A Burning Question

Coal Is Here to Stay. What’s the Government Role in Making It Clean?

Posted April 7, 2011 at 5:20pm

Barack Obama had a pragmatic response when an  environmental activist confronted him last year about his support for federal research efforts into “clean coal” technology.

“Don’t be stubborn about it,” the president implored the protester, Gillian Caldwell of the green group 1 Sky, who argued the administration should put all of its environmentally friendly energy research dollars into advancing wind, solar and other renewable-power innovations — and abandon forever the pursuit of what she derided as the “unicorn” of energy innovation: carbon capture and sequestration, or CCS, technology.

“We are not going to get all our energy from wind and solar in the next 20 years,” the president said. “You know, if I could do it all with wind and solar I would. We can’t. Not yet.”

The pithy exchange — which occurred before Obama delivered a speech in Washington on February 2010 and can still be viewed in a shaky  video posted online — underscores the tension the president faces as he tries to steer the country away from fossil fuels and toward greater use of cleaner energy sources.

The problem is this: Despite the tens of billions of dollars allocated in Obama’s two-year-old economic stimulus package toward promoting innovation in renewables and energy efficiency, the bulk of America’s electricity will continue to be generated from burning fossil fuels for at least a generation. And in the United States that means carbon-rich coal, which accounts for roughly half the nation’s electricity and a third of its greenhouse gas emissions.

Even after accounting for growth in cleaner energy, mainly renewables and natural gas, the government’s Energy Information Administration last year predicted that coal would generate 43 percent of U.S. electricity by 2035 — a decline of just 2 percentage points from current levels. Driven by China and India’s insatiable energy needs, EIA projects global coal use will nearly double over the next 25 years, far outpacing other sources of electricity.

To the chagrin of environmentalists, those realities provide a ready political rationale for supporting big-time federal spending on clean coal. The effort is promoted not only by coal-state lawmakers at the Capitol, but also by an administration that has backed mandatory caps on carbon dioxide emissions and production mandates for renewable electricity. As a result, the search for clean-coal technology is the dominant focus whenever discussion turns to government efforts to innovate for a greener and more energy-efficient nation.

The leading technology, CCS, involves capturing carbon dioxide emissions from coal-fired power plants before they enter the atmosphere and injecting them deep underground. There, if all goes well, they will be safely stored in geologic formations instead of warming the planet’s atmosphere to unsafe levels.

CCS has been called nothing less than coal’s savior in a carbon-constrained world, given the fuel’s contribution to global warming. That explains why the Democrat-brokered economic stimulus package provided $3.4 billion for fossil fuel research, in addition to the substantial sums for renewables and efficiency. Since 2009, the Energy Department has distributed hundreds of millions of stimulus dollars across the country for CCS demonstration projects.

Eyes on Illinois

The centerpiece of the stimulus spending for coal is $1 billion committed by the administration last year for the FutureGen project, which aims to retrofit an aging Illinois power plant into a zero-emissions plant.

The much-touted project — also funded by a consortium of coal companies and electric utilities — has proceeded in fits and starts in recent years. First proposed by the George W. Bush administration as a brand new, cutting-edge facility, it was scrapped in 2008 because of cost overruns. Last year it was scaled back to the current retrofit plan, after being brought back from the dead by the Democratic stimulus.

Despite the twists and turns, the goal of FutureGen has remained constant: to show the technological feasibility of a commercial-scale CCS plant. Backers of the process were heartened by the findings of an Obama-commissioned federal task force, which reported last year that the technical and regulatory hurdles associated with CCS were not “insurmountable.”

For instance, oil companies already inject CO2 underground to improve crude oil yields. And the EPA is taking steps to develop a regulatory framework to hasten its use. Other thorny legal questions — such as who will bear responsibility for the massive quantities of CO2 that would be sequestered — will likely need to be sorted out by lawmakers.

But by far the largest challenge for the widespread deployment of CCS remains the economics, which have become part of the legislative morass of global warming politics. Without a national policy for reducing greenhouse gas emissions — such as a cap-and-trade program or carbon tax — “the electric utility industry has little incentive to capture and store its CO2 emissions,” a 2008 Government Accountability Office report concluded. Other independent analyses support that assessment, and it has stalled consideration of important practical issues raised by carbon capture and sequestration — such as how to transfer to large quantities of captured CO2 from power plants to storage facilities.

