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NET Power Zero Emissions

If the numbers in this article are even remotely accurate, this is a game changer for the fight against climate change, and sets the stage for a major fight within the environmental movement.

NET Power is currently building a zero emissions natural gas plant that uses something called an Allam cycle, which is different from the simple and combined cycles typically used in power plants. Allam cycle plants use supercritical CO2 to spin the turbine, which makes it a simple matter to capture the CO2 and store it somewhere. As an added bonus, Allam cycle plants can also capture all of the other byproducts, like nitrogen and argon. They have low capital costs, which makes them quick to build and financially flexible, and they're dispatchable, which means they can fill market niches that intermittent renewables struggle with.

According to the article, the cost per kilowatt hour for this new Allam cycle plant will be about 4 cents, the same as for a regular natural gas plant. That means that, with even a minimal price on carbon (or even just a small shadow price), you'd expect Allam cycle plants to eventually replace most or all regular natural gas plants, leading to massive reductions in CO2 emissions.

But they can also sell the nitrogen and argon they capture, and take advantage of the 45Q tax credits in the United States for sequestering carbon. When they do that, they're expecting the new plant to produce reliable, dispatchable, zero-emission electricity at a mind-blowing 1.9 cents per kilowatt hour. That blows pretty much everything else out of the water, and means that Allam cycle plants could potentially start crowding things like wind and solar out of the market, even with renewable energy subsidies.

And that's a bit of a problem. Renewables are extremely popular politically, especially among environmentalists, and people aren't likely to be very happy about the fossil fuel industry undercutting them, especially if it's relying on a federal tax credit to do so. 45Q was intended to make carbon capture at least vaguely economically viable, not to turn it into a superpowered dragon that lays waste to the rest of the energy system. There are environmental concerns associated with fossil fuel extraction that have nothing to do with climate change, and there's also a lot of uncertainty about how much carbon we can actually sequester. One way or another, we will need to dramatically reduce our reliance on fossil fuels. The astonishingly low price quoted for NET Power's new plant is likely to complicate that.

The 45Q tax credit only applies to plants built before 2024, so Allam-ogeddon isn't yet set in stone. But if prices really do end up being that low, there's going to be a mighty political battle about extending it. There's also a very good chance that we'll see large scale attacks on Renewable Portfolio Standards, since they would have the effect of making emissions reductions slower and more expensive.

It's going to be an interesting decade.

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