The Obama Administration is falling all over itself to find new and inventive ways to kill the U.S. coal industry. New rules aimed at discouraging coal mining as well as coal-fired electricity generation — both of which are essential to Utah’s economic well-being — are nearly too numerous to count, but one rule in particular captures the folly that is the Administration’s climate policy.
EPA’s New Source Performance Standards, a draft rule that sets tight limits on the amount of carbon dioxide a new power plant can emit, effectively mandates that all new coal-fired plants use carbon capture and sequestration (CCS) technology. Unfortunately, CCS is no more commercially viable than a manned mission to Mars.
Utilities and the coal industry have cried foul, pointing out correctly that the EPA has no grounds for ordering the use of a technology that doesn’t exist at commercial scale. But not afraid of a fight, EPA officials have gone to great lengths to defend the CCS mandate and have pointed to the Kemper power plant in Mississippi as evidence of CCS’s viability.
Kemper is a CCS-equipped coal plant under construction that will capture 65 percent of its carbon emissions. But Kemper, instead of making EPA’s case, has become its Waterloo.
The plant was supposed to enter service in 2013 and cost $1.8 billion. Still under construction and with a cost ballooning to $6.2 billion and still rising, it has become a symbol not of CCS viability but rather of its futility, proving just how far the technology has to go before it becomes sustainable.
And yet, for all of Kemper’s problems, it remains the best large-scale CCS project going. The government’s FutureGen project in southern Illinois, which was supposed to be the nation’s first commercial-scale demonstration of a nearly zero-emissions coal plant, recently had its funding pulled by the Department of Energy.
The experiences of FutureGen and Kemper have made abundantly clear what was obvious all along: CCS technology remains in its infancy. The EPA’s claim that CCS-equipped coal technology is ready for commercial deployment, which is the foundation for its mandate under the New Source Performance Standards, is laughable.
If the Obama administration is serious about tackling climate change and holding down energy costs it needs to completely rethink its coal strategy. That reassessment must recognize coal’s importance both to our energy mix and the world’s.
Coal still generates the largest share of our electricity — nearly 40 percent — and it’s our most affordable source of power. Instead of pushing efficient coal plants into early retirement or mandating the use of CCS, we need to allow our utilities to build the best commercially-proven coal technology, such as integrated gasification combined cycle coal plants or plants outfitted with ultra-supercritical boilers.
And we must jumpstart research, development and deployment efforts for advanced coal technologies like CCS. Backing away from the FutureGen project was a grave mistake. The necessity of advancing clean-coal technology is not just about preserving a balanced and affordable U.S. energy portfolio, but also providing the tools other nations need to cap and eventually roll back their own carbon emissions.
As important as coal is to our own energy needs, it’s doubly important for many European and Asian nations. China, for example, now burns nearly as much coal as the rest of the world combined. India, scratching and clawing to bring electricity to hundreds of millions still with little or no access to it, is aiming to double its coal consumption and will surpass the United States as the world’s second largest coal consumer in 2020.
While some richer nations, where electricity demand is flat or falling, might try to slowly replace coal with cleaner but costlier options, it is unrealistic to expect developing nations to follow suit. Because electricity demand in those nations is growing so rapidly, additions of low or zero-carbon sources of energy will come almost exclusively on top of existing coal power capacity, not in place of it.
The United States can be a leader in championing policies and approaches to emissions reductions that can be replicated around the world. Shuttering our own coal industry is not the way forward.
William F. Shughart II is J. Fish Smith Professor in Public Choice at Utah State University’s Huntsman School of Business, Director of Research for the Independent Institute and Strata fellow.
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