Will Power Plant Carbon Capture Costs Prove Prohibitive?

Carbon capture technology for coal fired power plants has been one of the darlings of Congressional committees working on climate change bills during the last year and a half, but panelist comments from industry leaders at the 12th Annual Electric Power Conference and Exhibition suggest that two aspects of carbon capture – cost and facility location – could toss a monkey wrench into the grand legislative plans surrounding this approach to greenhouse gas emission control. A representative of AES Corporation told the conference last week that under cap and trade the carbon dioxide allowances for coal fired electricity cost about $2 per ton. On the other hand, construction of a carbon capture facility adds $37 per ton to the cost of coal fired power, and transportation of CO2 to a storage site could add another$13 per ton, for total carbon capture cost of up to $50 per ton.

Just as the issue of nuclear power spent fuel rod disposal generated the acronym NIMBY, for Not In My Back Yard, conference attendees were busy discussing the new acronyms already in use regarding opponents of carbon capture facility site construction: NUMBY for Not Under My Back Yard; NOPE for Not On Planet Earth; and the new pejorative acronym for environmental activists opposed to carbon burial sites – BANANA, for Build Absolutely Nothing Anywhere Near Anyone. At least the debate is enriching Washington’s alphabet soup.

Power Industry Lobbying Efforts Support Senate Climate Bill

Electrical generation industry leaders at the twelfth annual Electric Power Conference executive forum in Baltimore yesterday rallied behind the Kerry/Lieberman American Power Act, the Senate’s alternative to the Waxman/Markey cap and trade bill passed last year by the House. Urging his colleagues to get behind passage of the Kerry/Lieberman legislation, James Connaughton, Executive Vice President of Constellation Energy Group, told the assembled power industry executives: “In Washington, difficult legislation is often declared dead – right before it is passed.”

Lamenting that heavy handed USEPA regulation of carbon dioxide emissions is the likely alternative should Congress fail to pass any climate change bill this session, Connaughton told the power industry leaders that in his experience USEPA rules usually accomplish about a quarter of their goals at four times the estimated cost to industry.

During the executive round table on climate change legislation, Connaughton’s sentiments in support of the Kerry/Lieberman bill were echoed by Keith Trent of Duke Energy.

New Climate Bill At Odds With Copenhagen Developments

The only really useful document coming out of the U N climate change negotiations in Copenhagen this week is a draft of the REDD draft, Reducing Emissions From Deforestation and Forest Degradation, which will be delivered today to leaders of the 200 or so nations participating in the discussions. This draft document sets up a program for paying developing nations for conserving natural assets which reduce accumulations of carbon dioxide in the atmosphere. The payments are to be funded by industries in developed nations who contribute by purchasing offsets for their carbon emissions into the atmosphere. One top U N official, when asked about the status of talks on other issues, gave a disheartening one word response: “Terrible.” U N Secretary General Ban Ki-moon, speaking of the plan to defer conclusion of a treaty to replace the Kyoto Protocol for another year, said “We do not have another year to deliberate. Nature does not negotiate.”

Meanwhile, back in Washington, Senators Maria Cantwell and Susan Collins have introduced an alternative to the climate change legislation passed earlier by the House, called CLEAR, for Carbon Limits and Energy for America’s Renewal. Directly contrary to the policy emerging in Copenhagen, CLEAR would prohibit American industries from purchasing carbon emission credits based on offsets, such as reforestation or forest conservation in other countries. Under CLEAR, the only trading in emission credits would be permitted among fuel producers, excluding both speculators and energy users from trading in carbon emission credits. The Cantwell/Collins bill would not allow large energy consumers from trading emissions credits as a hedge against rising fuel and power prices. Why is it that some elements in the United States Senate seem to be two steps behind the rest of the world when it comes to twenty first century energy policy?

