After all, it was only five years ago that Miller, then Mayor of Dallas, emerged triumphant in a David-vs-Goliath showdown with energy developer TXU to block the construction of 11 new coal plants in Texas.

Once Miller learned about the proposal that, along with seven others proposed, would double the number of coal plants in Texas, she cobbled together a coalition of three dozen cities, counties and school districts to block the deal. Following a marathon process, Miller’s coalition was instrumental in getting TXU to retreat from its plan. Embattled by critics, TXU became a buyout target as its stock dropped, and the new owners negotiated with national environmental groups to build eight of the 11 coal plants.

After her term, Miller was asked by a variety of environmental groups to carry the anti-coal flag. Convinced that simply obstructing new coal plants wasn’t a solution to the climate challenge, Miller instead went on a mission to learn about alternative technologies.

Her odyssey ended at Summit Power Group, a Seattle, Washington based developer that’s developing a carbon capturing, coal gasification power plant with a new kind of business model. Summit’s so-called ‘poly-gen’ plant will make money by selling CO₂ and other by-products for multiple uses.

It will sell CO₂ to the oil patch for enhanced oil recovery. And the plant will convert some of the extra syngas it produces into valuable chemicals. Taken together, Summit believes it can build and operate a coal plant with 90 per cent capture that makes money, without a price on carbon.

Miller has spent the past four years pushing plans to build the 400-megawatt Texas Clean Energy Project in Odessa, not far from the New Mexico border. When completed, TCEP will be the cleanest coal-fueled power plant in Texas.

In an era where cancellations of CCS projects in the US are outnumbering successful start-ups, TCEP has come a long way. Despite the bitterly polarised politics around energy, Summit’s $2.4-billion project won bi-partisan support in Texas’ state-house.

Its secret? Summit’s process offers something to supporters of both green energy and fossil fuels. It captures and reuses CO₂ emissions, which pleases the Greens, and it sells the CO₂ to the oil industry, which boosts oil recovery from ageing wells. In December, TCEP was granted an air permit with no opposition.

In September, Miller and I met in New York. She was in town for ClimateWeek, where she took part in a roundtable discussion hosted by the Global CCS Institute. More recently, we caught up for a longer talk about her project. What follows is Part 1 of our conversation. Part 2 will be published tomorrow.

Would you characterise your personal transition as one of being anti coal to pro coal within certain conditions?

When I left being mayor, the environmental community asked me to go out and teach other mayors how to fight dirty coal. And I said, “You know, I think it would be more worth our while to go out and build the cleanest possible coal-fuelled plant in the world and then raise the bar”.

So for four years, all I have done is work on what we believe and what a lot of the environmentalists believe is going to be the cleanest coal plant: 90 per cent carbon capture, extremely low emissions on all the other pollutants.

Given recent cancellations of CCS projects in the US and Europe, your project is a stand out. What’s holding things back?

There’s a lot of uncertainty around where these projects fit in, which makes it harder for the private sector to move forward. Even some Greens are luke warm in their support for CCS, wanting to spend more time on promoting renewables. And a lack of popular conviction on climate issues means it’s safe for politicians to go slow.

In the face of this indecision, our saviour is really enhanced oil recovery. There’s a growing appetite for the CO₂ in Texas and other oil-producing states, regardless of climate discussions, or a price on CO₂.

We have the ability to take all this CO₂ that we can capture off the industrial projects and sell it to bring more oil out of the ground out of wells that already exist.

Summit was awarded $450 million from the DOE to scale up this process, and one of the reasons we got the award was because of our financial model to sell CO₂ and other products.

Are you vulnerable to the backlash against renewables energy funding simmering in the US Congress?

Four years ago, when we proposed this project, we had no plans and no need to ask for any federal money because we had a good business plan. Not only will we sell electricity, we’ll also get revenue from the CO₂ we sell for enhanced oil recovery. And lastly, we also make a whole lot of urea fertiliser. We’re planning more than just a power project. We call it a poly-gen plant.

The focus of the renewable controversy right now is on a large government loan that was made to a company that took the money when it was financially troubled and subsequently declared bankruptcy. We, on the other hand, have a cost-share agreement for the $450 million in which we only get the money as a 50 per cent cost reimbursement after we spend private funds during construction.

