Kansas High Court Case Cast Coal’s Future in a New Light

Ken Silverstein | Oct 07, 2013

An interesting case is creating potentially unbearable headwinds for a Kansas-based coal plant. There, the state’s supreme court just reversed a state environmental ruling that had issued an air permit. The judges sent the case back to regulators, noting that consideration must be given to federal laws and proposals.

At issue is the Sunflower Electric Power Corp’s desire to build an 895-megawatt advanced coal facility in Kansas. But, last week, the Kansas Supreme Court revoked the permission that it had been issued in 2010. The high court unanimously agreed to remand the file to the Kansas Department of Health and Environment, saying it did not consider the one-hour emission standards for nitrogen dioxide and sulfur dioxide. At the same time, regulators must think about the potential rules involving greenhouse gases, and mercury.

Here are some policy and legal issues to ponder: Why shouldn’t state-of-the-art coal plants be constructed? Right now, it is not economic to do so because the price of a combined cycle natural gas plant is cheaper. But the price of that fuel will eventually rise and wouldn’t it then make sense to be on the cutting edge of cleaner coal technologies?

It would. But the problem is that even the cleanest coal units are still dirtier than combined cycle natural gas units, which release roughly half of the emissions as coal, including carbon. And, assuming that the Obama administration’s most recent proposals are enacted, coal units could emit no more carbon dioxide than gas plants. That’s not possible now. Still, the research should continue especially because the developing world will rely on coal and this country could then export that advanced coal research.

Legally, did the 2010 decision by the Kansas regulator precede -- and therefore override -- any new federal environmental regulations that have been issued since then? The plant was approved under a certain set of rules and a potentially new set of laws will apply -- before the first shovel has gone into the ground. That’s key. But the reality is that is no new coal facility will get built if coal plants have to meet the same carbon dioxide release standards as natural gas plants. Those regs would apply to future facilities, although it is uncertain if such rules would pertain to existing units. That’s why the date of this original permission is significant.

“Sunflower will respect the decision of the court in this very complex case involving state and federal laws and regulations and will continue to work with (state regulators) to implement the instructions of the court as the permit process moves forward," says Sunflower. "Sunflower will continue to take the steps necessary to preserve and advance the project, which is one of many resources under consideration to meet the long-term power needs of our member co-ops.”

Complex Thinking

While Sunflower is putting on its best face, the court decision is not just significant legally but also financially. The modern facility had been projected to cost $3 billion. Now, if it has to incorporate carbon capture and sequestration, it would notably drive up the price tag -- if it could even be done. The cost of new tools to minimize mercury, sulfur dioxide and nitrogen dioxide will also raise the price.

In 2006, Sunflower narrowed its options and sought to build one modern coal facility, although the Kansas-state government initially denied the request. However, in 2010, under a new state administration, the state’s environmental agency Okayed the plant. Right after that, the Sierra Club filed suit to stop the construction. On October 4, 2013, the Kansas High Court agreed with the green group and has asked the regulator to rethink the project given the various federal environmental regulations.

“As state’s embrace renewable energy and utilities are locking in contracts for energy at record-low prices, there just isn’t a need for dirty, expensive energy that Sunflower Electric is looking to sell,” says Holly Bender, deputy director for Sierra’s Beyond Coal campaign.

Consider, though, that the coal plants won authorization because renewable energy standards were implemented. But herein is where the politics come into play: In reaction to the Sierra Club’s suit to rollback the deal, conservative think tanks such as the American Legislative Exchange Council have tried to do the same with regard to the portfolio requirements. Such rules mandate Kansas-based utilities incorporate a certain percentage of their offerings in the form of green energy.   

The group is not just doing this in Kansas. It is trying to do the same all over the country. Gone is the compromise. It’s an all-or-nothing proposition for both sides. However, the greenies are winning. That is, the portfolio standards may be adjusted but they are not getting thrown out. Meantime, very few, if any, coal plants are going up and stricter regs are headed their way.

Twitter: @Ken_Silverstein

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