Rachel's Democracy & Health News #925, Wednesday, September 20, 2007
THE COAL INDUSTRY IS IN DEEP TROUBLE
[Rachel's introduction: As the bad news about global warming sinks in, Big Coal finds itself in decline. They have pinned their hopes on a massive federal bailout, asking Congress and the military to jump- start a new 'coal to liquids' industry -- but there are cheaper, cleaner ways to make liquid fuels.]
By Peter Montague
Big Coal is in deep trouble and wants Congress to provide a massive federal bailout. Since the beginning of 2006 at least two dozen new coal-fired electric power plants have been canceled, most for environmental reasons. As of May there were only 132 coal plants scheduled for construction nationwide, down from 137 in 2006, and even this number will likely dwindle. A small but effective citizens' movement has managed to box in Big Coal.
Last week Alan Greenspan, the nation's financial elder statesman, acknowledged that the Iraq war "is largely about oil." Big Coal is hoping instability in the Middle East will spook Congress into a $10 billion subsidy for 10 or more coal-to-liquid (CTL) plants, to make diesel fuel from coal instead of from oil. Coal-to-liquid (CTL) is Big Coal's best hope for remaining viable, but the chances of success grow dimmer each passing day.
As recently as 2004, the coal industry seemed invincible. But since then the threat of global warming has produced a scientific consensus, which has begun to produce a political consensus. 'Ban coal' is becoming a popular slogan.
** U.S. Senate Majority Leader Harry Reid (D-Nevada) has announced he opposes the construction of any new coal plants: "There's not a coal-fired plant in America that's clean. They're all dirty," Reid told reporters recently. "Unless we do something quickly about global warming, we're in trouble," he said.
** Some states have begun to force utilities to consider renewable energy sources. For example, in June the bi-partisan Florida Public Service Commission rejected a proposal from Florida Power and Light to build a coal-fired electric plant. Florida's Republican governor Charlie Crist said approvingly that the Public Service Commission's decision "sent a very powerful message" and that Florida "should look to solar and wind and nuclear as alternatives to the way we've generated power in the Sunshine State."
** In January the California Public Utilities Commission voted 4-0 to prohibit the state's three big electric companies from entering into long-term contracts with sources that emit more carbon dioxide than a modern natural gas plant. This means no coal.
** Colorado has a new law requiring its rural electric coops to get 10% of their electricity from renewable sources. And in July environmental groups in Montana sued to stop the U.S. Agriculture Department's Rural Utilities Service from giving hundreds of millions of dollars in low-cost loans to rural electric cooperatives to build a huge coal-fired plant to supply electricity to Missoula, Montana and to sell excess electricity far and wide. The case could have important consequences because rural electric coops rely on coal for 80% of their power and many have been planning new plants subsidized by low- cost government loans.
** The Sierra Club is asking U.S. Environmental Protection Agency (EPA) to reconsider all air permits issued to coal-burning plants because the U.S. Supreme Court ruled earlier this year that carbon dioxide is a pollutant that must be regulated under the Clean Air Act. The Supreme Court ruling created great uncertainty about the future of carbon dioxide regulation -- and investors dislike uncertainty more than anything else. Who knows? Perhaps the Supreme Court ruling will create some new liabilities among major carbon dioxide emitters. Coal plants emit more than a third of the nation's total carbon dioxide each year.
** The Washington Post reported September 4 that, "In July, Citigroup coal analysts downgraded the stocks of coal companies across the board." "Prophesies of a new wave of coal-fired generation have vaporized, while clean coal technologies... remain a decade away, or more," Citigroup said.
** In late August U.S. Environmental Protection Agency (EPA) announced that it is reconsidering whether to label coal ash a "hazardous waste." In 2000 EPA had decided not to apply the "hazardous" label to coal ash, but since that time the agency has discovered what many already knew, that groundwater beneath coal ash piles can become contaminated with dangerous levels of arsenic, thallium, and other toxic materials.
** EPA itself has also proposed new air regulations that would require utilities to capture more of the "fly ash" that presently flies out the smokestack -- and any captured ash must be buried in the ground somewhere. The electric utility industry presently captures roughly 120 million tons of toxic ash each year. About 38 percent of it is presently "recycled" into highways and other concrete construction projects (on the old, mistaken assumption that "dilution is the solution to pollution") but EPA's proposed new air regulations would require the addition of chemicals to the ash, making it unsuitable for use in construction. It will have to be buried in a big hole in the ground, where it will almost certainly contaminate groundwater sooner or later.
** Big Coal played a crucial role in getting George Bush elected, and Mr. Bush is loyal to a fault. The President has said he wants the nation to adopt "alternative energy" -- being careful not to say "renewable energy." Coal fits the President's definition of "alternative" energy.
The administration in August proposed to weaken the already-weak regulation of coal mining in Appalachia, but citizen groups there have promised a major fight. In Appalachia, jobs in the coal mines are being steadily replaced by machines, and the up-and-coming industry is tourism. In Appalachia, coal companies employ a mining technique called "mountain top removal," which is incompatible with a growing tourist industry. As the name implies, whole mountains are blasted into rubble with high explosive and then gigantic machines shovel the millions of tons of broken rock and soil into adjacent valleys and streams. In Appalachia between 1985 and 2001, 724 miles of streams were buried beneath mine rubble, and 400,000 acres of forest were destroyed. By 2018 the destruction will have doubled in size. Mr. Bush's lax new federal mining rules were written initially by Deputy Secretary of the Interior Stephen J. Griles, a former mining industry lobbyist who is now relaxing in a federal prison for lying to a Senate Committee.
