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Subsidizing carbon pollution

Does this make any sense? A proposed coal-gasification plant in Indiana would capture it’s CO2 output and sell it to a big oil company who would build a pipeline costing more than a billion dollars to pipe the gas to the Gulf of Mexico to be used to force oil out of depleted oil wells. Under cap and trade policies, taxpayers would pay the coal plant for capturing CO2 which is actually used to produce more CO2 from more dirty fuel.

First off, a study by the U.S. National Academy of Sciences (NAS) found that fuel from gasification plants would produce about twice the amount of greenhouse gases as oil without carbon sequestration. With sequestration, the greenhouse gas output would be about the same as oil. So, we are using our dirtiest fuel to produce more of our second dirtiest fuel both of which would be burned to increase greenhouse gas output. The only way the plant can become feasible is with massive investments of tax money. A spokesman for the project “said he hopes to obtain the federal government’s promise to pay off $1.87 billion in debt should the plant fail.” Gas from the plant would have to sell for about $7.50 per therm (100,000 BTU). Current market price is $3.79 per therm. A similar Indiana plant, under construction just upped it’s building cost estimate to about $2.5 billion from original estimates of $1.3-$1.6 billion and is expected to rise further. “Duke’s Indiana customers have been expected to see about an 18 percent rate hike to pay for the project, which is receiving more than $460 million in government tax incentives. But that rate increase doesn’t reflect the latest cost increases.” The plant by itself won’t produce enough CO2 to support the pipeline, so they have to get at least one more plant to buy into the project.

There isn’t enough coal currently being mined to support large gasification efforts. The NAS report found that “The U.S. transportation sector consumes 14 million barrels of oil per day. If coal mining activities in the U.S. increase by 50 percent – an additional 580 million tons of coal mined each year – up to 3 million barrels of fuel per day could be produced. To achieve this, two or three new coal-to-fuel plants would need to be built each year over the next 20 years” Costs of fuels produced by gasification could be competitive with current fuel costs only if the costs of carbon sequestration and pollution isn’t added in. It costs about a third more in power to sequester CO2. It only becomes anywhere near economically feasible if the gases are secondarily used to produce oil from depleted fields. Capturing CO2 to produce more CO2. That doesn’t pass the smell test.

This is just another example of using massive infusions of public money to support coal technologies that have never been proven and may never be economical. Have we come to the point where using more coal to produce more oil is a good idea? Why do we keep subsidizing this crazy stuff and skimping on funding for renewables and conservation?

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One Response

  1. […] myriad of boondoggles – sequestration, gasification – and Sunday’s article Subsidizing Carbon Pollution is a […]

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