Carbon capture and storage: actions necessary to improve the management by the DOE of demonstration projects

What GAO found

The Department of Energy’s (DOE) $ 1.1 billion investment in carbon capture and storage (CCS) demonstration projects has resulted in varying levels of success. Largely due to external factors that have affected their economic viability, coal CCS projects have generally been less successful than CCS projects in industrial facilities, such as chemical plants.

Coal projects. The DOE provided nearly $ 684 million to eight coal projects, resulting in an operational facility. Three projects were pulled – two before receiving funding – and one was built and went into operation, but its activities were halted in 2020 due to changing economic conditions. The DOE terminated funding agreements with the other four projects prior to construction. Project documentation indicated and DOE officials and project representatives told GAO that economic factors, including falling natural gas prices and uncertainty about carbon markets, were negatively impacting sustainability. economics of coal-fired power plants and therefore on these projects.

Industrial projects. The DOE provided about $ 438 million to three projects designed to capture and store carbon from industrial facilities, two of which have been built and have come into operation. The third project was withdrawn when the facility on which the project was to be incorporated was canceled.

GAO has identified significant risks to DOE’s management of CCS coal demonstration projects. These risks include the following:

High risk selection and negotiation process. The DOE’s process of selecting coal projects and negotiating funding agreements has increased the risks that the DOE will fund projects that are unlikely to be successful. Specifically, the DOE was fully engaged in the coal projects during their initial selection, instead of allowing time for further consideration, as it did for some industrial CCS projects. Additionally, according to DOE officials, the department used accelerated timelines for coal project negotiations – less than 3 months instead of a year – based on DOE’s desire to start spending the funds quickly. The American Recovery and Reinvestment Act of 2009. These actions reduced the DOE’s ability to identify and mitigate technical and financial risks, a principle cited in DOE guidelines.

Bypass of cost controls. The DOE, under the direction of senior management, did not adhere to cost controls designed to limit its financial exposure to funding deals for coal projects that the DOE ultimately terminated. As a result, the agency spent nearly $ 472 million for the definition and design of four unbuilt facilities, almost $ 300 million more than expected for these phases of the project. According to documentation and DOE officials, senior management led actions to support projects even if they did not reach required key milestones. DOE documentation also indicates that had Congress authorized an extension of the use of funds, the DOE could have continued to fund some of these projects. By managing future CCS projects against established scopes, schedules and budgets, the DOE would be in a better position to mitigate its financial exposure if projects encounter difficulties. Additionally, in the absence of a congressional mechanism to ensure increased oversight and accountability, such as the requirement for regular DOE reporting on the status and funding of the project, the DOE may risk spending funds. important taxpayers for CCS demonstrations that are unlikely to be successful.

Why GAO did this study

Key scientific assessments have underscored the urgency of reducing emissions of carbon dioxide (CO2), the most important greenhouse gas, to help mitigate the negative effects of climate change. CCS technologies have the potential to reduce CO2 emissions from sources such as coal-fired power stations and industrial plants. Since 2009, the DOE has sought to establish the viability of CCS technologies through various demonstration projects. The Infrastructure and Jobs Investment Act of 2021 authorized and allocated billions of dollars in new investments in CCS demonstration projects.

Congress included a provision in the Energy Act of 2020 for GAO to review the practices, successes, failures, and improvements of the DOE in the execution of CSC demonstration projects. This report examines (1) the results of the DOE-funded CCS demonstration projects and the factors that affected them and (2) the management of these projects by the DOE. GAO reviewed laws, regulations, guidelines, funding agreements, and other project documents, and interviewed DOE officials and project officials.