making sense of the "coal rush": the consequences of expanding america's dependence on coal

7/31/2019 Making Sense of the "Coal Rush": The Consequences of Expanding America's Dependence on Coal

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Environment TexasResearch & Policy Center

Making Sense ofthe Coal Rush

The Consequences of Expanding

Americas Dependence on Coal


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Travis MadsenRob Sargent

Environment TexasResearch & Policy Center

July 2006

Making Sense ofthe Coal RushThe Consequences of Expanding

Americas Dependence on Coal


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The authors thank Erik Shuster of Science Applications International Corporation and theNational Energy Technology Laboratory for sharing information on coal-fired power plantproposals. In addition, the authors are grateful for the input of Bruce Nilles and DaveHamilton of Sierra Club, John Barth of Western Resource Advocates, Joe Lovett of theAppalachian Center and clean energy advocates at PIRG-affiliated organizations across thecountry. Thanks to Tony Dutzik, Elizabeth Ridlington and Susan Rakov at Frontier Groupfor editorial assistance.

The views and opinions expressed here are those of the authors and do not necessarilyreflect the views of our funders or those who provided editorial review. Any factual errorsare strictly the responsibility of the authors.

Copyright 2006 Environment Texas Research & Policy Center

Environment Texas Research & Policy Center is a 501(c)(3) organization. We are dedi-cated to protecting Texas air, water and open spaces. We investigate problems, craft solu-tions, educate the public and decision makers, and help Texans make their voices heard in

local, state and national debates over the quality of our environment and our lives.

Frontier Group is the research arm of the state PIRGs. Frontier Group provides researchand policy analysis designed to support state-based efforts toward a cleaner, healthier andmore democratic society.

For additional copies of this paper, see: www.environmenttexas.org

Previous papers in this series include: Making Sense of Americas Oil Needs: A Sustainable, State-Based Response to Dwindling Oil

Supplies, 2005, available at www.newenergyfuture.org. Making Sense of Hydrogen: The Potential Role of Hydrogen in Achieving a Clean, Sustain-

able Transportation System, 2004, available at www.newenergyfuture.org.

Acknowledgments


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Table of Contents

Executive Summary 4

Introduction 7

The Coal Rush 9Americas Energy Crossroads 9A Return to Coal? 10

Consequences of the Coal Rush 13Increased Global Warming Pollution 13

Risk for Energy Companies, Shareholders, Ratepayers and the Economy 19Mining Damage to Americas Land and Water 26More Health-Threatening Pollution 27Lost Opportunities for Clean Energy 28

A Better Alternative 35Limit Global Warming and Health-Threatening Pollution from Power Plants 35Prevent the Construction of Any New Coal-Fired Power Plants 36Eliminate Subsidies for Coal and Other Fossil Fuels 37Prioritize Cleaner and Safer Alternatives, Including Efficiency

and Renewable Energy 37

AppendicesA: Global Warming Impacts by State 40

B: Lost Opportunity Costs by State 41C: List of Proposed Coal-Fired Power Plants 42D: Conventional Pollution Increase by State 48

Notes 49


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4 Making Sense of the Coal Rush

Executive Summary

Energy companies have proposed build-ing a fleet of new coal-fired powerplants across America. As of June

2006, power producers have approximately150 new coal-fired plants on the drawingboard, representing a $137 billion invest-ment and the capacity to supply power to96 million homes.

If energy companies succeed in build-ing even a fraction of these new power

plants, it would have major impacts onAmericas environment and economy. Fur-ther, this coal rush would consume in-vestment dollars that could otherwisepromote more sustainable energy sources.

Fortunately, alternatives exist that wouldreduce or eliminate the need for new coal-fired power plants. By funneling investmentinstead into improvements in energy effi-ciency and expansion of renewable energy,the U.S. can avoid the potential impacts ofthe coal rush and improve the economy,

the environment and public health.

The coal rush would increase U.S.global warming pollution at a time whenaggressive action is needed to reduceemissions.

To avoid the worst consequences ofglobal warming, scientists believe thatthe U.S. needs to stabilize emissionswithin a decade, begin reducing themsoon thereafter, and cut global warm-ing pollution by as much as 80 percentby the middle of this century. Newcoal-fired power plants will take us inthe wrong direction.

If all of the proposed plants are built,

they would increase U.S. carbondioxide pollution from electricitygeneration by more than 25 percentabove 2004 levels. This would beequivalent to a 10 percent increase intotal U.S. emissions and a 2.4 percentincrease in world emissions.

The vast majority of proposed plantsuse traditional coal-burning technol-ogy, which emits massive amounts ofcarbon dioxide. Only 16 percent of the

proposed plants would use coal gasifi-cation technology and could somedaybe equipped to capture and storecarbon dioxide. Even these plantswould require costly future upgradesto avoid large releases of globalwarming pollutants.


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Executive Summary 5

Increasing Americas dependence oncoal carries significant economic risksfor power generating companies, theirshareholders, utility ratepayers, and theeconomy as a whole.

The growing urgency of addressingglobal warming makes limits oncarbon dioxide pollution a virtualcertainty for the future. As these limitsare set, coal-fired power plants willdecline in value compared to less-polluting resources. Additionally,companies or ratepayers may be forcedto pay the significant cost of retrofit-ting the new plants to capture andstore carbon dioxide.

Companies that build coal-fired power

plants today knowingly and signifi-cantly contribute to the public health,environmental and property damagethat will result from global warming.Such companies face potential legalrisks, similar to the lawsuits filedagainst the tobacco industry in the lastdecade.

The new coal-fired power plants, ifbuilt, will strain the U.S.s ability toextract and deliver enough coal to keepthem running. U.S. coal demand

would increase by over 30 percent if allthe plants are built, requiring addi-tional mines and expanded railroadinfrastructure to move the coal aroundthe country.

Mining additional coal would damageAmericas land and water.

According to the U.S. Department ofEnergy, currently operational coalmines have enough recoverable coal tosupply the power industry for only 18years at current levels of demand (andfewer years if demand increases).

While the U.S. has enough coalsupplies to sustain current levels ofconsumption for nearly 200 years,extraction of that coal is likely to

damage wide areas of land now usedfor agriculture, housing and recre-ation, while fouling water supplies andharming wildlife.

Between 1985 and 2001, mountaintopremoval coal mining in Appalachiacut down more than 7 percent of theregions forests and buried more than1,200 miles of streams.

In 2004, coal mines across the U.S.reported the release of more than 13million pounds of toxic chemicals,including over 300,000 poundsdumped directly into streams andrivers.

The coal rush would increase

health-threatening air pollution. If all of the planned coal-fired power

plants are built, they would increasetotal pollution from power plants andother industrial facilities on the orderof 1 to 3 percent, including:

120,000 tons per year of sulfurdioxide, a major ingredient in fineparticle pollution, linked to prema-ture death and respiratory andcardiovascular disease;

240,000 tons per year of nitrogendioxide, a major ingredient in thephotochemical smog that plaguesmany cities across the U.S. onsummer days; and

3 tons per year of mercury, aneurological toxicant that contami-nates fish in rivers, lakes and theoceans.

The coal rush would consume in-vestment dollars that could be used topromote safe and sustainable energysources, including energy efficiency andrenewable energy.

Building all of the coal-fired powerplants on the drawing boardwould require capital investment of


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$137 billion. On top of that, energycompanies would have to spend morethan $100 billion to operate, maintainand fuel the plants and build transmis-sion lines.

If that $137 billion in capital wereinstead directed toward energy effi-ciency, it could reduce electricitydemand in 2025 by about 19 percentcompared to a business-as-usualforecast (1 million GWh/year),without additional investment fortransmission and distribution. In otherwords, energy efficiency could com-pletely alleviate the need to build anynew coal-fired power plantsand doso for less cost and with zero globalwarming pollution.

Directed instead toward renewableenergy, that $137 billion could develop110 GW of the best wind resources inthe western U.S. with a cost of elec-tricity comparable to conventionalcoal. Alternatively, the money couldbuild over 50 GW of promising zero-emission solar technologies likeconcentrating solar thermal powerplantspredicted to provide electricityat prices competitive with coal within

the next 10 years, with the potential tosupply energy day or night usingthermal storage.

Wind, solar, tidal, geothermal andbiomass resourcescoupled withenergy-saving renewable technologiessuch as passive solar heating andlighting, solar hot water heating andgeothermal heat pumpscouldprovide a large and growing share ofAmericas energy. A consistent empha-sis on renewables in public policy and

in research and development fundingcould bring many of these technolo-gies into the mainstreambut not ifAmericas investment dollars are stakedon coal.

