Hill Heat

On Monday Citi Group, Morgan Stanley, and JPMorgan Chase announced the establishment of an “enhanced diligence” framework for judging proposed financings of certain new fossil fuel generation.

The framework, according to the joint press release, sets principles for energy efficiency (including “regulatory and legislative changes that increase efficiency in electricity consumption”), renewable energy and low-carbon distributed energy technologies, and assessing the “financial, regulatory and certain environmental liability risks” of CO2-emitting fossil fuel power generation. The group intends to “encourage regulatory and legislative changes that facilitate carbon capture and storage (CCS) to further reduce CO2 emissions from the electric sector.”

The group, which as the Rainforest Action Network’s Understory blog notes does not include major investor Bank of America, consulted the power companies American Electric Power, CMS Energy, DTE Energy, NRG Energy, PSEG, Sempra and Southern Company and the environmental organizations Environmental Defense and the Natural Resources Defense Council.

The purpose of the hearing is to receive testimony on the regulatory aspects of carbon capture, transportation, and sequestration and to receive testimony on two related bills: S. 2323, a bill to provide for the conduct of carbon capture and storage technology research, development and demonstration projects, and for other purposes; and S. 2144, a bill to require the Secretary of Energy to conduct a study of the feasibility relating to the construction and operation of pipelines and carbon dioxide sequestration facilities, and for other purposes.

Witnesses

Panel 1

• Joseph T. Kelliher, Chairman, Federal Energy Regulatory Commission
• Krista Edwards, Deputy Administrator, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation
• Benjamin Grumbles, Assistant Administrator for Water, U.S. Environmental Protection Agency
• C. Stephen Allred, Assistant Secretary for Land and Minerals Management, U.S. Department of Interior
• James Slutz, Deputy Assistant Secretary of the Office of Oil and Natural Gas, U.S. Department of Energy

Panel 2

• Lawrence Bengal, Director, Arkansas Oil and Gas Commission
• Scott Anderson, Senior Policy Adviser, Environmental Defense
• Tracy Evans, Senior Vice President, Reservoir Engineering, Denbury Resources, Inc.

31/01/2008 at 10:00AM

Today Sen. Kerry chaired a hearing on geological carbon sequestration and introduced legislation to establish CCS demonstration projects.

The legislation provisions:

• Establish 3-5 commercial-scale sequestration facilities
• Establish 3-5 “first-of-a-kind” coal-fired demonstration plants with carbon capture
• Establish an interagency process to determine a regulatory framework for CCS
• Direct USGS to perform a capacity assessment of sequestration potential; establish an aggressive CCS R&D program at DOE
• Authorize technology sharing agreements with China, India and other coal-intensive developing countries.

At the hearing the consensus was that the federal government should invest not only in a few large-scale projects, but also a greater number of small-scale pilot tests, and in use-directed fundamental research. The EPRI representative emphasized the advantages of starting R&D investment before carbon emissions pricing kicks in, and promoted the work EPRI has done to study advanced coal technologies and CO2 capture and sequestration.

• Dr. Howard Herzog, Principal Research Engineer, MIT Laboratory for Energy and the Environment
• Mr. Charles E. Fox, Vice President, Kinder Morgan CO2 Company, L.P.
• Dr. Sally Benson, Executive Director, Global Climate and Energy Project, Professor, Energy Resources Engineering Department, Stanford University
• Dr. Robert C. Burruss, Research Geologist, Energy Resources Team, U.S. Geological Survey
• Mr. Ron Wolfe, Corporate Forester and Natural Resources Manager, Sealaska Corporation
• Dr. Bryan Hannegan, Vice President, Environment Electric Power Research Institute

07/11/2007 at 02:30PM

Grist’s Brian Beutler covers yesterday’s Global Warming Committee hearing on The Future of Coal Under Cap and Trade:

Here are two takes on the issue, from two sources that couldn’t be more deeply at odds with each other. Both suggest coal may yet see its heyday.

The first comes from Michael Morris, CEO of American Electric Power, who testified at the hearing. He supports, in the same tepid way that many energy companies now do, an economy-wide cap-and-trade program with carbon credits allocated freely. (His justification for this might just represent one of the great moments in the history of inadvertent honesty: “We believe that credits ought to be allocated to those who will invest the capital to make a difference in the environment, rather than an auction so that those who buy them can make money by the positions they have taken.” In other words, give energy companies the allocations because we’re already rich and don’t award the innovators for beating us to the punch.) One of Moore’s other main points was that coal companies won’t begin installing CCS equipment until CCS “has been demonstrated to be effective, and the costs have significantly dropped so that it becomes commercially available on a widespread basis.”

He’s certainly not the only person who thinks it’s politically infeasible to impose drastic, costly policies on the coal industry—and that therefore carbon-based energy companies have the world by the political balls. Robert Sussman, an environmental expert testifying on behalf of the Center for American Progress, said, “unfortunately, our analysis indicates that the initial stages of cap-and-trade programs [do not] not make carbon prices high enough to eliminate cost differentials” between clean and dirty coal plants.

