Capturing C[O.sub.2]: advances in technology could make 'clean coal' a reality, but can we afford it?

• Author: Andersen, Glen

A lot of factors will shape America's energy future, and the cost of the technology needed to reduce coal emissions is among the most important.

The capture and storage of carbon dioxide from coal plants has been demonstrated at a number of pilot projects. The challenge is whether this technology can be expanded to be competitive on a commercial scale, and whether the nation is willing and able to invest the resources to do so.

Generating electricity produces 40 percent of the nation's greenhouse gas emissions and coal-fired power plants are responsible for the majority of them. There are many different types of greenhouse gas emissions, but C[O.sub.2] is the one most produced by human activity.

Since coal produces nearly half the nation's electricity--and more than 75 percent in many states--the federal government, utilities, states and many interest groups want to find a viable way to capture carbon dioxide from coal and permanently store it underground. C[O.sub.2] emissions are a concern for many people who believe they contribute to climate change.

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"Carbon capture and sequestration will be necessary to alleviate concerns in the public, so investing in this technology is a good Glen Andersen directs the Energy program at NCSL. move for any state with coal reserves," says Illinois Representative Dan Reitz.

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The future of carbon capture and storage, however, is uncertain. In the past two years, numerous coal-fired power plants have been cancelled, and many will be phased out because of the cost of meeting new clean air requirements, local opposition, uncertainty about the costs of potential greenhouse gas regulation and lack of financial support. If a carbon tax, cap-and-trade program or EPA efforts to reduce greenhouse gases are established, the costs of operating coal-fired power plants are likely to increase. Since coal plants last 40 to 60 years, lenders and investors realize that higher operational costs, even if they occur 10 or 15 years in the future, could hurt the profitability of plants and the ability of plant owners to pay back loans.

"The biggest impediment to new power sources is fear of additional costs in the future," says Reitz. "People are afraid to upgrade or build new plants only to find out they'll have to spend more money in five years if rules change."

These concerns are especially serious in states that export or are highly reliant on coal. Colorado, Indiana, Iowa, Kentcuky, New Mexico, North Dakota, Ohio, Utah, West Virginia and Wyoming get more than 75 percent of their electricity from coal, while 13 others get between 50 and 75 percent from coal. They often have cheaper electricity than much of the nation, and are likely to see the largest effects from policies that make coal-fired electricity more costly.

Even without new policies on greenhouse gas emissions, existing environmental regulations on other emissions, including mercury and sulfur dioxide, are making coal plant operations more expensive. A recent forecast by ICF International, a global consulting group, predicted the costs of upgrading to meet these regulations, even without new climate policy, would lead to the closing of up to 20 percent of U.S. coal plants by 2020 since owners are likely to find new natural gas plants to be a cheaper alternative.

State lawmakers will have a big role to play in this energy debate. Some already have jumped in and passed legislation creating incentives for projects to explore carbon capture, set C[O.sub.2] emission standards for their state and passed climate bills. Others have passed resolutions against federal action to regulate greenhouse gas emissions.

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