Friday, March 13, 2009

Energy Plan Comments, Part 2

Tonight I present the second of two excerpts from my comments on the state's draft Energy Plan, which can be found at the Energy Office website:
There are recommendations in the plan that do not stand up to closer analysis. The draft plan itself acknowledges (page 17) that some of its recommendations “have not been subjected to cost-benefit analyses or full costing studies.”
In particular, Recommendation 36: Clean Coal (page 71) has not been subjected to such analysis, and should not be adopted:
Delaware, through the appropriate state agencies, should promote deployment of carbon emission reduction technologies at existing coal plants in Delaware and should consider incentive[s] for viable and effective technologies.
The draft plan recommends public support for clean coal:
The State should work with these facilities to explore incentives and funding options such as R&D support, grants for capital investment, and tax relief.
Any such state support would be wasteful of scarce resources in support of outdated and inherently dirty technology. Apart from the need to control other emissions, anticipated carbon emission controls will increase the cost of coal power by at least 20 percent, according to an MIT study published in 2007.
This chart from McKinsey & Company, found on page 33 of the draft report, depicts the relative cost effectiveness of different technologies:
You will find “CCS: coal retrofit” at the right (more expensive) end of the scale.
Capital markets are increasingly skeptical of coal power. Last year, investment banks Morgan Stanley, Citigroup, J.P. Morgan Chase and Bank of America announced that they would factor in the large and uncertain costs of carbon controls when considering whether to invest in new coal plants. If Wall Street wouldn’t fund coal technology (even before it collapsed), why should Delaware’s taxpayers?
More stringent and inclusive cost analysis of coal power should also include factors dismissed by accountants as externalities, such as health costs and the clear and present danger posed by accumulated and unprotected piles of coal ash. Such costs may be external to a company’s balance sheet, but they must be considered as essential to the public interest. When all relevant factors are considered, this 19th century technology is not suited to meet the environmental and economic needs of the 21st century.
Yes, it would be a good thing to reduce CO2 emissions from the Indian River plant. But reducing emissions can and should be accomplished through regulatory enforcement and cost shifting using a cap and trade system, either a proposed national system or extension of RGGI to include power plants.
In light of the economic inefficiencies of further investment in coal power, I have doubts about support for the Mid-Atlantic Power Pathway Project or MAPP (page 94). The draft plan acknowledges the concern that the MAPP would make it easier to import power from “electric generation facilities with relatively high air emissions,” particularly those upwind from Delaware. This does seem to be at odds with the spirit and intention of the Electric Utility Retail Customer Supply Act of 2006, which called for greater reliance on home grown energy sources.
I also have doubts about the argument that the MAPP would make it easier to distribute power from offshore wind to states west of Delaware. But the Bluewater Wind project has been scaled to meet Delaware’s needs, not those of the greater PJM grid. I think that investing in smart grid technology to better accommodate wind power and other renewable source close to home could be far more cost effective than building a power superhighway running through southern Delaware.


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