Will U.S. EPA's greenhouse gas regulations for new coal-fired power plants stymie technological advancements? During today's OnPoint, Ben Yamagata, executive director at the Coal Utilization Research Council, explains why he believes the Obama administration's regulatory proposal for new coal plants does not encourage industry to work toward developing carbon capture and storage technology.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Ben Yamagata, executive director at the Coal Utilization Research Council. Ben, thanks for joining me.
Ben Yamagata: It's a real pleasure, Monica. Thanks for having us.
Monica Trauzzi: Ben, a little background here: Your organization advocates for the development of technologies that will allow for the economical and efficient use of coal in the United States. Taking the Obama administration's new power plant proposal into account, what's your view on how it incentivizes the coal industry to move towards carbon capture and storage technology?
Ben Yamagata: That's a very good question. The EPA as you know has claimed that there are new re-proposed regulations for new power plants as a technology driver. We happen to believe it's just the opposite, and the reason we say that is because we're in a situation that the market has dictate where it doesn't appear that there are going to be a lot of new coal builds for a number of literally years if not decades. To the extent that's the case any kind of regulatory "driver" that insists upon carbon capture technologies on new installations when that technology is not yet commercially proven on electric-generating units and is also must more costly to put them on, you're not going to find a market for manufacturers or technology innovators looking forward to even use those technologies when there's really no market. So we're not going to have a market for these new technologies as a consequence of the requirements of the re-proposed regulations.
Monica Trauzzi: Without a regulatory approach, though, what incentive does the industry have to move towards these technologies?
Ben Yamagata: And that's a good question, too. I think that the real incentive here is, number one, the electric utility industry has said that they want options for the future. We have 250 years' supply of coal. That's a real option because it's domestically secure, et cetera, et cetera. That's a real important piece of reality. Secondly, we need to have an environment where there is in this case policies that are conducive to and supportive of technology development. That's not what we have today unfortunately. We don't have an administration that's aggressively pushing for new technology appropriations, and we have unfortunately administration that thinks there is a lot of technology development just on the edge ready to be used, which is not the case either.
Monica Trauzzi: So coal also wants to remain relevant ...
Ben Yamagata: Yes.
Monica Trauzzi: So in a carbon-constrained world isn't this the way to do it?
Ben Yamagata: I think that over the long run absolutely it's the way to do it. Our membership has indicated very specifically that we don't see the possibility, at least in the near term, for the development and construction of what we have today, which is ultramodern, supercritical coal plants, without addressing the carbon question. So we're going to have to do that whether some people believe we should or not.
Monica Trauzzi: EPA Administrator Gina McCarthy has said she's confident that CCS is attainable and in fact provides a way for coal to survive in a carbon-constrained world. Is she mistaken? Is she ill-informed? How do you qualify what the administrator is saying about these regulations and how CCS plays into the future of coal?
Ben Yamagata: We agree with the administrator and I think she agrees with us. We can develop the technologies that will be used, can be used for addressing CO2 capture and eventually CO2 storage. The problem is timing. We're not ready yet. As I said earlier we don't have regulations that provide a technology driver. It's really a disincentive to the development of technologies when the market isn't there. Technology developers are going to look at that and see no market there in the near term. And so we have to have other forms of supportive technologies that will move the technology along. That's got to be in the form of very supportive and aggressive appropriations so that there's a public-private cost share involved, and we have to have a clear path that says, "Look, over time we're going to develop these technologies just as we've done it for sulfur dioxide emissions, NOX emissions." We have 183 percent more coal that we're using now than we did in 1970.
Monica Trauzzi: How far away is the industry from attaining this technology?
Ben Yamagata: We're probably a couple of decades or less depending on how aggressive everyone is. And what I mean by that is if you're looking for carbon capture with sequestration, that is, long-term storage, that's the kind of time we're looking at. We're doing things now where we're using the CO2 for enhanced oil recovery purposes. To the extent that that's the case, if you keep in mind that we need to have cost-effective, meaning cost-competitive, technologies out there, at least the CO2 part of it for enhanced oil recovery purposes is probably going to allow us to do that quicker than the two decades that I mentioned earlier.
Monica Trauzzi: So when you look at something like the Kemper plant, you still think it'll take another 20 years?
Ben Yamagata: No. I think that what the Kemper plant is showing us, it's very understandable that we have larger costs than predicted. This always happens with new technologies. But we're hoping that before 2020 that technology will be well ensconced into sort of the technology base, and then we're looking for technology or iteration number two. Part of the problem that we've gotten, this goes back to the how aggressive we want to be, public and private, in terms of moving the technology forward, is if you look at the Kemper project, first of all, kudos to Southern Company for doing it in the first place. But in addition to that, and you probably know this, the Kemper project, like all of the other demonstration projects that EPA cited as reasons for saying these technologies are adequately demonstrated, that project, Kemper, like others that have been cited are fairly heavily subsidized with federal dollars. Now can you go from the Kemper project to the next project that uses Kemper-like technology? And the answer is you're probably going to have to use a lot of outside, public support in order to move a second iteration along, plus the fact Kemper is in some measure unique. They're using lignite coal. There are very close to an EOR that is enhanced oil recovery and not all plants, not all electric utility-generating plants are going to be in similar circumstances.
Monica Trauzzi: House Energy and Commerce and Science Committees are taking up the debate over these regulations this week. Are these hearings a preview of what some of the key legal challenges might be on these EPA regulations?
Ben Yamagata: I'm not sure I can speak directly to the legal issues. We tend to be clearly more oriented towards what's technology-ready or available, within the realm of being available. I would say as the House has in the past, has been taking a hard look at the legal issues that support what the EPA has been trying to do, and I presume that that is part of the rationale for these hearings coming up this week.
Monica Trauzzi: Recently we heard that China has moved to ban the construction of new coal-fired power plants in some major cities. Do you think that's indicative of a broader trend?
Ben Yamagata: I think that the Chinese government has recognized the requirements and the calls from their own citizenry that they have to clean up their air. So China actually is building highly modern, supercritical power plants, better than and more than we have done in this country. And so they have a lot of conventional technology controls on them. What they haven't started to do is the topic of our discussion, is how do we capture carbon dioxide. So it's a step beyond what we know the Chinese are trying to do today.
Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show. Very interesting.
Ben Yamagata: Thank you. It's been my pleasure.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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