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Recent Catastrophic Accidents in the Fossil Fuel Industry…

What was up with April 2010?

The fossil fuel sector would love to forget this past month. During this one month alone, no less than three catastrophic accidents have significantly affected the image of each of the sector’s primary industries: petroleum, coal, and natural gas.

The Headline Stories:

Apr 21 – BP Offshore Oil Rig Explodes and Results in Enormous Gulf Oil Spill
o Potentially the worst environmental disaster in US history
o 11 presumed dead

Apr 5 – West Virginia Coal Mine Explosion
o Worst US coal mining disaster in forty years
o 29 people dead

Apr 18 – Natural Gas Well Hits Shallow Pocket, Contaminates Town’s Water Supply
o Over 135 homes evacuated in Caddo Parish, LA
o Told they cannot drink their water

While accidents have always been a part of the energy production story, it is strange how easily we forget how frequently and severely they can occur. Unfortunately it takes something significant and in rapid succession like what has happened in the past month to remind us of the true, hidden costs of our dependence on fossil fuels.

The British Petroleum Oil Spill

BP’s oil rig explosion and enormous gulf oil spill seriously threatens the future of deep water domestic offshore oil production. While the root cause is still being sorted out, what is clear is that after the well was drilled and about to be capped off, an oil/gas mixture accidentally shot up the mile long pipe and ignited into a fireball once it reached the surface rig. The ensuing fire killed 11 people, destroyed the rig, and caused it to collapse and sink, breaking the pipe as it sank into the ocean. But the wellhead at the sea floor could not and STILL cannot been shut off (now three weeks after the event) despite safety valves and attempts to use an improvised large metal “cap” to siphon off the leaking oil. BP is spending $6-7M per day to stop the leak and it is believed that the total cleanup costs will end up running anywhere from $2B to $14B[1]. To put that into perspective, BP’s net income for all of 2009 was $17B, and the company’s stock has already fallen almost 20% since the accident, wiping out $32B in equity value.

Here’s a time-lapse aerial movie of the spill:

Original estimates were that the oil leak was 1,000 bbls/day, but this was quickly raised to at least 5,000 bbls/day based on satellite images that showed a rapidly spreading oil slick. Recent estimates have put the leak as high as 70,000 bbls/day[2] based on analysis of a video made public of the leaking well. But the real problem is that it isn’t clear how long it will take to turn off the leak. The worst case scenario is that it will take 90 days to drill another well into the original one to shut it off. If this happens, this spill will easily eclipse the 1989 Exxon Valdez spill in Alaska, the largest ever in US waters with roughly 250k bbls spilled. Compared to the Valdez oil spill whose cleanup took a very long time due to the remote location, the Gulf Coast is much more accessible which should speed up cleanup efforts. The flip side is that a lot more people live around the Gulf and there are a lot more businesses and livelihoods that will be affected. There is also the concern that the spreading oil slick could enter the Gulf Stream and be swept around the tip of Florida and onto beaches of the East Coast.

Footage from the ocean floor:

One thing to keep in mind, however, is that while terrible, the amount of oil that has been spilled in accidents is actually very small relative to the amount we consume. If you total ALL of the oil spills that have been recorded in the world since the 1940s[3], you find that there have been a total of roughly 40M barrels of oil spilled over the last 70 years. Considering that the US currently uses ~20M barrels of oil and the world uses ~85M barrels every day, the average yearly amount that gets spilled is actually a very tiny fraction (0.002%) of what the world uses in a year. It’s almost a miracle that we don’t spill more, especially considering that 30,000 oil wells have been drilled in the Gulf with over 3000 producing today[4]. The problem, of course, is that even this tiny spilled fraction can wreak environmental havoc on the affected area and result in billions of dollars of direct and indirect damages – or worse, destroy ecosystems for generations.

