Coal Generates More Interest

Coal Generates More Interest; Proposals Pushed to Tax Carbon Dioxide Pollution

By Melita Marie Garza, Chicago Tribune -- Mar.28

As coal makes a comeback, efforts to tax and curb its deadly byproducts are rising.

Power-generating plants are the single-largest producers of carbon dioxide, which is created by burning coal, gasoline and other fossil fuels. Carbon dioxide emissions are also a leading cause of climate change.

"We now see that the ice caps are melting, that the earth is warming, and even the length of seasons is changing," said Daniel A. Lashof, science director at the Climate Center of the Natural Resources Defense Council, an environmental group.

"Most scientists now agree that global warming pollution is primarily responsible," Lashof said. "That is a change from 10 years ago, when the evidence was more ambiguous."

Though carbon dioxide emissions have yet to be regulated by the federal Environmental Protection Agency, regions such as the Pacific Northwest and the Northeast have pushed to set their own tough requirements.

Most of the Northeastern seaboard states hope to develop a rule to cap such emissions from power plants. They also intend to establish a system in which utilities that emit less than their share could trade carbon dioxide emission credits to utilities that exceed limitations.

Drifting pollution also has become an issue.

Maine, for instance, dispatched a representative from its Department of Environmental Protection to a public hearing in Downstate Illinois last week to protest a proposal by coal giant Peabody Energy Corp. to build two 750-megawatt coal-fired plants in Washington County near St. Louis.

Stephen Davis, a director of Maine's environmental agency, said toxic pollutants from Midwest plants ride air currents to the Northeast.

"Despite Maine's best efforts, the state of Illinois coal-plant-building-spree proposal poses a threat to the Maine's citizens and natural resources," Davis said. Illinois has 10 coal-fired plants in the works.

In Washington, U.S. Sens. Joe Lieberman (D-Conn.) and John McCain (R-Ariz.) sponsored ill-fated legislation this year that would have set up a national "cap and trade" system on carbon dioxide emissions. It would have been similar to a 1990 limitation of sulfur dioxide, a prime component of acid rain.

Increasingly, big industry players are taking notice of efforts to limit emissions.

Last month, two of the nation's largest emitters of carbon dioxide, Columbus, Ohio-based American Electric Power Co. and Cincinnati-based Cinergy Corp., told shareholders they would study the costs of meeting potential emission limits.

"Our common dioxide emissions are the highest of any other company in the industry. So we have a significant risk exposure here if we don't manage it well," said Dale Heydlauff, American Electric Power's senior vice president for government and environmental affairs.

The company owns 80 electric power plants in the U.S. and generates 65 percent of its electricity from coal.

Heydlauff said the company also sees a strategic advantage in helping shape new regulations, which he believes are inevitable.

"There is not a lot of debate in the scientific community that rising concentrations of greenhouse gasses are occurring and will lead to climatic changes. I believe that that reality will continue to put pressures on government to react," he said.

Cinergy was the first coal utility to voluntarily reduce greenhouse gas emissions. It set aside $21 million for projects to hold emissions at 5 percent below 2000 levels between 2010 and 2012, said John Stowell, vice president for environmental strategy.

Cinergy owns 14 fossil-fuel electricity-generating plants, including nine that are coal-fired.

"We have to develop new technology that will cut down carbon dioxide emissions and allow the Midwest to use its coal resources," Stowell said.

Three years ago, New Orleans-based Entergy Corp. became the first U.S. power company to set a voluntary limit for carbon dioxide emissions. Entergy owns 30 power plants and generates more than half of its electricity from fossil fuels.

Since May 2001, when it committed to holding greenhouse gases at 2000 levels through 2005, the company has spent $18 million of $25 million it had dedicated to that goal.

Entergy, which is developing new goals to limit greenhouse gasses beginning in 2005, believes that staying out front will give it a competitive advantage.

"People who blended the need to address ozone depletion into their strategic plans for the future did well," O'Brien said. "Those who waited to see whether regulations would be put in place were at the mercy of the capital markets. That is not the position Entergy wants to be in on carbon dioxide emissions."

One industry insider is pushing for a tax on emissions. He is John Rowe, chairman and chief executive of Chicago-based Exelon Corp., even though he knows if a tax is imposed that it would increase costs for consumers and business.

"I think the climate change problem is real," said Rowe.

Some in the coal industry, however, say Rowe is acting in his own self-interest. Exelon is the nation's largest operator of nuclear reactors, which could escape the brunt of such a tax.

"A carbon tax would be an attempt to shift profits towards natural gas or nuclear power by making coal, the cheapest electricity source available, more costly," said Bill Hoback, bureau chief of the Illinois Office of Coal Development.

But Ralph Cavanagh, energy program director for the Natural Resources Defense Council, countered that "Rowe is an industry leader, not just the chairman of Exelon Corp.

"He is making decisions everyday about buying electricity from coal-fired plants," Cavanagh said. "This is a watershed moment in the debate over measures to reduce global climate change."

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