Episode 138 | Louisiana Leadership | Cleco Power
In the past year, several high-profile carbon capture and storage (CCS) projects have been announced in Louisiana. Last month, Central Louisiana utility Cleco announced a $900M project at its Madison 3 unit.
Madison 3, which runs on petroleum coke, not coal, is a “Unicorn” in many ways. Built in 2010, it is one of the youngest solid-fuel fossil facilities in the country. The underground site planned for carbon storage is directly below the existing plant. Louisiana is also home to one of the largest concentrations of CO2 pipelines in the nation.
My guest, Bill Conway, is Cleco’s general counsel and Chief Compliance Officer. He is also the acting development officer for the Madison project. He says the announcement was born out of necessity. As a 641-megawatt baseload energy unit, closing Madison 3 early would be financially catastrophic to the utility. Bill says changing capital markets offered the clearest direction for the company.
“Within the last two years, ‘World Capital’ has made the decision that global climate change is a problem regardless of what governments decide or not decide to do,” he says. He adds Cleco is just one of the many companies around the world under pressure to cut carbon emissions fast.
Cleco’s April announcement specifically kicked off a $12M FEED study, to determine the viability of the project. The study will also incorporate more characterization of the underground geology.
“We know the geology is superb. In fact, we may have the very best site in the whole state of Louisiana,” says Bill. Early indications from Battelle, who is leading the work, show that the site could have as many as three underground layers of storage potential.
This means Cleco could not only store all of the carbon captured at Madison 3, but store CO2 from other facilities in other states. Closer to the site, Cleco is discussing partnering with operators to install Direct Air Capture (DAC) modules to sequester CO2 from the atmosphere. To make the financials work, Cleco would take advantage of 45Q tax credits, which offer $50 per ton of CO2 sequestered indefinitely. A DAC operator would sell “carbon reduction credits” to 3rd-party markets like the one in California.
During the announcement and throughout my interview, the point was driven home that Louisiana is 1) a carbon-producing economy 2) at the mercy of climate change 3) with enormous carbon storage potential.
“There are great things that are going to be happening economically as a result of all this investment,” says Bill. “All of these things compel you to look at a strong CCS future for Louisiana.”
Useful Links: