Earlier this week Department of Energy (DOE) Secretary Moniz followed up on one of the major financing commitments contained in new President Obama’s Climate Action Plan by releasing a draft solicitation (found here). DOE will make up to $8 Billion in loan guarantees available under Section 1703 of the Energy Policy Act of 2005 to assisting in the financing of projects and facilities that employ innovative and advanced fossil energy technologies that avoid, reduce, or sequester air pollutants or anthropogenic GHG emissions. The following types of projects are identified as eligible:
Advanced Resource Development. Projects or facilities that employ new or significantly improved technologies to economically develop, recover, and produce traditional and non-traditional fossil energy resources with reduced greenhouse gas emissions – e.g methane capture, low carbon unconventional gas production, underground coal gasification;
Carbon Capture & Sequestration (CCS). Projects or facilities that integrate fossil fuel usage in traditional processes with new or improved technology that captures and removes CO2 for permanent storage in underground formations or through beneficial reuse – e.g. carbon capture from flue gases at power plants or effluent streams of industrial processes;
Low-Carbon Power Systems. Projects or facilities that use fossil fuels for electricity generation using novel processes or improved technologies that can seamlessly integrate with CO2 storage or beneficial reuse – e.g. coal oxycombustion, hydrogen based fuel cells, chemical looping; or
Efficiency Improvements. Projects or facilities that incorporate new or improved technologies to increase efficiencies and substantially reduce greenhouse gas emissions associated with fossil fuel supply and use – waste heat recovery, combined heat and power, high-efficiency fossil fuel distributed systems.
Although this is just a draft DOE solicitation, keep in mind that it was announced on the heels of President Obama’s directive to EPA to issue GHG performance standards for existing fossil fuel power plants – which many believe will have a primary focus on efficiency improvements as the best system of [GHG] emission reductions. In other words, this solicitation may end up funding the types of “efficiencies” that become the de facto standard for feasible GHG reductions that can be achieved to meet future EPA compliance obligations. It should also be noted that while $8 billion sounds like a lot, in the context of the kinds of projects deemed eligible, DOE could end up only approving loan guarantees for a handful (3-8) projects…