Citizens and government should actto stop the coal rush and instead pur-sue a cleaner, more sustainable path tosatisfying Americas energy needs.

States and the U.S. as a whole shouldimpose strong caps on global warmingpollution from power plants at levelsthat are sufficient to minimize humaninterference with the global climateon the order of 80 percent below 1990levels by mid-century.

States and the federal governmentshould not allow any new coal facilityto be built, unless:

Allthe costs of coal-fired powerplantsincluding the societal costof global warming and the probablecost of additional pollution controlrequirementsare fully consideredwhen utility investment decisionsare made;

Gasified coal with carbon storage isdemonstrated to be the least-costway to reduce global warmingpollution consistent with climatestabilization goals, compared toother clean resources that couldsatisfy or reduce energy demand,

such as renewable energy andenergy efficiency; and

Any new gasified coal plants withcarbon storage are used to replaceold, inefficient coal-fired powerplants, not augment them.

Public funds should not be used tosupport the construction of any coal-fired power plants.

Leaders at all levels of governmentshould take aggressive action to encour-

age the development of cleaneralternatives to coal-fired power plants,particularly measures to improve energyefficiency and encourage the develop-ment of clean renewable resources.


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Introduction 7

Introduction

America is at an energy crossroads.Across the country, policy makers,experts and ordinary Americans are

debating which path to take to satisfy ourenergy needs. When it comes to electric-ity, for example, should we rely on naturalgas, which is relatively clean-burning butalso increasingly scarce? Or should we castour lot with nuclear power, which is bothexpensive and risky? What about clean

coal, which television ads tell us can beenvironmentally friendly after all? Or isthere some way to shift more of our energyproduction to clean renewable sources likesolar and wind power?

This energy debate is taking place in board-rooms and classrooms, at kitchen tables andon the Internet. But while the Americanpeople are talking, utilities and power gen-erators are laying the groundwork for theirown vision of Americas energy future.

And that future looks an awful lot like

the past.It is a future of dozens, perhaps hundredsof big coal-fired power plantsmost ofthem using traditional dirty coal technol-ogysprouting up across the country, fromFlorida to Washington state and from Texasto Pennsylvania.

It is a future of continued mercury andsoot pollution from power plant smoke-stacks, of landscapes denuded and water-ways fouled by mining operations, and ofmassive emissions of the greenhouse gasesthat have already begun to warm the globeand that threaten unimaginable harm to ourenvironment, economy and society in theyears and decades ahead.

It is a future in which Americans feel

constrained by the bad policy decisions andbad investments of the pastunable tomake the transition to a cleaner, moresustainable energy system that is moreprotective of the environment and theeconomy.

It is also the future toward which we areheadedunless we act now.

The recent boom in proposals for coal-fired power plantsthe coal rushthreatens to undermine efforts to protectthe environment and slow global warming,

and could saddle the nation with a widerange of economic risks.But such a path is not inevitable. America

has at hand a variety of better solutions toits energy problems. Technologies exist thatcan dramatically reduce our consumptionof energy, while at the same time drawing


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more of that energy from clean, renewablesources. Pursuing such a new energy fu-ture would free America from much of itsdependence on fossil fuels, allow the na-tion to do its part to reduce global warm-ing, create jobs, and safeguard Americas

future economic and national security.This paper describes the dangers posed

by the coal rush and proposes policy

changes and other actions that can head offan ill-considered rush to build coal-firedpower plants, while putting America on amore sensible energy path. Policy-makersand all Americans need to understand theimplications of the coal rush and take

action to stop it, before the nation is irre-vocably set on a road to the wrong energyfuture.


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The Coal Rush 9

Americas EnergyCrossroads

America faces tough choices abouthow the nation will serve its elec-tricity needs.

Should the nation continue consumingelectricity along a business as usual path,

demand for electricity will grow dramati-cally over the next several decades. Fore-casts by the U.S. Energy InformationAdministration (EIA) predict that electric-ity consumption will grow 45 percent in thenext 24 years.1 (See Figure 1.)

In the past, policy-makers have takengrowing demand as a given, and have encour-aged various strategies to serve that de-mand. Many of those approaches imposed

The Coal Rush

0

1,000

2,000

3,000

4,000

5,000

6,000

2005 2010 2015 2020 2025 2030

Figure 1: Projected U.S. Electricity Demand2

ElectricityDemand(BillionkWh)


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unnecessary costs that are still affecting ustoday.

For much of the 20th century, utilitiesmainly attempted to meet increasing de-mand by building coal-fired power plants.3

For much of this period, there was little

understanding of how power plant pollut-ants such as mercury, sulfur dioxide andsoot could affect human health and the en-vironment. And until the late 1980s, therewas very little understanding of the impactof carbon dioxide emissions on the globalclimate. Today, we continue to grapple withthe public health and environmental prob-lems caused by those power plants, whileratepayers have been called upon to financethe installation of pollution control equip-ment to reduce environmental impacts.

During the 1960s and 1970s, utilitiesresponded to projections of rapid demandgrowth by encouraging the construction ofnuclear power plants. Despite initial prom-ises that nuclear power would be too cheapto meter, nuclear power turned out to bean economic disaster, requiring well over$100 billion in government subsidies, caus-ing electricity rates in states that investedheavily in nuclear power to skyrocket, andsaddling ratepayers with billions of dollarsin capital costs which are still being paid

off today.4

In addition, nuclear reactorshave created more than 50,000 tons of toxic,radioactive waste and continue to pose sig-nificant threats to public health and safety.5

In the 1990s, the answer was natural gas.The boom in natural gas power plant con-struction was in part predicated on the no-tion that natural gas supplies would remaincheap for the foreseeable futurejust ascoal is being portrayed as an infinitely avail-able, cheap source of energy today. It didntturn out that way. In recent years, natural

gas shortages and price spikes have rever-berated throughout the economy. Naturalgas prices have doubled in recent years,squeezing the pocketbooks of consumersand the profit margins of industry; both ofwhom have become increasingly dependenton natural gas for electricity, heat, hot

water and as a raw material.6 Limited sup-plies of natural gas make it clear that drill-ing our way out of the natural gas crisis isnot an option.7

Now, the energy industry is turning backto coal.

A Return to Coal?At first glance, coal appears to face none ofthe problems affecting natural gas. It isdomestically available and relatively abun-dant. Compared with nuclear technology,coal-fired power plants have a simpler per-mitting process and do not produce dan-gerous radioactive waste.

Hoping to take advantage of these per-ceived advantages, utilities and power gen-erators are proposing to build a vast newfleet of coal-fired power plants acrossAmerica. As of June 2006, utilities haveapproximately 150 new coal-fired powerplants on the drawing board, representing

AndyOlsen,iStockphoto.com


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The Coal Rush 11

$137 billion in investment and the capac-

ity to supply power to 96 million homes.8(See Tracking Coal-Fired Power Plants,above.) If all of these plants are built, itwould increase Americas coal-fired genera-tion capacity by nearly 30 percent.9

Plants have been proposed in 42 states.11

(See Figure 2.) At least one plant is pro-

posed in every state west of the Mississippi.Texas leads the pack with 17 new coal unitsproposed, with Illinois following closelybehind at 14. Other major locations forproposals include Kentucky (8), Nevada,Ohio and Pennsylvania (7 each), and

Tracking Coal-Fired Power Plants

To develop the list of coal-fired power plants on the drawing board, we beganwith a database of proposals compiled by the U.S. Department of Energy, datedMarch 2006.10 The plants listed in the database are at various stages in the approvalprocesssome are only proposals and may never move beyond that stage, some arein permitting, and some are approved and already under construction. We updatedthe list with changes we were aware of as of June 2006. These changes may not befully comprehensive; it is possible that we are not aware of new proposals or changesin the status of existing proposals. The full list of proposed facilities, sizes and loca-tions can be found in the appendix to this report on page 42, where additions anddeletions to the DOE list are indicated.

Over 150 coal-fired power plants could be sprouting up across the country, from Florida to Washing-ton state and from Texas to Pennsylvania. Numbers reflect proposals for new plants as of June2006not all of which will necessarily move forward. In addition, 3 plants have been proposed inAlaska and 4 proposals do not yet have locations.

Figure 2: Proposed New Coal-Fired Power Plants by State13


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Florida, Montana and Wyoming (6 each).12

Not all of these proposals are equallylikely to move forward. Regulatory hurdlesor shifting investment decisions by powergenerators could mean that some of these

plants will never move past the proposalstage, even without opposition.

