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Sat 25 Nov, 2006 08:19 am
Energy Firms Come to Terms With Climate Change
By Steven Mufson and Juliet Eilperin
Washington Post Staff Writers
Saturday, November 25, 2006; A01
While the political debate over global warming continues, top executives at many of the nation's largest energy companies have accepted the scientific consensus about climate change and see federal regulation to cut greenhouse gas emissions as inevitable.
The Democratic takeover of Congress makes it more likely that the federal government will attempt to regulate emissions. The companies have been hiring new lobbyists who they hope can help fashion a national approach that would avert a patchwork of state plans now in the works. They are also working to change some company practices in anticipation of the regulation.
"We have to deal with greenhouse gases," John Hofmeister, president of Shell Oil Co., said in a recent speech at the National Press Club. "From Shell's point of view, the debate is over. When 98 percent of scientists agree, who is Shell to say, 'Let's debate the science'?"
Hofmeister and other top energy company leaders, such as Duke Energy Corp.'s chief executive, James E. Rogers, back a proposal that would cap greenhouse gas emissions and allow firms to trade their quotas.
Paul M. Anderson, Duke Energy's chairman and a member of the president's Council of Advisors on Science and Technology, favors a tax on emissions of carbon dioxide, the most prevalent greenhouse gas. His firm is the nation's third-largest burner of coal.
Exxon Mobil Corp., the highest-profile corporate skeptic about global warming, said in September that it was considering ending its funding of a think tank that has sought to cast doubts on climate change. And on Nov. 2, the company announced that it will contribute more than $1.25 million to a European Union study on how to store carbon dioxide in natural gas fields in the Norwegian North Sea, Algeria and Germany.
These changes come as Democratic leaders prepare to take over key committees on Capitol Hill. Sen. Barbara Boxer (Calif.), who calls global warming "the greatest challenge of our generation," will take the place of Sen. James M. Inhofe (R-Okla.) as chairman of the Senate Environment and Public Works Committee. Inhofe refers to global warming as a "hoax."
Sen. Jeff Bingaman (D-N.M.), the incoming Energy and Natural Resources Committee chairman, said he hopes to "do something on global warming." Even though the Bush administration's expected opposition might make the enactment of legislation unlikely in the next two years, many companies cannot put off decisions about what sort of power plants to build.
Duke Energy, for example, has not added significant power generation in two decades, and customer demand is rising 1 to 2 percent a year. The company has included a price for the carbon emitted in its cost estimates for a new coal-fired generating plant proposed for Indiana.
"If we had our druthers, we'd already have carbon legislation passed," said John L. Stowell, Duke Energy's vice president for environmental policy. "Our viewpoint is that it's going to happen. There's scientific evidence of climate change. We'd like to know what legislation will be put together so that, when we figure out how to increase our load, we know exactly what to expect."
One reason companies are turning to Congress is to avert the multiplicity of regulations being drafted by various state governments. The Regional Greenhouse Gas Initiative, a group of seven Northeastern states, is moving ahead with a proposed system that would set a ceiling on greenhouse gas emissions, issue allowances to companies, and allow firms to trade those allowances to comply with regulations.
California is drawing up its program. Other states are also contemplating limits. Even the city of Boulder, Colo., has adopted its own plan -- a carbon tax based on electricity use.
"We cannot deal with 50 different policies," said Shell's Hofmeister. "We need a national approach to greenhouse gases."
Next week, the Supreme Court will hear arguments on whether the federal government is obligated to regulate carbon dioxide as a pollutant; its decision could force the government to come up with guidelines.
Though many energy firms had already voiced support in recent months for federal regulations limiting greenhouse gas emissions, the coming changeover in Congress has intensified the discussions.
"There have been many more folks wanting to engage on the detailed architecture of climate-change legislation," said Jason S. Grumet, executive director of the bipartisan National Commission on Energy Policy. "The tenor, tone and the detail of discussions has changed in the last couple of months. Nobody's going to want to be the last company to come before the Congress and say, 'I've been opposing you for five years, but now can I have my piece?' "
Some businesses are making new hires based on the assumption that legislative activity on global warming will increase in the coming months. Truman Semans, director of markets and business strategy for the Pew Center on Global Climate Change, said at least half a dozen of the companies that belong to the center's Business Environmental Leadership Council have recently hired staff members focused on global warming.
