American Electric Power (AEP) is terminating its co-operative agreement with the US Department of Energy and putting on hold its plans for commercial-scale carbon dioxide capture and storage (CCS) citing uncertain US climate policy and the weak economy.

Despite having advanced CCS technology “more than any other power generator” over a two-year project, the company sees no sense in continuing work in the commercial-scale CCS project beyond the current engineering phase, said Michael G. Morris, AEP’s chairman and CEO.

“We are clearly in a classic ‘which comes first?’ situation,” he said.

As a regulated utility, it is impossible for AEP to gain regulatory approval to recover its share of the costs for validating and deploying CCS technology without federal requirements to reduce greenhouse gas emissions already in place, he said.

“The uncertainty also makes it difficult to attract partners to help fund the industry’s share.”

In 2009, the Department of Energy (DOE) picked AEP to receive up to $334m through the Clean Coal Power Initiative to help install a commercial-scale CCS system at AEP’s 1300 MW Mountaineer coal-fuelled power plant in New Haven, West Virginia.

The system would capture at least 90 per cent of carbon dioxide (CO2) from 235 MW of the plant’s capacity. Captured CO2 would be injected into suitable geologic formations for permanent storage.

Commercial operation in 2015 was due to begin in 2015 but AEP has informed the DOE that it will not proceed beyond the project’s first phase, which covers front-end engineering and design, developing an environmental impact statement and drafting a detailed Phase II and Phase III schedule.

AEP and partner Alstom began operating in October 2009 at the Mountaineer Plant a smaller-scale validation of the technology, which the companies describe as the world’s first fully integrated capture and storage facility.

The system captured up to 90 per cent of CO2 from a slipstream of flue gas equivalent to 20 MW of capacity and injected it into suitable geologic formations for permanent storage about 1.5 miles (2.4 km) below the surface.

The validation project, which received no federal funds, was closed as planned in May after meeting project goals.

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