** Coal can readily be turned into diesel fuel or jet fuel (though not into gasoline). Reliable coal-to-liquid (CTL) technology was developed in 1925 by German chemists and it provided half of Nazi German's military fuel during World War II. Unfortunately, the German process uses 5 to 7 gallons of water for each gallon of fuel it produces -- and in the U.S. much of the nation's coal lies beneath semi-arid lands in Montana and Wyoming where water is particularly precious.
Worse yet, the German process (known as Fischer-Tropsch) produces twice as much carbon dioxide per unit of energy, compared to diesel made from petroleum. From a global warming perspective, investing in coal-to-liquid plants could be a serious mistake, and Wall Street knows it. CTL plants are having trouble finding financing.
On paper, the coal industry has a plan for dealing with its massive carbon dioxide emissions. The plan -- or, more accurately, the hope -- is to "capture" the carbon dioxide and "permanently store" it deep in the earth. But our civilization has been down this road before -- we built 438 nuclear power plants worldwide without any solid idea where to "permanently store" the radioactive wastes. Almost 70 years into the nuclear enterprise, scientists still don't even have a consistent definition of "permanent storage."
If we pretend to have a "permanent" solution to the carbon dioxide problem only to discover in 100 years that our solution was full of holes, the earth will heat up rapidly, perhaps even becoming uninhabitable. Do we really want to gamble the future of humanity and of the planet on untested (and essentially untestable) schemes for "permanently" storing carbon in old oil fields, beneath the ocean, or in deep mine shafts? Have humans ever engineered anything that could be considered permanent?
** Big Coal does have one solid plan: they are spending tens of millions of dollars buying the support of representatives and senators in Congress. Big Coal is banking on the U.S. military to jump-start the coal-to-liquids (CTL) industry and thus salvage the future of Big Coal. If the CTL industry could get off the ground, U.S. coal consumption could increase from 1.2 billion tons in 2006 to 2.2 billion tons in 2030, according to Peabody Coal Company, the nation's largest coal producer. Peabody knows what it wants: if CTL gets going, the value of the company's coal reserves will increase 10-fold.
Unfortunately for Peabody, the military buys much of its fuel overseas, so a domestic CTL industry might be of limited use to them. Perhaps a military petroleum reserve makes better sense from a defense perspective. "Right now, coal-to-liquids looks to me to be pretty darn low on the reasonable list of alternatives," says James Woolsey, former director of the Central Intelligence Agency, who is part of a study team examining the Pentagon's energy options.
CTL plants are expensive. The industry estimates that building an 80,000-barrel-per-day coal-to-liquids refinery would cost $7 to $9 billion, compared with less than $2 billion to build a similar-size petroleum refinery. Despite endless lip service to "free markets," Wall Street investors are not going to gamble such large sums without a substantial return guaranteed by the government. Long-term contracts to sell expensive fuel to the Air Force is what the CTL industry has in mind. Presently the Air Force is prohibited from making contracts longer than 5 years -- so Congress would have to extend that to at least 20 years (and then come up with additional subsidies, loan guarantees, and price supports) to kick-start the CTL industry. In Congress, it is Democrats who are most keen to subsidize the CTL industry, the New York Times reports.
** A massive study of the coal-to-liquids, released by a team at M.I.T. last March [7 Mbytes PDF] estimated that it would take an investment of at least $70 billion to build enough plants to replace 10 percent of American gasoline consumption. And the M.I.T. team pointed out that past cost estimates of CTL plants have been "wildly optimistic." All this makes Wall Street investors nervous. They don't want more blather about free markets. They want substantial gains guaranteed by government.
** Virginia is a coal state, but a June 5 editorial in the Roanoke Times, titled, "Billion-Dollar Boondoggle" said, "The National Coal Council, an industry-laden advisory board, painted an even bleaker picture. It estimated that a $211 billion investment would be needed over the next 20 years to replace 10 percent of current gasoline usage.
"More important, the council found that burning the same amount of coal to produce electricity to power plug-in hybrids would replace twice as much oil without generating nearly as much greenhouse gas."
** This summer the Institute for Energy and Environmental Research (IEER) completed its report Carbon Free and Nuclear Free: A Roadmap for U.S. Energy Policy. As the name implies, the report lays out a strategy for meeting the nation's energy needs without emitting carbon and without any nuclear power plants.
The existence of this new report shifts the burden of proof onto the energy corporations and the federal government to show why we need any new coal plants, any new oil refineries, or any more nuclear plants. Has your favorite presidential candidate take a position on this report?
It is apparent that, for the first time in years, Big Coal finds itself on the defensive. At this point, their only hope is a massive federal bailout to jump-start a new industry -- coal-to-liquids, or CTL. CTL is a dirty, expensive, -- and above all, unnecessary -- solution to the nation's need for liquid fuels. This seems like a political fight we can win -- if we can just keep the Democrats in Congress from making a pact with the devil.