'Mountaineer': Sobering News out of West Virginia

I'm late on this but wanted at least to note it: yesterday's NYT front-page story that American Electric Power, a huge utility company providing electricity mainly in the Midwest, is postponing or killing plans to build a full-scale "carbon capture" facility at its Mountaineer plant, in West Virginia. (Mountaineer photo, below, from NYT.) This is the kind of project that I described several months ago, in a cover story, as the best and urgently necessary hope to allow the US, China, and other countries to keep using coal (as for various reasons they're bound to do*) while reducing carbon emissions.

I don't know enough about AEP's inner dynamics to be confident in describing everything about this decision, and at the moment I can't report it out.  But even late to the story, I wanted to underscore two implications of the news:

1) Companies can't do this without a sustained government policy. AEP, which is by no means a pinko organization -- it is running a campaign now of complaint about burdensome EPA regulations -- said the reason it was calling off the plans was governmental failure to set a clean energy/climate policy. By definition, any "cleaner" form of using coal will be more expensive than the current dirty approach, at least in the short run. This is true "by definition" because if the cleaner approaches were cheaper, the utilities would already have switched to them; because the cleanup technology is still in its developmental phase; and because in many places cleaner systems mean new capital investment.

To afford the investment, the utility companies have to know either (a) that the cost difference will be offset by "a price on carbon," emissions taxes, or anything else which would make it more expensive to keep polluting and not switch to the new system or (b) that regulatory boards will let them recover the cost of the investment through monthly utility bills. In other words, a rock-ribbed corporation says that it cannot afford to take this step until federal and state governments are more reliable in shifting toward a cleaner-energy policy. And this says something discouraging about America.

2) The U.S. can't develop a sustained government policy. Efforts to develop cleaner-coal power systems are still going on. But they're happening in China -- which has made a major long-term commitment to developing this technology. It's better for the world as a whole that China is taking this step, and that many U.S. firms and institutions are on the scene there to learn from the Chinese experiments. But it's worse for the U.S. that we're deliberately taking such a step back in what will be one of the world's important new technologies and businesses.

After the jump, a passage from my coal article that seems all the more poignant at the moment. It's about the contrast between the Chinese commitment to longer-term public investments -- despite everything that is wrong with the Chinese system -- and the increasing impossibility of these investments in the United States. Apart from the regulatory uncertainty that led to the AEP announcement, right now "clean coal" initiatives and other energy projects are among the federal commitments that the Obama Administration is willing to slash, as part of the new debt "deal." Arrrgh.

UPDATE: More info from Charleston Gazette site, here.

The conclusion of "Dirty Coal, Clean Future." Emphasis added to apply to this week's events:

>>CHINA'S COOPERATION WITH the United States on coal is good news for the world. If the two countries had decided to make this another arena for demonstrating their respective toughness--if, as at the failed Copenhagen talks last winter, they had mainly exchanged accusations about who was more to blame for emissions problems--they would have guaranteed that the problems could not be solved. If that cooperation breaks down, Julio Friedmann said, "we'll end up paying twice as much to get the same learnings--and delaying the technology on both sides by another decade." Both sides seem to have looked for ways to keep the cooperation going. They have not been in the newspapers, but they deserve recognition for attempting to do the world's work.

But China's very effectiveness and dynamism, beneficial as they may be in this case, highlight an American failure--a failure that seems not transient or incidental but deep and hard to correct.

The manifestation of the failure is that China is where the world's "doing" now goes on, in this industry and many others. If you want to learn how the power plants of the future will work, you must go to Tianjin--or Shanghai, or Chengdu--to find out. Power companies from America, Europe, and Japan are fortunate to have a place to learn. Young engineers and managers and entrepreneurs in China are fortunate that the companies teaching the rest of the world will be Chinese.

The deeper problem is the revealed difference in national capacity, in seriousness and ability to deliver. The Chinese government can decide to transform the country's energy system in 10 years, and no one doubts that it will. An incoming U.S. administration can promise to create a clean-energy revolution, but only naïfs believe that it will.

"The most impressive aspect of the Chinese performance is their determination to do what is needed," Julio Friedmann told me. "To be the first, to be the biggest, to have the best export technology for cleaning up coal." America obviously is not displaying comparable determination--and the saddest aspect of the U.S. performance, he said, is that it seems not deliberate but passive and accidental, the product of modern America's inability to focus public effort on public problems.

"No one in the U.S. government could ever imagine a 10-year plan to ensure U.S. leadership in solar power or batteries or anything else," Joseph Romm, a former Department of Energy official who now writes the blog Climate Progress, told me. "It's just not possible, so nobody even bothers to propose it."

The Chinese system as a whole has great weaknesses as well as great strengths. Its challenges, as I have reported so often in these pages, make the threats facing America look trivial by comparison. But its response to the energy challenge--including its commitment to dealing with the dirty, unavoidable reality of coal--reveals a seriousness about facing big problems that America now appears to lack.<<

* And while I'm at it, another part of the piece, on why despite its many detrimental side effects coal will be a major energy source for the foreseeable future:

>>Coal will be with us because it is abundant: any projected "peak coal" stage would come many decades after the world reaches "peak oil." It will be with us because of where it's located: the top four coal-reserve countries are the United States, Russia, China, and India, which together have about 40 percent of the world's population and more than 60 percent of its coal. It will be with us because its direct costs are in most circumstances far lower than those of the alternatives--that's why so much is used. (Prices vary widely from place to place and company to company, but one utility executive said that the lowest-price coal plant might generate electricity for 2 cents per kilowatt-hour, while the same amount of power from a new wind farm in the same area might cost 20 cents.) It will be with us because its indirect costs, in miner deaths, environmental destruction, and carbon burden on the atmosphere are unregulated and "externalized." Power companies that answer to shareholders or ratepayers have a hard time justifying a more expensive choice. "Coal is so cheap because its dirtiness still doesn't count against it," an air-pollution expert with the Natural Resources Defense Council told The Wall Street Journal 10 years ago. In the absence of climate legislation in the United States and international agreements to reduce emissions, the dirtiness still doesn't count. Coal will be with us because changing a power infrastructure--like building a new transportation system or extending cable or fiber-optic connections through an entire country--is the very opposite of a "virtual" process, and takes many years to complete.

And it will be with us because of a surprising constraint: after a century in which medical diagnosis and treatment, computer and communications systems, aerospace and nanotech industries, and nearly every other form of technology have routinely achieved the magical, energy production is essentially what it was in the time of James Watt. With the main exception of nuclear-power plants and the hoped-for future exception of practical nuclear-fusion systems, we mostly create electricity by burning something that was once underground--coal, oil, natural gas--to boil water and turn turbines with the steam....<<