Carbon-capture advocates want Perry to take coal to the future

By Darius Dixon

04/21/2017 05:05 AM EDT

Rick Perry is setting himself up to be President Donald Trump’s coal warrior.

The Trump administration has made a big show of its efforts to tear down policies and regulations that Republicans and industry groups portrayed as President Barack Obama's "war on coal," such as EPA's power plant regulations and the Interior Department's stream protection rule.

But Trump's Energy secretary is in the best position to design a proactive strategy to help the coal industry adapt for the future.

At DOE, Perry doesn't have air pollution standards to relax or federal land to open up like his counterparts at EPA or Interior, but he does have money to give away — and coal-focused projects will likely be a top recipient. And although the Trump administration has largely abandoned Obama's climate change agenda, Perry and other industry boosters know that coal still needs to reduce its carbon footprint.

“Just because we are in the process of ending the war on coal doesn’t mean the coal industry isn’t without challenges," Perry told the National Coal Council, which advises Energy secretaries on the issue, in a keynote address Wednesday. "While this war was being waged on coal, technology advanced all around you. ... The world has changed, and coal has to change with it.”

Carbon capture and sequestration has already caught Perry's eye, and it's a technology he should be familiar with from his time as governor of Texas, where the captured carbon is increasingly used to squeeze more oil out of the ground.

“I think Perry is the natural point person for CCS,” said Paul Bledsoe, a supporter of the technology who worked in the Clinton White House and consulted for DOE under President Barack Obama.

“No single administration has really been serious about CCS,” Bledsoe added. “It’s actually — strangely — a huge opportunity for the Trump administration.”

The Trump administration can't just eliminate environmental regulations and expect the coal industry to rebound, according to Charles McConnell, an outspoken coal booster who ran DOE’s fossil energy office during Obama’s first term and seemed out of place in a renewables-focused administration.

“It has to be accompanied by a thoughtful, programmatic effort to invest in the necessary technologies for coal, coal usage and utilization,” said McConnell, who now leads the Energy and Environment Initiative at Rice University in Houston.

Perry touted the success of a big CCS project last week, when he visited NRG Energy’s Petra Nova power plant outside Houston.

The Petra Nova project will capture 90 percent of the facility's carbon emissions for use in enhanced oil recovery. It was partially supported with a DOE grant funded through the 2009 stimulus law, which included about $3.6 billion for "clean coal" programs.

McConnell, who has spoken to members of Trump's DOE transition team, said the stimulus money could have been used better, but he was optimistic that Perry would improve things.

“Let’s be honest about that. It wasn’t a thoughtful technological strategy that the Obama administration was advancing,” McConnell said. He added, “We have created a business strategy around CO2 sequestration that’s called enhanced oil recovery. Let me tell you something: Rick Perry understands that in spades."

DOE may not have as much money to play with under the new administration. Trump's "skinny" budget proposed a 5.6 percent budget cut at DOE and sought to eliminate its loan guarantee program, among other initiatives. But the administration seems more eager to take a bite out of renewable energy and efficiency programs than those that benefit coal.

Mike McKenna, an industry lobbyist who had a stint running the DOE transition team, suggested it was possible that the loan guarantee program may ultimately survive in order to promote fossil energy projects. Ultimately it will be up to Congress whether to go along with the administration's spending proposals.

DOE's loan office can guarantee up to $8 billion worth of loans for companies and universities to pursue advanced fossil energy projects. Toward the end of Obama's term, then-Energy Secretary Ernest Moniz sought to refresh the program, which was created during the George W. Bush administration. But only one conditional loan guarantee totaling $2 billion has been announced so far, leaving ample opportunity for Perry to back new projects if he keeps the program around.

Even if the budget gets cut, coal supporters say there are other ways the department can help.

“The administration and the DOE needs to be out there in front of convening the states that have the willingness and the opportunity to make investments in these technologies because they make business sense, not because they’re trying to save the world,” McConnell, the former fossil office chief, said. “This is where DOE can play a major role, and it’s not just by throwing a bunch of federal money at stuff. But actually being in there and acting as the convener — providing not just the spiritual leadership but also the fundamental political support for this kind of stuff.”

DOE can also keep pressure on FERC to make sure the regional power markets support generators that provide around-the-clock power, such as coal-fired plants. Perry took a step in this direction last week, when he directed the department to study how "regulatory burdens ... are responsible for forcing the premature retirement of baseload power plants."

The change in tone from the Obama years helps too, McKenna noted.

“I know that sounds a little yoga/Woodstock, but the reality is that in a lot of cases, what people really need is encouragement,” McKenna wrote in an email.

Of course, one big hang-up within DOE — and across the executive branch — is staffing. Besides Perry himself getting confirmed last month, only a deputy energy secretary has been announced, with no word about an assistant secretary for fossil energy. FERC has been operating without a quorum since February, and the Trump administration hasn’t yet nominated new appointees.

Despite the new administration’s promises to bring coal back from the financial brink — and the expectation that U.S. coal production will go up slightly this year and next — its overall trend has been one of steady decline for a decade.

Since Trump's election, no utilities have announced plans for new coal-fired power plants, while a few have announced new closures. With cheap natural gas in the U.S., electric industry executives have made the calculation that they’d rather risk higher gas prices over the next three or four decades than build a coal-fired plant that could face more stringent carbon controls in that time.

“Electric utility executives know that carbon constraints are inevitable and they’re not going to build a straight coal plant no matter what Trump says because it would be a stranded asset,” Bledsoe said. “The notion that you would build a plant that could be obsolete within a decade or by [2050] is just laughable.”

Last month, Ohio-based Dayton Power & Light announced plans to close two coal plants, and San Antonio utility CPS Energy still expects to shut down its big Deely coal-fired power plant next year.

And this week, Tennessee Valley Authority CEO Bill Johnson told the Associated Press that the federal utility wouldn’t rethink its plans to shutter coal plants next year. "[W]hen we decided to close the coal plants, that was the math we were doing,” he said. “We weren't trying to comply with the Clean Power Plan or anything else. What's the cheapest way to serve the customer? It turned out to be retiring those coal plants."

CCS advocates say the coal industry needs to worry more about adapting for the future than glorifying its past, which isn't going to return in the U.S. There also are potential export opportunities in selling CCS technology to developing countries like India and China that are expected to keep building coal plants for the foreseeable future, even as they try to hit emissions pledges they made as part of the Paris climate agreement.

“There’s really only one way to de-risk that for coal, and that’s to take away the CO2 problem [with CCS],” said Rich Powell, policy chief at the ClearPath Foundation, a conservative group headed by Republican businessman Jay Faison that promotes low-emissions energy sources. “We need to come up with a couple of new-build coal carbon capture plants quickly, if we want coal building again.”

To view online:
https://www.politicopro.com/energy/story/2017/04/carbon-capture-advocates-want-perry-to-take-coal-to-the-future-155524