Thursday, January 31, 2008

Coal gets battered again while natural gas waits in the wings

Coal has been taking blows from environmentalists for a long time, but the prospect of climate change and coal’s contribution to atmospheric CO2 has put it at the center of the bulls eye. Many in the electricity industry continue to insist that coal is less expensive than new gas and that states that keep the lights on with coal have lower electricity costs than those that don’t—with the exception of states that rely on hydropower.

But, if the economic consequences of global warming are added into the equation, the math looks less clear. When discussing clean coal and carbon capture and sequestration (CCS), the equation, in fact, becomes fuzzy. (No one really knows how and where carbon sequestration will work and how much it will add to the coal bill.) As I’ve often said about climate change--perception is everything. If the majority of citizens in the US believe in climate change and believe that burning coal contributes to the buildup of CO2 in the atmosphere and to global warming, then the electricity companies are going to have to start at least acting like they’re listening. (If the markets start taking CCS into consideration, the cost of coal will change dramatically—and the electricity companies will most definitely start listening.) So far, the primary response to American’s concern about climate change has been a lot of talk about CCS and clean coal, but the announcement that DOE has decided to scrap FutureGen, just a month after the Mattoon, IL site was announced, says a lot.

Deputy Energy Secretary Clay Sell said he and Secretary Bodman learned last March that the price tag for the FutureGen project had gone from an original $950 million to $1.8 billion. "I knew (then) that we were in to something that would not end well," Sell said, according to the Associated Press. Hmm. DOE knew last March that the costs were out of hand and that the program was in trouble. But, the PR train had left the station and the FutureGen dream just kept on chugging along.

So now, Sell says that DOE will solicit industry applications for new CCS projects in conjunction with new coal plants. The government will pony up the money for the CCS projects, each designed to capture 1 million metric tons of CO2, while industry will build the new plants. (I wonder if anyone in Washington has heard that communities across the country are just saying no to coal?)

Coal is in trouble. In fact there's a movement afoot to demonize coal and cast it as an enemy of mankind. This is a movement that is gaining ground amongst future ratepayers. According to the Christian Science Monitor, (Thursday, Jan 24) the battle against coal is taking shape across the country this week with Focus the Nation: Global Warming Solutions for America. “Organizers bill the culminating day, Jan. 31, as the largest teach-in in the nation's history, drawing parallels to the civil rights and antiwar movements of the 1960s and '70s. More than 1,500 institutions, most of them colleges and universities, will host classes, documentaries, performances, energy-saving competitions, and discussions with political leaders.”

To get students to understand the role of coal in energy, at least one college is literally dumping piles of coal on campus to illustrate how much is needed to power the student’s daily lives. Others are staging mock battles between a windmill and a smokestack, and at one university, taking a page straight from the Aristophones’ Lysistrata, a one-woman show is being staged in which the “fictional first lady calls for a boycott against sex until the nation starts a serious dialogue about climate change.”

The bottom line is that the coal industry better start taking these concerns seriously. If they don’t, coal is going to be just a lump in the nation's stockings and natural gas is going to come out smelling like a rose.