Coal Industry Sees Life or Death in Senate Climate Debate

By ANNE C. MULKERN of Greenwire
Published: July 6, 2009
When people in the coal business talk about "the valley of death," they are referring to a grim place not located near any mine. It is an economic chasm that the industry fears awaits it if the Senate approves climate legislation similar to what passed the House.





"Unless they come up with a breakthrough technology to capture carbon and store it, coal is dying," said Kenneth Green, resident scholar at American Enterprise Institute, a conservative think tank. "If this [bill] does what they want it to do, I would say coal is on its way out."

That is what coal hopes it can prevent with its latest lobbying push.

Passage of the House climate and energy bill kicked off renewed lobbying efforts, with industry advocates urging senators to produce legislation that would slow down the pace of efforts to cap carbon emissions. Environmentalists are pushing back, seeking to prevent a weakening of proposals in the House bill.

The House bill, which passed last month in a 219-212 vote, would limit carbon emissions and require businesses to buy permits for the greenhouse gases they emit. In the early years, the government would give away 85 percent of those permits and auction off the remaining 15 percent.

Of the free permits, 35 percent would go to the electric utility industry in 2012 and 2013. The sector's free permit portion shrinks every few years after 2013. The allowances phase out completely between 2026 and 2030.

That sounds like some good news for coal, which is used for generating about 50 percent of the country's electricity. In fact, environmentalists consider the bill crafted by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) highly favorable to coal.

"They're probably popping champagne corks and are partying all summer long because of what they got in the Waxman-Markey bill," said Nick Berning with Friends of the Earth, an environmental group. "The idea that coal lobbyists are out there complaining that they need more is just appalling, because they already got so much."

But both coal-industry and independent experts foresee a situation where utilities start to abandon coal.

Utilities will want to prepare for the shrinking number of free permits in the future, AEI's Green said. By switching from coal to natural gas, utilities could cut their carbon emissions almost in half, he said, then sell any leftover free permits to other businesses. Coal produces nearly twice as much greenhouse gas pollution as natural gas, per unit of energy made.

And if a carbon cap becomes law, Green said, investors are not going to put money into coal-fired power plants or coal mines.

"Expansion of coal is probably going to cease," Green said. "Nobody is going to want to build a coal power plant." The only growth, he said, could come in coal sales to China or other countries.

The industry's hope is that it can find a commercially viable way to capture carbon emissions and sequester them underground or underwater. But putting the pieces of that technology together and getting them running before the carbon cap tightens could be difficult.

"You're talking about a minimum of 10 years" to show the feasibility of a carbon capture and sequestration plant, said Joel Darmstadter, senior fellow with Resources for the Future, a nonpartisan research group.

Such a time frame is "unbelievably fast when you don't even have a pilot project," Green said. And building pipelines needed to move the captured carbon, he said, is "virtually impossible" within that decade.

It is through that narrow window that the industry sees a potential valley of death.

If utilities switch away from coal, coal-fired plants won't be built, coal production will stop, coal miners will lose their jobs and the ancillary businesses around coal will shut down, said Luke Popovich, spokesman for the National Mining Association.

Then, even if carbon capture and sequestration comes online, Popovich said, it will be too late.

"You wouldn't have the expertise," Popovich said. "You wouldn't have the infrastructure. You wouldn't have the labor force you would need to sustain the industry."


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