US Presidential Candidates Highlight Clean Coal Debate

Industrial Metals

The pro- and anti-coal discourse seen in the US election campaign distracts from global action to clean up coal.

Coal’s impact on the environment is a divisive issue for Americans. In the runup to the November US presidential election, Mitt Romney’s vision for American coal has placed his energy policy miles apart from Obama’s current approach.

Romney, the recently nominated Republican candidate for president, would revise the Clean Air Act to eliminate restrictions on greenhouse gas emissions and streamline rules affecting coal-fired power plants. His pro-coal-industry stance is an about-face from Romney’s earlier position, while governor of Massachusetts, to implement a cap and trade system to limit coal plant emissions.

Obama, on the other hand, has taken a harder line against coal, directing the Environmental Protection Agency to issue the country’s first-ever standards limiting mercury emissions and toxins from coal-fired power plants.

Campaign rhetoric between the presidential camps has — in typical election style — placed candidates within pro- or anti-coal-development camps. But despite the hyperbole and division that characterize debates on the future of coal globally and in the US, two facts remain.

The first is that coal use is rising and will likely continue to do so for years to come. Global coal consumption increased 400 percent between 1980 and 2010, according to the US Energy Information Administration, and the BP Energy Outlook 2030 predicts that coal consumption in countries that are not members of the Organisation for Economic Co-operation and Development will grow by 2 percent per year for the next 20 years.

The second fact is that industry and governments see economic, environmental and political motives for taking the middle ground of improving efficiency and reducing the footprint of current and future coal-burning technology.

Because of these realities, carbon capture and storage (CCS) technology — a process by which carbon dioxide emissions from power plants or industrial facilities are collected, compressed and injected deep underground for permanent storage — is receiving significant attention.

While the cost of CCS technology is currently too high to merit widespread usage, governments are pursuing demonstration and test facilities aimed at balancing the need for ensuring a stable power supply with the reduction of greenhouse gas emissions.

Governments take action

The US is already taking strides on the CCS front. Through joint efforts with the US Department of Energy, several coal mining companies and power producers have developed plans for the FutureGen 2.0 power plant, a “first-of-its-kind, near-zero emissions coal-fueled power plant” based in Morgan County, Illinois.

With the help of Xstrata (LSE:XTA), Peabody Energy (NYSE:BTU), Alpha Natural Resources (NYSE:ANR) and others, the project will integrate power generation facilities with carbon capture technology to eliminate more than 90 percent of the plant’s carbon emissions.

Similar efforts are occurring elsewhere, with the United Kingdom ratcheting up its involvement in CCS by investing £1 billion (C$1.57 billion) to promote the development of commercial CCS technology, to be deployed in the 2020s.

The UK government’s Department of Energy and Climate Change (DECC) released a report this month that states that advances in CCS technology will be a central component of a successful roll out of its low-carbon strategies. The DECC report notes that technological advancements could help reduce the projected $225 billion cost of CCS by as much as 29 percent ($41 billion) through 2050.

The Energy and Climate Change Committee, a cross-party UK policy group, released a report this week that points to trade opportunities with China, whose emerging low-carbon market is worth US$680 billion.

“British firms could benefit enormously as China invests in carbon, capture and storage and wind, wave and tidal power, but the Government needs to do more to help them gain access to these huge potential markets,” the committee’s chairman, Tim Yeo, said in the release.

Yeo added that supporting the country’s participation in the global low-carbon race will allow the country to “enjoy economic as well as environmental advantages.”

Not to be left out, Australia’s coal industry has instated the COAL21 Fund, a voluntary levy on coal production aimed at raising AU$1 billion over 10 years to support the pre-commercial demonstration of low-emissions coal technology, including CCS.

Actions speak

Beyond these far-reaching commitments, China was the first country to develop an operational deployment of CCS technology. China’s Shenhua Group is operating the country’s first CCS demonstration facility. The project is aimed at quelling the growing emissions from the country’s ballooning number of coal-powered electricity plants.

The demonstration project has already sealed off more than 40,000 tons of carbon dioxide in the past 15 months and aims to sequester 300,000 tons by mid-2014, Shenhua reported earlier this month.

As the debate about the next steps for the future of the coal industry continues in the US and abroad, the future of coal is already underway — and it is not as clear cut as recent presidential debates suggest.

 

Securities Disclosure: I, James Wellstead, hold no direct investment interest in any company mentioned in this article.

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