Not every energy company is planning to curb greenhouse gas emissions in the near future. TXU Corp. is planning to spend $10 billion to build 11 new coal-fired power plants, which would more than double the company's carbon dioxide emissions, from 55 million tons to 133 million tons a year. That increase in emissions is more than the total carbon dioxide pollution emitted in all of Maryland or by 10 million Cadillac Escalade sport-utility vehicles.
In an e-mail to The Washington Post, TXU spokeswoman Kimberly Morgan said that the company supports "a comprehensive, voluntary, technology-based approach to global climate change based on carbon intensity" that is both "flexible and cost effective."
"We are at a point in time where other states and businesses are starting to take global warming seriously," said Colin Rowan, spokesman for the advocacy group Environmental Defense. "California is heading toward the future, and TXU and Texas are sprinting full speed back to the 1950s."
The company's approach may pay off in the short term, but it may not last. "Over the next two years I don't think environmental policy is going to change radically," said Carl Pope, executive director of the advocacy group Sierra Club. But he added, "I think the environmental agenda and conversation will change radically."
Corporate America wants to be part of that conversation. Duke Energy's Stowell said: "Industry is coming together and saying, 'Okay, if we're going to do this, let's do this in a way that won't wreck the economy.' "
Frequently asked questions about synthetic fuel
On November 2, 2004 Brian was elected as Montana's first Democratic governor since 1988. Brian Schweitzer became the 23rd Governor of the great state of Montana on January 3, 2005. Brian earned a Bachelor of Science degree in International Agronomy from Colorado State University, and later earned a Master of Science degree in Soil Science from Montana State University.
Montana Govenor, Brian Schweitzer, is one of the smartest experts on global warming solutions.
His answers to Frequently asked questions about synthetic fuel
Montana is actively pursuing development of ultra-clean coal technology in the areas of our major coal deposits in central and eastern Montana. The technology to convert coal into synthetic petroleum products or natural gas has existed for almost a century, and modern versions of this technology offers great promise for reducing American dependence on foreign oil and developing Montana's natural resources in a responsible manner. Below are answers to some basic questions about coal gasification and coal liquefaction.
What are synthetic fuels?
Synthetic fuel, also known as synfuel or Fischer-Tropsch liquids, is fuel such as diesel and jet fuel that is made from coal, natural gas or biomass, instead of oil. These are clean--burning, high-performing fuels that run in existing engines.
What is coal gasification? What is IGCC?
Unlike conventional coal burning plants that ignite the coal and send pollutants up a smokestack and into the air, synfuel plants gasify coal. This conversion takes place in a contained reaction and creates syngas, a mixture of gases which then can be made into liquid fuel. As an alternative to liquid fuel production, syngas can be upgraded to natural gas and sold on the market or can be used directly as fuel for a power plant. Plants using syngas are known as Integrated Gasification Combined Cycle (IGCC) plants and are among the cleanest types of electricity generators.
Why are synfuels cleaner than traditional fuels?
When coal is gasified, rather than burned as at conventional coal plants, impurities such as sulfur and mercury can be stripped out of the gas stream, instead of otherwise being emitted into the air. The resulting fuels burn virtually free of these pollutants. Sulfur-free fuel means less smog and acid rain, among many other benefits.
What is Carbon Sequestration?
In addition to removing pollutants such as mercury and sulfur, the gasification process allows carbon dioxide (CO2), the leading global warming agent, to be removed with little difficulty from the waste stream. Once separated, the CO2 can be stored permanently underground, buried deep in the earth and stored much like it was stored as coal. This is known as "carbon capture and sequestration" and is strongly supported by leading environmental scientists and global warming experts. In fact, there is a market for injecting carbon dioxide underground. Oil fields use CO2 to revive depleted oil wells, pumping the gas under pressure deep into oil-bearing formations, to force otherwise irretrievable oil to the wellhead. This process, known as enhanced oil recovery (EOR), causes the CO2 to remain deep in the ground and eventually react and stabilize with the rock and water in the formation.
