WonkLine: June 8, 2009
From the Wonk Room.
“We really can’t say we’re the Saudi Arabia of coal anymore,” says Brenda Pierce, head of the USGS team that found the estimates of a 240-year supply of coal in the United States to be grossly inflated, as “relatively little of it can be profitably extracted.”
The Congressional Budget Office has released its cost estimate of the Waxman-Markey American Clean Energy and Security Act (H.R. 2454), finding that it would reduce budget deficits “about $24 billion over the 2010-2019 period.”
In a mock hearing today, Republican senators Lamar Alexander (R-TN), John McCain (R-AZ), and Jim Bunning (R-KY) “will propose building 100 new nuclear power plants over the next 20 years” instead of a mandatory cap on greenhouse gas emissions.
Waxman-Markey Legislation Gives Coal a Competitive Future 2
By SolveClimate’s David Sassoon.
America’s future climate law began working its way through Congress this week, rewritten with new details and changes that were negotiated to give the coal industry generous incentives and the regulatory certainty to compete for a place in the nation’s energy future.
Here’s how Rep. Rick Boucher of Virginia, a lead negotiator for coal state Democrats on the House Energy and Commerce Committee, described the deal they worked out:I’ve been working extensively to fashion a controlled program that Congress can adopt which will preserve coal jobs, create the opportunity for increasing coal production and keep electricity rates in regions like Southwest Virginia affordable. The compromise that I have reached with Chairman Waxman achieves those goals.
Boucher and fellow coal state Democrats cut those deals with the bill’s authors, Reps. Henry Waxman and Ed Markey, with President Obama – a "clean coal" supporter – giving them a free hand to arrive at the formula that would secure the votes needed for passage.
Although the president called for a polluter-pays 100% auction of carbon allowances when he asked Congress for a climate law, the now 932-page American Clean Energy and Security Act of 2009 does the precise opposite: It contains a formula that gives most of the allowances to polluters for free – with about a third of them going to the coal-dominated power industry at no cost.
The free allocations were one major reason that Greenpeace withdrew support for the bill within hours of its introduction, but most of those in the climate community who have weighed in so far have been willing to swallow compromises that would have been unthinkable in January. Al Gore’s support for the bill remains undiminished. Paul Krugman at The New York Times summed up the prevailing attitude best:
The legislation now on the table isn’t the bill we’d ideally want, but it’s the bill we can get — and it’s vastly better than no bill at all.
As climate actors start wading further into the details of the bill’s provisions, however, they may find themselves hard pressed to justify passive acquiescence while enduring the certain further weakening of the bill on the Senate floor.
Ground zero of the contention centers around coal, an embattled industry which emerged from the negotiations with a surprisingly good deal. The bill contains performance standards for new coal plants that are weaker than those in the original Waxman-Markey discussion draft, funnels billions in funds and incentives to the development of "clean coal," and strips EPA of authority to proceed with development of regulations for smokestack CO2 produced by the industry.
Further, although the bill imposes a gradual economy-wide emissions cap, the penalty for non-compliance or failure to achieve target reductions would amount to no more than a slap on the wrist, given the low price permits are expected to fetch on the market for some time.
Mainstream environmental groups, however, are focused on what they would get in exchange — the holy grail of their climate campaign — the establishment of an economy-wide cap-and-trade system whose efficacy they believe can be increased over time. The bill also legislates valuable and groundbreaking support for clean energy, energy efficiency and green jobs, using federal law to erect economic pillars vital for eventually transitioning to a clean energy economy.
They seem satisfied even though the new bill also reduced the proposed national standard on renewable energy from 25% to 20%, compared to the first draft, diminishing its potential competitive pressure on coal.
All sides are now wading through the details of the massive bill, spinning messages and planning strategies for the political battle that is likely to continue for the duration of the year. It is unlikely that the parameters of coal’s good deal will substantially change during this week’s committee mark-up, but in the coming months, the future of coal will be a major topic of concern.
