Old King Coal: the APA Unloaded

For those of you with climate change heartburn, get ready for some legislative Tums. Last week we examined the parts of the American Power Act that would create a carbon capture and sequestration tech race. This week we'll be exploring the second part of Senator Kerry, Lieberman and Graham's coal project: commercial CCS deployment. There are some aspects of this plan that are frankly troubling; but it is still light-years ahead of the earlier section on off-shore drilling.  Try not to shoot sparks when thinking about that near H2O. It might explode.

Like their ideas on nuclear energy, the good Senators Kerry, Lieberman & Graham seem to think coal technology will only get safer and safer over time. They're already planning the ways they can sell it. Here's the problem: There is nothing to make this scheme a reality except money and faith. It's a little like the sub-prime mortgage bubble, only this time with "clean energy technology." If people believe that clean coal and safe nuclear technology will never stop advancing, we may end up loaning these utilities time and money that they will not or can not pay back. If energy companies take out a loan from you that they can't return with safe energy, and they default, no TARP in the world will be big enough to cover us.

Clean Coal: Fairy Tale or Fact? (important sections in bold)

Section 1431— Unlike a fable, this may get technical rather quickly, so please bear with me. The framework for reducing fossil fuel emissions in coal power plants hinges on the government's ability to create viable incentives for these utilities to reform; to move away from practices that have worked for them these past hundred years or so. As is, there is very little prod to this stick and carrot operation.

No later than two years after the enactment of the APA the Administrator of the Carbon Capture and Sequestration program must regulate a carbon marketplace that would provide commodities of carbon allowances per ton of carbon sequestered. Only energy companies that reduce their emissions by more than 50 percent before 2019 would be eligible to receive and trade in these allowances.  (If you're confused about what exactly is being "allowed," when there has been no mention of any restrictions yet— trust me, I know that sinking feeling. But there are economy-wide caps on emissions coming soon, to a post near you).

Under this marketplace, companies that reduce their emissions would be given an allowance to sell in auctions to other utilities. This allowance increases with every percentage point reduced until a company reaches 90 percent reductions: So a 60 percent reduction would sell for $60 per ton, 75 percent at $75 a ton, and so on. At 90 percent there is a super-saver bonus, and the allowance jumps to $96 per ton of carbon sequestered.

Timing is everything for this program, and the amount of money a utility can earn in these auctions degrades over time. Electric Generating Units that reduced emissions by 90 percent by 2017 would receive an additional $10 allowance per ton of carbon reduced; however, EGU's that do not cut carbon emissions in half by 2015 would be ineligible for this bonus allowance.

For fine tuning of this marketplace, see the next section.

Section 1432— Amends the Clean Air Act to allow the Comptroller General of the U.S. to make a study of any barriers in the way of full deployment of CCS technology. Additionally, the Comptroller would also be allowed to advise the Administrator to increase the allowances listed above if the investigation indicated it would increase the rate of CCS deployment.

Section 1441— Amends the Clean Air Act to create performance standards that apply to new coal plants. Like the allowance system, these coal-fired power plants would be required to reach emissions standards that become increasingly stringent. EGU's that begin operating between the enactment of the APA and 2019 would have to reduce emissions by 50 percent within four years, or by 2020, whichever comes first.

Plants approved after 2020 would be held at a 65 percent cut in emissions once operations began.

As for the old coal kilns, this section requires the creation of a task force within a year of the APA's enactment to make recommendations on the best way to send them off to the farm. The task force would include the EPA, the DOE, the DOT, and state and public utility commissions. This team of acronyms would investigate current laws and standards for coal plant retirements, as well as tax incentives and allowances, in order to make the sweetest transition possible to cleaner facilities. All federal agencies that receive recommendations by this task force would be obliged to follow them.

There are two raging ideals here that have a hard time finding detente: moving as far from extracting, refining, and burning coal as fast as possible vs. patching the system we have, even at the loss of declining ecosystems. There are few people entirely to one side or the other, and realistically neither side has a snowball's chance in Louisiana of dominating policy. If the middle path that is likely to form has a chance, it will only work with vigilance and real commitment to the time-lines— call them deadlines— we set for ourselves.

Next week: Transportation and efficiency gain traction.