July 8, 2013-Gas to Power Journal. Editor’s note: valleywatch.net does not believe there is such a thing as “clean coal.” That term is nothing but a ruse used by coal interests to dupe a naive public and politicians into thinking that coal can be used. An even then they rfuse to acknowledge that controlling coal’s numerous emissions is a VERY expensive proposition.
Robert Bradley, CEO of The Institute for Energy Research (IER), has denounced the US President’s Climate Action Plan for its subsidies for clean coal. “The new proposal would throw good money after bad,” he said. “Not only is taxpayer money being wasted, businesses are being enticed into investments that are costing their shareholders dearly as real-world experience shows.”
The President’s recent plan foresees large subsidies for clean-coal technologies, including carbon capture and storage despite the current heavy US deficit.
The loans provide $8 billion in federal guarantees to fund clean coal projects, for example coal-fired plants equipped with Carbon Capture and Storage (CCS).
Clean coal deemed “too costly”
The clean coal projects the US government plans on subsidizing are expensive, which Bradley puts down to the ‘unproven’ nature of clean coal technology. To exemplify the costliness of clean coal projects he points to is the construction Mississippi Power’s 582-MW lignite gasification Kemper Power Plant, that includes CCS.
Costs to realise the project have doubled from the original estimates. To promote clean coal, the US government granted Mississippi Power subsides for the project, including a $270 million grant from the Department of Energy and $133 million in investment tax credits from the IRS.
The Kemper Power Plant project, which was originally estimated to cost $2.4 billion, is now estimated to cost $4.3 billion, a number that could increase by the time the project is finished next year.
Project developer Mississippi Power, a subsidiary of the multi-state utility Southern Company, took a $540 million hit to earnings in the first quarter of this year. A regulatory review is required before the plant can begin operations to cover the rising costs.
While Southern Company has said cost overruns are due to the “pioneering nature of the project”, overruns on similar projects go back to the 1970s, according to Bradley.
Learning from history
In the 1970s the Great Plains Coal Gasification Project, which produced methane from coal, was built on a $2 billion federal construction loan. Ultimately the plant lost equity and was confiscated by the government, which handed the plant over to municipal owner, Dakota Gasification.
Today’s energy executives and lawmakers should be better informed of the consequences of the decision to finance clean coal because they have “access to many examples of failure from the past,” Bradley stressed, suggesting “It’s the taxpayer and stockholders, who will have to pick up the bill if clean coal is not successful.”