The continued growth and survival of coal brings three strikes against the bill in every climate campaigners handbook: It’s the source of the lion’s share of global CO2 emissions, it creates a weak negotiating position when across the table from China, and it fails to show the kind of leadership the world will want to see from the U.S. in Copenhagen.
Weakened Standards and Large Bonuses
The discussion draft of the Waxman-Markey bill contained performance standards for new coal plants that had some real bite. For starters, the draft stipulated that after January 1, 2015, no coal plants that emitted more than 1,100 pounds of CO2 per megawatt-hour would be permitted for construction. That’s a natural gas standard of performance, something that no coal plant can currently do, so it looked as if after 2015, no coal plants could be built unless they could capture and store their emissions. But the current bill has relaxed the standard in both definition and start date (see page 91).
Utilities may build coal plants permitted between now and 2020, as long as by 2025, these plants "achieve an emission limit that is a 50 percent reduction in emissions of the carbon dioxide produced by the unit." The language stipulating specific rate of emissions per megawatt-hour has been removed.
At the heart of the standard is the assumption that carbon capture and sequestration technology will be available for commercial deployment so that industry can comply. The bill is silent on what happens if CCS technology is not ready or proves unworkable.
It is possible that these new coal plants would be permitted to continue operations through a relaxation of the legal standard, since EPA even now cannot enforce a technology standard that cannot be met. Companies in the UK are already negotiating for an opt-out clause there if CCS is not ready in time.
Utilities in violation in any case would not be shut down, but would face penalties — set by the bill at two times the "fair market value of emissions allowances" (see page 427). The EPA estimates that a permit for a ton of CO2 would sell for only about $15 in 2020. That makes it possible for industry to plan to pay for non-compliance as the penalties would be relatively cheap, especially when compared to penalties under the acid rain cap and trade program, which are $2,000 per ton of pollutant in excess of allowance.
If the coal plants succeed in capturing and sequestering CO2 on the other hand, the owners stand to reap huge profits. First, the bill reserves 2% to 5% of allocations to pay for the development of CCS, which would amount to tens of billions of dollars of federal support for industry out of the gate, supplemented by an additional $1 billion annually made available through a small ratepayer levy.
The bill also provides enormous bonus allowances for the first movers of CCs technology potentially worth tens of billions of dollars. For every ton of CO2 that it sequestered, a utility would receive a bonus allowance many times more generous than the open carbon market would provide, from a minimum of $50 a ton to a maximum of $90 a ton for every ton of carbon sequestered.
EPA to Lose Primary Authority over CO2
In March 2008, Lisa Heinzerling of Georgetown Law School testified before Congress to explain the implications of Massachusetts v. EPA, the landmark case decided by the U.S. Supreme Court. In no uncertain terms, Heinzerling, an expert on the Clean Air Act who now works as an advisor to EPA Administrator Lisa Jackson, testified that the agency must regulate CO2 from power plants as a result of the decision.
It was a prospect that sent shivers through the fossil fuel industry, fearful of an uncertain and protracted regulatory process. The Waxman-Markey bill, through amendments to the Clean Air Act, imposes limitations on the authority of EPA to proceed. The bill devotes an entire title, Title VII, to the amendments (see page 590), which prohibits any greenhouse gas, including CO2, from being listed as a "criteria pollutant" or a "hazardous air pollutant" on the basis of their effect on climate change.
The bill also does not permit greenhouse gases to trigger New Source Review, nor affect the granting of a permit to operate under Title V of the Clean Air Act.
In short, the legislation rewrites the law so that the impact of Massachusetts v. EPA is narrowed in scope and Congress takes the lead on GHG regulation. With coal state lawmakers controlling the swing votes, however, some groups like Greenpeace would rather see EPA in charge of setting the rules on climate protection.
