Can the coal industry be saved in spite of itself? Should it be?

One of biggest debates about climate solutions is whether coal generation with carbon capture and storage (CCS) is going to be practical and affordable on the timescale needed to avoid catastrophic outcomes. And, of course, there are many who don’t CCS is coal should be saved at all.

I am not in the second camp, but I doubt coal with CCS is likely to exceed one wedge (I’ll discuss this more next week). And we probably need 14 wedges to stay below 450 ppm. I have no doubt concentrated solar will delivery far more power than coal with CCS (see here) — two or three wedges are possible.

The coal industry has long been in denial about the reality of human-caused global warming, so they are woefully unprepared for what is to come. And the administration has botched Futuregen (see here), the centerpiece of its CCS effort.

Can Congress do a better job? The answer can be found in a new analysis by Bob Sussman and Ken Berlin for the Center for American Progress, “Maximizing Carbon Capture and Storage Under the Lieberman Warner Global Warming Bill.” Here is a summary:

Bob Sussman and Ken Berlin have analyzed the Lieberman Warner bill provisions to encourage early deployment of carbon capture and storage (CCS) at new coal plants. They focus on the “bonus allowance program” — which would issue free allowances to utilities who build plants with CCS based on the tons of CO2 sequestered. Their conclusion: this program would be very costly (between $68 and $110 billion through 2030) but would result in a small number of new plants with CCS (no more than 48 Gigawatts by 2030).

The reason for these large costs is that utilities would receive windfalls far greater than the added costs of CCS itself. Some one Gigawatt plants, for example, would receive free allowances worth $4.6 billion. These allowances would enable utilities not simply to finance the added costs of CCS but to offset emissions at existing coal plants, delaying reductions that would otherwise be required under the bill’s declining emission caps. Despite the windfalls received by specific utilities, CCS would not in fact be required at any new plant and conventional uncontrolled coal plants could continue to be built.

Sussman and Berlin argue that a better approach is to adopt an emission performance standard for all new coal plants based on the capture potential of the best performing technology, coupled with a program of subsidies that would offset the higher costs of CCS but not provide windfalls to utilities. These subsidies would derive from the revenues from auctioning allowances under Lieberman Warner, not from bonus allowances. Sussman and Berlin estimate that subsidies which cover the incremental costs of CCS as compared to conventional coal plants would enable construction of 150 gigawatts of new coal capacity by 2030, at a cost of between $28.7 billion and $96 billion, depending on the price of allowances. The emission performance standard would make it unnecessary to pay a premium to utilities to entice them to build CCS plants rather than conventional high-emitting facilities and would accelerate the research and development, demonstration projects and site testing necessary for early CCS deployment and advances in the technology.