United States: Carbon Capture And Sequestration – Opportunity For Federal Funding

Introduction

The U.S. Department of Energy, National Energy Technology Laboratory (DOE) has issued a Funding Opportunity Announcement (FOA) under which it will award up to $1.3 billion for projects involving large-scale carbon capture and sequestration (CCS) from industrial sources and an additional $100 million for innovative concepts for beneficial carbon dioxide (CO₂) use. DOE anticipates making 10 to 12 awards for large-scale industrial source projects and six to eight awards for beneficial use of CO₂. The funding will cover up to 80% of the project cost for each budget period. The awards will be made in the form of cooperative agreements or technology investment agreements.

What Is CCS?

CCS is a term used to describe the process of capturing carbon dioxide emitted from industrial and energy-producing sources for the purpose of permanently storing it underground. First, CO₂ is captured from plant flue gas and other stationary CO₂ sources and compressed into a fluid. Liquid CO₂ is then transported to the geologic sequestration site, usually by pipeline, and injected via wells into deep subsurface rock formations for long-term storage. If the site is properly selected and monitored over time, the CO₂ remains sequestered due to both physical and geochemical trapping processes.

CCS is one approach that could reduce the amount of atmospheric CO₂ in an effort to mitigate climate change. Although underground injection of CO₂ for enhanced oil and gas recovery is a long-standing practice, CCS is potentially much larger in scale, involves different technical issues and thus requires significant investment in R&D, in addition to potentially requiring a new regulatory scheme. More information about CCS can be found in our May 27, 2009 update: "Carbon Capture and Sequestration – Evolving Legislative and Regulatory Issues."

What Are the Application Deadlines?

Applications for funding under the FOA must be received by August 7, 2009 and will result in Phase 1 awards initially, with Phase 2 awards to be made in accordance with a competitive Renewal Application process. Phase 1 will last for seven months and may encompass work ranging from project definition activities through preliminary design and permitting.

Renewal applications will be due no later than five months after the Phase 1 award. Only Phase 1 awardees will be eligible to compete in the Phase 2 Renewal Application process. Phase 2 will include design, construction and operation, with reimbursement of costs to awardees available until September 30, 2015.

How Much Funding Is Available?

Awards are distributed in two phases. The award size for Phase 1 projects is expected to range from $500,000 to $3 million. For Phase 2 large-scale industrial CCS projects, applicants can expect to receive between $50 million and $400 million.

Under the Energy Independence and Security Act of 2007, applicants must share at least 20% of the total allowable costs of the project. The recipient's share must come from nonfederal sources, unless otherwise allowed by law. Therefore, DOE cost share may not exceed 80% of total costs, with a target of 50% cost sharing for commercial scale demonstration projects.

What Projects Are Eligible?

Technology Area 1: Large-scale industrial CCS projects from industrial sources. The funding for large-scale CCS from industrial sources is intended to promote demonstration of advanced technologies that capture and sequester CO₂ from industrial sources into underground formations. Projects should include integration of CO₂ capture, transportation and sequestration incorporating comprehensive monitoring, verification and accounting. Projects also may include plan efficiency improvements for integration with CO₂ capture technology.

Sequestration sites may include deep saline formations and deep geological systems, including basalts, operating oil and gas fields, depleted oil and gas fields, and unmineable coal seams. The sequestration may provide commercial benefits, such as enhanced oil recovery and enhanced methane recovery from unmineable coal seams.

DOE expects award recipients to make progress toward capture and sequestration of 75% of CO₂ from the treated stream, comprising at least 10% CO₂ by volume that would otherwise be emitted into the atmosphere, and at a scale sufficient to evaluate the impact of the CO₂ capture technology on plant operations, economics and performance. DOE will give funding preference to projects that, as an integral component of commercial operation, could capture and sequester at least one million tons of CO₂ per plant per year by 2015. Long-term commitments from suppliers, purchasers or users of CO₂ would strengthen an application.

Technology Area 2: Innovative concepts for beneficial CO₂ use. The funding for innovative concepts for beneficial CO₂ use is intended to promote various projects, including: CO₂ mineralization to carbonates directly through conversion of CO₂ in flue gas; use of CO₂ from power plants or industrial applications to grow algae/biomass; and CO₂ conversion to fuels and chemicals. Carbonates produced from mineralization processes must be permanently storable through end uses such as cement additives or long-term underground storage.

Who May Apply?

Industrial sources eligible for award include, but are not limited to, refineries, cement plants, chemical plants, steel and aluminum plants, manufacturing facilities, and power plants using opportunity fuels (e.g., petroleum coke or municipal waste). Facilities with electric power output greater than 50% of total energy output and that operate on more than 55% coal as a feedstock are not eligible for funding under Technology Area 1. Furthermore, other federal agencies, Federally Funded Research and Development Center Contractors, and nonprofit organizations that engaged in lobbying activities after December 31, 1995 are also ineligible.

What Are the Steps for Applying?

First: All applicants must have a DUNS number and must be registered in the Central Contractor Registration (CCR) database to be eligible for an FOA award. A DUNS number is a unique nine-digit identification number issued by Dun and Bradstreet that can be obtained by accessing http://fedgov.dnb.com/webform. Registration in the CCR database can be completed by visiting http://www.ccr.gov/. DOE recommends that all applicants allow 21 days to complete the registration process.

Second: Complete all application forms available for download at Grants.gov, including form SF 424 (Application for Federal Assistance), a Project/Performance Site Location form, a Project Narrative File, various budget-related files, a cover letter, resume and an environmental questionnaire. The application must include a project narrative (30 pages maximum in length) that addresses both Phase 1 and Phase 2 activities and describes the following: Technology Merit, Technical Plan and Site Suitability; Project Organization and Project Management Plan; Commercial Potential; and Funding Plan. A letter of intent and pre-application are not required.

Applications must be submitted through the FedConnect portal to be considered for an award.

How Are Applications Reviewed?

DOE will perform an initial review to determine that applicants meet eligibility requirements and that all required information has been submitted. DOE will then conduct a technical evaluation to determine the responsiveness of the application to FOA technical requirements, in addition to the potential of the proposed project, the degree to which the applicant's plans could lead to successful operation of the project, and the potential for future commercial applications of the proposed technology. Applications will be scored numerically based on various criteria including: Technology Merit, Technical Plan and Site Suitability; Project Organization and Project Management Plan; Commercial Potential, and various financial management, budget and environmental criteria.

DOE anticipates notifying applicants selected for award in September 2009 and making awards soon thereafter.

Additional information is available on DOE's website at http://www.energy.gov/recovery/documents/tDE-FOA-00000.15.pdf.

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