Abby L. Harvey
GHG Monitor
7/25/2014
Investing in innovative energy technologies in the coal industry is a worthwhile risk, Tom Fanning, Southern Company Chief Executive Office said this week at an event in Washington sponsored by the Bipartisan Policy Center and the American Energy Innovation Council. Southern Co. owns the Kemper Country Energy Facility, a new-build first-of-its-kind coal-fired power plant located in Mississippi which when operational will employ carbon capture and sequestration technology. Southern Co. also runs the United States Department of Energy’s National Carbon Capture Research Center. “We’ve got to figure out a way to use the blessings that this nation has,” Fanning said of the nation’s vast coal reserves.
While the nation’s energy sector has shown a shift toward other energy sources, Fanning sees reason to build a business case around coal. “The United States has something like 28 percent of the world’s coal reserves and they are darn good. I fully understand that the economy of the United States is moving away from coal, that’s not true elsewhere in the world. What we’ve got to do is work constructively to find ways to innovate around the issues in coal. Topic de jure is carbon,” Fanning said, going on to say that Southern Co. has invested and developed its own technology to address this issue which will be used on the Kemper County plant. “Via our technology, imagine this, we can take a resource that otherwise is going unused, native Mississippi lignite, we run it through our process, we create electricity, we strip out 65 percent of the CO2 and so therefore from a carbon footprint standpoint, this coal technology is cleaner than natural gas,” Fanning said.
Mississippi lignite coal is not the only otherwise untapped resource the Southern Co. business case for CCS takes advantage of. “The CO2 is not a waste stream,” Fanning said explaining that the captured CO2 will be used in Enhanced Oil Recovery. “We push it underground and push out more domestic oil that otherwise goes unachieved and we’ll develop, once this plant goes into service, we think another 2 million barrels of oil every year. More electricity, more oil, more energy security, more tax base, more jobs, that’s the kind of thinking we need to do here in the United States around coal.”
These sorts of innovations need to come from the private sector, Fanning said. “When you think about the tough kitchen table economic decisions that the citizens of America make every day, why can’t we? We know that with frozen government and we know that with competing kind of politics of today, it’s folks like us that are going to come in the middle and provide real common sense solutions.”
Natural Gas, Renewables Can’t Support Nation’s Energy Sector
While Southern Co. also generates energy with natural gas, the pricing structure for the fuel is too volatile to be a dependable source of energy production in the long term Fanning said. “Coal gives this nation, if we handle the carbon right, clean, safe, reliable, affordable [energy] with low volatility. Right now with the advent of gas we’ve been able to keep prices low. Volatility of energy, we estimate over the next decade, it’s going to be up about 50 percent. You’re getting something cheaper in the near term. You’re taking some volatility risk in the long term.”
Renewables, while promising progress has been made, are by and large not mature enough to offer the reliability required to dominate the nation’s energy sector. “There are those that will say we can solve the nation’s energy problems with renewables and energy efficiency, that’s just not going to happen certainly in the near term,” Fanning said. “Renewables are an intermittent resource, what do you do when the wind doesn’t blow and the sun doesn’t shine? The back-up generation resource is going to be natural gas and you’re doubling down on that big bet this nation is taking and you’re raising the risk, the volatility of price and supply of energy for the United States. That’s going to have a huge consequence to manufacturing and consumers.”
EPA Regulations Could Drive Development of Business Case
Growth in demand for innovative clean energy technology may be incited by recently proposed Environmental Protection Agency regulations, a panel of experts said later at the event. The regulations, which set carbon emissions reduction targets for each state and mandate that states develop plans to meet these targets, send a market signal, Alicia Barton, Chief Executive Officer of the Massachusetts Clean Energy Center said. “What it has done … is send a strong market signal again that there is going to be continued demand for the long term for companies that are delivering solutions in these areas,” she said. “You’re really just selling a product that solves a problem for your customer and those problems become a little bit, perhaps, in shaper relief when you layer on these regulatory requirements to solve them.”
Meeting reduction targets and successfully battling carbon emissions will not be accomplished through the development of one technology, Steve Corneli, Senior Vice President of Sustainability, Policy, and Strategy at NRG Energy said. “It’s not really just about financing technology. It’s not about a gizmo. It’s about a business model. It’s about an ecosystem that that business model can thrive in.”