Kansas and New Hampshire
In recent years, the utility industry has had an almost impossible time proceeding with construction of new coal plants. Sierra Club’s Beyond Coal campaign has halted close to 100 projects, forcing industry to look to extending the life of its aging fleet of existing plants, which on average are close to 40 years old.
A look at circumstances in two cases — one in Kansas and one New Hampshire – shows how a proposed new plant and the upgrading of an aging plant, respectively, would proceed even if Waxman-Markey is signed into law. The long time horizon before the law begins to bite in 2025 – when allowance auctions begin and performance deadlines hit – means the regulations have little chance to impact the behavior of corporations, which can barely contemplate a decade of strategic planning.
Evidence of this comes recently from Kansas, where the new governor recently signed a surprise deal with Sunflower Electric to allow construction of a new coal plant that would send 75% of its electricity to customers out of state. The deal signaled a reversal of two years of effort championed by former Gov. Kathleen Sebelius, now Obama’s Health Secretary.
The utility said it planned to break ground on construction within 10 months, fully aware of pending federal legislation that would impose a price on carbon and emissions standards on new plants eventually. There are no plans to make the plant ready for a CCS retrofit.
Similarly in New Hampshire, PSNH’s Merrimack Station, the largest single source polluter in the state, is moving ahead with a massive upgrade despite the opposition from leading local businesses, including Stonyfield Farms and Timberland.
The nearly half-billion dollars worth of upgrades won’t do anything to reduce the plant’s carbon emissions, but will allow the utility to reap an extra $20 million to $25 million a year from ratepayers. The state legislature, under the influence of the utility lobby, is turning a blind eye to the survival strategy of a dinosaur responsible for close to half of the CO2 emissions in the state.
Waxman-Markey is silent on the regulation of aging plants like these, presuming the carbon cap embedded in the bill will force needed changes through market mechanisms. PSNH, undeterred by the pending federal legislation, is already proceeding with construction on the half billion dollar upgrade.
There is some optimism within the climate community that market forces unleashed by the cap-and-trade program will put sufficient pressure on coal to force plants to close or diminish new construction in the coming decade. But the satisfaction within industry at the currently negotiated outcome is causing concern among others that the cap is far too weak to have an effect for decades.
It calls for a 4% reduction in U.S. emissions below 1990 levels by 2020, which is far below the EU target of a 20% reduction. The market signal may be barely audible. Indeed, one industrial Fortune 100 company with a carbon-intensive product line has been advised by three separate teams of consultants about the impact of a carbon price upon its business. Independently, the consultants reported that the impact in 2020 would be negligible, according to a company executive not authorized to speak publicly.
And even after 2020, one watchdog group was skeptical of success in ever making polluters pay. In a statement released today, Public Citizen had this to say:
We should not assume that a future Congress will hold fast to today’s pledge to hold polluters accountable in 20 years. In fact, using history as a guide, these polluters will simply ramp up their lobbying and influence-peddling in an effort to again stall the day of reckoning when their greenhouse gas emissions carry a price.
Climate advocates still have time to reassess where this legislation is headed. For now, official statements are supportive, though laced with carefully wrought caveats about the need for strengthening its climate protection mechanisms. The 932 pages have been publicly available for only a few days, and the first order of business is getting the bill out of committee and onto the House floor.
It remains to be seen how hard lawmakers will allow themselves to be pressed to dial back the generous cards being handed to coal-fired power generation in particular, and the massive bet they are making on a future in which greenhouse gases will kept out of the atmosphere and instead buried underground.
No one can dispute that politics has trumped science in the design of this law — at least considering the gradual pace of emissions reductions contemplated for the next decade or two. And there is great concern that this climate bill in Copenhagen will look like too little too late from an administration that has promised global leadership on climate change.
WonkLine: April 28, 2009
From the Wonk Room.
Although Interior Secretary Ken Salazar made it clear he “likes coal,” the Interior Department “said on Monday it will try to overturn a Bush administration rule that made it easier for coal mining companies to dump mountaintop debris into valley streams.”