However, some of these plants have al-ready been approved and are under con-struction. Tuscon Electric Power isbuilding a 400 MW plant in Springerville,Arizona. LS Power Development startedconstruction on a 665 MW plant inOsceola, Arkansas this March. Xcel Energybroke ground on a 750 MW supercriticalcoal-fired plant in Pueblo, Colorado at theend of 2005. Mid-American Energy is

building another supercritical facility inIowa, scheduled to begin operation in 2007.Omaha Public Power District is now build-ing a plant in Nebraska. Santee Cooperrecently began construction of two plantsin South Carolina. Wisconsin utilities havealready begun construction on two new

The Frontier Line

In 2006, seven utility companies and four governors of Western states announced

support for a massive new transmission line that would carry electricity fromthe coalfields of Wyoming to highly populated areas in California and Nevada.17

The project, known as the Frontier Line, would cost $4 to $6 billion and carryas much as 14,000 MW of power from Wyoming and Utah.

Separately, the Governors of California and Wyoming pledged to pursue in-vestments in coal gasification plants. However, there is no legal limit to howmuch conventional and dirty coal energy the Frontier Line could carry. In 1996,the Federal Energy Regulatory Commission (FERC), which regulates the inter-state transmission of electricity in the U.S., issued an order requiring that theowners of transmission lines provide open, non-discriminatory access to theirlines in order to facilitate the development of wholesale electric markets.18 Be-cause of this policy, the Frontier Line could serve as a conduit to support a huge

expansion of conventional and dirty coal plants, even if proponents claim it willcarry energy from wind and clean coal.

plants and two new plants are under con-struction in Wyoming.14

The number of proposals has increasedrapidly in the first half of 2006. In April,TXU Corporation announced plans for

eight new coal-fired power plants in Texas,in addition to three previously announcedprojects. In total, TXU plans to invest $10billion in 8,600 MW of coal-fired capac-ity.15 In June, NRG Energy announced sixnew coal-fired projects in Connecticut,Delaware, Louisiana, New York and Texaspart of a $16 billion expansion plan.16

In addition, energy companies have be-gun planning transmission infrastructure tosupport many of the planned coal-firedplants, enabling electricity from plants in

the center of the country to serve largecoastal markets. (For example, see TheFrontier Line above.)

If even a fraction of the proposed newpower plants are built and start operation,Americas environment and economy willface serious consequences.


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Consequences of the Coal Rush 13

Construction of new coal-fired powerplants on such a massive scale wouldextend U.S. overdependence on coal

for another half-century, with major im-pacts on Americas environment andeconomy. It would commit the U.S. to anenormous increase in global warming pol-lution; risk financial harm to individualpower companies, ratepayers and the U.S.economy; damage wide areas of land and

foul water supplies with mining waste; andcreate health-threatening air and water pol-lution. Furthermore, staking Americas en-ergy future on coal would consume billionsof dollars that could otherwise promotemore sustainable energy sources.

Increased Global Warming

PollutionA new fleet of coal-fired power plants willdramatically increase U.S. global warmingpollution, increasing the severity of theimpact of global warming on current andfuture generations of Americans.

Global Warming Will Havea Severe Impact

Global warming threatens to significantlyincrease temperatures across America andaround the world, causing dramatic changesin our economy and quality of life. Vastamounts of scientific evidence show thatglobal warming is happening, and that hu-man activity is the primary cause.19

By burning fossil fuels, humans havechanged the composition of the atmo-sphere. As a result, it now traps more ofthe suns heat near the Earths surface. Theleading culprit is carbon dioxide, the prod-uct of fossil fuel combustion. Carbon diox-ide levels in the atmosphere are nowincreasing faster than at any time in the last20,000 years, and are likely higher now thanat any point in the last 20 million years.20

As carbon dioxide levels have risen, glo-bal temperatures have increased. In the lastcentury, global average temperatures roseby about 1.4 degrees Fahrenheitan un-precedented event in the past thousandyear s.21 The 1990s were the warmestdecade in a millennium and 2005 was thehottest year in over a century of record-keeping.22

Consequences of the Coal Rush


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This warming trend cannot be explainedby natural variables such as solar cyclesor volcanic eruptions. However, it doescorrespond to models of climate changebased on human influence.23

The Intergovernmental Panel on Cli-

mate Change (IPCC) predicts that globalaverage temperatures could rise by between2.5 and 10.4 F by the end of the century,depending on how society responds to thethreat.24 Recent research suggests that theIPCC may have underestimated the extentto which feedback loops could increase thewarming effectmeaning that tempera-tures could actually rise by as much as 14F by 2100.25

Climate scientists warn that the worldfaces dire environmental consequences

unless we find a way to quickly and rapidlyreduce our emissions of global warmingpollutants.

Many scientists and policy-makers (suchas the European Union) recognize a 3.6 F(2 Celsius) increase in global average tem-peratures over pre-industrial levels as arough limit beyond which large-scale, dan-gerous impacts of global warming wouldbecome unavoidable.26 Even below 3.6 F,

significant impacts from global warming arelikely, such as damage to many ecosystems,decreases in crop yields, sea level rise, andthe widespread loss of coral reefs.27

Beyond 3.6 F, however, the impacts ofglobal warming become much more severe,

including some or all of the following im-pacts:

Eventual loss of the Greenland icesheet, triggering a sea-level rise of 7meters over the next millennium (andpossibly much faster)28 ;

A further increase in the intensity ofhurricanes;

Loss of 97 percent of the worlds coralreefs;

Displacement of tens of millions ofpeople due to sea level rise;

Total loss of Arctic summer sea ice;

Expansion of insect-borne disease;

Greater risk of positive feedbackeffectssuch as the release of methanestored in permafrostthat could leadto even greater warming in the future.29

iStockphoto.

com


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electricity-related carbon dioxide pollu-tion by more than 25 percent above 2004levels (an increase of 590 million metrictons).42 (See Figure 4.) This translates to a10 percent increase in overall U.S. carbondioxide pollution (compared to 2004) and

a 2.4 percent increase in global emissions.43Assuming plants built during the coal rushhave 60-year lifetimes, they would emitover 35 billion metric tons of global warm-ing pollution.

The New Coal-Fired Power Plants:Same as the Old Ones

Proponents of coal as an energy source of-ten point to coal gasification technology asan environmentally responsible way to usecoal, with lower overall pollution. For ex-

ample, General Electric has been runninga series of television advertisements pro-moting its clean coal technology as a wayto solve Americas energy problems.44

Gasified coal technology, such as inte-grated gasification combined cycle (IGCC),does have some modest advantages overconventional pulverized coal technology: itis slightly more efficient and has loweremissions of conventional pollutants.45 Inaddition, gasification technology trans-forms coal into a mixture of gases before

burning it, making it possible to capturecarbon dioxide before it heads up thesmokestack. The federal government, inpartnership with the power industry, isstudying the possibility of storing carbon

Table 1. Carbon Dioxide EmissionRates by Fuel40

Fuel Output Rate

(pounds CO2

per kWh)

Coal 2.095Petroleum 1.969

Natural Gas 1.321

0

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1,000

1,500

2,000

2,500

1989 1991 1993 1995 1997 1999 2001 2003

Figure 3: Carbon Dioxide Pollution from Coal-Fired Power Plants41

All Electricity Generation

Coal-Fired Power Plants

CarbonDioxideEmissions

(MillionMetricTons)


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dioxide in large quantities undergroundwhich would theoretically allow for theproduction of low- or zero-carbon powerfrom coal.46

But while IGCC technology may be theone option for the coal industry to demon-strate it can be part of a global warming

solution, there is one problem: gasificationplants are not the kind of coal plants elec-tricity companies are proposing to build.

Only 16 percent of currently proposedcoal-fired power plants would use gasifica-tion technology, and only the Departmentof Energys FutureGen demonstrationplant is proposed to incorporate carboncapture and storage. Most of the proposedplants use conventional design. (See Table2). As a result, many of the coal plants, ifbuilt, will not be well suited to the carbon

capture and storage process that many seeas the only way to use coal without a hugeincrease in global warming pollution.

Even if all of the new coal-fired powerplants were to use gasification technologywith carbon storage, the approach remainsexpensive, and no industry or country has

yet demonstrated the feasibility of perma-nently storing billions of tons of carbondioxide underground. (See Gasified Coaland Global Warming on page 18.)

