"Like Detroit, the coal industry chooses (assisted) suicide"
A Politico story today begins:
A major coal industry group has spent an estimated $45 million on an ongoing advertising campaign promoting the clean energy potential of coal, but its members are spending relatively little on the research that would make the technology a viable solution, a report by the Center for American Progress [CAP] finds.
The only hope for the coal industry (at least in a world that is itself not suicidal) is a very well-funded effort to demonstrate and deploy carbon capture and storage. This will take at least 10-years from the time the industry (and government) gets serious — and probably much longer (see “Is coal with carbon capture and storage a core climate solution?“). That was true ten years ago when the coal industry — and car companies — lobbied against Kyoto saying they needed time to develop new technology. But those complaints turned out to just be an excuse for inaction, as many warned.
Detroit suicidally squandered that time, with the support of their conservative allies (see “The car companies bailed out on us“). The equally self-destructive behavior of the coal companies were also enabled by conservatives (see “In seeming flipflop, Bush drops mismanaged ‘NeverGen’ clean coal project“).
Now CAP has a new report that details just how unseriously the industry has taken the pursuit of its only hope for long-term survival:
A series of feel-good ads this year showcased a variety of people straight from central casting: the feisty grandma, the hip-looking teacher, the salt-of-the earth farmer. They all communicated the same message: “I believe in…” the future, technology, American ingenuity. Only at the end do we learn what they all believe in: “Clean Coal. America’s Power.”
These ads were sponsored by the American Council for Clean Coal Electricity, an industry group comprised of 48 coal and utility companies. ACCCE spent at least $45 million on advertising this year to convince Americans that “clean coal” is the solution to global warming. The ACCCE companies claim that they “are committed to making coal a clean energy source.” Yet the coal mining and electric utility industries spent over $125 million combined in the first nine months of 2008 to lobby Congress to delay global warming pollution reductions until clean coal technology is ready.
Despite the ads’ claims, an analysis by the Center of American Progress determined that ACCCE’s companies spend relatively few dollars conducting research on carbon capture and storage, the most promising clean coal technology to reduce global warming pollution from coal-fired power plants. This technology would allow power plants to capture 85 percent or more of their carbon dioxide emissions and permanently store them underground in geological formations.
Recently, ACCCE spokesman Joe Lucas admitted that the commercialization and widespread use of CCS is still 10 to 15 years away. And ACCCE opposes binding pollution reductions until CCS is ready. Instead it supports essentially voluntary measures to reduce greenhouse gases from coal-fired power plants and other sources.
Despite its slogan that ACCCE companies made “a commitment to clean,” a review of its member companies’ research programs found that they are making relatively insignificant investments in CCS compared with their profits. CAP’s analysis found that the 48 ACCCE companies made a combined profit of $57 billion in 2007 (See chart 2) while investing over several years only $3.5 billion in CCS research (See chart 1). That means the companies combined made $17 in 2007 profits for every $1 invested in CCS research over several years. This is a very generous estimate, because the analysis includes several projects that haven’t yet begun. Nonetheless, the research funding over a number of years is dwarfed by the profits for a single year.
With such relatively small investments in CCS research, it’s no wonder that it may take many years to develop and commercialize the technology. The lack of investment reinforces the notion that the real purpose of the clean coal campaign is to postpone requirements to reduce emissions.
The rate of investment must increase dramatically for CCS to play a role in greenhouse gas emission reductions from coal-fired power plants. A recent study by the International Energy Agency found that “current CCS spending and activity levels are nowhere near enough” to reduce emissions by 20 percent by 2020. Instead, the IEA advised that “up to USD 20 billion is needed for near-term demonstrations.” Credit Suisse says that CCS research “needs a further $15 billion of investment and 10 more years of research and development to be ready for commercial use.” These levels are significantly more than the than the combined research effort of the ACCCE companies and Department of Energy.
Coal-fired power plants generate nearly 50 percent of the electricity in the United States, and are also responsible for 27.2 percent of U.S. greenhouse gas pollution. CCS is the most promising technology to reduce carbon dioxide emissions from these plants. Although there is no fully operational full-scale CCS plant today, many countries are researching the technology. This past September, Germany launched a 30-megawatt power plant that will capture and store its CO2 emissions. This plant is much smaller than most commercial power plants. Much more work remains to research, develop, deploy, and commercialize this technology on a large scale.
