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Coal Plants, ESG and Net-Negative CO2

By Steve Winberg, Chair & CEO, Net-Negative CO2 Baseload Power, Inc.
June 2, 2022 - S&P Global’s headline: “Early coal exits, transmission spending to help utilities’ ESG records in 2022” is certainly ominous.  The story goes on to suggest: “It is truly a race…and companies are all but tripping over themselves to exit coal.  It is essential to understand the pressures faced by coal-consuming Investor-Owned Utilities (IOU) and position the industry in an evolving marketplace if the reliability of the nation’s electricity system and the economic future of the industry and coal communities is to be preserved.
Steve Winberg

ESG concerns and related financial realities in the IOU community are major risk factors for the future of coal power. In the United States, concerns over coal’s future are real and embedded in the reality of the decline from 1 billion tpy to under 600 million. To reverse the trend of declining demand, ESG concerns must be turned from a liability into an asset, which enables continued coal use.  The first step, in what can be a successful process, is to recognize that CO2 emissions can be managed with 21st century coal technology.  For this to be successful, substantial Federal financial incentives (not regulations) will be required.  Wind and solar have enjoyed such incentives for decades, so should low-carbon coal technology.

Advancing 21st century coal means acknowledging that finance, insurance, and utility markets increasingly see CO2 emissions as the principal driver for an exit from thermal coal.  As such, future success is centered on CO2 emissions.  Electricity is one of life‘s necessities, like air, food and water.  The claim that ESG proponents embrace is that the world needs to stop using coal, oil and natural gas.  In short, their version of an acceptable energy transition requires a full stop for fossil fuels.  And today, unlike years past, there is no observable opposition from the IOUs to this version of an energy transition.  Rather, there is acceptance, and corporate goals established based upon it, but no clear, pragmatic roadmap on how the United States, much less the entire world, will continue to provide affordable, reliable energy to consumers.

This lack of a roadmap is evidenced by the alarm being sounded by the electricity grid’s independent system operators (ISOs) and the North American Electric Reliability Corporation (NERC) who recently warned that 70% of the country faces a high or elevated risk of grid reliability, including blackouts, this summer.  At the same time, anti-coal pronouncements from the Biden Administration and EPA are not abating.  As a nation, we should be asking ourselves why we have allowed market drivers to emerge that have utilities “tripping over themselves to exit coal”, as S&P Global suggests, an action that is clearly, and unnecessarily, putting our energy system and economy at risk?  21st century coal technology can abate that risk.  

Because of the realities that surround us today, it is time to engage on the CO2 issue with a cohesive, pro-coal, pro-people, pro-ESG climate technology answer.  We should embrace an approach that preserves (not prematurely retires) existing coal fleet assets.  We should embrace using our technological capabilities to significantly reduce, and even eliminate, CO2 emissions by using coal, biomass (forest and agricultural residues), and carbon capture, utilization and storage (CCUS).  We should embrace the idea that the technology exists to create coal power plants that operate with net-negative CO2 emissions.  And, because governments increasingly demand attention be paid to climate change concerns, we should demand that the government create financial incentives (not regulations) that enable the full power of 21st century coal technology to be released.  As part of an all-of-the-above energy strategy, it is the only way to preserve affordable, reliable electricity while addressing climate change concerns.

Climate change is a global challenge.  If the U.S. just focuses on our CO2 emissions, the global climate challenge will not be resolved.  Developing countries have stated that they will continue the use of coal and, indeed, need to continue its use to lift their people out of energy poverty.  Our nation has long taken a lead role in developing technology, whether energy, aviation, medical, manufacturing, or communications.  These technologies have been shared globally and improved billions of people’s lives.  Now is not the time to ignore our ability to develop 21st century coal.  Rather, now is the time for the U.S. to step-up and develop the technologies that will allow us to use coal, our largest energy resource, and provide the rest of the world with the technologies that will allow them to cost-effectively address climate change and also lift their people out of energy poverty.

Last year Steve Winberg, Ken Humphreys and Fred Palmer, established the non-profit organization, Net-Negative CO2 Baseload Power, Inc.  Its mission is to advance the dialogue on 21st century coal technologies, including the legislation and policies necessary to achieve the goal of providing affordable, reliable, clean electricity while giving hard-hit coal communities an opportunity to prosper.  Specifically, this effort advances federal legislation leading to continued use of the United States coal power plant fleet through CCUS with coal/biomass co-firing (~80% coal and ~20% biomass as fuel).  CCUS at 95+% capture, with sustainable biomass co-firing, results in net-negative CO2 emissions, and provides affordable, reliable electricity even in the face of the most aggressive CO2 reduction targets.

As part of successfully preserving coal plants, the same type of Federal financial assistance, through tax credits, that the wind and solar industry has enjoyed for decades, will be required.  This would include Production and Investment Tax Credits.  Also, the 45Q tax credit, which addresses capture and storage, should be increased.  Tax credit “stacking”, which the renewable hydrogen industry has proposed, should be allowed for abated fossil energy.  For the rural and electric cooperatives, municipal utilities, and other non-profits, the “tax credits” should include direct payments. 

Transitioning to any zero-emission energy future will have a cost.  A recent McKinsey estimate of the capital cost to move to 100% renewables was $4.3 trillion, and this reflects only part of the cost of such a transition.  Noteworthy studies, such as those of the IPCC, have concluded that technology provides significant leverage in controlling the costs of addressing climate change.  Further, studies conclude that keeping all major technology options in the solution set minimizes cost.  Retrofitting and repowering the existing coal fleet with 21st century coal technology is part of that solution set.  It brings the enormous economic advantage of using the transmission system that is already in place, as well as providing substantial employment and tax benefits to coal and power plant communities.

This is ESG, at its best, in our view.  It should be a reason to embrace, not exit, coal.

To put in place this ambitious pro-coal, pro-energy, pro-people 21st century coal program will require a sustained effort over time backed by the efforts of many and financial resources.  The effort is a major one, but achievable if all of us in the coal supply chain come together to ensure that the United States maintains an all-of-the-above energy strategy as the nation seeks to address climate concerns.