As Arctic carbon dioxide levels are growing at an “unprecedented rate,” an “area of an Antarctic ice shelf almost the size of New York City has broken into icebergs this month.”
Speaking about the Waxman-Markey clean energy bill, Rep. Gene Green (D-TX) called for free pollution permits to petroleum refiners and Rep. G. K. Butterfield called for free pollution permits to electric distribution companies. These companies have given more than $375,000 to energy committee members in the first three months of 2009.
WonkLine: April 24, 2009
From the Wonk Room.
As a wildfire in Myrtle Beach on the South Carolina coast “spread over thousands of acres by early Friday” and a “7,500-acre-plus blaze” raged in South Florida, scientists reported that “wildfires spur climate change, which in turn makes blazes bigger, more frequent and more damaging to the environment.”
Rep. Gene Green (D-TX), who “represents a district with several oil refineries, a huge source of greenhouse gas emissions, said about the Waxman-Markey clean energy bill, “they have to get our votes, and I’m not going to vote for a bill without refinery allowances.”
Sen. John Barrasso (R-WY), a prominent coal industry advocate, asked administration nominees whether they agreed with comments this week by Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, that no new nuclear or coal plants may ever be needed in the United States.
WonkLine: April 21, 2009
From the Wonk Room.
“Several hundred people marched on Duke Energy headquarters this morning” – and forty-four were arrested – “to decry the expansion of Duke’s Cliffside coal-fired power plant in Rutherford County.”
Oxfam report: “Emergency organizations could be overwhelmed within seven years” as the “victims of climate change-related disasters” “increase by “54% to more than 375 million people a year on average by 2015.”
Sen. Sherrod Brown (D-OH): ” What many people” – see Roy Blunt (R-MO), Sen. John Barrasso (R-WY), Rep. Shelley Moore Capito (R-WV), Rep. Fred Upton (R-OH) – “don’t understand is that climate change legislation can make our region and our country stronger.”
WonkLine: April 15, 2009
From the Wonk Room.
Wildfires fueled by “high winds and bone-dry conditions” raged through Oklahoma and Texas, burning over 200,000 acres of land. In Texas, the fires destroyed two towns and killed three people, while in Oklahoma, “losses from wildfires could reach $20 million dollars.”
Michigan officials “announced investments in four new operations that would employ several thousand workers” in advanced battery production collectively worth about $1.7 billion. The projects “illustrate the state’s burgeoning hold on the vehicle battery production market.”
St. Louis-based Peabody Energy Corp, the world’s largest coal company, announced “first-quarter profit tripled” to $170 million.
FutureGen and the Department of Energy's Advanced Coal Programs
- Victor K. Der, Acting Assistant Secretary, U.S. Department of Energy
- Mark Gaffigan, director of the natural resources and environment team, Government Accountability Office
- Sarah Forbes, senior associate, climate and energy program, World Resources Institute
- Robert Finley, director, Energy and Earth Resources Center, Illinois State Geological Survey
- Larry Monroe, senior research consultant, Southern Co.
A House Science and Technology subcommittee will explore the troubled FutureGen advanced coal project Wednesday, days after Energy Secretary Steven Chu said he hoped to proceed in a “modified” way with the project that his predecessor abandoned.The review of FutureGen, a prototype that would capture and sequester carbon dioxide emissions among other goals, is part of a broader Energy & Environment Subcommittee probe of DOE programs to curb emissions of heat-trapping gases from burning coal, which currently provides half the nation’s electric power.
The hearing will “inform members about near-term and long-term strategies to accelerate research, development and demonstration of advanced technologies to help reduce greenhouse gas emissions from new and existing coal-fired power plants,” according to the committee.
But questions about FutureGen – a joint federal-industry project that was slated for construction in Mattoon, Ill. – specifically will probably take center stage.