The issue with BP is that they’ve had a string of accidents in the last few years, including a burst Alaskan oil pipeline and a fatal refinery explosion, and investigations have pointed to a culture of cost-cutting and a lack of safety measures that resulted in the accidents[5]. So far, there is evidence that a relatively inexpensive second-level wellhead shut off device was not installed that could have already stopped the leak. While this device is not legally required by the US (although it is required by the governments of Norway and Brazil), it certainly gives the appearance of a very bad gamble to cut corners. At the time of this writing BP (the overall well owner), Transocean (the rig owner), Haliburton (the well capping company), and the Mineral Management Service (the federal agency responsible for determining and enforcing regulations) are all pointing fingers at each other in an attempt to shift blame.

This is already affecting public policy: Obama has distanced himself from his previous willingness to pursue offshore drilling. Ironically, this oil spill could actually threaten action on a climate change bill. In order for the bill to have gotten as far as it did, environmentalists and conservatives had to compromise, and a plan was developed that called for more renewables, more nuclear, and offshore drilling. Now, the environmentalists are putting their foot down and are backing away from the table, while conservatives are still scrambling to shape a message. “California Gov. Arnold Schwarzenegger and Florida Gov. Charlie Crist have changed their minds about offshore drilling. Schwarzenegger went a step further and withdrew support for a plan to allow drilling offshore Santa Barbara County. Several senators, the latest being Democrat Jay Rockefeller, have refused to vote for any bill that expands offshore drilling.[6]” In some sense, this incident could polarize the debate and force a restart of the legislative/negotiation process.

The West Virginia Massey Energy Coal Mine Explosion

This accident is a sad reminder of just how dangerous coal mines are. Since 1970, 262 coal miners have died in the US and thousands have suffered from indirect, respiratory deaths over the years[7]. In the past 10 years, over 10,000 miners have died from black lung in the US alone[8]. Worldwide, thousands of workers die each year and undocumented tens of thousands more will die from respiratory problems. But these respiratory issues don’t just affect the miners. The particulates that are released into the atmosphere when coal is burned to generate electricity increase the risk of asthma attacks, and are estimated to cut short 30,000 lives each year in the US alone. Considering the direct and indirect deaths due to respiratory problems, and the environmental damage due to strip mining, mountain top removal mining, CO2 emissions, and the occasional coal ash tailing pond that collapses[9], it is clear that coal is one of our dirtiest fuel sources. None of these negative externalities are priced into the deceivingly rock bottom <$0.04/kWh price that we pay for wholesale electricity. Perhaps this latest tragedy that killed 29 miners – the highest number in the US since 1970 – will help us reconsider these hidden costs.

Exco Natural Gas Well Water Contamination

Finally, the natural gas fracking incident that occurred in Caddo Parish, Louisiana – in the heart of the Haynesville Shale discovery – is exactly what the shale gas industry does NOT want to happen. On April 18th, Exco Resources apparently hit a pocket of natural gas that was much closer to the surface than expected which caused the gas to be released into the atmosphere. Subsequent tests of the local water supply showed that the aquifer had unacceptably high levels of natural gas. This is PRECISELY the biggest concern that environmental groups have with the process of hydraulic fracturing, or “fracking” that natural gas companies use to extract shale gas from the geologic formations underground. Although fracking is a mature process that has been used tens of thousands of times over many years, and the gas is typically found far below surface aquifers, the potential to contaminate a region’s water supply perhaps permanently is there. Natural gas has clear benefits over coal, especially in terms of reduced CO2 emmisions, and it is gaining in popularity as a “transition fuel” toward renewables. But incidents of water contamination such as this one will only hurt the industry’s image. If enough large accidents were to happen in the near future, it could spell an abrupt halt to this promising domestic energy source.

