Report Vindicates Sebelius: Coal’s Cost Puts Kansans 'At Significant Risk'
Originally posted at the Think Progress Wonk Room.
In October of last year, the administration of Kansas Gov. Kathleen Sebelius (D) denied permits for two new coal-fired plants in her state because the greenhouse gases such coal plants would emit constitute a threat to the environment and public health. Last Friday, she vetoed a legislative attempt to allow the plants to be built. Opponents of the veto claimed “the decision is costing the state jobs and economic investment” and warned of “higher electric bills for Western Kansas,” where the plants were proposed.
But a landmark report released yesterday by an esteemed financial research firm finds that, in fact, Sebelius has been acting in her state’s best economic interests.
Innovest Strategic Value Advisors finds that Sunflower Electric Power Corporation, the company whose proposal was denied, failed to account for the effects of the likely regulation of carbon dioxide on the cost of coal-fired electricity when it sought to build two 700 MW coal plants in Holcomb, Kansas:
Innovest examined the economics of the transaction and determined that under the most plausible regulatory scenarios the decision to build new coal generating capacity will put Sunflower Electric’s ratepayers – who in this particular case are the actual owners – at significant risk. The report concludes that Sunflower’s management has not adequately addressed the competitive and financial risks associated with climate change in deciding to pursue the expansion of its Holcomb Station power plant.
Sunflower was remiss in not considering that federal legislation that places a price on carbon emissions is extremely likely, considering the bipartisan support and strong international pressure for such action.
The report compares the economics of coal plants versus natural gas plants, which have a considerably smaller carbon footprint, and concludes:In general, this analysis demonstrate that gas is the more financially sound choice for the construction of baseload generating capacity in all scenarios except 100% free allocation [to power companies] of carbon allowances.
It is thus unsurprising that the coal lobby attacked the natural gas industry when the decision was made.
The report also notes that western Kansas has “among the nation’s most abundant wind resources” and that the cost of wind power has plummeted 80% in the last 20 years.
Kansas Governor Vetoes Attempt to Override Denial of Coal Plants
Originally posted at the Think Progress Wonk Room.
Last October, the Kansas Department of Health denied air quality permits to a proposed coal plant expansion near Holcomb, KS, because of the danger greenhouse gas emissions pose to the climate.
Today, Sebelius issued a long-expected veto of the legislature’s plan to not only approve the plant but also strip the Department of Health of its regulatory capacity. From her veto statement:
This decision not only preserves Kansans’ health and upholds our moral obligation to be good stewards of this beautiful land, but will also enhance our prospects for strong and sustainable economic growth throughout our state. Instead of building two new coal plants, which would produce 11 million new tons of carbon dioxide each year, I support pursuing other, more promising energy and economic development alternatives.
Industry opposition to the Sebelius administration has been intense. Following the air permit denial, Peabody Energy, one of the largest coal companies in the world, funded newspaper ads attacking the natural gas industry. Sunflower Electric Power Corporation, the rate-payer-owned company making the bid for the new plants – offered a quid pro quo to Kansas State University, promising millions of dollars to fund energy research if the coal plants were approved.
Polluters Believe This May Be the Best Year for Climate Legislation
Representatives of the coal, oil, and gas lobby met yesterday at the United States Energy Association’s “State of the Energy Industry” conference at the National Press Club in Washington. They agreed that Lieberman-Warner may be the best legislation they can hope for, especially if issues like polar bear habitat set the standard for legislation.
Katherine Ling reports for E&E Daily that David Parker, president and CEO of the American Gas Association, said “Who would you rather have writing a bill in the Senate? I might guess it may set a tone for business to fully work with the Senate this year.” He continued that “the polar bear habitat is going to really drive this [climate change] debate. We all have a big education job to do and I think we need to do it collectively.”
Bill Scher has further commentary at Blog for Our Future.
While most panelists agreed it was not likely that a full bill capping greenhouse gas emissions would pass this session, they said a great deal could be accomplished in laying the groundwork this year.Tom Kuhn, president and CEO of Edison Electric Institute, predicted there will be a floor vote in the Senate this year on a climate bill. “No matter what happens on those votes, that will set the marker for what we do in the future,” he said, especially if there is White House involvement.
David Parker, president and CEO of the American Gas Association, agreed with Kuhn. Despite a general disagreement the energy industries have with the climate bill sponsored by Sens. Joe Lieberman (I-Conn.) and John Warner (R-Va.), he said, future legislation could be even harder on the industry.
“Warner is retiring this year, and then the question is, ‘Who comes into play?’” Parker said. Potentially, Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.) – who both favor greater emission limits than those in the Lieberman-Warner bill – could lead the next attempt to pass climate change legislation under a Democratic president, he said.
“Who would you rather have writing a bill in the Senate? I might guess it may set a tone for business to fully work with the Senate this year,” he said.
Achieving workable legislation will require educating policymakers and the public a great deal more on energy markets, panelists said.
Parker said he was worried that “the polar bear habitat is going to really drive this [climate change] debate. We all have a big education job to do and I think we need to do it collectively.”
Kansas Coal Lobby Attacks Natural Gas Industry 1
without new, next-generation coal-fueled plants, Kansans will be captive to high-priced natural gas, allowing hostile foreign countries to control the energy policy of Kansas and America. We are already held hostage to some of these same countries for oil.
The text of the ad runs below full-color photographs of Vladimir Putin, Hugo Chavez, and Mahmoud Ahmadinejad.
The Natural Gas Supply Association and Kansas Gas Service have not yet responded.
Congress Nears Conference on Energy Bill 1
After negotiations with key Republicans, Senate Majority Leader Harry Reid said Friday he was prepared to seek a conference with the House on energy policy legislation.“The Speaker wants to go to conference. I want to go to conference,” Reid, D-Nev., said on the floor Friday. “We know we can’t do a bill unless we include the Republicans in it.”
The unanimous consent to move to conference was blocked on a procedural basis by John Cornyn, R-Texas, Friday afternoon because many senators were traveling, but no objections were expected this week.
That said, the battle over CAFE standards remains strong, with the auto industry lobbying hard for the weaker Hill-Terry language (HR 2927). Last week GM Chairman and CEO Rick Wagoner met with Al Hubbard, director of the National Economic Council, Nicole Nason, the administrator of the National Highway Traffic Safety Administration, and EPA officials, and Ford CEO Alan Mulally is expected in DC this week.
Meanwhile, the natural gas industry is calling for expanded drilling:The American Petroleum Institute, Independent Petroleum Association of America, and seven other trade associations representing natural gas producers, pipelines, and consumers jointly expressed strong concern Oct. 19 about US House energy legislation that they believe would reduce instead of increase domestic gas supplies. . . . The 2005 Energy Policy Act contains several provisions to encourage production in frontier areas, including ultradeep water, ultradeep gas, and offshore Alaska, which HR 3221 seeks to repeal, they said.
Impact of Greenhouse Gas Reduction Policies on Natural Gas Demand
The Natural Gas Council will hold a news conference to discuss a new study that projects the impact of proposed greenhouse gas reduction policies on future natural gas demand and energy markets.
Contact: Jeff Eshelman at 202-857-4722
1201 15th St. N.W., Suite 5000