That points toward two possibilities: We could ratchet up the regulatory impact of climate-change legislation, or we could subsidize the hell out of CCS.

At the end of the hearing, Sussman suggested that the Congress set a date (specifically the year 2016) by which CCS technology be standardized, saying the cost of such a hasty transition would require $35 billion to $40 billion in research subsidies.

As a consolation prize, David Hawkins, director of the Climate Center at NRDC, proposed that the marginal costs of outfitting coal plants with CCS technology should be paid directly by consumers (a green incentive) and not by direct tax subsidies. Woot?

The nomination of Stephen J. Isakowitz to be the Chief Financial Officer of the Department of Energy. The draft of an original bill drawn from the text of bills: S. 731, S.962, S. 987, and S. 1115.

CQ:

A tenuous agreement to delay action on divisive issues blew up Wednesday as a Senate panel marked up its first major energy legislation of the year.

The Democratic and Republican leaders of the Energy and Natural Resources Committee had agreed not to consider amendments on coal and renewable electricity. But the deal fell apart when Republicans forced a vote on an amendment by Sen. Craig Thomas, R-Wyo., to create a new mandate for coal-based transportation fuels.

Democrats tightened ranks — despite the fact that many support “coal to liquids” technology — and defeated the amendment 11-12 in a party-line vote.

The panel went on to adopt, 15-8, an amendment by Chairman Jeff Bingaman, D-N.M., that would make various industrial facilities — including coal-to-liquids facilities — eligible for a 50-50 cost share program that would help pay for projects that capture the resulting greenhouses gases and store them underground.

The deal between Bingaman and ranking Republican Pete V. Domenici of New Mexico was intended to save controversial amendments for the Senate floor debate on the legislation. The underlying bill, which is still unnumbered, includes language from four measures that would address biofuels (S 987), energy efficiency (S 1115) and carbon sequestration technologies (S 962, S 731).

Although Republicans broke what one Democratic aide called a “ceasefire,” Democratic committee aides said Bingaman plans to keep his end of the bargain and withhold his amendment to create a “renewable portfolio standard” until the bill moves to the floor. That language would require utilities to produce 15 percent of their electricity from renewable sources by 2020.

Thomas and Jim Bunning, R-Ky., plan to bring their proposal to boost coal-to-liquids technology to the floor as well.

The committee also adopted by voice vote 22 minor amendments that had been cleared with staff on both sides of the aisle in advance.

02/05/2007 at 10:00AM

Opening statement from Sen. Jeff Bingaman (D-N.M.): In today’s hearing in the new Finance Subcommittee on Energy, Natural Resources, and Infrastructure, we look forward to hearing testimony on advanced coal technologies. As we discuss energy policy and how to best use coal, a natural resource that we have in abundance, to enhance our energy security, it is important that we learn more about the feasibility of various advanced clean coal technologies that feature clean emissions and allow carbon sequestration and storage.

In our current tax code, we have several tax incentives for these technologies, including investment tax credits for investments in advanced coal technologies and accelerated depreciation to address the capital costs involved in these technologies. We hope during this hearing to collect testimony regarding the response of the market in general, and of coal producers and utilities in particular, to these incentives. We are also interested in hearing your views on new incentives that might be more effective in helping us achieve our energy policy goals. In particular, we sought testimony from experts on:

• Clean coal and gasification projects, including the newly announced Wyoming Coal Gasification Project, a private-public partnership formed to develop an integrated gasification combined cycle (IGCC) power plant.
• Coal to liquids, the process of making liquid fuels from coal
• Refined coal production tax credits
• The costs of establishing new facilities as well as retrofitting existing coal-fired power plants.

We also look forward to hearing these experts’ views on the feasibility and future of carbon capture and sequestration as well as the market for sequestered carbon. Sequestered carbon can be used in many useful technologies, including enhanced oil recovery. A primary focus of energy policy discussions is the abundance of coal in the U.S. This hearing represents our first examination of the possibilities of that endowment.

Witnesses

• Steve Waddington, Executive Director, Wyoming Infrastructure Authority
• Dr. Nina French, ADA-ES, Director, Clean Coal Combustion
• John Diesch, President, Rentech Energy Midwest Corporation
• Dr. Brian McPherson, Research Scientist, Petroleum Recovery Research Center, NM Tech and Manager, Carbon Engineering Group Energy and Geoscience Institute, University of Utah
• Bill Townsend, CEO, Blue Source

26/04/2007 at 10:00AM

S.731, to develop a methodology for, and complete, a national assessment of geological storage capacity for carbon dioxide, and S.962, to amend the Energy Policy Act of 2005 to reauthorize and improve the carbon capture and storage research, development, and demonstration program of the Department of Energy.

16/04/2007 at 02:30PM