Is carbon sequestration practiced anywhere today?
Yes. The closest location is Beulah, North Dakota, at the Dakota Gasification Plant the largest gasifier in America. This plant produces synthetic natural gas from lignite coal. CO2 from this process is piped several hundred miles to oil fields at Weyburn, Saskatchewan, where it is sequestered in the process of enhanced oil recovery.
Why is Montana suited for a clean coal industry?
With a demonstrated reserve base of 120 billion tons, Montana's coal is, in liquid terms, over one quarter the size of the entire Middle East oil reserve--enough fuel to power every American car for decades. In Montana and across the West, if even a fraction of our reserves were developed and converted to liquid fuel, we could greatly reduce the oil we now import from unfriendly and unstable countries. Or, if we moved toward a gasification program for generating electric power with IGCC plants, we could substantially reduce emissions from the utility industry.
Where is synthetic fuel made today?
South Africa is the leading producer. For decades, it has operated plants that produce an estimated 300,000 barrels of gasoline and diesel a day from coal. A number of other countries, including Qatar, Malaysia and China, are investing in either coal gasification or synfuel production. Increased global demand for oil and other energy has driven up prices and made synfuel production an economically viable alternative.
How would the military benefit from synfuel?
The Office of the Secretary of Defense recently issued a Clean Fuels Initiative proposal to run all battlefield engines on a synthetic fuel. Though its fulfillment may be many years away, this strategy would enable the military to 1) avoid buying oil from unstable regimes that are known sponsors of terror, 2) mitigate supply chain vulnerabilities to events like Gulf Coast hurricanes, 3) meet clean air requirements in European countries where we have airbases, and 4) simplify the fueling of battlefield equipment that presently run on multiple fuels.
Why haven't synfuels been pursued in America before?
They have. In fact, the U.S. government was exploring synfuel as early as 1925. In the 1940s, a Synthetic Liquid Fuels Act passed by Congress appropriated over $80 million for research and production. By the 1950s, America was producing thousands of gallons of synthetic gasoline a day at a test plant in Missouri. But the discovery of cheap oil, combined with a lobbying effort by the oil industry, caused the government to abandon its synfuel research. During the oil crisis in the late 1970s, the federal government briefly pursued synfuel production, but abandoned the idea when the price of oil receded.
Are there other applications of this technology?
In addition to making liquid fuels, coal gasification can be used to generate electricity with virtually no emissions. Looking to the future, it can be used to produce hydrogen for use in fuel cells. Gasification also can be used for industrial products such as naphtha, chemicals, waxes for cosmetics, fertilizers, and carbon dioxide for enhanced oil recovery.
Is synthetic fuel cost effective?
Yes. The cost of making a barrel of synthetic fuel is estimated to be around $35, including the sizeable infrastructure investments and the labor force necessary to operate the plant. At the current and projected price of oil, production should be a cost effective enterprise. Key economic incentives in the recently enacted federal Energy Bill, such as 80% loan guarantees for certain coal liquefaction projects, reduce the economic uncertainty of bringing this technology up to commercial scale.
How long will it take for America to produce enough synfuel to make a difference?
There are already a number of small plants being designed around America, but a large-scale national effort must involve the federal government and will take a number of years. Given South Africa's success in this field, we can assume that if the federal government became meaningfully invested in this concept, America could have a strong synfuel industry within the next decade.
This is just another benefit the US has derived from the defeat of the republicans in the last election. And now on to fetal stem cell research. Now if we can get Bush to crawl under the rock from whence he came. It would be complete victory.
Ba
I should think the correct thing to do is for congress to pass legislation mandating that new facilities must be built using the cleaner technologies. Hoping to force the building of these facilities through taxation is like putting the cart before the horse.
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