Thursday, August 26, 2010

Bad news about coal ..... and future climate policy.


Coal fired power plants, like the Scherer plant in Georgia shown above, are notable for several reasons. First, they currently provide roughly 50% of US electricity. Second, coal is a comparatively plentiful fossil fuel and, despite projected cost increases, remains comparatively cheap. Third, power plants are massive sources of atmospheric carbon dioxide: according to data from CARMA, the 8,000 power plants in the US are responsible for roughly one-sixteenth of the world's carbon dioxide emissions. But not all power plants are created equal. Nuclear plants have minimal emissions while the twelve largest carbon emitters (of which Scherer is the largest) are all coal fired plants (emitting between 17 and 25 million tons of C02 annually).

New power plants cost billions to construct and operate for decades. Thus, in a rational world, carbon emissions would be a significant consideration when constructing new plants. And, since it is widely recognized that large scale deployment of 'clean coal' technology is 15-20 years away, one would think that power companies would be shying away from the construction of new coal fired plants. But, as a recent review of documents by AP has shown, this isn't the case.
An Associated Press examination of U.S. Department of Energy records and information provided by utilities and trade groups shows that more than 30 traditional coal plants have been built since 2008 or are under construction.

The expansion, the industry's largest in two decades, represents an acknowledgment that highly touted "clean coal" technology is still a long ways from becoming a reality and underscores a renewed confidence among utilities that proposals to regulate carbon emissions will fail. The Senate last month scrapped the leading bill to curb carbon emissions following opposition from Republicans and coal-state Democrats.

"Building a coal-fired power plant today is betting that we are not going to put a serious financial cost on emitting carbon dioxide," said Severin Borenstein, director of the Energy Institute at the University of California-Berkeley. "That may be true, but unless most of the scientists are way off the mark, that's pretty bad public policy."

Federal officials have long struggled to balance coal's hidden costs against its more conspicuous role in providing half the nation's electricity.

Hoping for a technological solution, the Obama administration devoted $3.4 billion in stimulus spending to foster "clean-coal" plants that can capture and store greenhouse gases. Yet new investments in traditional coal plants total at least 10 times that amount — more than $35 billion.

Approval of the plants has come from state and federal agencies that do not factor in emissions of carbon dioxide, considered the leading culprit behind global warming. Scientists and environmentalists have tried to stop the coal rush with some success, turning back dozens of plants through lawsuits and other legal challenges.

As a result, current construction is far more modest than projected a few years ago when 151 new plants were forecast by federal regulators. But analysts say the projects that prevailed are more than enough to ensure coal's continued dominance in the power industry for years to come.

Sixteen large plants have fired up since 2008 and 16 more are under construction, according to records examined by the AP.

Combined, they will produce an estimated 17,900 megawatts of electricity, sufficient to power up to 15.6 million homes — roughly the number of homes in California and Arizona combined.

They also will generate about 125 million tons of greenhouse gases annually, according to emissions figures from utilities and the Center for Global Development. That's the equivalent of putting 22 million additional automobiles on the road.

The new plants do not capture carbon dioxide. That's despite the stimulus spending and an additional $687 million spent by the Department of Energy on clean coal programs.

While the news itself is troubling, it is what this news implies about the future of US climate change policy that is truly disturbing. As anyone who has followed the comments of talking heads about the current unemployment situation knows, uncertainty kills investment. This isn't simply a talking point, there is empirical economic research documenting the connection. Thus, the paradox: In the wake of the collapse at Copenhagen, conventional wisdom renders the future of climate negotiations uncertain, a business environment that, typically would lead firms to delay major infrastructure investment.

But this is not what the power companies have done. Instead, they have massively increased their commitment to coal. There seems, to me, to be only two possible explanations. 1) These guys are collectively stupid and betting billions on an uncertain regulatory future or 2)they know they have enough politicians under their control that there is no serious likelihood of future regulatory change that would undermine their investment in coal. My bet is on the second.

Update:

No sooner had I finished this post, than I came across an article by George Monbiot. He discusses lots of interesting political developments that are worth knowing about and I've linked to the referenced version of the piece. Here is the concluding paragraph, which largely echos my conclusion:
Yes, man-made climate change denial is about politics, but it’s more pragmatic than ideological. The politics have been shaped around the demands of industrial lobby groups, which happen, in many cases, to fund those who articulate them. Right-wingers are making monkeys of themselves over climate change not just because their beliefs take precedence over the evidence, but also because their interests take precedence over their beliefs.

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