Coal industry hopes it has place in Obama's energy plan

WASHINGTON — The coal industry — long the lifeblood of mountain rich but economically poor states like Kentucky — is bracing for a seismic shift as the Obama administration charges ahead with re-envisioned energy policies focused heavily on renewable resources and new ways of storing carbon emissions.

The gambit pits mining companies and lawmakers who are concerned about costly innovations against environmentalists who argue the ecological damage left behind by an industry that powers nearly all of Kentucky and much of the nation is too high a price.

"The stakes are very high. We have to reduce our greenhouse gas emissions and efforts to do that will affect how we use coal in the future," said Barbara Freese, author of the book "Coal: A Human History," and a clean energy and climate policy advocate with the Union of Concerned Scientists. "Climate change will force economic and technological changes. The question is how to bring those changes about in the most cost effective and efficient way."

Politically, changes in the nation's approach to coal are already afoot.

The Department of Energy will soon announce whether it will use $1 billion in stimulus funds to resurrect FutureGen, a proposal to create in Illinois the world's first coal-fired power plant designed to capture and bury carbon emissions underground. Kentucky was once a contender for the plant, which the Bush administration ultimately decided not to build citing a cost overrun that pushed the price tag to $1.8 billion.

A recent Government Accountability Office report said the cost to build is actually closer to $1.3 billion, and the Bush administration's overestimation, coupled with the decision not to build the plant, set the country's "clean coal" efforts back a decade.

In response to last year's massive coal ash spill at a Tennessee Valley Authority facility in Kingston, Tenn., the Environmental Protection Agency recently announced plans to create standards for regulating the ash that is left over after coal is burned to produce electricity.

According to a Natural Resources Defense Council report, Kentucky comes in at No. 11 on a "Filthy 15" list of states where new power plants would produce more coal ash.

The Obama administration is also promising to make good on a campaign pledge to implement a governmental cap-and-trade program that would "cap" companies' carbon emissions and force businesses to purchase or "trade" for lower emissions levels.

The economic stimulus has $16.8 billion for renewable energy and efficiency programs compared to $3.4 billion for the coal industry. Congress previously nixed $50 billion in loans for the coal-to-liquid fuels and nuclear industries.

Some Kentucky lawmakers feel that's not nearly enough.

"President Obama in his budget proposal said that if they initiate a cap and trade it would produce $650 billion in revenue for the federal government. That's a little bit scary in itself because it's a source of income he's depending on to offset some of his proposals," said Rep. Ed Whitfield, R-Hopkinsville, who sits on the House Energy and Commerce Subcommittee on Energy and the Environment. "It will increase the cost of electricity being produced and it will be extremely difficult for Kentucky and a lot of Midwestern states to get themselves in a position to meet these standards."

Lexington has the country's largest "carbon footprint" -- leading the nation in emitting the greenhouse gases that most scientists think contribute to global climate change. Other Kentucky cities follow closely, including the Cincinnati-Northern Kentucky area and Louisville, according to a study of the nation's 100 largest metropolitan areas by the Brookings Institution.

The coal mining industry has donated heavily to the state's congressional delegation's campaign war chests.

Kentucky lawmakers have long pinned their hopes for an economic revival in Appalachia on a windfall in federal funding to capture and store carbon emissions underground. The method is seen as critical to efforts to convert coal to liquid fuels -- a process that produces a significant amount of carbon dioxide that could be released into the atmosphere.

Clean Coal Power Resources of Louisville could decide in a few months if it will move forward with a proposed $7.6 billion coal-to-liquid fuels plant in McCracken County -- a project that would take years to build as environmental and regulatory standards are met. During the last Congress, Whitfield and other Kentucky lawmakers co-sponsored legislation to advance the development and deployment of carbon capture and storage.

However, that technology is not yet commercially viable, and "absent greater incentives through government subsidies, regulatory policies, or shifting construction risks to vendors, 'clean coal' is likely to remain an elusive part of the future of electric generation," Todd Shipman, a credit analyst with Standard and Poor's, told the House Energy and Commerce Subcommittee on Energy and the Environment during a panel on the future of coal last week.

The tremors created by the shift in energy policy can perhaps best be seen in the multimillion-dollar advertising battle over the public perceptions of coal as an energy resource. The mining industry, environmentalists, lawmakers and the Obama administration all have varying definitions of "clean coal". Coal companies through the American Coalition for Clean Coal Electricity have produced television spots punctuated with snippets from Obama's campaign trail speeches extolling the virtues of "clean coal".

The Reality Coalition shot right back with a commercial directed by Academy Award-winning filmmakers Joel and Ethan Coen that features a clean coal air freshener that "harnesses the awesome power of the word clean."

"The term clean coal has been around for a long time, before we were even talking about carbon capture and storage," Freese said. "It came out of the industry and it became a catchall phrase for reduced pollution related to coal. That's not helpful because there are so many technologies involved."

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