Sector Spotlight: Advanced Fossil
In this post, I’ll explore how the DOE Loan Programs Office (LPO) is supporting advanced fossil projects.
As electrification, end-use efficiency, and renewables adoption sustain reductions in U.S. power sector emissions, the Energy Information Administration’s (EIA) 2023 Annual Energy Outlook projects the domestic capacity of fossil-fired generation will drop through 2030 before leveling off for the foreseeable future. Even though they comprise a declining share of electricity generation, fossil fuels are expected to continue to play a role in the nation’s economy. Growing global demand for fuels and exports like chemicals, fuels, and fertilizers has led EIA to project natural gas and oil production will continue, especially as the U.S. industrial base is expected to grow. The opportunities to decarbonize the production of petroleum-derived exports cannot with chemicals production and oil refining accounting for ~11% of the U.S.’s total energy-related carbon dioxide emissions in 2021, according to DOE’s Decarbonizing Chemicals and Refining Liftoff Report.
Whereas Carbon Capture, Utilization, And Sequestration projects will be important for the decarbonization of legacy power assets and may offer scalable solutions to industrial decarbonization in the future, there are many Advanced Fossil technologies ready today with the potential to reduce carbon emissions in hard-to-decarbonize sectors. These include abating emissions associated with upstream oil and gas extraction and midstream transport activities, recycling fossil fuel-derived products, and producing fossil-dependent manufacturing feedstocks more cleanly or with decarbonized alternatives. With the right technologies and processes, fossil fuels can also be used as zero- or low-emissions inputs in the production of hydrogen, explained further in our Hydrogen Sector Spotlight.
LPO can support Advanced Fossil technologies through its loan programs in a few different ways. Title 17 Clean Energy Financing Program’s Innovative Energy and Innovative Supply Chain categories (Section 1703) can provide financing for deployment of advanced fossil technologies or for supply chain projects that manufacture advanced fossil technologies; if qualifying Advanced Fossil projects receive meaningful support from a State Energy Financing Institution, they do not need to be innovative. The Title 17 Energy Infrastructure Reinvestment (Section 1706) category provides financing for projects that either retool, repower, repurpose, or replace fossil infrastructure that has ceased operations or to enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases, including the repair and/or replacement of natural gas pipelines to reduces methane leaks. Finally, the Tribal Energy Financing program can support advanced fossil technologies in eligible projects to federally recognized tribes and qualified tribal energy development organizations.
As of the end of September 2024, financing requested from LPO for Advanced Fossil projects totaled $16.7 billion. For more current details, view LPO’s Monthly Application Activity Report, which explains the level of interest from applicants for LPO financing and what technology sectors have been most actively engaged with LPO.
ADVANCED FOSSIL – WABASH VALLEY RESOURCES
In September 2024, LPO announced a conditional commitment of up to $1.559 billion to Wabash Valley Resources for a commercial-scale, waste-to-ammonia production facility with carbon capture and sequestration (CCS) technology in West Terre Haute, Indiana. The project would repurpose an industrial coal gasifier to produce 500,000 metric tons of anhydrous ammonia-based annually for Corn Belt farmers use as locally sourced nitrogen fertilizers while permanently storing captured CO2.The project has potential to be the world’s first carbon-negative ammonia production facility and the first producer in the Corn Belt to produce low-carbon ammonia cost-competitively.
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Ammonia-based fertilizer is a crucial element of the U.S. agricultural system, but its production is a significant contributor to climate change, accounting for between 1-2% of global CO2 emissions. Currently, the region is lacking supply of locally sourced nitrogen fertilizers the volatile market for ammonia often subjects farmers to price fluctuations. By producing low-carbon ammonia and permanently sequestering 1.6 million metric tonnes of CO2 annually, Wabash Valley Resources will address these challenges while demonstrating a commercially and environmentally viable end-use alternative for petcoke, a waste product generated during the oil refining process.
ADVANCED FOSSIL – LONGPATH BASIN SCAN
In October 2024, LPO announced a $162.4 million loan guarantee for the multi-state, real-time methane emissions monitoring network being fabricated and deployed by LongPath Technologies, Inc. LPO’s second advanced fossil announcement will support the infrastructure buildout for an emissions detection, location, and quantification subscription service for tens of thousands of oil and gas extraction sites across California, Colorado, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, and Wyoming. Using tower-mounted, eye-safe lasers manufactured in Boulder, Colorado to accurately identify molecules including methane, the system can notify operators in the event of even the smallest leaks to facilitate a rapid response, reducing needless emissions and generating savings across the value chain.
Emissions of methane, a greenhouse gas up to 80 times more potent than carbon dioxide, occur across the oil and gas production and compression, but are difficult to identify across vast production areas, are a major source of U.S. methane emissions. The network has already helped reduce 3.7 BCF of gas leaks from 71 towers. With over 1,000 towers from this loan, this should be one of the most impactful loans that we make. Already subscribers that used to identify and respond to methane leaks in 15 days are now doing so in less than 1 day.
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Advisor @ RM Systems llc | Business Reviews, Corporate Strategy Ex Accenture, EY, Pwc
3wVery helpful
MBA | Developer | Director of Business Development | Driving renewable & distributed energy transition & success
4wLove this
Circuit design engineering consultant. Precision analog, SMPS, EMI /EMC, controls, systems integration, & mentoring.
4wWhen you map end use power to front end extraction a multiple is calculated. When you chain these systems together the efficiencies (and thus the losses) we are told of that system, get multiplied by the up stream, losses. If your in the middle like a conversion process then you multiply your losses with upstream losses. If your extraction multiple is 10x of end load, then a 10% efficiency, removes as much up stream wastage as the actual down stream load uses!
Aerospace Engineer at Booz, Allen, Hamilton, Commercial Pilot
1moWow, that's really great news. I've also heard about NASA spacecraft that monitor methane in the Earth Atmosphere. Is there enough resolution from those to accurately see leaks and dispatch a patching team ?
Co-founder Investors for Climate | Climate Investor, Advisor & Solutionist
1moThis is exactly the type of solution we need to see more of! Methane reduction is a big win for climate action Jigar Shah