Lobbyists Drafting Climate Change Treaty

International treaties are a lot like Congressional legislation: if you want a preview of what will be in them, you need to get to be close friends with a lobbyist. The lead lobbying organization at the Copenhagen climate change talks starting next week will be the Climate Action Network, an amalgam of 450 environmental, business and scientific groups worldwide. CAN is already circulating a proposed draft of the new treaty to replace the Kyoto Protocol among delegates and hangers on at the Copenhagen conference.

The CAN draft treaty comes complete with all the required legal language to embody international commitments on greenhouse gas reductions, economic wealth transfers to pay for the costs of environmental controls in developing nations, and a framework for a global cap and trade system of emissions futures. Of course, blanks in the draft exist where diplomats and other government functionaries from participating nations can fill in numbers representing each country’s emission and financial commitments, but except for some minor tweaking to satisfy this or that nation’s particular wants or needs, no government leader or group of leaders from the 192 participating nations needs to bother his or her staff with the details of drafting such an important international treaty – the draft already exists, and the tweaking will be mostly handled by lobbyist cell phone conversations, E-mails and twitter tweets from hallway to hotel room during the conference.

Anyone with a blackberry, a laptop and the price of air fare to Denmark can seek to participate in the real, though informal, corridor conversations which will finalize the details of the next climate change treaty, but only those folks who have already worked at establishing trust and confidence from world leaders is likely to have significant input. If you can stand the Danish winter weather, though, and you have a subscription to twitter, it would really be fun to eavesdrop on the conversations.

Climate Change Initiatives Still Face Major Hurdles

In a speech at MIT Friday, President Obama praised the efforts of Congressional leaders to move forward climate change legislation, ahead of hearings this week in the Senate Environment and Public Works Committee on the Kerry/Boxer cap and trade bill. Environment and Public Works Chair Barbara Boxer will preside Tuesday, Wednesday and Thursday over hearings which will include 54 witnesses from various federal agencies to be involved in administering the proposed legislation, business and industry leaders who will be affected by the measure, and analysts involved in predicting its costs to various sectors of the American economy.

Boxer hopes to mark up the bill in her Committee the first week in November, but Environment and Public Works ranking member James Inhofe is threatening to withhold the required quorum for a markup unless the complete text of the bill is released, together with details of the USEPA cost analysis of the proposal. Other government climate change initiatives also face strong opposition.

Wisconsin Congressman David Obey is heading up a contingent of Great Lakes Democrats seeking to block a new USEPA rule on ship diesel fuel sulfur content, The EPA proposal would prohibit ships operating within 200 miles of US coastlines from burning high sulfur diesel fuel. The effect of the 200 mile limit would mean all lakers would be required to burn only low sulfur diesel, significantly increasing shipping costs over competing rail and highway transportation of cargo. James Weakley, president of the Lake Carriers Association, estimated that compliance would cost $210 million annually in increased fuel costs, bankrupting 24% of the lake carrier fleet. On the opposite hand, EPA estimates the rule will prevent at least 13,000 air pollution related deaths by 2020.

Paper mill “black liquor” burned as alternative fuel at the mills, produces tax credits of $2.5 billion annually for the paper industry. An IRS memo made public last week appeared to qualify black liquor for a $1.01/gallon tax credit as a cellulosic biofuel, which would magnify tax credits for paper mills by a factor of ten. However, before that can happen, USEPA will need to approve black liquor under the Clean Ari Act, and the agency has no procedure for registering non-transportation fuels. Current technology makes it impossible to use black liquor as a motor fuel.

President Obama wants to end the existing tax credit for black liquor, and Senate Finance Chairman Max Baucus and ranking member Charles Grassley have drafted legislation to do just that.

Some Senate leaders are pressing the committees with jurisdiction over climate change legislation to report out their bills by Thanksgiving, so the bills can be combined and brought to the Senate floor before the end of this year. After that, a conference committee would have to merge any Senate bill with the measure already passed by the House, and bring it up for final votes in both chambers.

