Hanson's Moratorium on Coal - Considering the Implications
James Hanson, director of NASA’s Goddard Institute, is considered a hero in the environmental community as one of the first to sound the alarm about global warming. Mr. Hanson was in Washington the week of June 23rd to mark the 20th anniversary of his original testimony before the Senate Energy Committee. This time, his message to the House Committee on Global Warming and to the National Press Club included a ban on coal fired power plants:
Practically, I don’t see how we can stop putting oil in the atmosphere, because that’s owned by Russia and Saudi Arabia. We can make our vehicles more efficient but that oil is going to get used and its going to get in the atmosphere…and it doesn’t really matter much how fast we burn it. But what we could do is stop coal.
Certainly, Mr. Hanson believes that in the context of global warming “desperate times call for drastic measures.” At the same time, the economic and national security consequences of Mr. Hanson’s proposal must be more fully considered. He calls for a phase out of all coal use by 2030 (unless plants can capture the carbon dioxide), to be replaced by solar, wind, and other renewable energy.
Some facts about coal:
- In 2007, coal constituted approximately 50 percent of all electrical generation in the US.
- In the West North Central states, coal accounts for 75 percent of electric generation.
- Our demonstrated reserve base for coal, as reported by the Energy Information Agency (EIA), is 491 billion short tons.
- In 2007, we used about 1.2 billion short tons of coal.
- At this rate, there is about 409 years worth of coal resources remaining in the US.
This is why the US has been called the Saudi Arabia of coal.
Currently, renewable energy constitutes approximately 3.5 percent of electric generation. Thus, under Mr. Hanson’s proposal -- either renewable energy must increase by more than 1,400 percent in the next 20 years or coal-fired power plants must find a way to capture carbon. These figures don’t even take into account the growth in energy demand projected over the next 20 years. EIA projects as much as a 39 percent increase in US electricity usage by 2030.
What concerns me most about Mr. Hanson’s remarks is how he surrenders to the global economics of oil, because “you’re not going to tell Saudi Arabia and Russia, the countries that have oil, not to sell their oil” but, forgoes America greatest resource base.
Similarly, one must consider the national security and economic implications of Mr. Hanson’s proposal. America’s dependence of foreign oil, currently at 70 percent or so, would grow even further presumably at staggering price levels. This would precipitate an even greater transfer of wealth from the US, Europe, and Asia while our own most abundant domestic fuel base would be banned. Does Mr. Hanson assume that the growth in renewables will offset the demise of the US coal industry? And what about the expected world wide growth of coal? The EIA projects that coal use will jump by nearly two-thirds by 2030, three-fourths of which will be accounted for by China alone. What impact will this have on global warming and will US coal exports also be banned?
All of this underscores the intricacies of the debate on climate change. Coal, our country’s most abundant resource, should not be phased-out in favor of Saudi or Russian oil. Instead, in my humble view, we need to consider a wide-breath of initiatives as well as strike a reasonable balance between carbon reduction and economic and national security issues. This would include offshore drilling for oil, Canadian oil sands, construction of new nuclear power plants, conservation and efficiency programs, biofuels and biomass, renewable energy portfolios, transmission line programs, tax incentives, and technology initiatives.
With respect to coal, we should continue to concentrate our national efforts on clean coal technologies, especially those that capture carbon dioxide. There is hope on the horizon with promising new technologies. Recently, the Department of Energy’s National Energy Technology Laboratory announced it hoped to capture 90 percent of the carbon from power plants by 2020 with an incremental increase in generating costs of some 20 percent. Mr. Hanson believes that carbon sequestration technologies will be available within the next 10 years.
Perhaps these are desperate times and while I agree that the US should lead by example, climate change is a border-less issue. While banning coal in the US might demonstrate an unparalleled commitment to climate change, without a world-wide response, that includes emerging nations, especially China, and India, the economic and national security consequences of our actions must be well-considered and ultimately not in vain.
Steve Gardner is an energy partner in the Washington, DC office. He previously served as Senior Counsel to AMAX Coal Company, at the time the nation’s third largest producer of coal.
