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Finding the Middle Ground Between Coal and Climate Change

Nov 30, 2016

Huntley coal-fired power plant in Tonawanda, New York

At some point, the country will need to find the middle ground between "The War on Coal" and the imperatives of "Climate Change". I have spent the last 12 years on the inside of this Power Plant/Climate Change debate. Here is my take:

Coal is not competitive because of the EPA New Source Performance Standards (NSPS), first issued in 2014. The NSPS mandated that coal-fired power plants deploy Carbon Capture (CCS), but allowed natural gas power plants to be permitted without doing anything. This was not done explicitly, but by setting the new power plant emissions limits at a level that the natural gas plant could meet “unabated”. This was a “Business as Usual” for the natural gas team.

Under this scenario, the coal plant was 5x the first cost and half the efficiency. This is the War on Coal. The EPA is aware of all this, their efforts were intentional and were supported by The Sierra Club, itself funded by the gas industry. It suited the EPA’s own hidden agenda as well. The EPA did not want to capture CO2 because it has no plan to deal with CO2, if it were to be captured.

On top of that, the gas price dropped precipitously. Some like to deflect their regulatory role and simply blame the gas price for the coal industry demise. It was the regulation first, then compounded by the fall in natural gas cost.

The "coal guys" first tried to make it all go away, but without success. They then lobbied for their own standard and EPA was happy to oblige in 2015 with a NSPS modification in 2015. The change did not materially affect the competitive positioning of the two offerings. Coal was still over 3x the first cost and had a 30% efficiency penalty.

Neither of these EPA standards mentions Climate Change or climate targets.

The Energy Information Agency baseline scenario models the build out an entire fleet of natural gas units without abatement and implementation of the Clean Power Plan. That scenario forecasts the U.S. to emit 5044 Mmt/year of CO2 in 2040. The U.S. CO2 budget for a 2°C target is 1300Mmt in 2050. The current trajectory with full implementation of the CPP is more than 3x the target. At the same time, we will have reached the impact limit of fuel switching from coal to gas.

Virtually all of the IPCC scenarios that suggest a 2°C/450ppm could be achieved include both Carbon Capture (CCS) and Nuclear. CCS is currently on “life support” and most of the nuclear projects have been shelved. They too cannot compete with the unfair competitive advantage of unabated natural gas. This is also the reason nuclear plants are being shut down, rather than being upgraded and relicensed to extend their life.

CCS is the key to giving both the Coal Industry a fair shot, and the world in meeting any reasonable climate goals, but only if applied equally and to all types of power plants. You cannot force coal to capture, while giving gas a free pass. CO2 is CO2. There is no such thing as clean CO2.

It is essential to require both coal and natural gas power plants deploy CCS to reach 250-300 lb-CO2/MWh. If done, we could be on 2°C/450ppm trajectory and the CCS learning curve.We would use the lower natural gas price to offset added cost of CCS, so as not to penalize end users.

Eliminating CO2 from the electric power generation is also the critical enabler to realizing the impact of electric vehicles.

We all agree that a value must be put on CO2, so that it can affect investment choices.

Cap and Trade is one method, but it has two components. The trade is easy. The cap is political, given to influence peddling, etc. Politicians have already proven that they cannot effectively handle that responsibility with anything like a timely and fair implementation.

“Revenue Neutral” tax and rebate/dividend schemes have been proposed. The tax is ok, but why give the money back? Use the money to solve the problem!

Solutions?

My favorite is to implement a “CO2 (waste) Disposal Fee” based on a calculable cost to dispose of it. I would use those funds to build pipelines to pre-permitted, remote underground locations for storage in perpetuity. The Federal Government would need to assume long-term liability.

Note….This entire effort would fit neatly into any infrastructure build-out and rural jobs program.

We also need to buy land and plant trees, as well as invest in mass transit.

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