July 5, 2017 at 5:00 am ET
We have heard a lot of discussion in the U.S. recently in favor of government support for basic research but against support of applied research. The argument put forward for this view is that private industry should be responsible for bringing innovations to the market. While this model may be appropriate in some sectors, there is a long history showing that government support of applied research in the energy sector is essential for bringing advanced technologies forward. The impacts on the U.S. economy associated with that support have been substantial, but they would not have been realized without the contributions of sustained government funding of the development process.
The energy technology development process
The development of advanced energy technologies typically spans many years and follows a series of steps toward commercialization. In recent years, the Department of Energy has adopted the Technology Readiness Level concept to track the progress of technology development. The TRL approach is a systematic measurement system to evaluate the maturity of a technology. The TRL score is based upon the scale, degree of system integration, and test environment where the technology has been demonstrated.
Bridging the ‘valley of death’
As technology development advances from the laboratory to commercial deployment, there is a period — generally in the TRL 5 to 7 range — that is often described as the “valley of death;” the technology has been proven in the laboratory, but has yet to move to commercialization. For carbon capture technologies, bridging this “valley of death” has been a major focus of development programs for several years. The DOE has supported the development of a wide range of technologies at the laboratory/bench scale, with the goal of driving down costs and leading to widespread deployment. The most promising technologies are selected for testing at small pilot scale. This testing is typically done at the 0.5 to 5 MW scale using gases generated by an operating facility. Success at small pilot scale can then lead to testing at large pilot scale. For capture technologies, this is typically considered to be 10–25 MW.
This was the development pathway that led to the recent start-up of the commercial-scale Petra Nova facility in Texas. The amine-based solvent capture technology used was initially subjected to testing and evaluation in the laboratory, scaled to small and then large pilot testing at Plant Barry in Alabama, and then based on what was learned in that development path, scaled to a 240 MW application. DOE funding played an important role all along that development path.
The share of government funding along the development pathway also typically follows a prescribed series of steps. For the earliest stages, most of the costs are borne by government. As testing moves to the bench and then pilot scale, cost-sharing is required of the technology developers — a public/private partnership — at the 80 percent government/20 percent private scale. For scale-up from large pilot to commercial, the nominal cost share increases to 50/50, although for Petra Nova it was closer to 20 percent government and 80 percent private.
There is significant value in these early CCS commercialization efforts, especially in terms of “learning-by-doing.” It is a well-established engineering axiom that any first-of-a-kind facility is significantly more expensive than subsequent facilities. For example, the experience and lessons learned from the design, construction and operation of a CCS facility can be applied to reduce the cost of subsequent projects. Petra Nova has stated that a capital cost reduction of 20 to 30 percent is readily achievable for any similar project undertaken in the future. Cost reductions of the type noted for Petra Nova are common in the evolution of environmental control processes and systems.
This same pathway was followed in past successful energy technology development efforts — notably unconventional oil and gas recovery. Natural gas was first extracted from shale formations in the 1820s, but high costs made widespread deployment uneconomic. Government support of R&D starting in the 1970s drove down costs, specifically:
The vital role of government in the development process was described by one of the principals intimately involved in the process — former Mitchell Energy vice president Dan Steward — as follows: “DOE started it, and other people took the ball and ran with it. You cannot diminish DOE’s involvement.”
Moving forward, there are great economic opportunities available in the development of carbon capture technologies. As a global low-carbon economy expands, carbon capture is going to be needed in both power and industrial applications. Support for the development of these technologies provides a pathway for continued technological leadership for U.S.-based companies in providing low-carbon solutions to support economic progress.
Ron Munson is the global lead of capture at the Global CCS Institute. He is a former senior engineer contracting to the National Energy Technology Laboratory and the Department of Energy.
Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.