EXPERTS: OBAMA SUPPORT FOR CCS IN 2ND TERM MOST LIKELY TO COME THROUGH GHG REGS

Tamar Hallerman
GHG Monitor
11/9/12

President Barack Obama presided over the largest-ever single injection of capital into the carbon capture and storage industry during his first term in office when his 2009 stimulus bill allocated $3.4 billion to the technology. As he enters his second term in office, though, the surest bet for CCS support will likely come through the continuation of the Administration’s regulation of greenhouse gases under the Clean Air Act, CCS experts said in post-election interviews this week.

Obama ran for president in 2008 with cap-and-trade as his cornerstone environmental policy. When that measure—which directly and indirectly carried billions of dollars of incentives for CCS—faltered in the Senate in 2010 after narrowly passing the House the previous year, Obama instead aimed to regulate greenhouse gas emissions under existing Clean Air Act authority, affirmed by a 2007 Supreme Court ruling that allowed EPA to regulate the pollutants if it determined that they are a threat to public health. EPA did just that in 2009 (in a decision legally upheld earlier this year in federal court) with its so-called endangerment finding. That determination later became the legal underpinning for several regulations placing limits on coal plant emissions, including proposed greenhouse gas performance standards for new power plants that have been the subject of extreme contention from Congressional and industry opponents. The performance standards set a limit of 1,000 lbs CO2 per MWh for new fossil fuel-fired units, which essentially require coal operators to either install CCS or switch to natural gas.

While some have argued that the performance standards would essentially disincentivize utilities from investing in CCS because the technology is not demonstrated or cheap enough to be able to compete with recent rock-bottom natural gas prices, several CCS stakeholders this week said that the rulemaking is likely the only government-sanctioned support the technology will receive over the next several years. “Clearly, the Administration views carbon capture and storage as a piece of their overall climate strategy, so we would expect them to continue to look at ways to advance that technology through both research and limits on carbon pollution, which then create an incentive to develop and install CCS,” David Goldston, senior advisor to the Natural Resources Defense Council’s Action Fund, said in an interview.

Greens Lobby for CAA Regs to Move Forward

Environmental groups said they will lobby the White House to move forward on regulating greenhouse gas emissions under the Clean Air Act. “We need to continue using existing authorities to the extent that we can,” Ann Weeks, senior counsel for the Clean Air Task Force, told GHG Monitor. Goldston said NRDC would aim for a similar approach. “Certainly our focus is on the Administration using the Clean Air Act authority it has and building on the steps it has already taken to finalize the performance standards for new power plants,” he said. “We certainly intend to push them to what we think is their full legal obligation to move onto existing power plants.”

New Money for CCS Not Likely

While establishing performance standards for coal, oil and gas plants would not directly push emitters toward CCS, stakeholders said it is likely the best shot the industry has at extra government support given the tight fiscal constraints on the federal budget. “With all the fiscal problems we have and the deficit hanging over our heads, if anything government programs are going to have to be cut,” Robert Gee, a former assistant secretary for Fossil Energy during the Clinton Administration who now runs a D.C.-area consulting firm, told GHG Monitor. “I don’t see any increases for most of anything, including CCS and the Department of Energy as a whole. Now’s not the time to be growing new programs—it’s just the opposite with the prevailing political winds—but I’m hopeful that for the CCS budget, if they have to do any cutting it will be measured and not draconian.”

Carbon Price Not Likely

Stakeholders this week said they would ultimately prefer carbon legislation if it were to resurface in a second Obama Administration as the ultimate CCS incentive, but all said they still expect the issue to be essentially dead on arrival in Congress given the current balance of power. While the idea of a carbon tax has modestly resurfaced in recent months in conjunction with alleviating the so-called “fiscal cliff,” most stakeholders did not seem optimistic about such climate proposal having legs in Congress. “I’m not optimistic,” Gee said. “I think the center of political gravity of House Republicans still decidedly against any form of carbon regulation and anything that results in the collection of revenues.”

Goldston said there is an opportunity for climate legislation to move forward if Republicans decide to work together with the President on the issue. “I think it’s too early to tell, but a lot of it has to do with how palatable a carbon tax becomes within the Republican conference,” he said. In an energy debate last month between Romney and Obama campaign surrogates, Joseph Aldy, an advisor for the latter, said Obama would only move forward on major carbon legislation if he sees some sort of “goodwill gesture” from Congress to do so. “Whether or not he would actually consider it I think is actually a more important question of whether or not the other side of the political aisle would consider it,” Aldy said during the debate. “It really starts to sort of beg the question of why would the Democrats and why would the president start to negotiate with themselves and then bring something forward when you have this kind of intransigence with this?”