In sum, the coal rush now beingplanned by electricity companies does notmatch up with the rhetoric touting coal as

a clean and environmentally friendly sourceof power. Rather, it would commit the U.S.to the expansion of traditional coal-fired

Figure 4: Impact of the Coal Rush on Carbon Dioxide Pollution fromElectricity Generation

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Emissions in 2004 Emissions After the CoalRush

Table 2: Proposed Coal-Fired PowerPlants by Type47

Technology Number Percentage

ConventionalPulverized Coal 89 59%

Coal Gasification

(IGCC) 25 16%

CirculatingFluidized Bed 22 15%

SupercriticalPulverized Coal 10 7%

To Be Determined 5 3%

CarbonDioxide

(MillionMetricTons)


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Gasified Coal and Global Warming

Some energy companies are promoting gasified coal as an environmentally re-

sponsible way to use coal to generate electricity. However, high costs and techno-logical hurdles make this technology less than ideal as a solution to global warming.Coal gasification is more expensive than cleaner and more sustainable ways of

addressing our nations energy-related and environmental problems. Coal gasifica-tion with carbon storage is more than twice as expensive as typical energy effi-ciency measures and more than 50 percent more costly than the best wind powerprojects.48 (See Figure 5). Even without carbon storage, the most optimistic fore-casts by the research arm of the electric industry, the Electric Power Research In-stitute (EPRI), put the price of coal gasification at around 4.7 cents per kWh in2010close to 200 percent more expensive than a well-executed energy efficiencyprogram.49 However, EPRI predicts that the average cost of wind power will drop30 percent between 2010 and 2020, and by 2020, both wind and biomass energy

will be significantly cheaper than any type of coal power plant with carbon storage.

50

Moreover, carbon capture and storageon the scale at which it must be imple-mented to fight global warmingis an immature technology with serious ques-tions about its future viability. Carbon dioxide has been injected into the groundfor some time to enhance oil recovery. However, the storage of captured carbondioxide from utility operations would require a vast expansion of carbon transpor-tation infrastructure and identification of storage locations with huge capacity. Stor-ing all U.S. power plant coal emissions would require enough infrastructure toliquefy, transport and inject roughly 2 billion metric tons of carbon dioxide annu-ally.52 Currently, there are only 21 demonstration projects in the world, and notone of them is large enough to store the lifetime emissions of even one powerplant.53

Storing any quantity of carbon dioxide presents problems. As with nuclear wastes,carbon dioxide stored in geological formations must be guaranteed to remain un-derground for hundreds or thousands of years to prevent re-release to the atmo-sphere and to prevent accidental, large-scale releases of carbon dioxide, which canbe fatal to humans and wildlife. Recent studies indicate that carbon dioxide acidi-fies saline aquifers, which can degrade some of the concrete-like minerals that sealholes in the rock, or concrete plugs in old oil and gas wells, raising questions aboutthe permanence of storage.54 Ocean storage, which has been considered a possibleoption for carbon management, appears less attractive given recent research tyingincreasing ocean carbon dioxide levels with acidification and damage to ocean eco-systems.55

Provided that the technological hurdles can be overcome, IGCC will likely onlybecome a key player in the energy mix if policies are in place to make it economi-

cally competitive with conventional coal technology. A carbon cap that places amarket price on carbon dioxide emissions from power plants could provide an in-centive for cleaner technologies such as IGCC to develop. Even then, however,IGCC power plants would only deliver global warming benefits by replacing exist-ing dirty and inefficient coal-fired power plantsnot by adding to them.


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power plant technology and to a large in-crease in global warming pollution. At atime when policy-makers and scientistsacross the world are struggling to find waysto avoid the most dangerous effects of glo-bal warming, allowing the coal rush to take

place as planned would be beyond unwiseit would be thoroughly reckless and irre-sponsible.

Risk for Energy Companies,Shareholders, Ratepayersand the Economy

Increasing Americas dependence on coalcarries significant economic risk for elec-tricity companies, municipally and coop-eratively owned utilities, ratepayers and

shareholders, and for the economy as awhole.

Global Warming Pollution Limits

Any new coal-fired power plants would be

built in the face of incontrovertible evi-dence that carbon dioxide emissions arecausing the planet to warm. There is grow-ing consensus, even within the UnitedStates, that concerted action must soon betaken to curb global warming emissions.

For example:

In early 2005, the Kyoto Protocol,which calls for significant globalwarming emission reductions in theworlds industrialized countries, wentinto effect. A total of 163 nations, not

including the United States, havesigned on to the protocol.56

In June 2005, The U.S. Conference of

0

2

4

6

8

10

Pulverized Coal Natural Gas($5/Mbtu) (NGCC)

Coal Gasification(IGCC)

Biomass Geothermal Wind (Best 110GW in 18

Western States)(No PTC)

Energy Efficiency(New England

2002)

Fossil FuelsWith Carbon Storage

Renewablesand Efficiency

Figure 5: Cost Comparison of Climate-Neutral Energy Sources51

LevelizedCostofEnergy

(2003cents/kWh)


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power plants could be required to pay forthe right to emit carbon dioxide into theenvironmenteither through a carbon taxdesigned to reduce emissions or throughthe purchase of pollution permits in anemission trading scheme. In either case, the

cost of producing electricity from coal-firedpower plants would increase and the valueof those plants relative to other, less car-bon-intensive forms of generation woulddecline.

Another possible scenario is that coal-fired power plant owners would be requiredto install equipment to capture and storecarbon dioxide emissions from the plant.Such investments are likely to be very ex-pensive. The Electric Power Research In-stitute (EPRI) estimates that energy from

a conventional coal-fired power plantwould cost 77 percent more with carboncapture and storage.67 (See Figure 6.) Asshown in the figure, pulverized coal plantswould become much more expensive thangasified coal after rules requiring carboncapture and storage are implemented. (Be-cause carbon sequestration is untested on alarge scale, it could prove even more ex-pensive than estimated by EPRI.)

Depending on the regulatory schemegoverning the particular company involved,

these additional costs would be passed downtion of the two. Allocation of these costs

could provoke significant battles. In the1980s, state PUCs and consumer advocatesfought heated battles with utilities over theallocation of costs for the construction ofnuclear power plants, in some cases argu-ing that the decision to invest in nuclear

power was imprudent, and that the utili-ties should not be permitted to recover ex-cess costs from ratepayers.69

Shareholders are unlikely to want to paythe additional costs either, and are begin-ning to demand that corporate directorsconsider their exposure to global warming-related risks. Shareholders of major com-panies filed 30 resolutions in 2005requesting planning or action to reduce therisk of global warming.70 And insurancecompanies have been considering reforms

to reflect the risk, including denying liabil-ity coverage for directors and officers ofcompanies sued for mismanagement overglobal warming.71

Municipal and cooperatively ownedutilities face the same risk by choosing coal-fired power. In the event of a reduction inthe value of their assets or an increase incosts caused by future climate regulation,these utilities would have to pass on coststo their members and ratepayers.

In addition, credit rating agencies may

lower the bond ratings of companies thatignore the risk associated with future carbon

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Gambling on the Future

Some observers have suggested that energy companies are proposing large numbers of new coal facilities now in an attempt to have them permitted and ap-proved before any new global warming pollution standards are implemented. Theidea is that these plants would be grandfathered under any scheme of carbonregulation, much as many existing coal-fired power plants continue to be exemptedfrom clean air laws.

The expectation of grandfathering has already factored into some utilities de-cisions. For example, the energy company TXU hired consultants to prepare areport on future air pollution and climate change policies that concluded thatreducing carbon dioxide emissions voluntarily would not be in TXUs interest.73

The report asserted that a mandatory carbon cap-and-trade program could be setup with an initial allocation of emissions allowances based on recent emissionslevels, suggesting that increased emissions now could yield increased allowancesin the future.

Building new coal-fired power plants under the assumption that energy com-panies will be held harmless for those decisions under carbon regulation is a dan-gerous gamble, however.

First, there is no guarantee that a national carbon cap-and-trade program wouldallocate allowances to generators for free based on recent emissions. Indeed, theNortheasts Regional Greenhouse Gas Initiative (RGGI)the first multi-statecap-and-trade program in the countryrequires that at least 25 percent of pollu-tion allowances be sold at auction, meaning that coal-fired power plant operatorswould need to pay for at least a portion of their allowances. Under RGGI, statesalso have the flexibility to require that a greater proportion of allowances be auc-tioned, rather than given away. The recent experience of emission trading pro-grams in Europe, where dispensing free allowances has led to a massive financialwindfall for generators at the expense of higher electricity prices for consumers,makes it even more unlikely that the U.S. would opt to follow a similar course.