Economic Factors Could Stymie Climate Change Accord

CBO Director Douglas Elmendorf testified yesterday to the Senate Energy and Natural Resources Committee that overall employment may not be significantly impacted by cap and trade legislation, but that particular industries heavily reliant on production or consumption of fossil fuels will be hard hit as employment shifts away from them toward renewable energy sectors of the economy. "The shifts will be significant," Elmendorf said, and added that addressing climate change will require "some cost to the economy."

At the same hearing, Senator Sam Brownback of Kansas said Kansas City utilities predict a 44% increase in energy prices under the Kerry/Boxer proposal, while Senator Mary Landrieu of Louisiana said oil refinery operating cost increases under the measure could force Louisiana refineries out of business, resulting in more foreign gasoline imports. Adding to the confusion, Larry Parker of the Congressional Research Service, when asked by the committee to review various cost estimates released by federal agencies and private interests, testified that "long term cost projections are at best speculative, and should be viewed with attentive skepticism."

The same sort of troubling economic uncertainties plague the run up to the UN Copenhagen conference on climate change. The range of economist predictions regarding the world wide cost of greenhouse gas emission reduction runs from a low of $100 billion per year by 2020 to a high of $1 trillion per year. Luiz Alberto Figueiredo Machado, the lead climate negotiator for Brazil, sums up the global situation succinctly: "The level of ambition in funding is not matching up to the sense of urgency everyone now has. ... Developing countries are not convinced that the market will find them the $100 billion they need. They want guarantees."

At the same time, pledges from the governments of industrialized nations to the UN Adaptation Fund for fighting climate change have almost completely failed to materialize. And, some planned clean energy projects already on the drawing boards are being scuttled because lack of growing demand for power has scotched their project financing. Dong Energy of Denmark is pulling investment out of two planned clean coal power plants, in Scotland and Germany, though it remains involved as a design consultant on the Scotland project. E.On AG of Germany has shelved plans to build a controversial Kingsnorth clean coal power facility in southeast England.

However, one California company, eSolar Incorporated of Pasadena, has partnered with Clean Energy Solutions of South Africa to distribute eSolar's power technology in a seven nation swath across sub-Saharan Africa. Earlier this year eSolar licensed its solar thermal power plant technology to Acme Group for development of power facilities in India over the next decade.

Agriculture Industry Split On Climate Change

Echoing the deep divisions within the industrial sector of our economy over climate change legislation working its way through Congress, the agriculture industry is also split over Congressional proposals for greenhouse gas emission limits. In an effort to keep a seat at the table while legislative policy continues to be formed in Washington, the National Corn Growers Association has taken a wait and see position respecting the Kerry/Boxer Senate climate change bill. At the opposite extreme, the American Farm Bureau Federation says it will oppose the Senate version of climate change legislation even more fiercely than it lobbied against the bill which has already passed the House.

Salivating over a potential 25 billion gallon ethanol market once cap and trade legislation passes, the corn growers want to keep whatever influence they may have over provisions in a final measure respecting indirect land use analysis. Corn farmers object to including the effects of increased ethanol use outside the U.S. on denuding of tropical rain forests when computing the "carbon footprint" of corn based ethanol production. The Farm Bureaus, already disappointed with that possibility, see the legislative measures only getting worse for American farmers.

Apple Quits U. S. Chamber of Commerce Over Climate Change

The latest major business to resign from the U. S. Chamber of Commerce over the Chamber's opposition to pending climate change legislation announced it's immediate resignation in a letter suggesting the Chamber should take a more positive role in efforts to control greenhouse gas emissions. In a letter sent yesterday to U. S. Chamber of Commerce President Thomas Donahue, Apple, Inc.'s vice president for worldwide government affairs Catherine Novelli wrote that Apple "would prefer the Chamber take a more progressive stance ... and play a constructive role" in the climate change regulation process. Apple's resignation is effective immediately.

A Chamber spokesperson issued a brief response stating that it represents "the broad majority of our membership" on ths issue, but that "there are some companies who stand to gain more than others with the current options on the table."