The Hidden Costs

With all of these accidents happening, it got me thinking – how DO you come up with the costs of all the negative externalities associated with the entire fossil fuel industry? There’s CO2 emissions and the effects of global warming, direct environmental damage (air, water, land) due to daily operation as well as accidents, loss of life, health problems, the cost of securing access to oil through military projection, and national trade deficits with countries that aren’t friendly to us. This is a very important question because the fact is we ARE paying for it one way or the other – just not at the pump or the plug. If, for example, gasoline costs $2/gallon at the pump, but causes $10/gallon worth of negative external effects that are distributed over everyone at some point later in time, this Total Cost of Ownership is not only worth knowing, but not recognizing these costs are a failure in the marketplace. Getting these numbers right is important to truly compare energy sources on an apples-to-apples basis in order to set effective policy.

A new report from the National Research Council, called “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use,” has attempted to arrive at a number[10]. This report looked mainly at the effects on human health (and did not thoroughly look at the effects of climate change, rising food prices, or risks to national security). It found that the hidden cost of our current energy mix on human health alone was $120B in 2005, the last year for which data was available. When the other effects are taken into account, this number could exceed $500B each year – over $1500 per person per year.

I don’t know why all of these serious accidents happened in just one month, but if there is any silver lining to them, it is that the currently un-priced, negative externalities associated with our dependence on fossil fuels are suddenly and unavoidably put back into the spotlight. Hopefully this will galvanize the growing public support for alternative sources of energy and will provide a renewed commitment to their development.

Links
[1] http://www.nytimes.com/gwire/2010/05/03/03greenwire-bps-oil-spill-bill-could-dwarf-exxons-ivaldezi-91298.html

[2] http://politicalticker.blogs.cnn.com/2010/05/14/congressman-to-launch-inquiry-on-how-much-oil-is-gushing-into-gulf/?iref=allsearch&fbid=DfkwRVk7c6s

[3] http://en.wikipedia.org/wiki/List_of_oil_spills

[4] http://www.foxnews.com/politics/2010/05/03/obama-administration-press-bp-settle-oil-spill-cleanup-costs/

[5] http://www.msnbc.msn.com/id/36925027/ns/business-us_business/#storyContinued

[6] http://industry.bnet.com/energy/10004270/gulf-oil-spill-one-more-way-to-kill-a-climate-bill/?tag=shell;content

[7] http://www.msha.gov/MSHAINFO/FactSheets/MSHAFCT8.HTM

[8] http://en.wikipedia.org/wiki/Coalworker’s_pneumoconiosis

[9] http://www.nytimes.com/2008/12/25/us/25sludge.html?_r=2&pagewanted=1&ref=us

[10] http://www.nap.edu/catalog.php?record_id=12794

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World Bank funds one of the planet’s dirtiest fuels

Green Death by Alexander Hunter for The Washington Times.

On April 8, 2010, the World Bank approved a controversial $3.75 billion loan to South Africa, most of it to help build 4,800 MW of coal power capacity – the world’s seventh largest coal plant. The Medupi plant will be Africa’s first supercritical power station but is still expected to annually spew an estimated 25 million metric tons of carbon dioxide emissions into the atmosphere. The loan has been made to Eskom, South Africa’s public utility which says that it will consider carbon capture and sequestration, should the option become viable.

The decision was made amidst powerful dissent from many environmentalists and economists who condemned it as “one of those stereotypical development disaster stories” that would exacerbate climate change and, in the long term, do nothing for poverty alleviation. Many South African activists have also charged that the Medupi power plant will not reduce electricity prices for the poor, but flood money into the pockets of corporations that have “sweetheart” deals with Eskom, and are currently being provided the cheapest electricity in the world.

The South African government, on the other hand, has been fiercely defending the loan as critical for the future economic growth prospects of not only the nation but also that of its neighbors – more than 60% of the electricity in the sub-Saharan region is produced by South Africa, with Botswana, Lesotho, Namibia, Swaziland and Zimbabwe, depending on Eskom for their electric power. South Africa, a more advanced nation in the region, has been repeatedly wracked by power outages in 2007-2008 and over 25% of its population still has no access to electricity.

