Washington, DC— Ever-rising industrial and consumer demand for more power in tandem with cheap and abundant coal reserves across the globe are expected to result in the construction of new coal-fired power plants producing 1,400 gigawatts of electricity by 2030, according to the International Energy Agency. In the absence of emission controls, these new plants will increase worldwide annual emissions of carbon dioxide by approximately 7.6 billion metric tons by 2030. These emissions would equal roughly 50 percent of all fossil fuel emissions over the past 250 years.
Policymakers and scientists now recognize that the current growth of greenhouse gas emissions must be reversed and that emissions must be reduced substantially in order to combat the risk of climate change. Yet a dramatic increase in coal-fired power generation threatens to overwhelm all other efforts to lower emissions and virtually guarantees that these emissions will continue to climb. This would preclude any possibility of stabilizing greenhouse gas concentrations in the atmosphere at levels that would acceptably moderate the predicted rise in global temperatures.
Fortunately, there is a potential pathway that would allow continued use of coal as an energy source without magnifying the risk of global warming. As a new Center for American Progress report shows, technology currently exists to capture CO2 emissions from coal-fired plants before they are released into the environment and to sequester that CO2 in underground geologic formations. Energy companies boast extensive experience sequestering CO2 by injecting it into oil fields to enhance oil recovery. Although additional testing is needed, experts are optimistic that this practice can be replicated in saline aquifers and other geologic formations that are likely to constitute the main storage reservoirs for CO2 emitted from power plants.
“In this country over half our electricity comes from coal, and a worldwide boom in coal plant construction is underway,” said CAP Senior Fellow and report Project Manager Bracken Hendricks. “If we are going to tackle global warming, we have to get serious about managing greenhouse gas emissions from these new plants. This proposal lays out a plan for ensuring that new coal plants don’t overwhelm our efforts to solve global warming.”
This paper considers how best to change the economic calculus of power plant developers so they internalize carbon capture and storage (CCS) costs when selecting new generation technologies. Five policy tools are analyzed:
- Establishing a greenhouse gas cap-and-trade program
- Imposing carbon taxes
- Defining CCS systems as a so-called Best Available Control Technology for new power plants under the Clean Air Act’s New Source Review program
- Developing a “low carbon portfolio” standard that requires utilities to provide an increasing proportion of power from low-carbon generation sources over time
- Requiring all new coal power plants to meet an “emission performance” standard that limits CO2 emissions to levels achievable with CCS systems.
Each of these tools has advantages and drawbacks but an emission performance standard for new power plants is likely to be most effective in spurring broad-scale adoption of CCS systems.
To provide additional flexibility while CCS technology is being perfected, plant developers during the first three years in which the new performance standard is in effect could have the option to construct traditional coal plants that do not capture and sequester CO2 if they offset on a one-to-one basis their CO2 emissions by taking one or more of the following steps:
- Improving efficiencies and lowering CO2 emissions at existing plants
- Retiring existing coal or natural gas units that generate CO2 emissions
- Constructing previously unplanned renewable fuel power plants representing up to 25 percent of the generation capacity of the new coal plant.
In 2011, this alternate compliance option would sunset and all new plants subsequently entering construction would need to capture and sequester their emissions.
If the United States is successful in maintaining the viability of coal as a cost-competitive power source while addressing climate concerns, our leadership position would enable U.S. industries to capture critical export opportunities to the very nations facing the largest challenges from global warming. Once our domestic marketplace adopts CCS systems as power industry standards, the opportunities to export this best-of-breed technology will grow exponentially.
This will be critical to combating the massive rise of coal-derived greenhouse gas emissions in the developing world. Boosting exports while also helping China, India, and other developing nations reduce emissions and sustain economic growth would be a win-win-win for our economy, their economies, and the global climate.