Even The Chinese Plan To Rapidly Expand Nuclear Power Generation

While authorities in the United States endlessly debate whether to promote, allow, or prohibit construction of more nuclear power generating reactors here, as climate change legislation wends its painful way through innumerable Congressional committee hearings and mark ups, China, the world's biggest consumer of electric power generated by burniung coal, is accelerating plans to exponentially expand its national nuclear electric generating capacity. Previous Chinese plans called for 440% growth in the proportion of electricity that country generates from nuclear power by 2020, but China's newest plan calls for 770% expansion in nuclear generating capaicty by 2020.

All the while, our Congress continues to debate whether or not to define electric power produced by nuclear reactors as "renewable energy" for the purposes of computing carbon emission credit allowances. Last time I checked, nuclear power doesn't give off a single gram of greenhouse gas emissions. What gives?

Will Climate Change Legislation Promote Coal And Nuclear Power To Cut Down Foreign Oil Dependence?

Senators Joe Lieberman, Lindsay Graham and Lamar Alexander are pushing for a far larger role for nuclear power generation and new technology coal fired power plant construction as part of the climate change legislation now moving through Congress at a snail's pace. Alexander is promoting a provision which would call for construction of 100 new nuclear power plants by 2030.

Lieberman echoes Alexander's sentiments. "Without a nuclear title that's stronger than in the House climate change legislation, we're not going to be able to get enough votes to pass climate change." Lieberman, who changed party affiliation from Democrat to Independent last year after campaigning for President Obama, was stripped by his party of his seat on the Senate Environment and Public Works Committee, but he is still actively talking to committee members about developing a bill in the Senate.

Climate Change Debate Sullied By Forgeries

Congressional recess discussion of pending climate change bills will undoubtedly be highlighted by the fact that a prominent 17th Street lobbying firm in Washington, D.C. apparently sent forged letters purporting to be from two Virginia civil rights groups to Congressman Tom Perriello, Congressman Chris Carney and Congressman Kathy Dahlkemper, and advocating opposition to the pending legislation in the House. House Global Warming Chairman Edward Markey has launched an investigation into the forgeries, and Bonner's business practices. Bonner has said the forgeries were created by a temporary employee who has already been fired.

Oregon Adopts Its Own Climate Change Laws

Unwilling to await Congressional action on climate change legislation, Oregon's governor last week signed into law a package of bills designed to level off greenhouse gas emissions from that state by 2010. Included in the package of bills are measures promoting home use of solar energy, energy efficiency upgrades for homes and businesses, and power plant emission controls. Construction contractors in Oregon should look forward to increased work in these facets of the construction business.

Climate Change Bills Inch Forward

Although agricultural opposition to the climate change measures in the House and Senate is dropping off now that the USDA says the increased costs to farmers resulting from the legislation would amount to only about 0.3%, businesses trading overseas still oppose the House version's requirement for mandatory imposition of tariffs on goods from countries not participating in international climate agreements, and Senate Environment and Public Works Chairman Barbara Boxer still wants stronger consumer protections for residential ratepayers in the Senate measure.

House Narrowly Passes Climate Change Bill - Senate May Not Follow

Late last Friday night the House passed the Waxman/Markey climate change measure, as amended by the 40 page manager's amendment filed at 3 a.m. the same day, leading to extremely contentious debate on the House floor and a 61 minute long detailed review of the managers amendment by Minority Leader John Boehner which ran an hour over the debate limit set by the House Rules Committee. House tradition permits the minority leader and majority leaders to close the debate with remarks unlimited by the time rules regarding any bill.