And construction won’t begin in 2012 until all of the private money is committed up front. So there is no risk like there is with the loan guarantees. And at $2.5 billion in capital costs, the $450 million federal award only accounts for 18 per cent of the total cost of our project.

How long do you expect the project to take?

Back when I started I was optimistic that we could start construction within a year, by end 2008, or maybe 18 months at the most – but then, I knew nothing about the power plant construction business. Well, it’s four years later, and we really are close to being ready to break ground, but I’ve learned that things work more slowly in the power sector than elsewhere.

And there’s an irony here. Erle Nye, the former chairman of TXU — but who wasn’t responsible for the coal build-out I was fighting, that was his successor John Wilder — as soon as Erle heard that I was involved with this project, he said, “Babe…” — because he’s old school — “Babe, you’re a very impatient woman, and you’re going to be frustrated because building a power project takes a lot of patience, takes a lot of time.” And I said, “Oh, no, no. We’re going to get this done right away”.

So here I am, four years later. Erle occasionally sends me an email and congratulates me when we get another milestone for our project.

What are the roots of this project and of Summit Power?

Let me start with Summit. The brilliance of this project comes from Don Hodel and Earl Gjelde, who founded Summit Power Group. Don was Energy Secretary for Reagan, and Earl was his number two. Then Don became Interior Secretary and Earl was his number two there again. In time, they left Washington DC and started this company. Previously, they’ve built natural gas plants and solar and wind.

They were interested in figuring out a way to use coal for national security reasons. They knew, because they have built a lot of plants, that you couldn’t finance a power plant with very low emissions that also captures carbon. That’s been the weak link for other CCS projects, I think: they were proposed with the confidence that there would be a price on carbon, which would help CCS become financially viable.

But Earl and Don did not favour cap and trade or a price on carbon. Because they’re political conservatives, and from the start, they thought that you’d need to put together a business plan that is financially viable without that kind of safety net.

So the genius of this project, in my opinion, is that they came up with a financial plan that made this power plant more than just a provider of electricity. They wanted other revenue streams to make it more profitable.

They wanted to create multiple by-products that would bring the project maximum revenue.

How does the process work?

You take the coal, you make a syngas. Then, with the gas, you make multiple products. You burn the gas to make electricity, but you also take quite a bit of the syngas and make urea fertiliser. So you have a separate manufacturing facility on the site next to your power generation.

The process also removes almost all of the bad sulphur. And we’re using a low sulphur coal to start with. We capture more than 99 per cent of the sulphur and put that into a separate manufacturing facility on the site to make sulphuric acid, which is also sold. Sulphuric acid is used in the farming community and by industry.

Finally, we capture 90 per cent of the CO₂ off the syngas, compress it into a liquid form and put that in a pipeline and move it to oil producers, who send it down into wells to drive out more oil.

How do the economics break down?

Originally, we modelled that the project would generate a third of its sales from power, a third from urea, and a third from CO₂. But because the economy isn’t getting much better, and construction prices aren’t getting any lower, we’ve decided that we’d make a little bit less electricity and make more urea, to improve the financials of the project.

The shift means that we’ll boost urea output to 720,000 tons per year, up from 500,000. That will drive urea to over 40 per cent of our total sales.

The irony of all this, and the reason why it’s so hard to build a power plant that captures carbon, is because the least profitable revenue stream we have is from electricity. You get much better returns on your CO₂ and your urea than you do on your electricity.

But the point of building this project is to show the world that you can build a power plant that captures this carbon. Hopefully, after these first few get built and people see that it’s possible to do a privately owned and funded project like this, you’ll see improvements in efficiency as you do with any new product, and this super-clean model will become the standard, and it won’t need any government assistance to be replicated worldwide. That’s the dream, and we are close to helping it become a reality.

Thank you Laura. We’ll pause here for now and return tomorrow with Part 2 of this Q&A.

Read part 2 of this interview here.

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* Fighting Goliath: Texas Coal Wars is a film, narrated by Robert Redford, that documents the efforts by Miller and others to block TXU’s project. You can learn more about the documentary at FightingGoliathFilm.com, or view the full film here.

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