State CO2 Rules May Jeopardize Frontier Line

Wyoming plans to warn the California Energy Commission that the state may be setting the bar too high on greenhouse gas emissions reductions, hindering the success of the "clean coal" demonstration project and/or the Frontier transmission line. Still, Wyoming is keen on partnering with California on a clean coal project that will benefit from newly created federal subsidies. "I hope that we can come together in the middle," said Steven Ellenbecker, energy policy adviser to Wyoming governor Dave Freudenthal. He called reaching a compromise on greenhouse gas emissions standards "the most formidable hurdle" in moving forward with the projects. CEC spokesperson Rob Schlicting said it was premature to comment on the issue. Next week, Wyoming officials plan to map out an initial funding strategy and timetable for a clean coal project. The plan will be submitted to the federal Department of Energy. Wyoming's project is expected to incorporate integrated gasification combined-cycle technology and capture carbon dioxide for enhanced oil recovery operations. The plant would transmit its electrical output to California, Nevada, and Utah along the proposed Frontier Line, Ellenbecker stated. The new transmission facility-backed in April by Governor Arnold Schwarzenegger-would open up a 12,000 MW transmission superhighway between resource-rich Wyoming and customers in California, Nevada, and Utah. It would cost up to $5 billion to build and would support an investment of up to $15 billion in both clean coal and wind generation plants (Circuit, April 8, 2005). The legislation authorized DOE to fund a Western clean coal project at a location above 4,000 feet in elevation. It would have to use integrated gasification combined-cycle technology and sequester carbon dioxide emissions, as well as running on Western coal, much of which is subbituminous. The bill has unleashed a horse race in the Rocky Mountains, as states work to prepare proposals even before DOE has prepared a funding program for such a project, said a DOE spokesperson. Also expected to join in the competition are New Mexico, Montana, and Colorado, according to observers. Ultimately, however, the Western governors are likely to cooperate on a project, instead of trying to edge each other out for federal funds, predicted Rich Halvey, Western Governors' Association clean and diversified energy initiative project manager. He said that the governors will discuss the best location for a project and probably back one in their upcoming clean and diversified energy report, due in June of 2006. Western coal is abundant but generally may not work as well with the advanced "clean" technology as Eastern coal because it does not have the same energy content. Advanced coal power in the West also could be hampered by the lower level of atmospheric oxygen in elevated locations, Halvey explained. The CEC, in its draft 2005 Integrated Energy Policy Report, recommends that the "greenhouse gas performance standard for utility procurement be set no lower than levels achieved by a new combined-cycle natural gas turbine." On October 6, the California Public Utilities Commission endorsed a weaker version of the state of the art standard, basing instead on the performance of existing combined cycle natural gas plants. It noted, however, that carbon dioxide sequestration would be needed on coal plants. The CPUC said that standard is essential to meeting Schwarzenegger's goal of rolling back state greenhouse gas emissions to 1990 levels by 2020. The problem for the Wyoming project is that existing technology may not be able to meet the standard. Unless California is willing to set limits based on what can be technically achieved, it likely will eliminate clean coal as a procurement option and eliminate the rationale for the Frontier Line, at least as now envisioned, according to Ellenbecker. Pacific Gas & Electric and Southern California Edison will meet with utilities from other states and Wyoming energy officials at the end of the month to put together a funding plan for the proposed Frontier Line, Ellenbecker said.

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State CO2 Rules May Jeopardize Frontier Line

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