The hottest topic at the meeting of the National Governors Association in Washington this weekend was energy, particularly how to figure out a way to cost-effectively store the carbon dioxide produced when power plants generate electricity.
Carbon sequestration — storing the carbon dioxide underground in deep geologic formations — was what governors from Wyoming to Pennsylvania wanted to discuss.
Coal-fired power plants are the largest stationary sources of carbon dioxide, one of the greenhouse gases.
If electric utilities can find ways to sequester carbon dioxide from power plants, then “the coal states will be back in business big time,” said Pennsylvania Gov. Ed Rendell at the NGA meeting.
Carbon dioxide is a pressing issue not only for Rendell and other governors of coal-producing states, but for the entire nation in an era of increasing energy costs and concern about greenhouse gas emissions.
Democratic governors in coal states
By coincidence, almost all of the biggest coal-producing states — Pennsylvania, Wyoming, West Virginia, Kentucky, Colorado, and Montana — now have Democratic governors.
Next year these Democrats will in all likelihood be dealing with a Democratic-controlled Congress — and possibly a president — who’ll be intent on enacting limits on greenhouse gas emissions.
That could be bad news for anyone who mines, sells, or burns coal. But that includes virtually everyone in America, since the burning of coal generates nearly half of the electricity used in the United States.
For the coal-state governors, carbon sequestration is imperative if their states’ coal is going to continue to be a source of electricity, jobs, and tax revenue. According to the Department of Energy, the United States has the world's largest known coal reserves, enough to last more than 200 years at today's consumption rate.
“Sequestration is nascent technology,” noted Jeff Immelt, the chairman and CEO of GE, who addressed the governors’ meeting Saturday.
“It’s got to be proven, but there is a lot of work going on to do it. The first six or ten plants are going to be more expensive” than traditional coal-fired power plants, Immelt said, “but there’s no reason to believe they won’t come down the learning curve just like every other thing the industry has done. The first ten or twelve are going to have some kind of national framework so that it is not just borne by the states that are willing to do it…. We’ve got to get some of these built so that we can start learning.”
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Consumers and taxpayers will have to pay the additional cost of storing the carbon dioxide from power plants underground.
“Sometimes there’s a perception that those of us in these (coal) extraction states are pushing back (at efforts to limit greenhouse gas emissions). That’s not the case,” said West Virginia Gov. Joe Manchin.
But “we can’t do it just by on passing the rates on to our base-load customers,” said West Virginia Gov. Joe Manchin. “We’ll do whatever we can in playing a part in this cleaning and greening of America but it has to be done as a national policy, not on a regional basis. Our economies can’t handle that and the people that depend on the energy we produce, on the East Coast, couldn’t handle it either.”
Montana Gov. Brian Schweitzer complained that Congress still has not enacted “a legal framework for carbon sequestration.”
Schweitzer pointed to the uncertainty created by the lack of action by Congress. “Are we going to have a carbon tax? Are we going to have a cap and trade system on CO2?”
Uncertainty over property rights
Congress, he complained, hasn’t resolved the question of property rights. “In most of the country, the surface owner may be different than the mineral owner,” Schweitzer said. “In Montana and other oil and coal states, you may own a ranch of 20,000 acres and it could be that you own none of the minerals under it, or you may own 25 percent or 50 percent. That framework has been worked out over the last hundred years.”
“Can you tell me who has the right to pump CO2 under my ranch in Montana? Is it the surface owner that owns those rights? Is it the mineral owner that owns those rights? Is it the state that owns those rights, or is it the federal government?”
The Montana Democrat mentioned another problem: legal liability.
“When we pump CO2 below the surface, we’re talking about sequestering it for thousands of years. If somebody has been paid to sequester CO2 and it begins to leak in two years, who’s responsible? How about after 50 years? How about after 200? How about after 2,000? So when we start talking about a legal framework and liability that extends for 50 generations into the future, we need Congress to act. These CO2 pipelines will cross state lines, these geologic formations will cross state lines and so there has been a legal framework that is national.”
Some of the coal-state governors and their legislatures are not waiting for Congress to act. Wyoming Gov. Dave Freudenthal said at this weekend’s NGA meeting that the lower house of his state legislature had just passed bills to regulate carbon dioxide sequestration and to clarify who owns the deep underground spaces where carbon dioxide would be stored.
“If you’re going to have a multi-generational storage scheme, we need to have a multi-generational regulatory scheme,” Freudenthal said.
Some electric utilities and states are doing their own carbon sequestration projects.
American Electric Power CEO Michael Morris told the governors meeting that his firm and Alstrom, the French engineering company, are set to begin operating a relatively small (30 megawatts) carbon-capture and storage project at a plant in West Virginia next year.
Morris said the underground storage has been done for decades; it is “the capture technology has not been developed at power plant size” which is the technological challenge. “We’re trying to see if we can scale the technology up so we can handle the big power plants. If we don’t do that, we are going to prematurely shut down some facilities that are essential to this economy” — that is, if Congress imposes greenhouse gas limits.
A Pennsylvania coal renaissance?
Meanwhile, Rendell sees a technology called integrated gasification combined cycle (IGCC) as a potential savior of coal in Pennsylvania. IGCC can be used to run coal-fired turbines to generate electricity, or to produce synthetic natural gas, and to produce non-sulfur diesel fuel. “The potential for it is absolutely enormous, but the question is what you do with the carbon (dioxide),” he said.
Rendell is seeking a federal loan guarantee for an IGCC facility in an old Pennsylvania anthracite coal bastion, Schuylkill County.
Pennsylvania’s anthracite regions, which had a boom in the early 1900s, could enjoy a renaissance. “Anthracite, which is now not very usable, comes back into business,” said Rendell, once the carbon sequestration problem is solved.
As yet, there’s no comprehensive set of federal regulations for storage. The Environmental Protection Agency (EPA) has jurisdiction under the 1974 Safe Drinking Water Act to regulate the injection of CO2 for underground storage.
As EPA administrator Stephen Johnson briefed western governors at the NGA meeting, Colorado Gov. Bill Ritter told him that he needed to promptly issue regulations so that states and private investors would know what they had to deal with.
“We’re looking for reliability as a part of the equation that investors take into consideration,” Ritter said later in an interview. “Reliability comes with regulation.” EPA regulations will help Colorado and other states “get to the place where the investors understand what the playing field is like. We think that enhances investment which hopefully takes it from a nascent stage to first generation technology.”