In light of the surprising popularity of last week's hydrogen economy rant, I'm going to try and make this a thing. Today's deep dive: why carbon capture and sequestration is a boondoggle that will never play a meaningful role in carbon-constrained electricity markets. Thread:

1/ For the uninitiated: carbon capture & sequestration (CCS) is the technology to capture CO2 from combustion tailgases, purify it then store it permanently (typically underground), enabling fossil-fueled sources to be CO2 free.

2/ It is distinct from direct air capture (DAC) that pulls CO2 out of the air and while it can be used in non-power applications (e.g., in cement plants) the useless boondoggle is in power generation applications.

3/ State and federal governments have thrown billions of dollars at CCS over the years. Google "FutureGen" in IL for an example of the scale of waste. Or the 45Q tax incentive to see where we still throw way too much money away on this dead end technology.

4/ The problems with the technology though have nothing to do with technology, but are simply about basic economics and thermodynamics.

5/ First economics: thanks to the power sector reforms created by the 1992 EPACT and FERC order 888, US power markets now dispatch on marginal price.

6/ That means that every power plant in the country looks at the revenue per MWh they can earn the next hour, compares that to their marginal cost of generating a MWh and decides whether to run or not.

7/ (Yes, I am simplifying a bit and don't mean to gloss over must-run dynamics or other complexities, but it's close enough for a twitter thread!)

8/ On balance, those market reforms have been an enormous boon to our economy and markets, for the simple reason that low-carbon power plants (nuclear, wind, solar, combined cycle gas turbines, etc.) also have lower marginal operating costs.

9/ Since those reforms were passed, the nuclear fleet has gone from operating 60% of the time to 90%+. 200 GW (roughly 20% of the entire power grid) of high-efficiency combined cycle gas turbines were built. 40 GW+ of renewables were built.

10/ Net result is that US CO2 emissions from power generation have fallen from 1300 lb/MWh to ~925 lb/MWh, all while power prices have come down. This is really important: favoring lower cost power plants drives down CO2 emissions.

11/ But in the meantime, the coal fleet has collapsed, and for the exact same reasons. 15 years ago, coal accounted for ~50% of all MWh consumed in the country. Today it's less than 25% and falling.

12/ And that's not because of economics. Once we decided to preferentially run our lowest marginal cost assets, the plants with lots of fuel and ash handling costs, inefficient power cycles, etc. couldn't justify operation. Consumers (and the environment) won.

13/ To be sure, the reforms from the 92 EPACT and FERC 888 weren't perfect. In particular, they really don't provide sufficient long-term certainty to drive capital investment. The increase in renewable construction owes more to long-term tax policy than short term spot mkts

14/ That means that while we now preferentially operate the low cost (and low CO2) power plants that are already built, it's still really hard to attract the capital to build new power plants.

15/ Ergo, operators have a bias towards least-marginal cost power plants and investors have a bias towards REALLY cheap construction costs. Nuclear benefits primarily from the former. CCGT benefits primarily from the latter.

16/ Now let's look at CCS. Adding gas separation, purification and storage will increase the capital cost of your power plant. That makes it harder to finance.

17/ Meanwhile, all the ancillary electric loads and fuel expense to separate, purify, compress and store that CO2 significantly increase the operating costs of a plant with a CCS addition.

18/ That means that all else equal, a power plant with CCS is going to run a lot less often than one without for purely economic reasons. Which makes the investment thesis even worse!

19/ In the power sector, CCS is literally the ONLY low-CO2 technology that costs more to build AND costs more to operate. (e.g., Solar: expensive to build, but effectively free to operate. CCGT: cheap to build, but depends on low gas prices to economically operate.)

20/ So while it is possible to waste a lot of money building those plants (see: FutureGen, 45Q), they are never going to operate in a carbon-constrained world that preferentially uses lowest cost power sources. All you can do is waste your investment $.

21/ So why the heck do we still talk about CCS? Partly because the coal industry still believes in magic unicorns and has convinced a lot of legislators to do the same. Partly because we want to believe that maybe there is some tech solution we've yet to figure out.

22/ But as Homer Simpson says, "In this house, we obey the laws of thermodynamics." I'd add economics too. You can't separate gases without spending capital dollars and burning more fuel.

23/ (As a separate but important point, it's worth noting that even with CCS, coal is still dirty. You still have acid rain-forming compounds, asthma-causing particulate. "Clean cheap coal" is, and will always be a fiction.)

24/ Bottom line is we have to get CO2 down as quickly as possible. And we have the opportunity to do so in a way that will save a lot of money. But not if we include CCS in the power sector. /fin