Grist  [Printer-friendly version]
August 24, 2006


[Rachel's introduction: Across the U.S., 153 new coal plants are
currently proposed, enough to power some 93 million homes. A recent
report from the National Energy Technology Laboratory anticipates the
construction of up to 309 new 500 megawatt coal plants in the US by
2030. Toasty weather ahead.]

By Carrie La Seur

From his rolling green soybean fields above a slow river in eastern
Iowa, Don Shatzer looks out over the farm where he was raised, across
land he and his neighbors have farmed all their lives. Below him are
the garden beds where his wife Linda grows organic vegetables to
safeguard the family's health, and the farm pond and beach he built
for the grandkids. A few miles to the west lies the city of Waterloo,
with a population of about 66,000. The sky is clear and the southwest
wind sweet on a humid summer day.

Shatzer's land is some of the most fertile in North America, part of
the fecund breadbasket on which a continent relies. And if New
Jersey's LS Power wins the fight it has started, a 750-megawatt
pulverized-coal electrical generation plant will sit right next door
by 2011.

The Shatzers, along with a dedicated coalition of local citizens, have
gathered 3,000 signatures on petitions against the proposed plant.
They have lawn signs, car decals, a growing library of informational
handouts for public meetings, and even a blog. The couple's whole
lives are invested in this land. They say they have not yet begun to

And they aren't alone. Across the nation, 153 new coal plants are
currently proposed, enough to power some 93 million homes. Of those
153 proposals, only 24 have expressed an intent to use gasification
technology, which offers a way to handle the large amounts of carbon
dioxide produced by coal combustion. A recent report from the
National Energy Technology Laboratory anticipates the construction
of up to 309 new 500 MW coal plants in the US by 2030. If NETL's
projections are correct, US coal-generation capacity will more than
triple by 2010, with corresponding air pollution and greenhouse-gas

Some of the 153 proposed coal plants will add capacity for existing
public utilities. Others, like those by developers LS Power and
Peabody, are speculative "merchant" coal plants, which ultimately
intend to sell the power -- or even the plant itself -- to the highest
bidder. Local need for power is not part of the calculations behind
these merchant plants. The concept isn't new, but the voracious
expansion plans are.

Economic projections indicate that demand for electricity will
continue to rise, so developers are gambling that the need for power
and the low price of western coal will make them very rich. Merchant-
coal developers are also finding ways to minimize the risks posed by
possible carbon regulation on the horizon. A recent Business Week
analysis approvingly cites Peabody's plan to sell ownership stakes in
its new plants to municipal utilities and electric cooperatives, along
with 30-year Peabody coal-supply contracts. If and when federal carbon
regulation pushes up the cost of coal-fired generation, a smart
developer like Peabody will have insulated itself from that expense.
The utilities and cooperatives will pay ever-higher prices to generate
electricity, passing those costs on to the consumer -- but Peabody's
profits will never falter.

The first public statement from LS Power in Iowa in late 2005
indicated that the power produced at the Waterloo plant would be sold
entirely out of state, probably in Illinois. The Shatzers, neighbor
Gail Mueller, local city council member Kamyar Enshayan, and a growing
group of local volunteers printed up and distributed a few thousand
"Why should Iowa kids breathe toxic emissions to light Chicago?"
fliers and fact sheets around Waterloo, along with petitions. The
Waterloo-Cedar Falls Courier began to give coverage to this vocal
opposition, which held its first rally on Earth Day 2006.

LS Power is not saying why it came to Waterloo, but local demographics
paint a poignant picture of a community desperate for any form of
economic development and already paying the price for industrial
pollution. Iowa census numbers pinpoint some of the state's highest
poverty rates in Waterloo and Council Bluffs (the site of another coal
plant already under construction). East Waterloo, the neighborhood
nearest the plant, has a large African-American population and high
asthma rates. The county has nearly five times the state average of
criteria air-pollutant facilities per square mile.

