A project to use petroleum coke for power generation and to capture and store carbon dioxide emissions is underway in California, a novel project that recently won approval from the state Public Utilities Commission.

Southern California Edison in taking part in a project by a joint venture of BP Alternative Energy and Rio Tinto to build plant to gasify petroleum coke for producing hydrogen and carbon dioxide. The hydrogen would be burned at a nearby facility to produce electricity while the carbon dioxide would be captured for enhancing oilfield production.

The commission President Michael Peevey said the project is unusual (he said "first of its kind") because it combines hydrogen and electricity production with carbon capture and sequestration. The petroleum coke, or petcoke, is a solid by-product of oil refining process that is similar to coal. It typically shipped to other countries where it's used for fuel.

"We also make coal in California. It's our dirty little secret for a state that claims to be clean," Peevey said at the Cleantech Forum in San Francisco this week. "We can eliminate the pollution from shipping and exporting our petcoke."

The commission approved last Friday authorized Edison record up to $30 million in the costs for taking part in the project, called the "California Hydrogen Project." The commission denied the utility's request to pass on some of the cost to its ratepayers. Edison can request to do so in a separate application, the commission said. Peevey would like other utilities in the state to take part to share the cost and the benefit from this project.

The $30 million would be used for the first two phases of the project. The companies will do a feasibility study for phase one and, if they choose, carry out engineering designs for phase two, the commission said.

Hydrogen Energy International, the joint venture between BP Alternative Energy and Rio Tinto, is the project developer. The 250-megawatt facility might use biomass as well as petcoke to produce the synthesis gas, which is then turned into hydrogen and carbon dioxide. Hydrogen Energy might use some of the hydrogen for transportation fuel, according to a commission report.  Hydrogen gas can also be used for energystorage: researchers in the U.K. are examining ways to combine wind power with hydrogen.

Hydrogen Energy is looking at building the project in Kern County, and has applied for a permit from the California Energy Commission.

Carbon capture and sequestration (CSS) is not a new concept, but technologies that have been developed to for it are largely in the testing and demonstration stages. The $787 billion federal stimulus package signed by President Obama two weeks ago included a lot of money for CCS work, including $1.52 billion for demonstration projects and $3.2 billion in bonds for its research and commercialization. CCS projects also will be eligible for some of the $6 billion in loan guarantees.

Lionel Kambeitz, CEO of CCS project developer HTC Purenergy, told an audience at the Cleantech Forum that every ton of carbon dioxide pumped into oil field can produce 6.6 barrels of oil.

"That's energy security," he said.