The Future of Coal Under Climate Legislation
The hearing addresses the future of coal under an economy-wide cap on greenhouse gas emissions, including the technologies and policies that may help reduce coal’s carbon footprint.
Witnesses- David Hawkins, Director, Climate Center, Natural Resources Defense Council
- David Crane, President and CEO, NRG Energy Inc.
- Ian Duncan, Ph.D., Associate Director for Earth and Environmental Systems, Bureau of Economic Geology, The University of Texas at Austin
- Frank Alix, CEO, Powerspan Corp.
- Harold P. Quinn, Jr., President and CEO, National Mining Association
- Lindene Patton, Climate Product Officer, Zurich Financial Services Group
ACCCE to Spend $20 Million on Online Media Campaign
From the Wonk Room.
The top public relations group for the coal industry is looking to shape public attitudes online, with a $20 million media budget for Internet-based advertising alone. The American Coalition for Clean Coal Electricity (ACCCE) is on the search for a “Vice President, Paid and Digital Media” to increase the public’s “appreciation for the use of coal”:The Vice President, Paid and Digital Media is responsible for implementing proactive digital media and traditional media placement strategies as a component of an integrated national communication program designed to 1) support coal-based electricity advocacy initiatives and 2) increase the public’s awareness of and appreciation for the use of coal to generate electricity.
This position, according to recruiting firm Korn/Ferry International, will oversee the public relations and media placement firms under contract and manage an annual media budget in excess of $20 million: more than $3 million for “digital media programs” (like the “Clean Coal Carolers” and a “Blogger Brigade“) and greater than $17 million for “media placement.”
ACCCE’s planned digital efforts are part of a comprehensive, national public relations campaign. In 2008, ACCCE spent over $45 million on its messaging, including $10.5 million to lobby Congress. The PR firm Hawthorn Group has promoted its “grassroots campaign” for ACCCE involving “sending ‘clean coal’ branded teams to hundreds of presidential candidate events” and “giving away free t-shirts and hats emblazoned with our branding: Clean Coal.”
The Wonk Room received the job description when Korn/Ferry approached Center for American Progress Action Fund’s Associate Director for Online Advocacy, Alan Rosenblatt, about the job. “While some may work just for money,” Rosenblatt said, “progressives work for values. Which might explain why this headhunter was naive enough to recruit me despite the fact I work for an organization that opposes her client.”
Download the Korn/Ferry job description for ACCCE’s Vice President of Paid Digital Media here.
Reid, Pelosi Call for End to Coal at U.S. Capitol Power Plant
From the Wonk Room.
Responding pre-emptively to plans of a massive act of civil disobedience at the coal-fired U.S. Capitol Power Plant, the leaders of Congress today called for an end to its use of coal. In a letter to the Architect of the Capitol, Senate Majority Leader Harry Reid (D-NV) and House Speaker Nancy Pelosi (D-CA) describe the plant as “a shadow that hangs over the success” of the architect’s efforts to green the Capitol:
The Capitol Power Plant (CPP) continues to be the number one source of air pollution and carbon emissions in the District of Columbia and the focal point for criticism from local community and national environmental and public health groups.Reid and Pelosi note that “there are not projected to be any economical or feasible technologies to reduce coal-burning emissions soon.” (In other words, coal is dirty.) They ask the architect to switch the plant fully to natural gas “by the end of the year”:
Therefore it is our desire that your approach focus on retrofitting at least one of the coal boilers as early as this summer, and the remaining boiler by the end of the year.
The switch will allow the plant “to dramatically reduce carbon and criteria pollutant emissions, eliminating more than 95 percent of sulfur oxides and at least 50 percent of carbon monoxide,” as well as the costs of “cleaning up the fly ash and waste.”
Gristmill’s Kate Sheppard reports “that doesn’t mean the big protest on Monday is off, according to organizers,” because “there are still hundreds of other power plants burning coal around the country.”