project that had a very successful CCS demonstration built within it,” Nasi said.

However, dependence on oil was not without its risks. NRG stated that it was the pandemic collapse in oil prices that caused NRG to stop operations in 2020. The carbon capture project was not restarted.

According to emails from the Energy and Policy Institute, an independent watchdog group, Nasi suggested some changes to Wyoming’s legislation. These changes were made to the final version of the Wyoming legislation. These changes accelerated the timeline of when utilities would need to install carbon capture equipment. The date was moved to 2030 from 2040 and the public service commission was required to set interim targets.

Nasi told Inside Climate News that the changes provided “adequate urgency” by forcing the utilities to move faster.

Black Hills declined comment on the filings as they are part of an Open Docket with the Public Service Commission.

PacifiCorp spokesman David Eskelsen said the company has not considered carbon capture to be viable in its own planning “due to the high capital cost.”

Both companies indicated in the filings they would continue to look at installing carbon capture equipment in their plants, as required by state law. Black Hills indicated that it would seek federal funding at the Energy Department. Rocky Mountain Power asked regulators for approval of a $3.1million annual surcharge on customers to help fund the ongoing study.

‘A Huge Burden to Bear’

Many independent experts have already concluded the U.S.’s prospects for carbon capture are dim. John Thompson, technology and markets director of the environmental organization Clean Air Task Force, doesn’t disagree, but he said he thinks the technology holds great promise in Asia, and that Wyoming could serve as a test case. Thompson’s group is one of a few environmental nonprofits advocating for federal spending on carbon capture for this reason.

Thompson pointed to data from the International Energy Agency showing that, as of 2020, the majority of China’s coal emissions came from plants that were less than 10 years old. China’s coal emissions are greater than all the greenhouse gas emissions produced in the United States and they hit their highest level last year. 

“I just don’t see how we solve the climate problem without carbon capture on coal,” Thompson said. “And if we don’t solve it in China, it’s game over on climate, it really is.”

Thompson suggested that Wyoming’s coal plants could be fitted with carbon capture technology to demonstrate how this technology could be used on a large scale in China. But, he said, he’d want to see some changes to what the utilities are considering. He pointed out that the filings would only capture 90 percent the emissions from coal plants. That should be at least 95 %. He also said they should pursue a different “dry-cooling” technology that would dramatically cut water use. Both of these changes would increase construction costs.

But Ian Lange of the Colorado School of Mines is an economist who has served on White House Council of Economic Advisers. He also studied carbon capture. In the United States and Europe, he said, governments and utilities have spent years and billions of dollars trying to make the economic model work, and “it basically didn’t.”

Wyoming will be the next trial. The state law gave utilities the ability to delay or even avoid installing carbon-capture equipment, provided they can convince regulators that it is not feasible.

Anderson, representing the Powder River Basin Resource Council, stated that the public commission should now intervene to stop the process.

“Wyoming legislators made a policy choice to do something that none of the other states have done, probably would never do, and Wyoming customers have to bear the costs,” she said. “It’s a huge burden to bear.”

Zwonitzer, the bill’s sponsor, insisted that any costs would be manageable. He stated that the state must wait for the responses of regulators before deciding what next. He said Wyoming is forced to pursue carbon capture technology.

“Am I gung-ho about it still? No. But, do you think we still have a few years to push the envelope and see what happens? Yes,” he said. “I think one day we’re going to wake up in Wyoming and coal will be gone and our economy will be devastated. So it’s my hope that my state and our consumers are OK with paying.”

Wyoming residents are just beginning their exploration of the potential costs.