Carbon Seize and Storage: Actions Essential to Increase DOE Administration of Demonstration Projects

What GAO Uncovered

The Office of Energy’s (DOE) investment decision of $1.1 billion in carbon capture and storage (CCS) demonstration jobs resulted in various levels of results. Largely due to external factors that impacted their financial viability, coal CCS projects were being normally considerably less profitable than CCS tasks at industrial services, these as chemical plants.

Coal tasks. DOE provided almost $684 million to 8 coal initiatives, resulting in one particular operational facility. Three projects ended up withdrawn—two prior to getting funding—and 1 was constructed and entered functions, but halted operations in 2020 because of to modifying financial circumstances. DOE terminated funding agreements with the other four tasks prior to construction. Venture documentation indicated and DOE officials and task reps explained to GAO that financial factors—including reduced purely natural gasoline costs and uncertainty with regards to carbon markets—negatively influenced the financial viability of coal ability crops and therefore these jobs.

Industrial initiatives. DOE offered roughly $438 million to three jobs designed to capture and keep carbon from industrial amenities, two of which ended up manufactured and entered functions. The third project was withdrawn when the facility onto which the undertaking was to be integrated was canceled.

GAO recognized significant hazards to DOE’s management of coal CCS demonstration jobs. These threats include the subsequent:

Large-danger assortment and negotiation procedures. DOE’s method for selecting coal jobs and negotiating funding agreements improved the dangers that DOE would fund initiatives not likely to thrive. Exclusively, DOE absolutely fully commited to coal jobs at their initial collection as opposed to enabling time for additional review, as it did for chosen industrial CCS initiatives. Moreover, in accordance to DOE officers, the office utilized expedited time frames for coal job negotiations—less than 3 months as opposed to up to a year—based on DOE’s need to get started paying out American Restoration and Reinvestment Act of 2009 resources quickly. These actions reduced DOE’s potential to establish and mitigate complex and fiscal challenges, a theory cited in DOE steerage.

Bypassing of charge controls. DOE, at the route of senior leadership, did not adhere to price controls developed to restrict its money publicity on funding agreements for coal tasks that DOE ultimately terminated. As a result, the company spent almost $472 million on the definition and design of four unbuilt facilities—almost $300 million far more than planned for those people undertaking phases. In accordance to DOE documentation and officials, senior leadership directed steps to guidance projects even while they had been not meeting required important milestones. DOE documentation also indicates that experienced Congress approved an extension on the use of the funds, DOE could possibly have continued funding some of these jobs. By handling future CCS jobs towards founded scopes, schedules, and budgets, DOE would be greater positioned to mitigate its economical publicity if initiatives wrestle. Additionally, absent a congressional mechanism to offer bigger oversight and accountability—such as necessitating standard DOE reporting on undertaking status and funding—DOE could danger expending considerable taxpayer resources on CCS demonstrations that have very little probability of results.

Why GAO Did This Study

Important scientific assessments have underscored the urgency of lowering emissions of carbon dioxide (CO2), the most important greenhouse gas, to assistance mitigate the negative effects of local climate modify. CCS technologies have the probable to minimize CO2 emissions from resources this sort of as coal vegetation and industrial amenities. Due to the fact 2009, DOE has sought to set up the viability of CCS systems by a variety of demonstration initiatives. The 2021 Infrastructure Investment and Jobs Act approved and appropriated billions of dollars in new investments in CCS demonstration tasks.

Congress provided a provision in the Electrical power Act of 2020 for GAO to assessment DOE’s tactics, successes, failures, and any improvements in executing CCS demonstration tasks. This report examines (1) the outcomes of DOE-funded CCS demonstration tasks and the elements that impacted them and (2) DOE administration of those people tasks. GAO reviewed legal guidelines, rules, guidance, funding agreements, and other task documentation, and interviewed DOE officers and project representatives.