Second, any serious effort to reduce global warming emissions in the U.S. willrequire significant reductions in emissions over the next several decades. The costof carbon emissions is likely to rise over that period. Because coal-fired powerplants are long-lived capital investments, power plant operators could find them-

selves paying more to operate their plantsthan initially expected.

There is a great deal of uncertainty re-garding how carbon dioxide emissions willbe regulated in the future. But companies

that attempt to slip in under the wire withnew coal-fired power plants before carbonregulation begins are gambling that theeventual rules will favor thema gamblethat may or may not turn out to be a winner.

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regulation. With a lower bond rating, acompany must pay higher interest rates inorder to obtain a loan and would likely passthe increased cost of capital onto its cus-tomers.72

While the scope and stringency of fu-

ture global warming regulations have yetto be decided, companies investing in coal-fired power plants know that carbon diox-ide regulation is right around the corner.Investing in coal-fired power plants underthe assumption that carbon dioxide willremain unregulated is imprudent, and is arecipe for future exposure to financial andregulatory risk.

Global Warming Liability

Companies that choose to build coal-fired power plants also potentially risk le-gal action for knowingly endangeringpublic welfare.

The risk parallels the cases filed by statesand the federal government against the to-bacco industry over the last decade. Thetobacco lawsuits sought to recover moniesspent by Medicare on tobacco-related ill-nesses directly tied to cigarette companieswrongful acts. In those lawsuits, lawyers forthe public proved that the tobacco compa-nies:74

Withheld information about the harmcaused by smoking and theaddictiveness of nicotine;

Made false and misleading statementsabout the health consequences ofsmoking;

Attacked research finding that smokingcauses health problems or that nicotineis addictive, despite knowing that the

research was valid; and Failed to take reasonable steps to make

their products safer.

The lawsuits were based on several le-gal foundations, including the RacketeerInfluenced and Corrupt Organizations Act

(RICO), which gives the federal govern-ment a right to obtain compensation fordamages caused by conspiracies and enter-prises to maximize profits through im-proper means.

To be sure, global warming is already

imposing significant financial costs on gov-ernments and individuals across the U.S.Those costs will increase as governmentsgrapple with:

rising sea levels;

the impact of more dangerous storms(and reduction in the willingness ofprivate insurers to cover coastalproperties);75

damage to agriculture; and

loss of freshwater supplies.

Some lawsuits have already been filed.In July 2004, eight states and New YorkCity announced a lawsuit against the fivelargest electric utilities in the U.S. (in termsof annual emissions of global warming pol-lution). The suit named American ElectricPower, Southern Company, Tennessee Val-ley Authority, Xcel Energy and CinergyCorporationtogether responsible for 650million metric tons of carbon dioxide pol-lution annually, or about 11 percent of to-

tal U.S. emissions.76

The suit only sought to compel the com-panies to reduce their global warming pol-lution, not to recover any damages. InSeptember 2005, a U.S. district court judgedismissed the suit, arguing that such im-portant decisions were better left to Con-gress and the executive branch. The statesare appealing the ruling in a higher court.77

Greenpeace, Friends of the Earth andseveral U.S. cities have filed a lawsuit un-der the National Environmental Policy Act,

attempting to compel two U.S. lendingagencies to consider the impact of globalwarming on the U.S. environment whenmaking funding decisions. According to theplaintiffs, these agencies are funding $32billion worth of fossil fuel projects usingU.S. taxpayer money, making the threat of


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and next summer.87 Making mattersworse, the number of major freight carri-ers has consolidated from 40 to four sincethe deregulation of the railroads in 1980.These major companies have closed raillines to trim costs, making the system more

vulnerable to bottlenecks.88The shortage of adequate shipping

routes could become worse in the future,as the mining industry opens new mines innew locations to supply increased demandfor coal (See discussion on page 26.)

Overall, the utility industry estimatesthat the cost of substituting more expen-sive fuels for the 20 million tons of coalfrom Wyoming tied up on the railroads hasexceeded $3 billion.89 The coal delays in-creased the demandand the pricefor

natural gas, and thus the impact on con-sumers and the economy as a whole maybe even higher.

Dramatically increasing demand for coalby building a fleet of new coal-fired powerplants would only aggravate transportationchallenges. Overcoming bottlenecks wouldrequire a large investment in transporta-tion infrastructure, some of which couldcome from the public. Failure to adequatelyinvest in transportation capacity during the

coal rush could create availability andprice volatility issues similar to those expe-rienced in the U.S. over the last severalyears. (See Figure 7.)

Figure 7: Coal Prices From Different U.S. Regions Over the Past Three Years90

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Mining Damage toAmericas Land and WaterMining additional coal would damageAmericas land and water resources.

Mining enough fuel to supply current

and planned coal-fired power plants wouldrequire opening new mines. Currently pro-ducing coal mines in America report thatthey have around 18 billion tons of recov-erable reserves, which would last less than18 years at current consumption ratesandfewer years at higher rates of consump-tion.91

Overall, the Energy Information Admin-istration estimates that the U.S. has enoughcoal resources to last for over 200 years atcurrent rates of consumption (270 billion

short tons).92 About 120 billion tons arelocated close to the surface, and 150 bil-lion tons are underground.

Over 75 percent of Americas coal re-serves are located in Montana, Wyoming,Illinois, West Virginia, Kentucky, Ohio andPennsylvania. Accessing these coal reserveswould involve building str ip mines or

underground caverns in places that cur-rently supply clean water, areas for recre-ation, fields for growing food, or townswhere people live. (See Figure 8.)

Coal mining causes a variety of seriousand harmful impacts.

Coal mining contaminates water sup-plies. In 2004, coal mines reported the re-lease of more than 13 million pounds oftoxic chemicals to landfills or directly tostreams, including emissions of ammonia,arsenic, chlorine, chromium and lead.94

Coal-mining waste, acids and toxic metalscan kill stream life and make water suppliesundrinkable.

Water contamination also arises fromwastes generated by the processing andcombustion of coal. Across the country, coal

ash and sludge is dumped into landfills andold mining pits, where it can leach toxicmaterials into the groundwater. Every year,coal-fired power plants in the U.S. gener-ate 130 million tons of ash and sludge, con-taining toxic substances includingchromium, arsenic and nickel. About halfof these plants dump their waste in surface

Mountaintop removal coal mining has leveled hillsides and polluted water supplies in Appalachia.

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pondsonly 26 percent of which are linedto prevent pollution from escaping.95

Coal mining also damages local land-scapes. In Appalachia, a form of miningknown as mountaintop removal has lev-eled many hills and filled valleys with theresulting debris. Between 1985 and 2001,mountaintop mining polluted or com-pletely buried more than 1,200 miles ofstreams and destroyed 7 percent of theregions forests.96 According to EPA analy-

sis, if mountaintop mining continues un-checked, it will destroy more than 1.4million acres of landalmost one tenth thearea of West Virginiaand harm wildlifeand disrupt dozens of communities.97

Underground longwall mining hastriggered land subsidence that has under-mined more than 5,000 homes, businessesand other properties and altered steams andwetlands.98 Federal and state mining andmineral rights laws often leave surfaceproperty owners and nearby landowners

with little recourse to protect their proper-ties and quality of life.

No matter what kind of technology anynew coal-fired power plants may use, cleancoal or conventional, extracting the mil-lions of tons of coal remaining in Ameri-can soil would come at a high price.

More Health-ThreateningPollutionIf all of the planned coal-fired power plantsare built, they would increase annual pol-lution from power plants and other indus-trial facilities on the order of 1 to 3percent.99 These plants would directly emitan estimated:

120,000 tons per year of sulfur dioxide,

a major ingredient in fine particlepollution, linked to premature deathand respiratory and cardiovasculardisease;

240,000 tons per year of nitrogendioxide, a major ingredient in thephotochemical smog that plaguesmany cities across the U.S. on summerdays, triggering asthma attacks andsending people to the hospital; and

3 tons per year of mercury, a neuro-

logical toxicant that contaminates fishin rivers, lakes and the oceans.

Because new coal-fired power plants willhave to meet modern air pollution stan-dards under the federal Clean Air Act, airpollution from new coal-fired power plants

Figure 8: Location of Coal Deposits in the U.S.93

The numbers indicatemillion short tons of coalproduction in 2005, andpercent increase from 2004.


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will be improved compared to the oldestcoal-fired plants. However, coal-firedpower is still far from cleanespeciallycompared to non-polluting energy sourcesincluding energy efficiency and windpower.

Adding to the pollution problem, in-creased coal freight shipments will createmore diesel soot across the country.