There were 44 Democrats voting against the bill, and the 2 vote margin of passage was procured only by the first floor appearance of Patrick Kennedy of Rhode Island since he checked into rehab, a last minute vote switch by Lloyd Doggett of Texas who announced at the beginning of the day that he would vote against the bill, and finally the yes vote of Alan Grayson of Florida, who was persuaded by Energy and Commerce Chairman Henry Waxman's promise of $50 million from the funds raised by the measure to fund a National Hurricane Research Center in Grayson's Florida congressional district. Defending the Waxman - Grayson deal, which was brokered openly on the House floor during the four hours of debate, Ways and Means Chairman Charles Rangel said "Deals are a means of bringing people together and coming up with a better bill."

Such are the workings of our federal government.

On the other side of the Capitol Rotunda, there are six different Senate committees with jurisdiction over climate change legislation. Senate Environment and Public Works Chairman Barbara Boxer says her committee will finish marking up the Senate version of climate change legislation by the end of July, but Senate Majority Leader Harry Reid does not expect toe other five committees to finish work on the bill before September 18, which would mean the climate change issue will not likely reach the Senate floor until October at the earliest. Look for many more months of deal making and horse trading before a final bill emerges from the conference committee.

Contractors Association Opposes Cap And Trade Bill

With House Democratic leaders predicting passage of the Waxman/Markey cap and trade legislation tomorrow with 218 votes in favor, and President Obama throwing the full weight of his administration behind the measure, the Associated General Contractors Of America is urging its members to write their Congressmen in opposition to the bill. AGCOA, while maintaining it is in favor of "reasonable climate change policies that reduce greenhouse gas," it opposes the Waxman/Markey legislation because, according to AGCOA, the bill will increase the cost of construction, make investment in manufacturing and industrial facilities less attractive, add 77 cents to the cost of a gallon of motor fuel, and further squeeze the Highway Trust Fund, which is already falling $20 billion short of infrastructure needs in the next 12 months.

AGCOA also asserts that onerous planning requirements in the legislation will create disincentives for local and state government investment in highway and bridge projects in the future. To facilitate the efforts of its members and like minded construction businesses in opposing the legislation, AGCOA has created a web page making it easy for citizens to write their Representatives in opposition to the legislation:

http://www.bipac.net/issue_alert.asp?g=AGC&issue=GHG&parent=AGC

House Climate Change Text To Be Released Today For Friday Debate

The complete text of the Waxman/Markey climate change measure, including the deal announced late yesterday between Energy and Commerce Chairman Henry Waxman and Agriculture Chairman Collin Peterson, is expected to be released to Representatives later today, in preparation for floor debate beginning Friday. Lagging behind the House proceedings, Senate Majority Leader Harry Reid won't meet with Environment and Public Works Chairman Barbara Boxer, Energy and Natural Resources Chairman Jeff Bingaman, Foreign Relations Chairman John Kerry and Agriculture Chairman Tom Harkin to discuss the Senate version until after the Independence Day recess.

Waxman agreed with Peterson to give USDA, rather than USEPA, oversight of agricultural activities coming under the cap and trade program, and to suspend for at least five years the EPA proposal to factor in Brazilian rain forest land use changes into calculation of the carbon footprint of American corn based ethanol. The deal gives USDA veto power over a National Academy of Sciences study on the land use issue during the interim five year period. Look for House passage of the climate change bill before the Independence Day recess, and for Boxer and other Senate leaders to fall substantially in line soon after Congress reconvenes.

Climate Change Hurtles Forward In The House

Late yesterday the House Energy and Commerce Committee filed its 1,202 page climate change measure with the House Rules Committee, in preparation for beginning floor debate on Friday. Final details of ongoing negotiations between Energy and Commerce Chairman Henry Waxman and Agriculture Chairman Collin Peterson needed to generate the 218 votes required for passage of the bill in the House will be handled as a floor managers' amendment during the debate. Meanwhile, Ways and Means Chairman Charles Rangel is seeking tougher provisions respecting countervailing tariffs to be imposed against goods from countries not coming up to at least 80% of U. S. emissions restrictions.

