Coal Power in a Warming World (2008)

A Sensible Transition to Cleaner Energy Options
October 2008

Executive Summary October 2008

If the United States continues burning coal the way it does today, it will be impossible to achieve the reductions in heat-trapping emissions needed to prevent dangerous levels of global warming. Coal-fired power plants represent the nation’s largest source of carbon dioxide (CO2, the main heat-trapping gas causing climate change), and coal plant emissions must be cut substantially if we are to have a reasonable chance of avoiding the worst consequences of climate change.

Treading A Dangerous Path

Yet despite the urgent need to reduce CO2 emissions, the United States is poised to increase its emissions greatly—by building many more coal plants. Virtually all of these new plants, like existing ones, would lack so-called carbon capture and storage (CCS) technology—equipment that would allow a plant to capture CO2 before it is released and then store it underground.

CCS is still an emerging technology. It has the potential to substantially reduce CO2 emissions from coal plants, but it also faces many challenges. In its current form the technology would greatly increase the cost of building and running coal plants while greatly reducing their power output. In addition, careful selection and monitoring of geologic storage (or “sequestration”) sites, and the development of regulatory standards and mechanisms to guide this process, will be needed to minimize the environmental risks associated with CO2 leakage (including groundwater contamination).

For CCS to play a major role in reducing CO2 emissions, an enormous new infrastructure must be constructed to capture, process, and transport large quantities of CO2. And although CCS has been the subject of considerable research and analysis, it has yet to be demonstrated in the form of commercial-scale, fully integrated projects at coal-fired power plants. Such demonstration projects are needed to determine the relative costeffectiveness of CCS compared with other carbon-reducing strategies, and to assess its environmental safety—particularly at the very large scale of deployment needed for CCS to contribute significantly to the fight against global warming.

Already, the United States gets about half of its electricity from coal plants that lack CCS. Building more coal plants without CCS would not only increase the risk of irreversible and dangerous climate change but also increase our nation’s dependence on a fuel whose mining and use cause other environmental damages, human health problems, and deadly accidents. Furthermore, an expansion of our coal fleet could inhibit the development of inherently cleaner, safer, and more sustainable technologies such as energy efficiency and renewable power (e.g., wind, solar).

The coal industry is even planning to develop new markets for coal in the form of liquid and gas fuels for transportation and other purposes. “Liquid coal” would increase net CO2 emissions even if the conversion process employed CCS technology, and would greatly increase CO2 emissions without it. Coal-to-gas technology could either increase CO2 emissions or decrease them depending on whether it displaces other uses of coal.

The Way to A Cleaner, Safer Future

Given the critical importance of combating climate change, all coal-related investments and policies should be judged by the ultimate standard of whether they will reduce global warming pollution at the pace and on the scale needed to avoid the worst consequences of climate change. Other considerations should include the environmental, human health and safety, and socioeconomic impacts of such investments and policies.

With these standards in mind, the United States should:

  • Increase research and development (R&D) for CCS to evaluate the technology’s potential in the fastest way possible. The United States should fund 5 to 10 full-scale, integrated CCS demonstration projects at coal-fired power plants, using different types of generation and capture technologies and different types of sequestration sites. Investing in demonstration projects is warranted given the promise this technology holds and is needed to determine whether wider deployment is appropriate, but it is premature to provide incentives for widespread deployment.

    These demonstration projects (and a detailed survey of possible sequestration sites) should be funded initially by a modest fee paid by operators of existing coal plants and later by a small portion of the revenue generated by auctions of pollution allowances under a cap-and-trade program. Support should be focused on CCS demonstration projects that actually reduce emissions from existing coal plants. In addition, the demonstration program should include the development of regulatory protocols for selecting and monitoring sequestration sites. As the technology becomes proven at commercial scale, it should be eligible to compete against other carbon-reducing technologies for funds intended to accelerate deployment.
  • Stop building new coal-fired power plants without CCS. Each new coal plant built without CCS represents a major long-term source of CO2. It is not safe to assume that new coal plants built today without CCS could cost-effectively add it later, because the cost of CCS (considerable even when included in the plant’s original design) would be much higher if added as a retrofit. The federal government should therefore adopt a strong performance standard limiting CO2 emissions from new coal plants, which will prevent the construction of any plant not employing CCS from the outset. Until such a policy is put in place, state regulators should evaluate proposed plants using a projected range of prices those plants would likely have to pay for their CO2 emissions under a cap-and-trade program.
  • Stop investing in new coal-to-liquid plants and reject policies that support such investments. Coal-to-liquid technology cannot reduce CO2 emissions (compared with petroleum-based fuels), but it could greatly increase those emissions. It should not, therefore, have any part in our energy future. All transportation fuels should be held to a low-carbon performance standard that limits global warming pollution and provides safeguards against other environmental damage.
  • Ensure that any coal-to-gas plants employ CCS and that the resulting fuel is used to offset coal use rather than natural gas use. Because coal-to-gas plants could either help or hinder our efforts to fight global warming, regulations are needed to ensure that this technology leads to CO2 reductions, not increases.
  • Significantly increase both deployment of and R&D for energy efficiency and renewable energy. States and the federal government should adopt policies such as renewable electricity standards, energy efficiency programs, and appliance efficiency standards that would accelerate the deployment of energy efficiency and renewable energy technologies. The federal government should also greatly expand its R&D and demonstration funding for these technologies (including energy storage technologies). Federal research money has long focused disproportionately on coal and nuclear power, greatly underfunding inherently cleaner technologies despite their tremendous potential. Given the urgency of the threat posed by global warming, this underfunding must be corrected.

    In combination, these deployment and R&D investments in energy efficiency and renewable energy will minimize the near-term cost of reducing carbon emissions, buy time until the cost-effectiveness of CCS can be demonstrated at commercial scale, ensure a diverse set of long-term low-carbon options, and avoid perpetuating the undue advantage coal has long had over cleaner energy technologies.
  • Adopt statutes and stronger regulations that will reduce the environmental and societal costs of coal use throughout the fuel cycle. Our use of coal, from mining through waste disposal, has serious impacts on the safety and health of both humans and our environment. Policies are needed to reduce these impacts and place coal on a more level playing field with low-carbon alternatives. This would include a ban on mountaintop removal mining and tougher standards for mercury emissions, mine safety, and waste disposal. Any federal policy that promotes coal use, including ongoing or expanded CCS subsidies, must be accompanied by such measures.
  • Put a price on CO2 emissions by adopting a strong economy-wide cap-and-trade program that, in concert with other policies, will drive emissions reductions from existing coal plants and help ensure that the price of coal reflects its true costs. The revenues generated by the auction of pollution allowances under this cap-and-trade program should be used to 1) augment deployment of the most cost-effective low-carbon technologies and 2) provide assistance to communities and workers affected by any coal plant or mine closures.
  • Ensure the transfer of low-carbon technologies to other countries—especially developing countries such as China and India—to reduce the serious threat posed by the world’s expanding use of coal without CCS. The United States should also provide financing for the international deployment of low-carbon technologies such as integrated gasification combined cycle (IGCC) and CCS (where such technologies are cost-effective relative to other low-carbon alternatives).

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