According to a recent report by the Environment Defense Fund, the World Bank and other international public financial institutions have, over the past 15 years, helped to fund about 88 coal plants, spending over $37 billion dollars. In fact, most of these institutions have, as a trend, increased their funding for fossil fuel over the years.

The balancing act: Economic Growth vis-à-vis Climate Change

The Medupi debate illustrates the challenges faced by developing nations struggling between two critical objectives – providing affordable energy to haul their citizens out of poverty and yet maintaining the commitment to preserve the planet.

South Africa’s pressing energy needs and the lack of near-term feasible low-carbon alternatives, in many ways, justifies the Medupi project. Contemplate not having access to electricity – considering only the most fundamental needs, it would mean no access to clean-drinking water; using primitive means to cook, and keep warm; and “turning on” lamps for lighting. This energy-paucity not only makes life harder but also takes a human toll. According to a report by the world-health organization, indoor air pollution (largely due to use of primitive bio-fuels such as wood, waste, coal etc.), leads to 1.6 million deaths annually. In another assessment, waterborne diseases are the leading cause of death accounting for over 3.4 million lives annually.

Affordable electricity is necessary to exit from this course of poverty and death. But affordable electricity, as we know it today, is not clean. Without access to clean and at the same time cheap energy technologies, developing nations like South Africa (which incidentally, also has large coal reserves) will continue to turn to coal.

The dilemma, of course, is that such poverty alleviation efforts driven by coal energy are short-lived and could prove to be a recipe for an even more vulnerable future – especially since climate change is expected to have a worse impact on the least developed countries first. A country like South Africa, rich in solar and wind potential, should perhaps be first prodded by the World Bank to explore and initiate sustainable long term development projects that do not compromise its future. And this is a course that every nation across the globe should take. However, perhaps it is here that we all falter.

Global Climate Battle…

Although both the United States and Britain abstained from voting, they expressed unequivocally that this should be the “World Bank’s final coal battle.” Earlier this year, the U.S. also wrote to the World Bank recommending it to stop funding coal power in developing economies. This has been seen by many as duplicitous since both the developed economies are still building coal power plants in their countries.

The U.S. finances coal power through U.S. Department of Agriculture’s (USDA) Rural Utilities Service (RUS) and the Department of Energy. Currently it has 600 coal plants which provide almost half of its electricity. Although the net capacity of coal plants in the U.S. has changed little, the total output has increased over the years (27% between 1990 and 2007). Additionally, 60 new coal plants have been proposed and are in various stages of planning.

The Medupi debate has deepened further the fissure formed at Copenhagen between the developed and the developing world. Moreover, it underscores the larger struggle in defining responsibilities that countries – both industrialized and those growing – need to take-on to mitigate climate change.

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Coal’s Hidden Cost in the Billions

A study ordered by Congress says the burning of fossil fuels costs the U.S. $120 billion annually and declares coal the biggest single source of such external expenses. But the damages are likely to be even higher.

The study conducted by the National Academy of Sciences set out to measure the costs not incorporated into the market price of a kilowatt-hour or a gallon of gasoline or diesel. The main budget item: excess mortality. According to the authors, 20,000 people die prematurely every year due to health complications brought on by criteria air pollutants that are released in the process of burning fossil fuels. These toxins include soot particles, which cause lung cancer; nitrogen oxides, which contribute to smog; and sulfur dioxide, the main culprit behind acid rain. While these hidden public health costs are caused almost equally by coal and oil, their single biggest source is coal burning, according to the study.

The findings add support to the efforts of regulators and environmentalists who are pushing for stricter regulations of power plant emissions at a time when representatives of the Obama administration and the E.P.A. are debating how to move forward on the issues. However, critics of the status quo say that the estimates that were not incorporated in the study are even more noteworthy than the enormous price tag researcher from the National Academy of Sciences put on the hidden costs of fossil fuels. These include, aside from the environmental damage of global warming or the damages from burning oil for trains, ships, and planes, the damages from current solid waste management practices in the power industry.