The Waxman/Markey bill currently requires other countries to meet only 60% of U. S. emissions restrictions, and gives the President discretion to either impose countervailing tariffs, or to continue distributing free carbon emission credits to American industries. Rangel wants the extension of free credits to be the exception to the countervailing tariff rule, and to be available only with Congressional approval.

Meanwhile, the Congressional Budget Office has scored the Waxman/Markey measure, and, despite the inflammatory rhetoric of many Republican politicians against the bill, CBO has determined that the average cost of cap and trade and all the other energy independence and efficiency requirements of the bill to consumers of power and heating fuels would be about $0.48 per day, or the equivalent of one postage stamp. Finally, a University of Massachusetts study of the legislation concludes its enactment could create as many as 1.7 million new jobs.

Chairmen Still At Odds Over Climate Change

House Energy and Commerce Chairman Henry Waxman and House Agriculture Chairman Collin Peterson remain in disagreement over the details of the cap and trade provisions of proposed climate change legislation, with Peterson insisting he will not vote for the measure unless USEPA gives up its plan to use Brazilian rain forest deforestation impacts in calculating the carbon footprint of American corn based ethanol as an alternative fuel.

Meanwhile, a CBO stand alone scoring of the cap and trade provisions of the climate change proposals predicts an average increase in energy bills for American households of $175 annually, with the poorest households seeing a reduction of $40, middle class folks getting bigger bills ranging from $235 up to $340 more than their current costs, and the richest of all among us [who presumably are already heating and cooling their mansions at great expense] an increase of $245 annually. Now we know the cost of energy independence and environmental responsibility.

Clean Coal Creeps Forward, Climate Change Stumbles Once More

Energy Secretary Steven Chu announced today that his department will commit $1 billion to move forward with the Mattoon, Illinois carbon capture demonstration power plant project which stalled under Bush administration Energy Secretary Samuel Bodman. Chu promises the Energy Department will complete and review a new cost estimate for construction of the plant before making a final decision whether to break ground and build the power plant.

Comprehensive climate change legislation, however stumbled again in Congress as House Agriculture Chairman Collin Peterson prepares a comprehensive amendment to address the concerns of the National Farmers Union over certain provisions of the Waxman/Markey climate change proposal from the House Energy and Commerce Committee. NFU President Roger Johnson issued a statement asserting his organization could not support the Waxman/Markey bill unless the Agriculture Department is given authority over agricultural carbon offsets rather than USEPA, there is no cap on domestic offsets, and farmers are permitted to stack environmental benefit credits.

Across the Capitol lobby, Senate Energy Chairman Jeff Bingaman amended the Senate version of climate change legislation to give FERC power to site new power transmission lines, and give federal courts the power to override state law eminent domain jury trials and procedures should transmission line building require private property to be condemned for power line easements. And, Florida Senator Bill Nelson is still threatening to filibuster any climate change bill in the Senate unless authority for offshore drilling along Florida's Gulf Coast is stricken from the measure.

Climate Change Measure Continues To Rankle

It isn't just Republican Congressmen and Senators who are opposing the American Clean Energy and Security Act of 2009; the Obama administration's carbon cap and trade measure pending in the House. Democrat Senator Bill Nelson of Florida is threatening to filibuster the measure in the Senate unless an amendment permitting oil and gas drilling off the Florida coast is stripped from the bill. Meanwhile, on the House side, Agriculture Chairman Collin Peterson and Commerce Chairman Henry Waxman are meeting in person today to see if they can resolve an impasse between the committee staffs on the question whether EPA or the Agriculture Department should control agricultural carbon offsets. At the same time, House Republicans are calling for alternative proposal to increase domestic oil and gas production, and construction of 100 more nuclear power plants in the next 20 years.

The problem for the construction industry is this: passage of the Democrat backed cap and trade bill will promote construction in certain energy sectors, and passage of the Republican backed measure would promote construction in other energy sectors. A deadlock resulting in no legislation on the subject, however, will stall energy sector construction for the next two years.