Faced with Democratic majorities in both houses of Congress some big companies that extract and use large amounts of fossil fuels are reexamining their opposition to restrictions on carbon dioxide (CO2) emissions and on other so-called greenhouse gases. Companies would rather start bargaining once they see CO2 emissions regulations as inevitable.
Exxon Mobil Corp., the highest-profile corporate skeptic about global warming, said in September that it was considering ending its funding of a think tank that has sought to cast doubts on climate change. And on Nov. 2, the company announced that it will contribute more than $1.25 million to a European Union study on how to store carbon dioxide in natural gas fields in the Norwegian North Sea, Algeria and Germany.
George W. Bush still has over 2 years left to go in his presidency. So the energy industry does not face an immediate threat of tougher regulations. But they need to think long term because their capital investments have operational lifespans measured in decades.
The US electric power industry has not expanded much since being mostly deregulated. Demand growth has reached a point where the industry can't wait any longer to build new plants. They suddenly find themselves wanting regulatory certainty that was less important when they were only trying to prevent costly regulations on existing plants.
Duke Energy, for example, has not added significant power generation in two decades, and customer demand is rising 1 to 2 percent a year. The company has included a price for the carbon emitted in its cost estimates for a new coal-fired generating plant proposed for Indiana.
"If we had our druthers, we'd already have carbon legislation passed," said John L. Stowell, Duke Energy's vice president for environmental policy. "Our viewpoint is that it's going to happen. There's scientific evidence of climate change. We'd like to know what legislation will be put together so that, when we figure out how to increase our load, we know exactly what to expect."
One reason companies are turning to Congress is to avert the multiplicity of regulations being drafted by various state governments.
Electric power plant operators face a dilemma. Electric power plants last decades. Decisions on their designs made today need to be optimal over the life of the plants. Should they build nuclear? Coal with conventional emissions controls only? Coal with CO2 capture technologies?
If they built new electric generator plants now under current regulations and tougher regulations are enacted 5 or 10 years from now the cost of retroffing those plants to capture CO2 will be far higher later than if they design and build the plants to allow CO2 capture. But if the tough regulations do not come fairly soon then the money spent on the CO2 capturing design will turn out to be a bad investment. They are better off knowing sooner when the regulations will come and what the regulations will be.
Regulatory uncertainties are not their only problem. They have to make guesses about future natural gas prices and also possible breakthroughs in competing technologies such as wind and photovoltaics. Huge capital investments made today in nuclear or coal could turn out bad choices 10 years from now if photovoltaics become dirt cheap.
Tougher regulations on CO2 emissions are pluses for all the non-fossil fuel energy sources. Companies like Duke and Entergy would be a lot more inclined to build nuclear plants if, say, CO2 emissions taxes were going to add 2 cents per kwh of coal generated electricity.
What I'd like to know: What does Duke Energy think its cost is for using today's technology to do full CO2 capture and sequestration for a new coal-fired electric power plant?
What I'd also like to know: Does the cost of full CO2 capture and sequestration make new nuclear power plants a cheaper source of electricity than coal?
As for the environmental effects of CO2 emissions regulations in the United States: China's growth in use of coal is so fast that US efforts to restrict emissions won't matter.
Already, China uses more coal than the United States, the European Union and Japan combined. And it has increased coal consumption 14 percent in each of the past two years in the broadest industrialization ever. Every week to 10 days, another coal-fired power plant opens somewhere in China that is big enough to serve all the households in Dallas or San Diego.
To make matters worse, India is right behind China in stepping up its construction of coal-fired power plants — and has a population expected to outstrip China's by 2030.
By 2012, the plants in three key countries - China, India, and the United States - are expected to emit as much as an extra 2.7 billion tons of carbon dioxide, according to a Monitor analysis of power-plant construction data. In contrast, Kyoto countries by that year are supposed to have cut their CO2 emissions by some 483 million tons.
China is the dominant player. The country is on track to add 562 coal-fired plants - nearly half the world total of plants expected to come online in the next eight years. India could add 213such plants; the US, 72.
To restate an argument that I know long time readers are already bored of by now: We need to accelerate the development of non-fossil fuels energy technologies. If we make those technologies cheap enough they will replace coal and oil without the need for impossible to achieve international treaties. China and India aren't going to go along with the greenie dreams of some affluent Western environmentalists. Poorer people have more immediate worries.
|Share |||Randall Parker, 2006 November 25 05:25 PM Energy Policy|