Climate Change and Aviation Fuel: A Tough Problem to Solve
Large aircraft require high energy fuel, and lots of it. But jet fuel is very difficult to clean up to satisfy climate protection imperatives, which has led to a major dispute in the US over the role coal-to-liquids and other alternative aviation fuels may play. Congress, the US Air Force, the major airlines, the US Environmental Protection Agency, its Federal Aviation Administration, a special Defense Department task force, coal-state senators, and many, many others are getting into the dogfight, which may go on for a long time.
With all the publicity aircraft greenhouse emissions are receiving, one might conclude that they rank right up there with electrical utilities, vehicle emissions, and other prominent categories in terms of greenhouse threats. In fact, US aircraft operations account for 10 - 12 percent of greenhouse emissions from the transportation sector and for only about three percent of total US greenhouse emissions, which is also about the total percentage contribution to greenhouse gases from aviation worldwide. The difficulty is, controlling aircraft carbon emissions is a particularly intractable problem, and the problem is going to become much worse over the next few years as demand for air travel and transport doubles or even triples by 2025. The issue is exacerbated by scientific uncertainty about just how much more potent at high altitudes aircraft emissions are in causing the greenhouse effect as compared to emissions on the Earth’s surface.
The airline industry has done a great deal already, however, to increase its efficiency and lower the rate of increase in greenhouse emissions per air mile traveled. The industry claims that improvements in operational efficiency over the past 30 years have reduced carbon dioxide emissions 70 percent in the course of improving fuel efficiency 110 percent. The most promising pathways at present to further reduce the carbon footprint of aviation involve improved air traffic control systems, on-ground aircraft operations management, lighter engines and more aerodynamically designed aircraft, and flight altitude and speed adjustments. Still, attempts to improve jet fuel composition and performance have received the lion’s share of attention in recent months.
Finding less climate-challenging fuels for today’s jet fleet is proving to be a particularly challenging and controversial topic. Some promising experiments in fueling aircraft reminds one of a trip to a botanical garden, to a marsh, or to the supermarket, or of the early days of flight at Kitty Hawk. Recent forays include biofuels derived from babassu nuts, coconut oil, algae, or the central American plant, jatropha (a relation of castor oil). A very light, albatross-like solar-powered aircraft is under development in Germany, while Boeing has actually flown – for twenty minutes at 60 miles an hour – a manned aircraft powered by hydrogen fuel cells and lithium battery-stored electricity. But the major battle over alternative aircraft fuel is taking place over fuel liquids derived from coal or oil (tar) sands.
Coal-to-liquids (CTL), whether for aircraft or for other consumption as a fuel, is hardly new. Germany pioneered the process in the Second World War, and for the past nine years South African Airways has flown its jets on a 50-50 mixture of CTL synthetic and ordinary commercial fuel. The US Air Force has completed a test program very much like the South African fuel mix, using 50 percent Fischer-Tropsch synthetic fuel and 50 percent commercial fuel. Even B-52s can safely burn the fuel.
The Air Force and members of the Senate and House from coal-producing states, not to mention proponents of tapping the vast reserves of oil sands in Canada, are pushing strongly for development and use of CTL aviation fuels. The difficulty is, among other things, that a lifecycle analysis conducted by the US EPA found that CTL fuel releases 118.5 percent more greenhouse gases than conventional fuel (EPA, 2007). Perhaps carbon capture and sequestration technology, were it to be developed, could be used to overcome this large carbon deficit? No, said EPA, even after going to the difficult and expensive effort of capturing and sequestering CTL carbon compounds, emissions would still be 3.7 percent greater than for conventional petroleum. The Defense Department has already asked MIT to study the lifecycle carbon profile of CTL production and use, and Senator Lautenberg intends to re-insert in the Federal Aviation Administration funding re-authorization bill making its way through Congress a provision requiring the National Academy of Sciences to organize a study committee to address the question. While these studies are pending it may be correct to say that the jury is still out on the climate implications of CTL and other alternative aviation fuels, but it is clear that widespread adoption of CTL and oil sands to liquids fuels would be accompanied by major environmental challenges.
The Air Force is particularly partial to CTL as a source of aviation fuel and is aggressively pursuing its development. However, a major study done by the Defense Science Board Task Force on DoD Energy Strategy at the request of the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, titled “More Fight – Less Fuel,” has concluded that domestically produced synthetic fuel will not contribute to the DoD’s most critical fuel problem – delivering fuel to deployed forces. The Task Force, co-chaired by James Schlesinger and retired General Michael Cairns, wrote that full carbon life-cycle analysis should be performed and that synthetic fuels should have a carbon footprint less than conventional petroleum fuels before they are adopted.
