The Conundrum of “Clean Coal”

Stephen DeAngelis

May 21, 2009

Television viewers in America have seen dueling advertisements between environmental groups and the coal industry. Coal industry ads show a video clip of President Obama on the campaign trail talking about clean coal. He makes the reasonable point that if America is capable of putting a man on the moon surely it is capable of developing technologies that can help it cleanly burn coal. Environmentalists, on the other hand, claim simply that there is no such thing as “clean coal.” The debate will continue to rage. Moving toward cleaner burning coal power plants comes with a price tag. With the economy sagging, some analysts claim that its a bad time to be raising the cost of energy generation. Others claim it’s the perfect time to start charging “the real price” of burning coal. Among those making the latter argument is New York Times‘ columnist Tom Friedman [“The Price Is Not Right,” 31 March 2009]. Friedman argues:

“Oil companies, coal companies and electric utilities today are selling energy products at prices that do not reflect the real costs to the environment and real risks of disruptive climate change (so future taxpayers will end up paying the difference). Whenever products are mispriced and do not reflect the real costs and risks associated with their usage, people go to excess. … Our biggest energy companies, utilities and auto companies became dependent on cheap hydrocarbons that spin off climate-changing greenhouse gases, and we clearly have not forced them, through a carbon tax, to price in the true risks and costs to society from these climate-changing fuels. … This is also why we need a tax on carbon — so we and our power utilities don’t become permanently addicted to cheap coal that makes for lower electricity prices today but spits out toxic greenhouse gases that have to be paid for by future generations tomorrow.”

During his campaign, President Obama indicated that he favored a cap and trade system (with the target being an 80% reduction in emissions by 2050) over a straight forward carbon tax. His administration appears to be setting the stage for a cap and trade system with the announcement that Environmental Protection Agency plans to establish a nationwide system for reporting greenhouse gas emissions [“EPA Plans U.S. Registry of Greenhouse Gas Emissions,” by Juliet Eilperin, Washington Post, 11 March 2009].

“The registry plan … would cover about 13,000 facilities that account for 85 to 90 percent of the nation’s greenhouse gas output. It was drafted under the Bush administration but stalled after the Office of Management and Budget objected to it because the EPA based the rule on its powers under the Clean Air Act. ‘Our efforts to confront climate change must be guided by the best possible information,’ said EPA Administrator Lisa P. Jackson in a statement. ‘Through this new reporting, we will have comprehensive and accurate data about the production of greenhouse gases. This is a critical step toward helping us better protect our health and environment — all without placing an onerous burden on our nation’s small businesses.’ Sens. Dianne Feinstein and Barabara Boxer, both California Democrats, had inserted language in a 2007 spending bill instructing EPA to develop a national greenhouse gas reporting system. If adopted by the end of the year, the rule could produce greenhouse gas statistics by the end of 2010. The EPA requirements would apply to large industrial sources that emit 25,000 metric tons or more a year, including oil and chemical refineries; cement, glass, pulp and paper plants; manufacturers of motor vehicles and engines; and confined animal-feeding operations. The 25,000-metric-ton threshold is about equal to the annual emissions of a little more than 4,500 passenger cars. Most small businesses would fall below the threshold and would not be required to report.”

One benefit of either a carbon tax or cap & trade system, proponents argue, is that the use of cleaner alternative fuels would stimulated because raising the costs associated with burning fossil fuels would make alternative fuels more competitive. Getting either system adopted during the current economic downturn may be difficult. People are extremely “price sensitive” and they won’t look kindly on politicians that add to their woes [“Cost Works Against Alternative and Renewable Energy Sources in Time of Recession,” Matthew L. Wald, New York Times, 28 March 2009].

“Windmills and solar panel arrays have become symbols of America’s growing interest in alternative energy. Yet as Congress begins debating new rules to restrict carbon dioxide emissions and promote electricity produced from renewable sources, an underlying question is how much more Americans will be willing to pay to harness the wind and the sun. Curbing carbon dioxide emissions — a central part of tackling climate change — will almost certainly raise electricity prices, experts say. And increasing the nation’s reliance on renewable energy will in itself raise costs. Fifteen months into a recession, that prospect does not sit well in some quarters.”

Wald provides an idea about the varying costs of producing electricity using different sources of energy:

“A modern coal plant of conventional design, without technology to capture carbon dioxide before it reaches the air, produces at about 7.8 cents a kilowatt-hour; a high-efficiency natural gas plant, 10.6 cents; and a new nuclear reactor, 10.8 cents. A wind plant in a favorable location would cost 9.9 cents per kilowatt hour. But if a utility relied on a great many wind machines, it would need to back them up with conventional generators in places where demand tends to peak on hot summer days with no breeze. That pushes the price up to just over 12 cents, making it more than 50 percent more expensive than a kilowatt-hour for coal.”

Not only are alternatives to coal more expensive, they are, with the exception of nuclear power, either less reliable or less abundant. Of course, nuclear power comes with its own issues. Coal, however, is the dirtiest of the energy sources which is why there is so much talk about “clean coal” technology. Those who don’t believe that coal-fired plants will ever be “clean” continue to protest against the construction of new coal-fired plants [“Is America Ready to Quit Coal?” by Melanie Warner, New York Times, 14 February 2009]. Warner points to the challenges Duke Energy is facing as it tries to build a new coal-fired plant in North Carolina.

“For three years, environmentalists have been battling to stop [the] company from building a large coal-fired power plant in southwestern North Carolina. They say it will spew six million tons of carbon dioxide into the atmosphere annually, in addition to producing toxic gases and mountains of fly ash similar to the muck that engulfed a Tennessee community recently.”