The Waterloo economic development agency, which courted LS Power from
the outset, began to push back against local activists by securing
union endorsement for the plant. LS Power, its finger in the wind,
stated for the first time at a public meeting in May that it planned
to sell most of the power in Iowa, although Iowa utilities have
publicly stated that they see no immediate need for this new capacity.
No details of power purchase contracts or clean air technologies have
been released regarding the Waterloo plant at this time. Utility
executives unaffiliated with the LS Power proposal speculate that the
plan is to develop the proposal to the point where it can be sold at a
hefty profit to an Iowa utility. Locals are left wondering what their
economic development agency has gotten them into, and why it backs
this proposal so fiercely.

Another LS Power proposal, for an 800 MW plant in Riesel, Texas, has
also drawn fire. Although the plant recently received permits from the
state, appeals have been filed and a fight rages on in the media.
Seventeen additional coal-fired power plants have been proposed for
Texas over the next five years, many of them near areas that already
exceed safe levels for airborne pollutants. Criticism of the LS Power
project has centered around the developer's status as a merchant-coal
speculator, the fact that it has never operated a coal-fired
generation plant, and the failure to embrace gasification technology.
Even the conservative Waco Tribune-Herald recently printed an
editorial urging state regulators to embrace gasification as the
technological standard for new coal plants.

A look behind the scenes of LS Power may be instructive as to the kind
of coal-plant operator the company will be. In the most recent annual
report on file with the Securities and Exchange Commission for LS
Power Funding Corporation, the corporation's listed executive officers
were all also executive officers of North Carolina-based Cogentrix, a
longtime player in the coal power game. Cogentrix has a checkered
history in coal-plant management, including failure to pay taxes in
Mississippi, corruption scandals in India, a bankrupt subsidiary, and
selling off plants it has built in a number of locations.

Those who follow the twists and turns of corporate PR might also
wonder what role Goldman Sachs plays in the Cogentrix/LS Power coal-
development boom. According to its own website, in 2003 Goldman Sachs
bought 100 percent of Cogentrix. In 2005, Goldman Sachs became the
first global investment bank to adopt a comprehensive environmental
policy. The firm has made a commitment to reduce its indirect
greenhouse-gas emissions by 7 percent from its leased and owned
offices by 2012, and to "report the annual greenhouse-gas emissions
from [Cogentrix] plants, and... continue to work to reduce direct
carbon emissions from them whenever practical." Critics say Goldman
Sachs' public stance regarding climate change seems inconsistent with
the position LS Power has taken in Texas, rejecting gasification as an
unreliable and ruinously expensive technology not ready for prime

There is also an irony in the new proposals popping up in Texas and
Iowa: the two states were leaders in renewable-energy development long
before energy independence became a national buzzphrase. Texas has one
of the most successful renewable-energy credit trading programs in the
country and a booming wind-power industry. Iowa has the highest per
capita amount of installed wind capacity of any state in the country.
Both states have made significant strides toward integrating biofuels
into their fuel markets, far beyond what many states considered to be
more progressive have accomplished.

Their leaders talk the talk on renewable energy and energy
independence; the merchant coal boom will be the test as to whether
Iowa and Texas can really walk the walk of a carbon-neutral,
sustainable energy future. Or, like so many other states, will they be
taken in by the promise of quick cash and cheap kilowatts, to be paid
for by generations to come?

Back at the Shatzer farm, there is work to do, as always. LS Power has
insisted on negotiating one-on-one with elderly local landowners for
land purchase options. On some farms, company representatives have
allegedly persuaded family members to talk an elder into signing, or,
when an option has nearly expired, threatened to buy the land and
evict the farmers if they don't extend the option. Many landowners are
afraid to express any public sympathy with the project opposition for
fear of losing their land.

These are old-style coal-industry tactics, Waterloo's amateur
advocates are learning. It will be an uphill battle -- but unlike the
developers, the Shatzers and their friends can't just move to the next
town if things go wrong here. Their equity is in land, community, and
family, things that don't move easily. On Wall Street, Goldman Sachs
is making self-congratulatory pronouncements about its climate-change
policies, but in Iowa the reality is clear. There is nothing to do but

Carrie La Seur is a lawyer and law professor in Iowa who has provided
pro bono counsel to the Waterloo citizens' coalition.