Man-made Global Warming Scam: $612 Million in Recovery Act Funding and $368 Million in Private Sector Cost-sharing for a Total Investment of $980 Million

Secretary Chu Announces Nearly $1 Billion Public-Private Investment in Industrial Carbon Capture and Storage

June 10, 2010

US Department of Energy - U.S. Energy Secretary Steven Chu today announced that three projects have been selected to receive up to $612 million from the American Recovery and Reinvestment Act -- matched by $368 million in private funding -- to demonstrate large-scale carbon capture and storage from industrial sources.

The projects- - located in Texas, Illinois, and Louisiana -- were initially selected in October 2009 for phase one research and development grants. Following successful completion of their Phase 1 activities, these three projects were identified as the most promising industrial CCS projects through a competitive process and will now enter into Phase 2 with additional funding to begin design, construction, and operation.

Today's project selections are aimed at testing large-scale industrial carbon capture and storage, an important step in moving CCS technology toward eventual commercial deployment. The Obama Administration has made a goal of developing cost-effective deployment of CCS within 10 years, with an objective of bringing 5 to 10 commercial demonstration projects online by 2016.

"Capturing carbon emissions and storing them underground is a crucial technology as we build a clean energy future and address the threat of climate change," said Secretary Chu. "These investments will create jobs and help ensure that America can lead the world in the clean energy economy."

Projects announced today include large-scale industrial carbon capture and storage projects that capture carbon dioxide emissions from industrial sources -- and store the carbon dioxide in either a deep saline formation or via enhanced oil recovery. The selections announced today are expected to capture and store 6.5 million tons of CO2 per year -- the equivalent of removing nearly one million cars off the road -- and increase domestic production of oil by more than 10 million barrels per year by the end of the demonstration period in September 2015.

Phase 2 of these projects includes $612 million in Recovery Act funding and $368 million in private sector cost-sharing for a total investment of $980 million. The projects will be managed by the Department of Energy's National Energy Technology Laboratory.

Potential additional applications for funding of large-scale industrial carbon capture and storage projects are pending further review.

Phase II Large-scale Industrial Carbon Capture and Storage Selections:

• Leucadia Energy, LLC (Lake Charles, LA) - Leucadia and Denbury Onshore LLC will capture and sequester 4.5 million tons of CO2 per year from a new methanol plant in Lake Charles, LA. The CO2 will be delivered via a 12-mile connector pipeline to an existing Denbury interstate CO2 pipeline and sequestered via use for enhanced oil recovery in the West Hastings oilfield, starting in April 2014. The project team includes Leucadia Energy, Denbury, General Electric, Haldor Topsoe, Black & Veatch, Turner Industries, and the University of Texas Bureau of Economic Geology. (DOE share: $260 million)


• Air Products & Chemicals, Inc. (Port Arthur, TX) - Air Products will partner with Denbury Onshore LLC to capture and sequester one million tons of CO2 per year from existing steam-methane reformers in Port Arthur, Texas, starting in November 2012. The CO2 will be delivered via a 12-mile connector pipeline to an existing Denbury interstate CO2 pipeline and sequestered via use for enhanced oil recovery in the West Hastings oilfield. The project team includes Air Products & Chemicals, Denbury Onshore LLC, the University of Texas Bureau of Economic Geology, and Valero Energy Corporation. (DOE share: $253 million)


• Archer Daniels Midland Corporation (Decatur, Ill.) - The project will capture and sequester one million tons of CO2 per year from an existing ethanol plant in Illinois, starting in August 2012. The CO2 will be sequestered in the Mt. Simon Sandstone, a well-characterized saline reservoir located about one mile from the plant. The project team includes Archer Daniels Midland, Schlumberger Carbon Services, and the Illinois State Geological Survey. (DOE share: $99 million)

PE Investors Begin Funding Carbon Credit Projects

June 4, 2010

Economic Times - There's something for the ‘green brigade’ to rejoice this Saturday, when the world dawns to yet another ‘World Environment Day’. Private equity investors have begun funding clean development mechanism projects, a strategy which will enable them to earn profits from the project as well as by selling certified emission receipts (CERs) or carbon credits.

Stable prices of carbon credits, which are currently trading at e12-13 apiece, are inducing private equity investors to go the carbon way. Analysts, the world over, are expecting (CER) prices to remain firm as polluting companies in the European Union and in countries that encourage voluntary reduction in emission, would require carbon credits to account for their higher pollution levels.

“It’s the two-way revenue stream that lures private equity investors to participate in clean development projects. Apart from a share of profit from the project, the fund also gains by selling carbon credits. Carbon credits are becoming popular among industries having higher emission levels,” said Chaitania Kalia, partner, Ernst & Young.

PEs adopt different ways to fund Clean Development Mechanism (CDMs), which are mostly in the renewable energy and energy efficiency space. However, a good number of them only invest in medium-to-large-sized community projects which revolve around hydro-power projects, bio-mass, solar power, wind energy and bio-fuels.

The business model of PE funds investing in such projects is simple. The fund, along with a CDM consultant, spots a viable project that has the potential to earn higher credits. Once the project is identified, the plan has to be approved by UN-accredited CDM valuers.

On getting necessary approvals, the PE fund releases money to start the project. Once the project infrastructure is completed, a panel of UN-appointed ‘executive board members’ looking into CDMs, ratify the project. Project activity commences on receiving the board’s approval. CDM verifiers review the project every year and hands out CERs, based on the core efficiencies of the project.

The CERs are often sold at exchange rates or at a slight premium in times of demand. PEs invest anywhere between Rs 50 lakh and Rs 5 crore in medium-to-large-sized projects. Funds that invest in small-sized or mini-projects — like rural household bio-gas or household energy plans — put in about Rs 5,000 to Rs 12,000 for setting up project infrastructure. PE funds expect 15-20% returns from their investment in CDM projects. However, in the case of funds that invest in mini-projects, selling carbon credits is the only source of revenue; most PE funds don’t charge the end beneficiary (the household) of the project.

“Private equity investments in CDMs will go up, as there is a strong demand for renewable energy and good support for such projects from the government. Renewable energy and energy efficiency interventions are some of the most profitable businesses in the world currently,” said Vishwajit Dahanukar, managing director, Managing Emissions, a ‘green’ private equity fund. Managing Emissions has tied up with SBI to spread its micro rural household bio-gas programme.

While money has begun flowing into CDM projects, there are uncertainties with regards to the expiry of Kyoto Protocol. The basis of using carbon credits to mitigate pollution by companies was evolved in the Kyoto Protocol.

“Investors are a bit uncertain about investing in CDMs, as they are unsure as to what will be the new norm after the Kyoto Protocol, which comes to an end in December 2012. Investors are not really willing to invest in small-scale projects; money flowing to medium-to-large-sized CER-yielding independent renewable energy projects,” said Ashutosh Pandey, CEO-carbon advisory business, Emergent Ventures.