Evidence shows that there has been a dramatic increase in coal waste products that are discarded in waterways or stored in ways that endanger human health. In many cases, such disposal or storage is not regulated or existing regulations are not enforced. Consequently, the hidden cost of power production from coal is likely to be significantly higher than the NAS estimate, critics argue. And thus far it is unclear when the Obama administration will push for additional regulation to curb the increase in harmful pollution.

The production of coal waste such as fly ash and other toxic byproducts of generating electricity from coal, in particular, has increased over the past two decades. To some extend this is the result of an increasing demand for electricity in the U.S. However, improvements in air pollution controls have contributed to this trend even more. Contaminants and waste products that used spew through the power plants’ smokestacks are now captured with greater frequency in solid form. As a result, American coal fired power plants produced 45 percent more combustion waste last year than in 1990, some 130 million tons in total. That’s enough to fill a train of box cars stretching from the District of Columbia to Australia.

While some of this waste product is used for construction fill and other “beneficial uses”, the majority is deposited in 1300 storage sites across the country, most of them unregulated and unmonitored. These dumps, which hold huge piles of this solid waste in 46 states, can reach up to 1500 acres. Frequently, they contain heavy metals such as arsenic, lead, mercury and selenium, all of which the EPA considers a threat to water supply and human health. Different studies have shown that substances leaching from storage sites can cause cancer and birth defects, according to the New York Times.

Yet currently these disposal sites are not subject to federal regulation. Tyson Slocum, an expert in environmental regulation and energy policy with the consumer rights organization Public Citizen in Washington whom I spoke with a few weeks ago, says, “The way we deal with coal combustion products is a big loophole in the country’s waste management system.” He explains that in the absence of federal policy, the states have set requirements, which vary significantly. Alabama, for example, does not regulate the waste product at all, except through nationally mandated water discharge permits. In Texas no groundwater monitoring or engineering requirements exist for utilities that dump coal ash on site.

According to Slocum, these differences in regulation are as much as the result of the varying regional influence of the coal industry as they are the product of tight state budgets. “Many states simply do not have the financial resources to pay the personnel costs necessary to regulate and monitor these waste sites.”

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Wind Will It End?

Please forgive me for the cheezy post title, but if you choose to read on I think you will see it is relevant. When we discuss the challenges facing wind energy we hear about the intermittency and storage issues, destroying the visual landscape, lack of transmission and even the dangers posed to birds. Many people also raise valid concerns regard whether or not wind can be economically feasible without government subsidies, regulations and mandates. A recent Scientific American article shows that wind proponents should also worry about the challenges we don’t hear about every day.

Not surprisingly, a lot of these less discussed challenges are coming from wind’s competitors. The Coalition for Fair Transmission Policy believes wind producers should fork over the funds needed to expand the transmission infrastructure from the areas of the country where wind energy is produced (the Midwest) to the areas with the highest energy demand (the East Coast). While this seems like a reasonable idea on the surface you should be asking yourself who is this Coalition?  Turns out the Coalition for Fair Transmission Policy is made up of East Coast utilities.

Closer to home we have players in the natural gas game demanding that wind developers be held responsible for some of the costs associated with running backup natural gas generators. These generators are essential in providing electricity when the wind slows down and is unable to produce the needed amount of electricity. As before this appears to be a reasonable suggestion. Why shouldn’t wind energy producers help foot at least part of the costs generated when a gas turbine is turned on to make up for a decline in wind energy? At the same time this seems like an attempt by the natural gas industry to increase their competitions costs and help keep natural gas competitive on price.