Lost Opportunities forClean EnergyThe coal rush would consume investmentdollars that could be used to promote

cheaper and cleaner energy sources, includ-ing energy efficiency and renewable power.

In order to build all of the coal-firedpower plants on the drawing board, elec-tric utilities would have to invest $137 bil-lion in capital costs. On top of thisinvestment, utilities would have to spendover $100 billion to operate and maintainthe plants, purchase fuel and build trans-mission lines to carry the power.100 Future

regulation of global warming pollutionwould create additional expenditures. Inaddition, the coal rush would also tendto drive billions of dollars in capital invest-ment from other actorsfor example, min-ing companies and railroads. Ultimately,

this money will come out of the pockets ofpublic taxpayers, ratepayers and investors.

However, by investing in coal, Americawould lose a golden opportunity. If thatsame $137 billion in capital were insteadinvested in a balanced clean energy strat-egy including energy efficiency and renew-able technologies like wind power, it couldproduce a similar amount of energy (ormore), while creating practically zero glo-bal warming pollution, safeguarding theeconomy from risks associated with global

warming, reducing mining impacts andgreatly cutting health-threatening air pol-lution. In addition, investment inrenewables and efficiency would generatejobs, renew communities, and help to sta-bilize energy prices.

Energy Efficiency

America has enormous potential to use en-ergy more efficiently.

Reviewing a set of leading recent stud-ies on achievable efficiency potential na-tionwide, the American Council for anEnergy Efficient Economy concludes thatthe typical state could achieve energy sav-ings of 24 percent below forecast levelswithin 20 years.101 In other words, the typi-cal state could halt growth in electricitydemand with a well-designed efficiencyprogram, and save money doing it.

Efficiency measures are two-thirds lessexpensive than generating and deliveringelectricity. In 2002, energy efficiency pro-grams supported by public benefit funds inNew England produced energy savings atan average lifetime cost of 2.4 cents perkWh.102 Northeast Energy Efficiency Part-nerships estimates that capturing all re-maining achievable energy efficiency

Compact fluorescent lightbulbs are an exampleof a simple technology that can greatly reducedemand for electricity and the need for newpower plants.


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potential in New England would cost just3.1 cents per kWh.103

A recent estimate of energy efficiencypotential in the Southwest (where energyefficiency measures have not penetrated asdeeply as in the Northeast) concluded that

six states from Arizona to Wyoming couldreduce projected electricity demand by 33percent by the year 2020 (or close to100,000 GWh/year).104 The benefits of thisapproach would include net savings on elec-tricity and fuel of $28 billion and avoidingthe need to build 34 power plants (500MW). The study identified energy effi-ciency measures across all sectors of theeconomy that could result in lifetime elec-tricity savings of 440 billion kWh at an av-erage cost of $0.02 per kWh (2000 dollars).

The study concluded that the benefits ofthe efficiency measures exceeded their costsby more than 400 percent.105

The six Southwestern states account forabout 5 percent of the U.S. electricity mar-ket. Conservatively assuming that the U.S.as a whole only has half of the energy sav-ings potential as these six states, extrapo-lating the findings of this study nationwide

would mean that the U.S. has enough low-cost energy efficiency opportunities to re-duce projected electricity demand byroughly 1 million GWh per year in 2025.This overall savings potential is likely anunderestimate, especially because cost-ef-

fective but slightly more expensive effi-ciency measures could achieve even greatersavings, and because a greater variety ofmeasures will become both economic andachievable as fuel and electricity costs risein the future.

With the conservative assumption thatachieving efficiency savings at this scaleacross the U.S. would be more expensivethan in the Southwest, costing 3 cents perkWh instead of 2 cents, a $137 billion in-vestment could reduce U.S. electricity de-

mand in 2025 by roughly 19 percent vs.business as usual, or about 1 millionGWh.106 (See Figure 9). And because en-ergy efficiency is a distributed resource, itwould help avoid the need to invest inpower lines and distribution infrastructure.

In comparison, the proposed coal-firedpower plants would produce about 670,000GWh per year.108 In other words, energy

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Figure 9: Estimated Effect of a $137 Billion Investment in Energy Efficiencyon U.S. Electricity Demand.107

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efficiency measures could completely alle-viate the need to build any new coal-firedpower plants, or new transmission and dis-tribution infrastructureand do so formuch less money.

Renewable Energy

America has similarly enormous potentialto generate electricity from the wind, thesun, geothermal heat, energy crops, theocean and many other clean and renewableresources.

The nations cumulative wind powerpotential has been estimated at upwards of10 trillion kilowatt-hours annuallymorethan twice the amount of electricity cur-rently generated in the U.S.109 The Great

Plains has been dubbed the Saudi Arabiaof wind for its vast, high quality wind re-source. Similarly, the United States couldgenerate all of its electricity using solarphotovoltaics (PV) by installing solar pan-els on only 7 percent of the land area cur-rently used for buildings, parking lots and

other built-up areas.110 Tapping solar ther-mal energy through passive solar appli-cations, such as solar hot water heating, cansignificantly reduce use of fossil fuels inbuildings. New central station solar powertechnologies promise the capability to use

the suns energy to generate electricity evenwhen the sun isnt shining, by storing heatfor use at night. And there is tremendouspotential for energy from crops, tides, un-derground heat and other renewablesources.

Wind

Until recently, the cost of renewable powerhas caused it to be rejected by utilities andregulators for most applications. Not anylonger. In particularly windy areas of the

country, wind power is already the cheap-est electricity resource available.111 For ex-ample, a recently constructed wind farm inLamar, Colorado is producing electricityfor less than 3.3 cents per kWh (with thebenefit of the federal production taxcredit).112

The Western Governors Association(WGA) estimates that from Texas to Wash-ington state, potential wind resources couldsupport 250,000 MW of wind turbinesdelivering electricity for an average cost be-

low 6 cents per kWh, including transmis-sion expenses but not distribution expensesor any tax credits.113 The best sites for windpower in the region could support approxi-mately 110,000 MW of wind turbines withan average cost of electricity of about 5.4cents per kWh.114

In comparison, the U.S. Department ofEnergy estimates that in the next decadecoal will have a levelized cost of about 5.3cents per kWh, including capital, fuel, op-eration, maintenance and transmission

costs.115

This figure does not take into ac-count the future cost of carbon regulationsor the environmental and public healthcosts of coal combustion.

Replacing the output of all of the coal-fired power plants currently on the draw-ing board would require about 256,000

The nations cumulative wind power potentialhas been estimated at upwards of 10 trillionkilowatt-hours annually.

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MW of wind.116 The 18 western statesalone have enough low cost wind resourcesto replace about 40 percent of the proposedcoal-fired power projects. Developing theseresources would require a capital invest-ment of roughly $130 billion.117 However,

unlike coal, wind power has no ongoing fuelexpenses, meaning that the capital invest-ment is effectively purchasing a lifetimesupply of fuel.

Expanding consideration of wind re-sources beyond just the western states, in-cluding the best sites for wind nationwide,on- or off-shore, greatly expands theamount of cost-effective wind resourcesthat would be available and competitive now.

In the future, much greater amounts ofwind resources will become available as

wind turbine technology improves and theindustry matures.118 The research arm ofthe electric industry, the Electric PowerResearch Institute (EPRI), predicts that theaverage cost of wind power will drop 30percent between 2010 and 2020, and by2020, an average wind energy project with-out tax credits will be cheaper than any typeof coal power plant with carbon storage,and cheaper than natural gas even if the costof emitting carbon is $0.119 A long-termfederal production tax credit would more

quickly enable much greater amounts ofwind power across the country to becomeeconomically competitive with conven-tional coal, as would effective limits on glo-bal warming pollution.120

Solar Energy

Solar Photovoltaics

The economics of solar photovoltaic pan-els (PV) as a direct electricity generationsource are not nearly as favorable as theeconomics of wind, but that is rapidly

changing. As with wind power, the cost ofsolar PV has dropped dramatically in re-cent yearsover the last two decades, thecost of solar panels has declined from about$20 per Watt to as low as $3.50 per Watttoday.121 (However, due to rapidly expandingdemand, manufacturing capacities are

strained and prices for silicon wafers haverisen about 10 percent in the first half of2006.122 Further investment in silicon sup-ply and manufacturing capacity will be re-

quired to expand the industry andeventually bring prices back downas ishappening in states that are actively expand-ing their solar markets.123 )

Moreover, residential and commercialPV provides unique economic value be-cause of its status as a distributed resourcemeaning that PV installations can reducethe need for additional investments in elec-tricity transmission and distribution infra-structure. The city of Austin, Texasestimates that solar power is worth 10.4 to

11.7 cents per kWh when added to itssystem.124

Concentrating Solar Thermal Power

Concentrating solar thermal power is onthe brink of commercial viability.

