Monday, September 30, 2013

The one weird trick missing from coverage of carbon emission rules for new power plants

Don't know how often I'll get away with a semi-bogus title like the one above, but I'll use it while I can.

Anyway, draft rules from last year for new plants have been revised without too much weakening. New gas plants with newest technology won't have trouble meeting limits, while the best coal plants, barring some breakthrough, will likely have to sequester about 40% of their emissions.

So the one weird trick that people forget is this is not a free market, it's a regulated utility market, so reactions between price and market have intermediaries. While the assumption is likely correct that virtually no coal plants would've been built anyway, to the extent that assumption changes for political reasons, this proposal means that carbon capture and sequestration (CCS) will be required. The issue of passing on sequestration costs in a regulated utility arose previously:

[One utility decided on a] recent deferral of a large-scale CCS retrofit demonstration project on one of its coal-fired power plants because the State’s utility regulators would not approve CCS without a regulatory requirement to reduce CO2.

This rule makes CCS slightly more possible, and there are four plants currently being constructed with CCS with special financial help, but this rule could assist these or similar plants.

With that weird trick out of the way, some other thoughts

- to litigate, the fossil fuel industry has to show it has standing to sue, and that could be an issue. Standing requires injury. If no coal plants were going to be built anyway, where's the injury? Once again, a conservative legal technique designed to cripple the law might have potential blowback against the conservatives.

- when the litigation happens, I have no idea of the maximum time it will take to finish, but it's pretty safe to say at least a year to happen, likely much longer than that. I believe these cases go direct to appellate courts, but from there they can request whether the Supreme Court would consider a further appeal.

- in a bit of irony for coal, their fight against cap-and-trade is coming back to bite them as far as new plants are concerned. New coal will have to reduce carbon by about 40%. I expect that if they have to sequester 40%, then sequestering 80% wouldn't have been hard, and if cap and trade had been in place, they could've sold the extra amount to existing plants.

UPDATE:  ironic timing - Norway is closing down its massive CCS project amid criticism and cost overruns. This keeps happening to CCS systems. Solar power has a mix of good news and bad news, but CCS seems to only have bad news. This will have to change if it's going to play an important role in the future.