By Susan Marriott

President Obama proposed several broad energy-related initiatives in his State of the Union address last week, which are summarized in David Flynn’s post below. Noticeably absent from the President’s address was “clean coal,” which had been part of the President’s “all of the above” approach to domestic energy development. The apparent absence of coal from the President’s energy agenda is another setback to the future of the coal industry, which has been declining in the U.S. due to greenhouse gas regulations and competition from natural gas. Nevertheless, recent developments in carbon capture and storage (“CCS”) technology may help the coal industry adapt to a changing regulatory environment.

Momentum for development of CCS technology had largely stalled in the U.S. because of the absence of any requirement or incentive to limit greenhouse gas emissions from fossil fuel-fired power plants. This will soon change, because the U.S. Environmental Protection Agency expects to finalize the first-ever greenhouse gas “new source performance standards” for power plants in March, which will limit carbon dioxide emissions from fossil fuel-fired power plants that commenced construction after April 13, 2012. Carbon dioxide limits affecting existing plants may not be far behind.

Also, CCS recently received a boost from the U.S. Department of Energy (“DOE”), which suggests that “clean coal” is still a part of the President’s energy agenda. The DOE recently approved proceeding to the second stage of the FutureGen project. This project would retrofit a coal-fired power plant in Meredosia, Illinois to capture more than 90 percent of the plant’s carbon emissions, or more than 1 million tons of carbon dioxide per year, according to the DOE. Additional CCS projects in Mississippi and Texas are in the pipeline.

However, commercial-scale CCS is not a proven technology in the U.S. and has faced criticism of its effectiveness in creating a net environmental benefit. An article recently published in the Energy Policy journal concluded that although CCS could deliver a 90 percent reduction in direct emissions from a power plant, the reduction is only 70 percent when full life cycle emissions are considered. Also, geophysicists in the UK are questioning whether CCS is worthwhile when close to 3.5 billion tons of carbon dioxide must be stored per year with a leak rate of less than 1 percent per thousand years to match the carbon footprint of renewable energy sources. Proponents of CCS should also note the strong public opposition to “fracking,” which, in several ways, is perceived as similar to CCS.

Without CCS, the regulatory environment remains hostile to new coal plants and existing plants are endangered by the likelihood of future greenhouse gas regulation and market forces that currently favor natural gas. Thus, the coal industry faces significant pressure to demonstrate the success of CCS if it hopes to continue to be a key component in meeting the country’s energy needs.