New designs for concentrating solarthermal plants show great promise. Solarpower towers with thermal storage canstore heat collected from sunlight duringthe day, to generate electricity duringcloudy weather or even at nightan effec-

tive power source that is clean, sustainableand produces zero global warming pollu-tion. Stirling dish solar systems are able tocapture and transform the heat of the suninto electricity at very high efficiency. Andsolar trough systems have been refined tothe point where companies are installing

Solar PV roof tiles.

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commercial facilities in the Nevada desert.Solar power towers with thermal stor-

age are one of the most flexible renewableenergy technologies, with the ability to usecaptured heat to generate electricity evenwhen the sun is not shining. In the late1990s, Sandia National Laboratory in NewMexico demonstrated thermal storage tech-nology on a power tower in the California

desert. The plant stored solar energy in theform of molten salt, achieved an energystorage and recovery efficiency approach-ing 100 percent, and showed that solarpower could cost-effectively serve electric-ity demand even at night.125

For almost two decades, 384 MW of so-lar trough plants have operated in the Cali-fornia desert. These plants do not havethermal storage, but instead rely on a smallusage of natural gas to ensure that power isavailable on demand. These plants produceenergy for around 12 cents per kWh, com-petitive in the peaking market, but not inthe baseload market.126

New plants will be able to operate withlittle to no backup from natural gas andproduce power for much less cost. With the

installation of the first 1,000 to 3,000 MWof capacity, experts predict that experienceand economies of scale will lower the costof power from these facilities to as low as 5cents per kWhcheaper than coal-firedpower with carbon storage, and competi-tive with conventional coal.127

Spain will be the site of the worlds firstcommercial concentrating solar thermalpower plant with thermal storage. Spanishpolicy offers a strong price premium to so-lar power, which is driving the installation

of new technology and helping the indus-try to get off the ground.In the U.S., Solargenix Energy is build-

ing a solar trough power plant in BoulderCity, Nevada, scheduled for operation inearly 2007, supported by Nevadas renew-able energy standard.128 Solargenix is con-sidering the addition of thermal storagetechnology within the next few years.129

Stirling Energy Systems plans to build twolarge Stirling solar dish power plants in thedesert southwest to supply energy to Cali-

fornia.130

One 300 MW power plant, con-sisting of 12,000 Stirling dishes to be builtin Californias Imperial Valley, will supplyenergy to San Diego Gas and Electric. Theother plant, a 500 MW facility with 20,000Stirling dishes, will be built in the MojaveDesert near Los Angeles, supplying energy

Solar Two (left), a power tower in the desertsouthwest, demonstrated the feasibility ofstoring heat from the sun to generate electric-ity at night.For over 10 years, parabolic solartrough power plants (right) have producedelectricity for California.

Stirling solar dishes efficiently transform solarheat into electricity.

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to Southern California Edison. The facili-ties will help the two utility companies meetCalifornias renewable energy standard.

Solar thermal technology could rapidlyincrease in importance as a source of elec-tricity in the U.S. The materials needed to

produce a power plant are fairly common-place, including glass, steel, salt, concreteand conventional steam turbines. SandiaNational Laboratory estimates that a hand-ful of companies implementing the tech-nologies could install 20 GW of solarthermal capacity in the southwestern U.S.by 2020.131

Solar thermal technology currently hasa capital cost of around $2.5 million perMW.132 At this price, an investment of $137billion would enable the construction of

over 50 GW of solar thermal capacity. Be-cause the capital cost of the facilities willdecrease as the industry gains experienceand benefits from economies of scale, sucha large investment would likely yield muchmore than 50 GW. This level of installa-tion is feasible: Nevada alone, excludingsensitive areas and land with a slope greaterthan 1 percent, has the potential for 1,700GW of solar energy.133

Geothermal and Other Renewables

Geothermal energy is yet another area inwhich great potential exists. Already, geo-thermal is a major source of electricity inseveral U.S. states, including California,Nevada and Hawaii. Currently identifiedgeothermal resources could provide asmuch as 25 to 50 gigawatts of additionalcapacity in the United States.134

A combination of wind, solar, tidal, bio-mass and geothermal resourcescoupledwith energy-saving renewable technologiessuch as passive solar heating and lighting,

solar hot water heating and geothermal heatpumpscould provide a large and grow-ing share of Americas energy. A consistentemphasis on renewables in public policyand in research and development fundingcould bring many of these technologies intothe mainstream.

Benefits of Efficiency andRenewables

Energy efficiency and renewable energy areeconomic and environmental winnerses-pecially compared to coal.

Investing in energy efficiency wouldbenefit consumers and the economy. First,individuals and businesses that implementenergy efficiency see direct reductions intheir energy costs over time. Second, allelectricity consumers benefit from reducedcosts to generate and supply powerpar-ticularly at peak periods when electricity isat high demand and is most costly to sup-ply. Finally, all consumers benefit from re-duced demand for fossil fuels.

Moreover, energy efficiency improve-

ments benefit local economies. By reduc-ing energy costs, efficiency measures freeup money that consumers can then use onother goods and services. And consumerspending on energy efficient products tendsto benefit local merchants and efficiencyservice providers, as opposed to spendingon fossil fuels, which tends to siphon con-sumer dollars outside of the region.

Wind energy has potential advantagesfor spurring rural economic redevelop-ment. The U.S. Department of Energy es-

timates that producing about 5 percent ofthe nations power from wind by 2020would create $60 billion in capital invest-ment in rural America by 2020, provide$1.2 billion in new income for farmers andrural landowners, and create 80,000 newjobs. This new source of incomewhichcould amount to as much as $14,000 peryear for the owner of a 250-acre farmcould make the difference between insol-vency and survival for many remainingfamily farmers, and the property tax rev-

enues from the installations could providea new source of income for strugglingrural communities.135

Investments in renewable energy sourcesalso support American businesses thatmanufacture renewable energy compo-nents. Despite the ground lost by American


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renewable energy manufacturers over thepast decade, significant manufacturing in-frastructure remains. Creating a home-grown market for renewable energytechnologies could ensure that these manu-facturers remain and grow in the United

States. For example, a startup companycalled Nanosolar recently announced plansto build the worlds largest thin film solarpanel manufacturing facility in California,after California established a $3.2 billionMillion Solar Roofs incentive program.136

One 2005 study estimates that a cleanenergy strategy, coupled with a shifting of

federal energy subsidies to renewables andefficiency, could create as many as 154,000new jobs in the United States and increasenet wages by $6.8 billion.137 The Union ofConcerned Scientists estimates that a 20percent national renewable energy standard

for electricity generation would create twiceas many new jobs as meeting demandgrowth with fossil fuels, while adding $10.2billion to the nations gross domesticproduct.138

However, if America stakes its energyfuture on coal, the opportunity to realizethese benefits will be lost.


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A Better Alternative 35

America is at a critical turning point.The current energy crossroadsuncertain supplies of fossil fuels

and rising priceshas the country perchedon a precipice that leads toward increaseddependence on coal. Committing to thatcourse would seriously harm the future ofAmerica, and of the world.

However, states and the federal govern-ment have an opportunity to stop the coal

rush and move toward a clean energy fu-ture. An America that uses no more energythan it does todayand that relies on re-newable sources for a large and growingshare of that energyis not a fantasy. It isa realistic, perhaps even conservative, goalthat can be achieved using technologies andpolicy tools existing today.

Achieving that goal will leave Americacleaner, safer, more secure and more pros-perous in the years to come. But it is only abeginning: the imperatives of global warm-

ing alone demand that we reduce our con-sumption of fossil fuels even further withinthe foreseeable future. By increasing energyefficiency, ramping up the deployment ofrenewable power, and continuing with re-search and development of the next gen-eration of energy technologies, America

will be in a better position to meet the chal-lenges of the future.

To stop the coal rush, citizens and gov-ernment should work to:

Limit Global Warmingand Health-Threatening

Pollution from Power PlantsThe states and the federal governmentshould impose strong caps on global warm-ing pollution from power plants at a levelthat is sufficient to minimize human inter-ference with the global climate.

Establishing a limit on carbon dioxidepollution from power plants can create apowerful disincentive to the constructionof new coal-fired power plants and the con-tinued operation of old, inefficient coal-

fired generation, hastening its replacementwith cleaner and more efficient sources ofelectricity.

