STAKEHOLDERS RECOMMEND CCS INCENTIVES VIA ‘WIRES CHARGE’ APPROACH

Tamar Hallerman
GHG Monitor
09/21/12

Coal industry and carbon capture and storage stakeholders are advocating for the government to incentivize CCS technology via an often overlooked mechanism folded into 2009’s Waxman-Markey climate legislation. When asked about which types of policy mechanisms could best support the commercialization of CCS technology during a hearing this week in front of the House Energy and Power Subcommittee, industry representatives from American Electric Power, United Mine Workers of America and Alstom Power suggested that Congress pass legislation implementing a ‘wires charge’ for CCS RD&D. “We would advocate the consideration of the wires charge approach. It is a non-budget way to raise [billions] to support CCS demonstrations,” said Eugene Trisko, an attorney who spoke on behalf of the United Mineworkers of America. “Until we have commercial-scale demonstrations, there will not be a regulatory structure that will allow that technology to proceed, and given the state of the federal budget, we need to find a non-budget source.”

Originally rolled out as a standalone bill by then-Rep. Rick Boucher (D-Va.), Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and others, the approach would have established a Carbon Storage Research Corporation that—through a surcharge in monthly electricity bills—would have collected roughly $1 billion annually from the customers of utilities that burn fossil fuels. That money would have subsequently been funneled into a fund for large-scale CCS projects chosen by an appointed board of representatives from utilities, fossil fuel producers and environmental groups and largely free of federal control. The provision was later incorporated into the so-called Waxman-Markey cap-and-trade legislation, which narrowly passed the House in 2009 but faltered in the Senate the following year. Sen. Jay Rockefeller (D-W.Va.) also offered similar standalone legislation in the Senate that also failed to gain much traction.

Supporters Say Fiscal Climate is Right

Proponents at the hearing said that the wires charge could be the right strategy for providing a consistent stream of additional support to CCS at a time of tightened federal spending. “We would hope this would be a good approach,” Bob Hilton, vice president for Power Technologies for Government Affairs at Alstom Power, told GHG Monitor on the sidelines of the hearing. “Clearly it’s something that’s outside the budget process—it has nothing to do with the deficit and goes from the consumer to the consumer. We think that makes a lot of sense.”

Hilton said that some companies like Alstom are trying to open up dialogue on the mechanism moving forward. “We’re hoping we can get some more dialogue going on about it and that people will reconsider it, because we got it through [Congress] halfway once, but it unfortunately got swept up in Waxman-Markey,” he said, adding that he thought the chances were good given the potential for the technology.

Others Say EPA’s Performance Standards Will Support CCS

While industry groups spoke in favor of the wires charge idea at the hearing, those representing environmental groups said that an adequate opportunity for CCS already exists within the scope of greenhouse gas emissions performance standards proposed by the Environmental Protection Agency earlier this spring. Daniel Lashof, director of the Natural Resources Defense Council’s Climate and Clean Air Program, said that a regulatory approach could help further CCS’ development. John Thompson, director of the Fossil Transition Project at the Clean Air Task Force, said that the regulations, paired with incentives for enhanced oil recovery operations, could also help drive the economic case for CCS.

Witnesses at the hearing were debating the merits of legislation introduced earlier this summer by a group of Energy and Commerce Committee Republicans and coal-state Democrats. If enacted, the bill would bar the EPA from finalizing greenhouse gas emission performance standards for new or existing fossil fuel-fired power plants until carbon capture and storage technology is deemed economically and technically feasible by at least three government agencies. The bill’s sponsor, Rep. David McKinley (R-W.Va.), said that the bill is needed to give CCS technology the “time to catch up” before implementing the regulation. “This preliminary EPA rule could literally cripple the future of coal because the implementation of carbon capture is not yet technologically or economically feasible,” McKinley said when he introduced the bill in July. “Utilities will simply stop building coal fired power plants and switch to gas fired units.”

Proponents Say Bill Needed to Save Coal Power 

Supporters at the hearing said that EPA’s performance standards, if left unchecked by Congress, would kill traditional coal-fired power and lead to a rush toward natural gas. “In my view, the proposed rule amounts to nothing less than an outright ban on new coal-fired power plants, and one that could later be extended to existing plants as well,” said Energy and Power Subcommittee Chairman Ed Whitfield (R-Ky.). “That is why this bill, or something like it, is so critical. The bottom line is that the federal government would have to be on record that what it is requiring of coal-fired power plants is achievable in the real world. … This bill does nothing more than bring back a common-sense approach to regulation.”

Opponents, though, said the measure is the equivalent to a free pass for the coal industry that will allow it to move forward without cleaning up or modernizing. “It’s about time we try to help the people in the coal area be viable in the new economy that’s coming,” House Energy and Commerce Committee Ranking Member Henry Waxman (D-Calif.) said. “Otherwise, you can scare them with war or start a war against them, but it’s a dishonest approach.”