As the Senate prepares to take up climate and energy legislation this fall, a binding cap on emissions could help spur the development and advancement of carbon capture and sequestration, or CCS, technology. During today's OnPoint, Pierre Gauthier, the U.S. president and CEO of Alstom, discusses his company's work on CCS development. He explains why Alstom would benefit from having a cap in place and discusses the CCS technologies Alstom is testing in the United States.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Pierre Gauthier, the U.S. president and CEO of Alstom. Pierre, thank you for coming on the show.
Pierre Gauthier: You're very welcome.
Monica Trauzzi: Pierre, Alstom recently announced it has joined the Pew Center on Global Climate Change Business Environmental Leadership Council. Why has your company taken this step now? What are you hoping to achieve through this partnership?
Pierre Gauthier: Well, first of all, we've moved our office here to Washington to be much closer to the activity involving especially climate change. And getting involved into the Pew Center as well as we're now members of U.S. CAP is part of our willingness to add our voice and of course, as a provider of technology, the knowledge we have of what we've been doing for several years now.
Monica Trauzzi: So, in terms of a cap and trade, how would your company benefit from having something on the books?
Pierre Gauthier: Well, we've been working quite extensively for many years now. We're involved by the way on all technologies, whether it's nuclear, hydro, and, of course, coal. And on the coal side we've been involved substantially over the years with carbon capture and today we have 10 projects in seven countries which are in the development stage and demonstration stage. So that's key for us to develop these new technologies because we're pretty sure that eventually there will be limits on the CO2 that everybody is allowed to emit.
Monica Trauzzi: Are there any specific provisions that you are looking for to end up in the final cap and trade that's passed in the U.S.?
Pierre Gauthier: Us, we believe that whatever the limits are, I mean this is a decision that has to be taken by every country and every government, but as long as there are, I think the moment you have objectives that's when then business starts operating. Today we're sort of in between. Europe is starting to move. The United States of course is starting to move with the bill that's now in the Senate and, of course, Copenhagen, which is the after Kyoto, will be coming in December. And we're quite hopeful that a worldwide agreement can be reached on at least certain objectives to reduce the emissions of CO2.
Monica Trauzzi: What are your thoughts on the Waxman-Markey bill that you just mentioned that passed the House, specifically on the allocation of allowances?
Pierre Gauthier: I think that's part of adjusting. When you're changing a regime that you had for so long and you're adopting something new you have to give it a chance I think and that's pretty good, to give a chance to all the utilities and customers that we have to adapt. But as long as there are clear objectives that everybody needs to set, that I think is the best thing. The worst would be no decision at all.
Monica Trauzzi: Do you believe that climate legislation, this climate legislation encourages utilities to use other forms of energy like natural gas to create electricity and perhaps step away from coal use? And then what does that mean for the development of carbon capture and storage technology?
Pierre Gauthier: Well, what we're hoping is that the climate bill, as well as the others that we find around the world, will give the opportunity to utilities a choice and that choice goes with pretty much everything that is available. It could be improvements, efficiency improvements. I think that's a payoff that is very quick. You could go into renewables, hydro, wind, solar. Or you can go directly also to non-emitting power generation, like nuclear. But, of course, there's a big fleet out there of coal and it's absolutely unthinkable that you can replace that very quickly. So obviously, if you have a choice, because coal is almost utilized worldwide, you will not be able to remove it. So the best thing to do is to be able to capture those emissions like we do today on the nitrous oxides and the sulfur oxides and we don't think twice about it. And if we go back 20 years ago everybody thought the cost would be unbearable for that. Maybe in 20 years we won't think twice about removing the CO2.
Monica Trauzzi: So, there are many concepts out there of how to actually make CCS happen. What are the different technologies that your company is testing out in the U.S.?
Pierre Gauthier: Well, there's three modes really; there's the pre-combustion, the combustion, and the post-combustion. We've been working mostly on the combustion and post-combustion. Post-combustion is probably the easiest, similar to what we do on the NOX and SOX. It's a chemical process where we remove the CO2 from the stack and then that CO2 is I'd say buried in areas that will stay there for thousands of years. The combustion one we're essentially adding oxygen in order to create a CO2 stream that can be removed right there in the combustion. The pre-combustion is an area where we haven't worked that hard today; the reason being it's more complex. It's a technology that's still evolving, that one really being a means of using coal in a different manner than burning it like we traditionally do. Not to say that we won't get involved eventually into that, but the fact that the fleet is so large and needs to be handled and 50% of the electricity produced in the United States is produced out of coal. Justified more are R&D investments which are substantial in the combustion and post-combustion areas.
Monica Trauzzi: So you have some preliminary results from the We Energies demonstration plant. What kind of timeline are you looking at for commercial deployment of the technology?
Pierre Gauthier: We Energy has been a success. It's what we call a pilot project, so it's a small one. It's a 5 megawatt and it's complete. It has achieved over 90 percent capture of CO2 and now we're moving, okay? We're scaling up the technology and our next step will be the one in construction with AEP, which is the Mountaineer Project and that goes to 30 megawatts and we're now looking for projects in the areas of 200 to 300 megawatts, which are pre-commercial. So we're still hoping that by 2015 we'll be able to offer commercial technologies to capture CO2.
Monica Trauzzi: 2015 is a lot sooner than many other projections. I mean do you really think that six years from now we're going to see CCS being used on a commercial scale?
Pierre Gauthier: Provided that there is legislation, provided there are objectives and that's the motivation is needed to be able to bring these technologies to the commercial side. We believe that can be done and that's quite quick. It's only six years from now.
Monica Trauzzi: Final question here the Obama administration has revived the government's FutureGen project. What's your assessment of how the U.S. government is approaching the R&D and the funding behind CCS?
Pierre Gauthier: Well, obviously, as the FutureGen is a pre-combustion type technology and there it's different than what we do, where we can scale up that project. So the cost, obviously, and the risk involved in that are huge and there is a need for government involvement. When you go to these CCS, the carbon capture, the amounts are slightly less, but nevertheless they are huge because when you think of a brand new power plant and you're adding that risk to it, unless there is something to help out, either in the rates or subsidies or whatever, this power needs to compete with other power producers. And therefore there is something that is needed to balance it out, to balance that risk, because shareholders will not be able to sustain that additional risk, so there, there is a need. And what we see is that, to put it in perspective, instead of dollars we calculated there is a need to help about 6000 megawatts. So that's about pretty close to at least 10 plants to be able to really work the R&D and make it commercial, meaning we can then reduce the cost to a level that can compete with other technologies or other power generation sources.
Monica Trauzzi: OK, interesting stuff. We'll end it right there. Thank you for coming on the show.
Pierre Gauthier: You're very welcome.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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