Anyone who is familiar with the wind industry understands the large role played by the government. While people can certainly debate whether the government should be involved at all and if so to what level, nobody can deny the importance of politics in the past or in the future. In my podcast I touched on the concerns Senator Charles Schumer raised regarding the spending of stimulus funds on projects that were creating more jobs in China than in the United States. Now Schumer and three other Senators proposed a plan that would prevent federal grants being issued to any project used blades or turbines manufactured outside of the U.S. opponents of the Senators’ plan claim that the U.S. cannot afford to slow or limit the growth of the wind industry because it will only put us at risk of falling behind Chinese and European manufacturers. They also point out that Schumer and his colleagues are simply trying to funnel jobs to their states and the number of jobs going overseas has been exaggerated. As with most things in politics the number of jobs being created in and outside of the United States differs significantly depending on who you talk to and before you know it the whole issue has taken a nasty turn towards “he said, she said”-ville.

It is obvious each of these parties (Senators, utilities, the natural gas industry) and their actions are motivated through their own self-interests, but it should be just as obvious that we cannot simply dismiss these legitimate concerns simply because we do not support the people raising them. In a perfect world we would be focused on finding solutions for the “natural” problems facing wind instead of creating additional artificial roadblocks. In that same perfect world everyone would be working towards the common goal of creating clean renewable energy and the traditional utility, natural gas and coal industries would be okay with that. Reality is the world isn’t perfect and the future of wind energy is hardly certain. For the wind industry to continue its impressive growth they will have to learn to be just as focused on navigating the wonderful world of politics and viciously competitive energy industry as they are with coming up with solutions to their storage issues.

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Coal is still part of the answer

The Fayette Power Project (FPP) is a power plant outside of LaGrange, Texas which uses coal-fired boilers to create steam for turbine generators.  The FPP is a vital part of the energy portfolio of Central Texas.  Of the ~1,600 MW capacity that serves as year-round baseload power, Austin Energy owns 600 MW.  Running at “full steam”, the plant goes through about 1,000 tons of coal every hour to keep up with demand.  The plant keeps about an 80 day supply of low-sulphur coal shipped on trains from Wyoming as emergency backup.  Operators constantly monitor emissions, operation parameters, weather conditions, and production output as managed the Electric Reliability Council of Texas (ERCOT).  Everything from the water discharge temperature to the 6-min average opacity reading recorded by the hundred thousand dollar CEMS (continuous emissions monitoring system) is displayed at the helm.

The FPP was recently recognized as a “gold level” facility under the Texas Commission on Environmental Quality’s (TCEQ’s) Clean Texas Program.  This honor is a result of the plant’s efforts in going beyond the regulatory requirements to reduce NOx and SOx levels. In fact, the plant is currently panning a shutdown of two of the three generators in order to install a new scrubbing system which will remove ~95% of SOx emissions, an increase from their current ~85% control efficiency.  This retrofit is budgeted to cost about $240 million, split between Austin Energy and the Lower Colorado River Authority (LCRA).

As much as the country, and indeed the world, is trending towards renewable energy and the promise of cleaner power, it is undeniable that a) we have a lot of coal, and b) we know how to use it.  While unregulated coal burning in some parts of the world is contributing emissions at an alarming rate, the U.S. has shown that these large utilities can remove a great deal of the hazardous air pollutants (HAPs) we recognize as most detrimental.  Indeed, many coal fired plants spend millions to stay in compliance or do better than required in perfect harmony with the objective of providing reliable, cheap power.  The elephant in the room is the looming CO2 discussion, one that is tricky and somewhat convoluted.  There is no silver bullet solution to collecting and reducing CO2 emissions in a simple, affordable way.  If CO2 control is required, the utilities will be forced to comply, and pass on the cost to the customer.  This may be fine with some people, but it will surely attract the ire of many as well.  Furthermore, the EPA does not have the people power or the regulatory infrastructure to deal with CO2 emissions.  It’s not as simple as inserting CO2 into the list of HAPs and requiring output limits.

It seems that perhaps the best course of action is not to give up on coal because it’s “dirty”, but rather to dedicate more research dollars into controlling or eliminating CO2 from coal-fired operations.  If we can use coal responsibly, and continue to advance new uses and controls, our energy outlook will be clear and promising.  As for now, it will be advantageous to educate consumers about where their power comes from, so that informed decisions can be reached.  The FPP offers tours not as a marketing gimmick to win over skeptics, but as a learning experience to share the behind-the-scenes work that goes into our daily power needs.