The irony is that many of the industries clamoring for development of CCS are the same ones that have helped mobilized the opposition that stopped the drive for cap-and-trade legislation. Under such a system, the federal government determines an annual limit on emissions and issues tradable permits to emitters — a market-based system designed to create a financial incentive for polluting less, while allowing businesses to decide how best to reduce emissions and be rewarded for efficiency. But critics were so successful in their efforts to disparage the cap-and-trade concept that it is considered politically unfeasible for the foreseeable future.

In the absence of congressional action, the EPA is moving forward with a regulatory plan to control emissions, using authority under the Clean Air Act that was affirmed by the Supreme Court in 2007. Opponents of basing the EPA’s action on the 40-year-old law — which requires polluters to install equipment to reduce emissions — say it is too cumbersome for regulating a gas as prevalent as CO2.

Citing the absence of technology for cutting emissions, many of the same lawmakers who worked to block cap-and-trade legislation last year are now furiously pushing a bill that would strip the EPA of its power to regulate greenhouse gases under existing law. These include some of the most powerful Republicans in Congress, including Senate Minority Leader Mitch McConnell; fellow Kentuckians Harold Rogers, the chairman of House Appropriations , and Ed Whitfield, chairman of the House Energy and Power Subcommittee; and Fred Upton of Michigan, who chairs House Energy and Commerce. All are supporters of more money for clean coal research.

Some coal state politicians have a different take on the issue, including Democratic Sen. John D. Rockefeller IV of West Virginia, who last month lamented that stopping the EPA from proceeding would effectively codify the “vicious uncertainty that is threatening coal today.”

Rockefeller has urged a two-year delay of the rules instead, which he says will give Congress time to develop an energy policy that includes extensive new federal support for CCS deployment. “If we can drive CCS forward over the next few years and take it global, then we will have in fact, secured coal’s future,” he said in a floor speech in March.

Money, Natural Gas, China

But even with support from powerful political allies and the White House, securing billions for CCS will be difficult, given the heightened focus on mounting budget deficits and the small-government mind-set of the new Republicans in Congress. For instance, in a letter sent to every member of Congress last month, dozens of conservative and tea party groups warned they would oppose any new energy subsidies or the expansion of existing incentives. Furthermore, the groups urged lawmakers to start dismantling current subsidies.

And that includes federal support for CCS, said Nick Loris, an energy analyst for the conservative Heritage Foundation. “That’s a commercial process that should be a decision that’s left to the private sector to determine whether it becomes commercially available,” he said.

Industry officials, however, say it is entirely appropriate for the government to invest in clean coal projects, such as FutureGen, to help overcome the financial expenditures associated with scaling up new technologies. “If we’re going to be the ones to pave the way on this, then it’s just not within the wherewithal of most utilities to be able to step up,” said Carol Raulston, a spokeswoman for the National Mining Association, which has members in the FutureGen consortium.

Another hurdle for domestic CCS development is the low price of natural gas resulting from development of massive reserves contained in shale gas in the United States. That makes natural gas, which produces about half the carbon emissions of coal, a more attractive investment opportunity. “Natural gas has really changed the entire conversation in the United States on what utilities are really focusing on,” said Kate Gordon, vice president for energy policy for the Center for American Progress.

Additionally, moderate growth in renewables is also creating competition for coal. Energy Secretary Steven Chu last month cited a “reasonable probability” that wind and solar power could be cost-competitive with fossil fuels by the end of this decade.

Ultimately, it may be China and not the United States where CCS is deployed on a widespread basis. Along with nuclear and renewables, China is building coal-fired power plants at a rapid pace. The U.S. government and many American companies are collaborating on technology transfers for CCS, which China sees as crucial for combating its legendary air pollution.

NMA’s Raulston said China’s boom is creating a unique chance for experimentation. Companies working on U.S. projects “are really more excited about China right now because they’re building so many new coal-based utilities that there’s a tremendous opportunity to try out new technologies,” she said.

With its unquenchable demand for coal and interest in burning it more cleanly, China may ultimately be the savior of American coal companies, said Gordon of the Center for American Progress. “We may see China both developing these CCS plants,” she said, “and importing a bunch of U.S. coal to burn in them.”