For example, seven states in New En-gland and the Mid-Atlantic created theRegional Greenhouse Gas Initiative(RGGI) in 2005, which will require reducing

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power plant carbon dioxide emissions by10 percent by 2019. The program caps re-gional carbon dioxide pollution from elec-tricity generation and sets up a tradingmechanism to achieve the required emis-sions reductions in an economically effi-

cient way.139 Another option would be torequire long-term utility contracts to carryglobal warming performance standards,limiting the amount of carbon dioxide emis-sions per unit of electricity.

Simply capping pollution will not beenoughglobal warming pollution levelsmust be dramatically reduced in order toprevent the worst impacts of climatechange. States can set targets and createmechanisms to ratchet down allowable pol-lution levels, offering signals to utility com-

panies that will help guide their investmentsin new technologies.

For example, in June 2005 GovernorSchwarzenegger of California issued anexecutive order establishing a target of re-ducing global warming pollution to 80 per-cent below 1990 levels by the year 2050.140

Governor Bill Richardson of New Mexicoissued an executive order shortly thereaf-ter setting similar global warming pollu-tion reduction targets, including 10 percentbelow 2000 levels by 2020 and 75 percent

below by 2050.141

Scientists estimate thatglobally, industrialized countries will needto cut pollution on this scale to avoid theworst impacts of global warming.

Prevent the Constructionof Any New Coal-FiredPower Plants

States and the federal government shouldnot allow any new coal facility to be builtunless it meets strict conditions consistentwith both climate stabilization goals and thefinancial interests of electricity consumers.

For example, the Idaho Legislature seta two-year moratorium on coal-fired power

plants in the state after Sempra Energy pro-posed to construct a coal-fired power plantin Jerome County.142 The moratoriumstates that coal-fired power plants mayhave a significant negative impact upon thehealth, safety and welfare of the population,

the quality and financial security of exist-ing agricultural businesses and industries,economic growth of the state of Idaho, andthe environmental quality and natural re-sources of this state, and that the morato-rium will offer time to study these issues.143

States and the federal governmentshould establish their own moratoriums,and set them for the long term. Moratori-ums should be lifted only if it can be dem-onstrated that a coal-fired technology (suchas gasified coal with carbon storage) is the

least-cost way to reduce global warmingpollution consistent with climate stabiliza-tion goals, and that carbon storage is fea-sible and permanent.

Price Coal Fairly

Government leaders and utility regulatorsshould ensure that allthe costs of coal-firedpower plantsincluding the societal costof global warming and the probable cost ofadditional pollution control require-

mentsare fully considered when utilityinvestment decisions are made.Even though the costs to society of globalwarming and of soot, smog and mercurypollution cannot be precisely determined,they are demonstrably greater than zero.Similarly, the exact costs utilities will facebecause of future limits on carbon dioxidepollution cannot be knownbut they canbe estimated. Proceeding as if these costswere zero leads to imprudent and irrespon-sible decisions. Investment decisions canalso have external benefits in addition tocosts, and these also deserve considerationin the regulatory process.

To price coal fairly:

Regulators and political leaders shouldexplicitly consider the costs of pollu-tion and future regulation when


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making decisions on the constructionof new power plants.

Other clean resources that could satisfyor reduce energy demand, such asrenewable energy and energy effi-ciency, should be explicitly consideredas alternatives.

When comparing coal to alternatives,decision-makers should consider theexternal benefits of efficiency measuresand renewable power, includingeconomic growth, improved publichealth and minimized environmentalimpact.

Regulators Should Not GiveUndue Preference to CoalGasification Technology

Regulators should not saddle ratepayerswith the additional costs of coal gasifica-tion power plants and carbon storage whencleaner, more sustainable options exist.Gasified coal technology should not bepushed to the front of the line ahead ofbetter alternatives, and should be approvedonly if:

Gasified coal and carbon storage areproven to be less expensive than otherclean resources that could satisfy orreduce energy demand, such as renew-able energy and energy efficiency; and

New gasified coal plants with carbonstorage are used to replace old, ineffi-cient coal-fired power plants, notaugment them.

Eliminate Subsidies for Coaland Other Fossil FuelsBetween 1950 and 1997, the coal industryreceived more than $70 billion in federalsubsidies, or nearly $1.5 billion per year.144

In the Energy Policy Act of 2005, Congress

approved an additional $7.8 billion for coal.These subsidies included several billion fora clean coal research and developmentprogram that has been criticized by theGovernment Accountability Office for mis-managing taxpayer money.145

As a whole, fossil fuels such as coal, oil,and gas received more than $420 billion infederal subsidies between 1950 and 1997.146

These subsidies distort the playing field andmake it harder for emerging renewabletechnologies to compete.

Lavishing additional money on the coalindustry, or other carbon-intensive indus-tries, is a poor use of public funds. Gov-ernment at all levels should ensure that nopublic money goes to support the extrac-tion or use of coal or other fossil fuels.

Prioritize Cleaner andSafer Alternatives,Including Efficiency andRenewable EnergyLeaders at all levels of government shouldtake aggressive action to encourage thedevelopment of cleaner alternatives to coal-fired power plants, particularly measures toimprove energy efficiency and encouragethe development of clean renewable re-sources. These measures should include:

Creating or improving energyefficiency programs.Despite the fact that energy efficiencymeasures are cheaper than increasingelectricity supply, they cant competewith new power plants on equal

footing. Market barriers (includinglack of consumer awareness, the up-front cost of efficient technologies, andsplit incentives between builders andbuyers) block the full penetration ofefficiency measures. Effective effi-ciency programs can overcome these


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market barriers and realize energysavings at low cost. Programs shouldhave a dedicated funding sourceadequate to realize achievable energysavings, with a minimum goal ofending growth in electricity

consumption by the end of thedecade.

Reform utility rate structures.Utility rate structures in many statescontinue to tie utility profits to sales ofenergyacting as a disincentive tocost-effective energy efficiency im-provements. In addition, both deregu-lated electricity markets and regulatorypractices in many states fail to treatenergy efficiency on a par with newpower plants and transmission infra-structure as a solution to electricitysupply problems. To correct thissituation, states can:

Decouple utility profits from energysales through the use of per-customer revenue caps;

Require that energy efficiency beconsidered as an alternative to newpower plant construction (Califor-nia, for example, requires utilitiesdoing long-range planning for

power procurement to secure theirneeds through efficiency first,renewables second and fossil fuelslast); 147 and

Require that demand side manage-ment (including efficiency improve-ments) be considered as analternative approach to new trans-mission line construction in grid-constrained areas.

Establish appliance efficiency

standards.States have latitude to impose energyefficiency standards for residential andcommercial appliances where thefederal government has failed to do so.States may also petition the federalgovernment for a waiver to implement

stronger energy efficiency standardsfor appliances subject to federalregulation. At least 15 residential andcommercial appliancesranging fromcommercial boilers to DVD playersare potential targets for immediate

adoption of efficiency standards.148

Upgrade building codes.State building codes regulate theconstruction of residential and com-mercial buildings and generallyinclude standards to ensure minimumlevels of energy efficiency. Most stateshave adopted some variation of inter-national building energy codes forresidential and/or commercial build-ings, but in many states codes areeither outdated or are not well en-forced. States should move to adoptthe most recent version of interna-tional building energy codes andwork with enforcement officials toensure that the codes are properlyimplemented in new construction.

Create renewable energy standards.Renewable energy standards (RES)require that a certain percentage ofthe electricity supplied to consumersin a given state come from renewable

resources. States vary greatly in theirrenewable energy potential, so there isno one-size-fits-all target for theamount of renewable energy statescan reasonably require. But anincrease in renewable power genera-tion of 1 percent per year is a realisticgoal for most states.

The percentage of renewable energyrequired is not the only importantdecision that must be made in design-ing an RES. Important as well is the

definition of what is renewable andwhat is not. A few state RESs haveallowed polluting fuels such as munici-pal solid waste and coal waste toreceive credit as renewable sourcesof energy. An effective RES sets highstandards for renewable energy


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generation, targeting truly clean andrenewable sources of energy such aswind, solar, geothermal, landfillmethane and clean biomass.

Another option to achieve the samegoal would be a feed-in law, guaran-teeing a specific purchase price for aspecific type of renewable energy. Forexample, Spain offers a premium forconcentrated solar thermal power.The guaranteed price stimulatesgrowth in the industry, helping tolower prices and speeding the pace atwhich the technology will penetratethe market and reach full economiccompetitiveness.

making sense of the "coal rush": the consequences of expanding america's dependence on coal

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