The 18 CCS projects by ACCCE companies have a lifetime cost of $5.7 billion, or one-tenth of the ACCCE companies’ profits in 2007 alone. Of this total cost, the ACCCE companies would eventually spend $3.5 billion on these projects, based on our analysis of publicly available data. The Department of Energy would provide an additional $1.9 billion. (We were unable to identify full funding details for one project.)
Scientists have repeatedly warned about the urgency to act to reduce carbon dioxide and other greenhouse gases to slow global warming. Rajendra Pachauri, the scientist who heads the Nobel Prize winning Intergovernmental Panel on Climate Change, cautioned: “If there’s no action before 2012, that’s too late. What we do in the next two to three years will determine our future. This is the defining moment.”
Despite these warnings, ACCCE continues to oppose mandatory reductions in greenhouse gases until CCS is commercialized. The organization maintains that, “prior to the commercial availability of carbon capture and storage technologies, policies should encourage near-term investments in conservation, enhanced energy efficiency, and terrestrial carbon sequestration.” Yet ACCCE companies have created their own “chicken and egg” policy loop: no action on greenhouse gas reductions until CCS is commercialized, and no real action to commercialize CCS.
The advertising by ACCCE, and coal and utility companies, is an effort to convince the public that “clean coal” is the solution to global warming. In response, five environmental organizations led by the Alliance for Climate Protection created the “Reality Coalition” to educate the public, media, and public officials “that in reality, there is no such thing as ‘clean coal.‘” The first salvo in this effort is a humorous television ad campaign that demonstrates that no clean coal technology exists to reduce global warming pollution.
ACCCE’s lead spokesperson Joe Lucas has responded defensively to attacks on the organization’s efforts to promote clean coal as a solution to global warming:
“For those Monday morning quarterbacks who suggest that the coal industry should put more money behind the research and development of advanced carbon capture and storage technologies (instead of advertising), I say this–what have they done lately? Most of these groups have a long-standing record of opposing funding for cost-shared projects to bring new advanced technologies to the marketplace.”
He is likely to react similarly to this analysis. It is important to note that CAP has urged federal investment in CCS, including in the 2009 economic stimulus and recovery package. CAP also supported a major demonstration project blocked by the Bush administration. Unlike ACCCE, however, we do not believe that the adoption of binding domestic greenhouse gas reductions requirements should wait until the development and commercialization of CCS. A cap and trade program to reduce greenhouse gases would actually speed the development of CCS by creating a market for the technology.
The coal and utility industries have spent millions of dollars to oppose mandatory reductions in global warming pollution until CCS is commercialized. Yet their paltry CCS research investment demonstrates that the ads and other public clean coal activities are merely designed to delay global warming solutions without suffering a public relations black eye. Meanwhile, atmospheric greenhouse gas levels grow, ice sheets melt, hurricanes become more ferocious, and the day of reckoning for the Earth looms closer.
CAP surveyed all 48 ACCCE members, inquiring about their investments in CCS technology. We sent two information requests to company officials in corporate communications, research and development, and media services. We received responses from nine companies. We conducted phone interviews with officials from Southern Company and Duke Energy.
CAP also reviewed company websites and annual reports for information regarding recent investments. In addition, CAP reviewed the Department of Energy list of current CCS projects included in their Regional Carbon Sequestration Partnerships. Many of the projects involved Integrated Gasification Combined Cycle-related technologies. IGCC reduces sulfur dioxide, particulates, and mercury. Many experts believe that IGCC is an important component for capturing carbon dioxide for CCS, but research into IGCC does not ensure that it will be used for CCS. So although IGCC is a “clean coal” technology, we did not include such projects unless it was part of an effort to make a plant CCS ready or test some element of CCS. We also reviewed the “clean coal” project list on the ACCCE website.
Profit figures were obtained from the 2007 10-K SEC filings provided on individual company’s websites. Eight of the 48 companies did not have profit (net earnings) data immediately available.
Download this report (pdf)