This last remark may be directed at a DoD-commissioned legal analysis attempting to show that in the Energy Policy Act of 2005, Congress did not intend for the military services to be considered as “federal agencies.” Why? Because section 526 of the 2005 law bans federal agencies from purchasing any fuels that produce higher levels of greenhouse gases than conventional jet fuels. (This provision is kicking up sand in many quarters and may not survive the political pressure that is being brought to bear.)
The EPA plans to join with the FAA in considering regulation of aviation greenhouse emissions in the course of the climate “town hall” comment period that EPA has called for to gather thoughts about using the Clean Air Act to broadly regulate greenhouse gas emissions, a topic we have covered in an earlier blog. The European Union first tried to ignore aircraft greenhouse emissions in its first round of actions under its climate authority (the issue, is, as we said above, a very difficult one), but it is now considering requiring airlines to participate in the emissions trading system.
The debate over how the US will attempt to come to grips with the difficult issue of direct aircraft engine emissions of greenhouse gases is just getting started.
Coal: The Energy Source of the Future?
Gas, oil, nuclear energy, biofuels, other alternative energy, energy conservation – are they enough to cause plentiful, Btu-rich, relatively inexpensive coal to take a back seat to post-Kyoto climate concerns in the developed and developing economies of the world?
With high prices for oil and gas and other promising sources of energy, precisely the opposite appears to be happening, with uncertain implications for carbon dioxide emissions levels and the success of technological fixes for Old King Coal’s dark side.
The expanding global demand for electricity, the skyrocketing prices of oil and natural gas, and the stubbornly high price of alternative energy sources have led to a global re-examination of the place of coal in supplying energy. Despite global attention to climate change, Old King Coal is receiving a new look, as well it might considering worldwide energy price pressures for all other fuel sources. Coal use in the United States, however, could face a less certain future.
As the price of natural gas has surged, utility companies have begun to reexamine coal-fired electrical generation. Coal offers utilities several advantages:
- Oil and natural gas reserves are expected to last for another 50 years, coal reserves will last for another 200 years.
- Coal is less expensive than oil and natural gas.
- Coal is found throughout the world and is exported by many countries. With so many supply sources, no coal cartel exists and buyers have more room to negotiate prices.
As surprising as the statistic may be to observers of the climate debate in the US, the Post-Kyoto economies of Europe contemplate adding about 50 coal-fired plants over the next five years. Although the European Union operates a greenhouse emissions trading program which forces utilities to purchase permits to emit carbon dioxide, the price of oil and natural gas is so high that burning coal represents the cheapest mode of electricity production in Europe, even after accounting for the permit cost. Further, countries like Italy and Germany have banned and are phasing out nuclear power, departing sharply from the pro-nuclear path France has chosen. Facing a narrow range of options, Italy’s largest power producer, Enel, has focused on coal and will soon produce 50 percent of its power from coal. As a country, Italy will increase its reliance on coal from 14 to 33 percent over the next five years.
In India, Tata Power recently received 450 million dollars in funding from the International Finance Corporation to open a 4,000 MW coal fired power complex. Between India and China, the worlds largest producer and user of coal, a new coal-fired plant opens almost every week.
Of course, the growth in coal as an energy source has major ramifications for climate change. Even under optimal conditions, coal emits more than twice as much carbon dioxide per unit of electricity produced as natural gas, according to the Electric Power Research Institute. While “clean coal” plants can reduce particulate matter, sulfur dioxide, and nitrous oxide emissions, clean-coal technology has a minimal impact on carbon emissions. Further, carbon capture and sequestration are not currently commercially available and, even if they become available relatively soon, many power plants cannot be retrofitted for sequestration without major renovation. With a growing global population and a growing global middle class demanding more energy, and over two billion people lacking access to viable energy sources, the world’s hunger for energy will not subside anytime soon. Coal, as a relatively inexpensive and readily available energy source, will play a major, and likely growing, role in supplying the world’s energy needs.