Warner insists that “the coal industry, which powered the industrial revolution and supplied America with much of its electricity for more than 60 years, is in a fight for its survival.” As proof she notes that, “in the last two-and-a-half years, plans for 83 plants in the United States have either been voluntarily withdrawn or denied permits by state regulators.” Why? The answer is lies in the fact that “the roughly 600 coal-fired power plants in the United States are responsible for almost one-third of the country’s total carbon emissions.” Under the cap & trade system favored by Obama, energy companies would stand to gain most from the development of so-called “clean coal” technologies. As Warner notes, however, people who don’t believe there is such a thing as “clean coal” are as passionate as the coal industry which is fighting for its life. She describes the opposing positions this way:

“The coal industry is aware of all of these issues and is fighting back. An industry-financed group called the American Coalition for Clean Coal Electricity spent $38 million last year informing Americans, via TV and newspaper ads, that coal is the source of 50 percent of their electricity, that it is an abundant domestic resource and, most importantly, that there is the promise of ‘clean,’ or carbon-free, coal. This argument is what [Robert F. Kennedy, Jr., and the Waterkeeper Alliance] call ‘the dirty lie.’ Nevertheless, the industry sees clean coal technologies as its best hope for joining the ranks of green power. The problem is that the technology, called carbon capture and storage, is still being developed and could make electricity generated by coal more expensive than power from other sources.”

The Economist, which favors a “carbon price or tax, which raises the cost of emitting carbon dioxide,” sides with Kennedy about “the illusion of clean coal” [“The illusion of clean coal,” 7 March 2009 print issue]. It believes “the world is investing too much cash and hope in carbon capture and storage.” Nevertheless, it points out that most of the world’s largest economies continue to rely on electricity generated by coal-fired plants.

“It provides almost 50% of America’s and Germany’s power, 70% of India’s and 80% of China’s. Digging up coal provides a livelihood for millions of people. And secure domestic sources of energy are particularly prized at a time when prices are volatile and many of the big oil and gas exporters are becoming worryingly nationalistic. It is hard to see how governments can turn their backs on such a cheap and reliable fuel.”

The Economist recognizes that its position is counter to those held by world leaders like Barack Obama and Angela Merkel. Those leaders favor “carbon capture and storage (CCS), or carbon sequestration, [which] entails hoovering up carbon dioxide from the smokestacks of power plants and other big industrial facilities and storing it safely underground, where it will have no effect on the atmosphere.” The problem, the magazine reports, is that “there are no big power plants using it [and] just a handful of small demonstration projects.” Being pro-free market, The Economist believes that governments should tax carbon emissions in some form and let market work out how best to reduce emissions. It laments the fact that governments appear to be subsidizing CCS technologies.

“With the private sector sitting on its hands, Western governments are lavishing subsidies on CCS. Some $3.4 billion earmarked for CCS found its way into America’s stimulus bill. The European Union, which already restricts greenhouse-gas emissions through a cap-and-trade scheme, unveiled further incentives for CCS last year. Britain, Australia and others have also vowed to help fund demonstration plants partly because they reckon the private sector is put off by the huge price-tag on a single CCS power plant, and also in the belief that the cost of CCS will fall with experience.”

The magazine believes that “politicians should indeed encourage investment in clean technologies, but direct subsidies are not the way to do it.” One country not mentioned by The Economist is China which has been frantically building new coal-fired power plants. The New York Times reports, however, that “China has emerged in the past two years as the world’s leading builder of more efficient, less polluting coal power plants, mastering the technology and driving down the cost” [“China Outpaces U.S. in Cleaner Coal-Fired Plants,” by Keith Bradsher, 10 May 2009]. “While the United States is still debating whether to build a more efficient kind of coal-fired power plant that uses extremely hot steam,” Bradsher writes, “China has begun building such plants at a rate of one a month.” For environmentalists, better simply isn’t good enough when it comes to coal-fired plants. Nevertheless, China is at least recognizing that there is a problem.

“China has begun requiring power companies to retire an older, more polluting power plant for each new one they build. … Without doubt, China’s coal-fired power sector still has many problems, and global warming gases from the country are expected to continue increasing. China’s aim is to use the newest technologies to limit the rate of increase. Only half the country’s coal-fired power plants have the emissions control equipment to remove sulfur compounds that cause acid rain, and even power plants with that technology do not always use it. China has not begun regulating some of the emissions that lead to heavy smog in big cities. Even among China’s newly built plants, not all are modern. Only about 60 percent of the new plants are being built using newer technology that is highly efficient, but more expensive. With greater efficiency, a power plant burns less coal and emits less carbon dioxide for each unit of electricity it generates. Experts say the least efficient plants in China today convert 27 to 36 percent of the energy in coal into electricity. The most efficient plants achieve an efficiency as high as 44 percent, meaning they can cut global warming emissions by more than a third compared with the weakest plants. In the United States, the most efficient plants achieve around 40 percent efficiency, because they do not use the highest steam temperatures being adopted in China.”

Bradsher notes that none of China’s new plants use carbon capture and storage systems. “China has just built a small, experimental facility near Beijing to remove carbon dioxide from power station emissions and use it to provide carbonation for beverages,” Bradsher reports, “and the government has a short list of possible locations for a large experiment to capture and store carbon dioxide. But so far, it has no plans to make this a national policy.” Coal’s ultimate future has yet to be determined. The only thing I know for certain is that the debates about whether there is such a thing as “clean coal” technologies will continue to rage.