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Retrofitting Coal Power

I got lucky last fall. Together with a friend I toured what many consider America’s most important power plant to see the future of coal. But it turns out: There is nothing to see, really. Long pipes connect the colossal Mountaineer Power Plant on the Ohio River to a structure four stories tall made of metal beams and aluminum tubes. Three hundred feet further down the road a pump station sits listlessly under the winter sky, two pipes disappear in the ground. That’s it. Nothing is moving. But energy companies and politicians along with environmentalists the world over are watching closely what’s happening in New Haven, West Virginia.

Here the United States government and American Electric Power, America’s biggest provider of electricity, are developing a technology that attaches to a coal plant, filters carbon dioxide out of the power plant’s emissions and stores the gas directly underground. Their goal: Pioneering a process that reduces CO2 emissions, which significantly contribute to manmade global warming, and thus creating a future for the most abundant energy resource in the US. The pilot project is the first of it’s kind in the world. It got under way in September and the Department of Energy just announced that it would fund its expansion with $334 million dollars.

The importance of the project becomes clear when we consider the role coal plays in the US economy – and in climate change science. America generates nearly 50 percent of it’s electricity with coal and is home to the lion share of the world’s known coal reserves, some 27 percent. At the same time, the fuel is responsible for 80 percent of all CO2 emissions in the power sector and a big reason why the United States, a country with less than 5 percent of the world’s population, produces more than 20 percent of global carbon dioxide emissions.

Enter carbon capture and sequestration, as the technology at the 30-year-old Moutaineer plant is called. Or CCS for short. Essentially it consists of a chemical factory and two deep wells, AEP engineer Gary Spitznogle told me. “In the factory smoke that has been diverted from the plant’s chimney is mixed with a chilled ammonia-based chemical. Once the mixture is heated, the carbon dioxide separates itself and is pumped nearly two miles into the earth under a protective layer of sandstone,” explains Spitznogle. There the liquid CO2 displaces saltwater from fine pores in a layer of dolomite and stays put, theoretically of tens of thousands of years.

At the moment AEP is operating a small-scale validation of the technology together with the French company Alstom, which captures less than 2 percent of the CO2 emitted by the power plant. But with the financial assistance of the federal government, equivalent to half the cost of the projects next phase, AEP plans to scale-up the project until 2015. At that point the CCS project is supposed to capture 90 percent of the carbon dioxide from 235 megawatt of the plant’s 1,300 megawatt capacity. With the help of of CCS technology AEP, America’s biggest emitter of CO2, could eliminate all CO2 emissions by retrofitting their fleet of existing coal plants by 2025, says the company’s CEO Mike Morris.

But whether or not those long-term goals are achievable, remains to be seen. From the power generator’s perspective lowering the operating cost is the first priority. CCS is only cost-effective for AEP if the technology consumes 20 percent of the electricity generated in the plant or less – currently the test unit is using 35 percent. At this price coal power could easily cost as much as or more than nuclear or solar power. Project risk analyses also list geological shifts, earthquakes and contamination of water supplies as potential complications, according to the New York Times, all of which worry residents. Most importantly though, in order to move the CO2 emitted by all 600 US coal-plant to places where the gas could be stored underground, a giant national pipeline network would have to be constructed. Many regions of US have little to no storage capacity.

That’s why advocates of renewable energy think CCS the wrong investment. David Holtz, executive Director of Progress Michigan, an environmental group, told the New York Times CCS resembled a methadone cure for addiction. He argues the industry would do better to go cold turkey. “There is no evidence that burying carbon dioxide in the earth is a better strategy than aggressively pursuing alternatives that clearly are better for the environment and will in the long-run be less costly.”

Power generators like AEP disagree and are eager to see the New Haven CCS project supply evidence of coal’s cleaner future. The rest of the world will be watching too.

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