In the United States, coal could be facing a less certain and stable future as investors, legislators, and the public have taken a keen interest in climate change and carbon dioxide emissions. According to Global Energy Decisions, an energy information supplier, natural-gas and renewable power projects have leapt ahead of coal in the development pipeline. Gas and renewables each show more than 70,000 megawatts under development compared with about 66,000 megawatts in the coal-power pipeline. In 2007, utilities scrapped plans for 59 coal power plants. The investment banks Citigroup, J.P. Morgan, and Morgan Stanley also recently announced that their financing for new plants would be contingent on the utilities’ plans to control greenhouse gas emissions. In Congress, Senate Majority Leader Harry Reid recently said that “there’s no such thing as clean coal,” and House Oversight Committee Chairman Henry Waxman recently called for a ban on new coal-fired power plants unless they come up with a way to control their carbon dioxide emissions.
The three presidential candidates seem committed to cap-and-trade for all greenhouse emissions when discussing climate change policy. Further, a report released by Synapse Energy Economics, Inc. stated that utilities that plan their futures around new coal-fired power plants will face “risks and uncertainties” comparable to those that derailed the US nuclear power industry in the 1970s. The risks associated with nuclear power led to fierce legal opposition to new plant construction, resulting in delays and cost overruns and causing investors to pull out of nuclear investments. The Synapse report concludes that “coal is losing its appeal as a predictable investment and is instead fraught with uncertainty.”
The United States is not immune to the input price pressures which are causing energy companies in other countries to turn to coal. Such pressures are amplified by a desire for energy independence from Middle Eastern energy sources, residual opposition to nuclear energy, and vastly underdeveloped renewable energy sources. Today, 22 new coal-fired power plants are under construction and more are on their way as companies rush to get them operating before carbon-emissions standards are enacted. But, energy must come from somewhere, so unless consumers are willing to pay substantial premiums for energy, coal should remain a major energy source in the United States for the foreseeable future.
Climate Change Tort Suits: Hot or Cold?
Kivalina, Alaska, a village located eighty miles north of the Arctic Circle on a barrier island, is falling into the sea.
Since the early 1980s, sea ice ‑ which offers seasonal protection from storm surges ‑ has been forming later and melting earlier. As a result, the village is exposed to more winter storms of increasing severity.
In 2006, the US Army Corps of Engineers (“CoE”) concluded that the situation in Kivalina had become “dire” and that the entire town would have to be relocated within six years. A group of 400 Kivalina residents have filed suit against twenty petroleum producers, coal-burning utilities, and other energy companies, asserting that their carbon dioxide (CO2) emissions create a public nuisance and that they conspired to mislead the public about climate change.
Native Village of Kivalina v. ExxonMobil Corp. et al., CV 08-1138 (N.D. Cal., Filed Feb. 26, 2008). Citing a report by the CoE, the Kivalina villagers allege that environmental changes associated with global warming have exacerbated flooding and erosion threats to Kivalina and other coastal villages in the Arctic.
They seek recovery of the estimated $400 million cost to relocate their village, which they claim is a result of the defendants’ climate-changing activities.
By no means is the Kivalina suit the first action in which plaintiffs have sought to recover climate change-related damages from a CO2-emitting industry. Electric utilities and leading automobile manufacturers have each defended similar actions. They defeated these suits by filing motions to dismiss, asserting that the lawsuits raised a political question ‑ how best to address climate change ‑ which is the type of policy determination that should be reserved for the political branches of government, rather than the courts.
So long as the legislative and executive branches remain undecided on climate change, the political question doctrine promises to keep such litigation in check. Many observers, however, believe that Congress eventually will pass, and the President will sign, climate change legislation. At that point, courts may have less ability to dismiss cases on the ground of the political question doctrine.
How will these climate change tort actions fare then?
In this Legal Backgrounder, we explore the next line of defenses to such actions. In brief, defendants to climate change tort suits likely can assert several other facial challenges, such as lack of standing and preemption, which may stop such litigation in its tracks. Moreover, climate change suits must overcome formidable causation problems. The charge of civil conspiracy adds a new wrinkle: it is the same strategy that forced big tobacco to settle. There are numerous differences, however, between tobacco and CO2, which portend a steeper climb for plaintiffs in climate change tort suits.
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