By Ken Humphreys, Net-Negative Baseload Power, Inc.., Senior Vice-President Analysis & Project Finance 

August 2, 2021 - The “Net-Negative Carbon Dioxide Baseload Power Act” (H.R. 4891) was introduced by David B. McKinley (R- WV) on Friday, July 30, 2021.  The legislation offers an innovative approach to addressing climate change concerns while protecting U.S. baseload coal-fueled electricity production.  The measure introduced by Representative McKinley is a candidate for inclusion in the infrastructure bill currently before Congress.  This legislation is another example of Representative McKinley's leadership on critical energy, environmental, and economic issues facing the nation.  The introduction of companion legislation in the U.S. Senate is expected.

David McKinley 

Specifically, the legislation provides a framework for financial incentives for coal-fueled power plants to use a blended coal-biomass fuel and implement carbon capture and storage (CCUS).  The measure would facilitate the transition of existing coal-fueled power plants from being carbon dioxide (CO2) emitters to baseload electricity generating assets with a net-negative CO2 emissions footprint. 

Benefits of the Act include:

·    Sustaining America’s baseload electricity production capability, which is essential to the reliability of the electricity grid, critical defense infrastructure, and U.S. manufacturing.

·    Providing continued economic opportunity for coal-dependent States and communities.

·    Providing new economic opportunities for the forest products and agricultural sectors.

·    Supporting the Administration’s CO2 reduction goals, which are otherwise unattainable without net-negative emitting technologies.

The Act:

·    Creates a streamlined incentive program administered by the U.S. Department of Energy.

·    Establishes qualification criteria for redevelopment projects proposed at existing coal-fired powerplants.

·    Opens eligibility to investor-owned utilities, rural electric cooperatives, municipalities, power administrations, and other power plant owners (as well as their project partners).

·    Provides federal grants for power plant-specific Project Concept Studies.

·    Provides cost-share for Project Development Activities, such as engineering, permitting, legal work, and community engagement.

·    Provides Project Construction and Operating Incentives that increase the likelihood of securing project financing, completing construction, and successfully operating, among them: construction and start-up cost-sharing; completion, performance, and loan guarantees; and liability management assistance.

·    Ensures the Federal incentives encourage success while protecting the public interest.

·    Establishes a trust fund for the federal monies that back the financial incentives. The trust fund is intended to provide the financial certainty necessary for the project participants to mobilize their share of each project’s capital.

The Act authorizes an initial $300 million for engineering and economic studies (referred to as Project Concept Studies in the legislation) at existing coal-fueled power plant sites across the country.  It establishes the framework for financial incentives for project development, construction and operations.  The financial incentives would be funded, with appropriations placed in the trust, through subsequent legislation. 

While the legislation was not intended to specify the full dollar value of the financial incentives, $30 billion in additional future funding is warranted.  While this would be a sizable federal investment, it is a realistic level of investment within the context of the hundreds of billions that some policymakers are proposing to address climate change concerns.