Regulators Warm to Climate Change

Whether coal fuel for power plants can be clean enough to lessen climate change was a key debate at a California Public Utilities Commission climate change hearing February 23. ?There is a growing consensus that we have a serious problem. The question is what do we do about it,? said commission president Mike Peevey at the packed meeting. Calpine called for shutting down old gas-fired plants and increasing reliance on more efficient fossil-fuel-fired, combined-cycle plants to reduce greenhouse gas emissions. California should eliminate reliance on out-of-state coal plants and build liquefied natural gas plants, recommended Peter Cartwright, Calpine chair, president, and chief executive officer. By contrast, Ohio-based Cinergy, which owns 32 coal-fueled power plants nationwide, said any program to cut heat-trapping gas emissions should still count on coal as a major resource. It?s important to face the reality that coal fuels 50 percent of the nation?s generation, said William Tyndall, Cinergy vice-president of corporate development and strategy. Any emissions-reductions program should be done gradually and predictably, he suggested. Many in the industry are looking to coal gasification as a way to reduce emissions, he added. Integrated gasification combined-cycle technology converts coal into gas. It removes most, but not all, of the carbon, then uses the gas to generate electricity ( Circuit , Nov. 12, 2004). The Cinergy official admitted that gasification plants are up to 20 percent more expensive than traditional coal plants. Despite the hefty price tag, Tyndall said, his company is planning a coal-cleaning plant in Indiana. Ralph Cavanagh, Natural Resources Defense Council energy program director, also sang the praises of coal gasification. The technology can ?open the door to economic carbon capture and storage,? he said. However, Cavanagh warned the state against committing to conventional coal plants, such as Sempra?s proposed 1,400 MW Granite Fox coal plant in Gerlach, Nevada. This facility, which is seeking California customers, would produce about 10 million tons of carbon dioxide annually, compared to annual emissions from all California sources of about 420 million tons five years ago, according to Cavanagh. Looking at potential financial risks linked with climate change, Denise Furey, Fitch Ratings senior director, said global warming is on investors? radar. Fitch expects the federal government to require carbon cap-and-trade programs within five years, she noted. Furey stressed that gasification devices aren?t economic and that the power industry will need to devise affordable emissions-control technology. Developing such devices could be hampered by the difficulty of measuring the price of carbon, she asserted. Fitch estimates that a 5 percent reduction in CO2 emissions could cost between $700 million and $4.2 billion across the energy sector. Investor-owned utilities touted their recent renewables and energy-efficiency accomplishments and agreed that stepping up these efforts will help further reduce greenhouse gas emissions. Utilities were also in accord that all energy providers should follow the same emissions-reduction policies. Bob Foster, Southern California Edison president, stated his utility is the country?s largest purchaser of green power. Subsequently, John Geesman, a California Energy Commission member who has been after Edison to do more with renewables, especially wind energy from the Tehachapis, asked whether Edison would ?lead the charge? on the governor?s idea to advance the renewables standard to 33 percent by 2020. The current target is 20 percent by 2017. This goal may be realistic, responded Foster, but utilities should be able to opt out if prices are exorbitant. While boasting of the utility?s green credentials, Foster also urged support for new investments in the San Onofre Nuclear Generating Station. Running SONGS spares the environment because it lessens the need to run plants with air-pollution problems, he asserted. The CPUC is currently considering approval of a $700 million investment in new steam generators that would extend the life of the nuclear plant. SONGS produces negligible greenhouse gas emissions, yet the facility produces highly radioactive wastes. Foster also said his utility is looking at coal gasification. Coal, however, doesn?t figure into Pacific Gas & Electric?s plans, according to Roger Peters, senior vice-president. The United States is the world?s largest emitter of greenhouse gas emissions, accounting for roughly 25 percent of global emissions, warns a CPUC paper prepared for the hearing. Climate change threatens the viability of California?s businesses and resources. Impacts on the availability of water and energy demands due to increasing temperatures and stunted growing seasons could damage industries sustaining the economy, according to the commission analysis. The commission?s call for action bucks federal opposition to the Kyoto Protocol, which went into effect last week. Ratified by 141 countries, the treaty mandates reduction of greenhouse emissions below 1990 levels and is seen by some as just the first step toward reducing pollution that contributes to global warming. In December, the CPUC directed regulated utilities to factor greenhouse gas costs into bids for new power plants as part of a decision on long-term procurement. Regulators are also considering creating a ?carbon cap? when regulated utilities purchase energy. As a next step, regulated industries will need to develop a collaborative report recommending industry actions and policies that tackle climate change. The commission will likely develop regulations on climate change, Peevey said.

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Regulators Warm to Climate Change

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