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IEEFA Update: Failed ‘Clean Coal’ Experiments Have Wasted Billions of Dollars

July 07, 2017
Sandy Buchanan

Long overdue news broke last week that that the Southern Company will no longer burn coal at the Kemper County “clean coal” plant.  Mississippi regulators had told the company they would no longer allow a blank electricity ratepayer check for construction of the plant.

In chasing the myth that any new coal-fired power could become socially or environmentally acceptable in this day and age, Southern Company and its subsidiary Mississippi Power squandered billions of dollars and several years of research that could’ve been spent much more wisely.

IEEFA’s findings demonstrated years ago that the Kemper project was financially unviable, and events have borne us out. The plant, which was supposed to be able to harness a gasification process that would power turbines off low-grade lignite coal, has proven extremely expensive to build and has been operationally unreliable.

In saying enough is enough, Mississippi regulators pointed to absurd cost overruns and delays in bringing the project online and told the utility to come up with a plan where the plant will burn only natural gas in the future. Originally approved at $2.9 billion, Kemper has gobbled up $7.5 billion — and it never worked as advertised. Although the plant is operational, it burns natural gas, not the “syn gas” from coal it was designed for. And the construction was far behind schedule: Southern Co. said when it proposed Kemper that it would be up and fully running by 2014.

It’s time for utilities and the coal industry to stop saddling ratepayers with costly and unworkable schemes, and the Kemper debacle proves it.

This doesn’t mean the fairy tale is dead, however.

“Clean coal” research has been an important source of public revenue for a number of taxpayer-funded research programs, especially at the University of Wyoming and The Ohio State University, even though these programs have not borne practical advances after decades of work.

Indeed “clean coal” is a misleading description (the coal doesn’t actually get cleaner), an oxymoron — all it signifies is that polluting emissions caused by burning the coal are being managed in a way that makes them somewhat less harmful.

Notably, the coal industry itself has invested very little of its own money in these research projects. Peabody Energy contributed $2 million to fund the University of Wyoming’s Peabody Energy Clean Coal Technology Laboratory in 2012, but only after $75 million in state money had been committed.

Other jarring examples of public dollars squandered on “clean coal” research include an Ohio bond issue passed in 1985 that has proven monstrously self-perpetuating. While Ohio limits total outstanding “clean coal” bonds to $100 million at any given time, new bonds have been issued as others have been paid off. Total public debt issued for “clean coal” research in Ohio has exceeded $200 million over the past 30 years, to support more than 400 projects that have proven lucrative for universities and think tanks — but have never achieved the stated goal of “encouraging the use of Ohio coal.”

The Kemper experiment in Mississippi aimed to implement a “carbon capture and storage” strategy, similar in concept to one that was studied but ultimately dropped at Duke Energy’s wildly expensive Edwardsport plant in Indiana. The federal government pulled the plug on its signature clean coal project in Illinois known as FutureGen in 2015 after sinking a billion dollars into it to little effect. AEP, the Ohio-based utility that consumes more coal than any other, ran a carbon capture and sequestration experiment for a while at its Huntington Plant in West Virginia but cancelled it in 2012 after concluding that the technology was commercially unviable.

The U.S. coal industry continues nonetheless to perpetuate the “clean coal” canard. As recently as last month, a New York group announced it was looking for investors willing to put up $80 million for yet another “clean coal project,” in Wyoming.

Interestingly, the Department of Energy budget proposed by the Trump administration cuts funding for carbon capture and storage by 85 percent, to the chagrin of its proponents in the coal industry. But if the federal government won’t fund it, and the industry won’t fund it, presumably developers are planning to leave ratepayers holding the bag.

The Mississippi Public Service Commissioners, in saying that Kemper is a failure, signaled that electricity-markets have shifted. When all is said and done, either the utility’s customers or its shareholders are going to pay a heavy price. In the energy transition, coal –even “clean coal” – is being left behind.

Sandy Buchanan is executive director of IEEFA.

A version of this piece first ran in The Hill.

Sandy Buchanan

Sandy Buchanan is IEEFA’s Chief Executive Officer, with responsibility for overseeing all aspects of the organization.

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