Coal’s Triple Play

Coal can contribute to our global energy future if Congress supports innovations with key marketplace incentives, says Bracken Hendricks.

Efforts to combat climate change around the world over the next 25 years will count for nothing if the projected numbers of coal-fired power plants are built as planned in the United States and abroad. And built they will be.

Ever-rising industrial and consumer demand for more power in tandem with cheap and abundant coal reserves across the globe are expected to fuel coal-fired plants producing 1,400 gigawatts of power by 2030, according to the Energy Information Administration. In the absence of emission controls, these new plants will increase worldwide annual emissions of carbon dioxide by approximately 8.4 billion tons, compared to the six billion tons worth of CO2 emissions currently produced in the U.S. from all sources of energy in 2005. The impact would be staggering.

What’s worse, existing emission-control technology will not make an appreciable difference in curbing greenhouse gases from these new plants. That’s why the Senate Commerce, Science, and Transportation Committee’s hearing on advanced coal technology tomorrow is so important. Congress needs to act, and act quickly, to ensure the United States leads the development of advanced clean coal technologies to protect our environment by cutting carbon emissions, securing our energy independence, and boosting opportunities for the export of advanced coal-technology products and services.

Fortunately, there is a pathway that could allow continued use of coal as an energy source without magnifying the risk of climate change. Technology currently exists to capture CO2 emissions from coal-fired plants before they are released into the environment. And experts are increasingly confident that the captured CO2 can be safely stored in underground geologic formations such as depleted oil fields, saline aquifers, and other natural formations.

If we are serious about addressing the growing threat of climate change, we must address this expected rise in coal plant CO2 emissions. This win-win-win proposition for our climate, our national security, and our economy is clearly within reach, but it will require policymaking innovation in Congress to match scientific advances in coal technology. The great challenge is ensuring that the widespread deployment of this technology happens quickly and efficiently.

For that to happen, Congress should enact a power-generation performance standard in the United States that effectively requires power companies to capture and then store carbon emissions from generating electricity rather than releasing it into the atmosphere. This new standard could be applied to all new plants built after 2010, allowing some flexibility in the timing of the phase first in of the requirement to capture and then in storing CO2 so that the utility industry can gain experience both with the new standard and in implementing this emerging technology safely, efficiently, and effectively for the long haul.

Existing clean coal technologies simply can’t do the trick. The prevailing coal-based power generation technology currently employed in the U.S. is pulverized coal, with high-temperature designs available to improve efficiency. It is possible to capture CO2 emissions at these plants, but the technology needed to capture these emissions currently has performance and cost drawbacks.

A new and less prevalent form of coal-based power generation known as Integrated Gasification Combined Cycle, or IGCC, has shown greater promise in achieving cheaper and more efficient carbon capture-and-storage capabilities because the CO2 can be removed before combustion. Yet few plant developers have committed to installing and operating the carbon capture-and-storage systems needed to sequester the CO2 underground—even though the U.S. energy industry boasts extensive experience sequestering CO2 injected into oil-fields to enhance oil recovery.

That’s understandable from a business perspective since these steps require add-on technology that could increase the cost of producing electricity by 25 percent to 40 percent. That’s why Congress needs to encourage the use of this new carbon capture-and-storage technology at new IGCC or other advanced coal power plants.

As a transitional strategy to provide some flexibility, Congress could give plant developers the option during the first three years that the new standard is in effect to begin constructing traditional coal plants that do not capture and sequester CO2 under certain limited conditions. Owners of these plants would need to offset on a one-to-one basis their CO2 emissions by taking one or more of following three steps:

  • Improve system-wide efficiency and lower CO2 emissions at existing plants.
  • Retire existing coal or natural gas units that generate CO2 emissions.
  • Construct previously unplanned renewable fuel power plants representing up to 25 percent of the generation capacity of the new coal plant.

At the end of this three year period, however, these options would be eliminated and all new plants subsequently entering construction would need to include carbon capture and storage systems. Such a performance standard will be outlined in detail in a forthcoming report by energy industry experts Ken Berlin and Robert Sussman, which will be published by the Center for American Progress next month.

This new performance standard should be accompanied by new government programs to offset the additional costs of installing the new technologies at new coal plants and provide some relief from electricity price increases. These programs would help assure that generation performance standards are implemented fairly and without disproportionate impacts on particular regions or groups of consumers. A government fund, for example, could be created to “credit” utilities or consumers for all or part of the price increase that consumers would otherwise experience if they receive power from plants using the new power generation standard.

Congress needs to encourage power companies and power-plant suppliers and builders to switch now to the most advanced clean coal so that all new plants in the United States are equipped with the best emission-reduction technologies now in development that are capable of capturing and storing carbon. Once our domestic marketplace adopts these new technologies as power industry standards, the opportunities to export this best-of-breed coal technology will grow exponentially, which is critical to combating the massive rise of coal-derived greenhouse gas emissions abroad.

In fact, the export of this new technology is perhaps more important than its adoption in the United States. The reason: Only about 154 gigawatts of new power from coal-fired plants is projected to materialize by 2030 in the United States, with the remaining 1,258 gigawatts of power spewing greenhouse gases into the atmosphere out of India and China and other rapidly developing nations.

Some coal-fired plants might get derailed here at home—witness the recent decision to scrap the construction of several new coal-fired plants as part of a $45 billion purchase of energy giant TXU Corp. by a collection of private equity investors led by Texas Pacific Group and Kohlberg Kravis Roberts. But in other parts of the world, such opposition will likely be limited and will not prevent new plants from being built.

The dramatic long-term increases in CO2 emissions from these new plants abroad would greatly impede the ability of developing nations such as India and China to moderate and ultimately reverse emissions growth, which will be necessary to achieve atmospheric levels of CO2 that acceptably reduce the risk of climate change. America cannot stand idly by while China and India burn up the planet. We need to lead.

Such bold action by the U.S. Congress to put in place a cutting edge power generation performance standard for new coal-fired power plants would demonstrate leadership in addressing climate change and build a technological and regulatory foundation which countries such as China and India could emulate as they attempt to tackle the risk of climate change without stifling economic growth. These nations will need our expertise and will heed our leadership because it is in their own self interest to do so.

Consider these three sets of facts. Emissions from projected new coal plants between now and 2030 are estimated to equal approximately 50 percent of all emissions from all power plants during the past 250 years. These new coal-fired plants, once built, will have a projected lifespan of up to 60 years, which means there will be powerful resistance to retiring them before investors have earned an acceptable return on their investment. And these new plants would be high CO2 emitters for decades

A power generation performance standard that requires carbon capture-and-storage capabilities for all new coal plants would ultimately assure coal a secure and important role in the future U.S. energy mix, while not turning a blind eye to the real threats of climate change. By establishing a clear technological path forward, such a policy will enable coal to be a viable fuel in a carbon constrained world and ensure that the United States once again leads the way in energy technology innovation and strengthened its export prowess in the process.

Bracken Hendricks is a Senior Fellow at the Center for American Progress and the project manager of a detailed policy plan for implementing a Power Generation Performance Standard, which will be outlined in a forthcoming CAP report authored by Robert Sussman and Ken Berlin, due for release in May 2007.

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Bracken Hendricks

Senior Fellow