Power utilities face a dilemma; they must build new power plants to meet the increasing energy demand and anticipate the future political climate and emissions regulations. (Lustgarten, 2011b). Standard & Poor’s, a ratings agency, says that two-thirds of U.S. coal-fired power plants are older than 30 years and must be retired or retrofitted with new emission controls. Old and small facilities are candidates for retirement and new, larger operations will be modernized (Silverstein, 2013). Power utilities have the option of building a new gas-fired plant with a $2 billion price tag, or wait for carbon emission controls, such as Carbon Capture and Storage (CCS) technology, to be brought to market cheaply for coal-fired plants (Lustgarten, 2011b).
Scientists say the U.S. must cut emissions in half by 2050; therefore, the European Gas Forum’s analysis assumes that all gas-fired power plants will have CCS technology in place after 2030. However, this technology has never been used at the commercial scale, because it is still too expensive to install. Therefore, running costs are also not known and carbon storage problems have not been solved (Harvey, 2011). The technology is at least 15 years away from the market. If it works on the commercial scale, emissions could be cut by 90 percent, said Nick Akins, president of American Electric Power (Lustgarten, 2011b). However, the efficiency of the power plant will be reduced by 25 percent if it uses CCS technology (Sahagian, 2013).
Peter Atherton, an energy analyst at the UK company Liberum Capital, said companies face the prospect of building plants that will run at 20 percent of their capacity for the majority of their lives to meet carbon budgets. These plants could be kept on standby and only used during winter peak of energy needs, or to supplement the intermittency of renewable energy (Harvey, 2013; 2011). CCS also adds to the cost of electricity production beyond the decrease in efficiency, because it requires additional energy input for the transportation and storage of the captured carbon dioxide, raising the net quantity of production emissions for gas or coal, and more fuel is needed to attain the same electricity output (Broderick et al., 2011, p. 73).