A coal industry front group funded by Peabody Energy and the state of Wyoming successfully urged the Department of Energy to fund a study proposing a carbon capture project at the Comanche coal plant near Pueblo, Colorado. The operator of the coal plant, Xcel Energy, and regulators in Colorado have made clear that Xcel will close the coal units to reduce costs, and the carbon capture proposal has not gained traction. The effort shows one of the many ways that the largest coal mining company in the U.S. pushes coal carbon capture proposals, while many electric utilities are now more focused on closing coal plants they operate than pursuing carbon capture projects. Beyond the effort in Colorado, Peabody Energy promotes coal carbon capture proposals through industry associations, direct lobbying, and public relations campaigns.
Coal industry front group proposed Department of Energy carbon capture report
As Xcel Energy sought approval from the Colorado Public Utilities Commission in 2018 to close two units at the Comanche coal plant, the utility faced opposition from a group that called itself a “Coalition of Ratepayers,” organized by the Independence Institute, a Denver-based conservative think tank. But emails obtained through a public records request show that the effort was actually the work of a front group for coal mining companies and the state of Wyoming called the Energy Policy Network (EPN).
The Comanche plant burns coal that is mined in Wyoming, and EPN’s effort to keep it operating is part of a broader campaign funded by coal mining companies with Wyoming operations to delay the closures of coal plants that burn coal from there. EPN hired lawyers to argue the case before the Colorado PUC, paid a public relations firm to influence media coverage in Colorado, and funded the Independence Institute. A lawyer for the Independence Institute wouldn’t say how much money it received from EPN.
The Independence Institute is a chapter of the State Policy Network, a web of state-based think tanks with a history of advocating for state policies that would aid its corporate donors.
Peabody helped fund EPN, according to an unredacted tax form, and EPN’s Vice President Jacob Williams is a former Peabody executive. In one email exchange, Williams told EPN Executive Director Randy Eminger to include six additional Peabody executives on updates about the effort to keep the Comanche coal units operating, explaining “The more Peabody Sr. Management engaged, the better.”
After the Colorado Public Utility Commission rejected that effort and approved Xcel Energy’s plan to close the two coal units, emails show that EPN shifted to a new strategy; urging Xcel to pursue carbon capture at the Comanche coal units instead of closing them. To promote that idea, EPN proposed that the U.S. Department of Energy publish a study supporting carbon capture at the Comanche coal plant.
In an email to coal industry executives and Wyoming officials, EPN executive director Randy Eminger wrote, “The Energy Policy Network, working with Friends of Coal West, approached the U.S. Department of Energy (DOE) and proposed the concept of capturing the carbon at Comanche and selling it to the Oil and Gas fields in West Texas.”
Other emails show EPN discussed its “pitch to U.S. DOE” in its quarterly board calls, and one email includes a “DOE Briefing” urging carbon capture at the Comanche coal plant. In one email, Eminger wrote that he “met with DOE 10 days ago and they agreed to do a study ($120,000) on the possibility of capturing CO2 and selling it into the West Texas oils fields for EOR.”
Leonardo Technologies, Inc. published the study on carbon capture at the Comanche coal plant, which it describes as “For The U.S. Department of Energy Office of Fossil Energy.” The Independence Institute helped promote the study; it was the subject of a post in the Independence Institute’s blog Complete Colorado, as well as an op-ed published in the Denver Post by Independence Institute President Jon Caldara. The Denver Post also published a rebuttal op-ed by David Schlissel of the Institute for Energy Economics And Financial Analysis.
EPN’s carbon capture proposal has not gained traction and there does not appear to be any support for the idea in Colorado beyond the Independence Institute. In a Denver Channel story about the planned closure of the Comanche coal units, Xcel Energy Colorado President Alice Jackson shot down the carbon capture proposal and said the DOE study was flawed, explaining that “It was a better plan for us to move forward with closure of Comanche 1 and 2 from the economics for our customers than it was to continue operating these plants.”
Peabody pushes coal carbon capture through industry associations and lobbying
Peabody Energy’s interest in coal carbon capture proposals is straightforward: beyond just the potential to keep coal plants operating and so allow Peabody to continue mining and selling coal, carbon capture could actually increase the amount of coal burned at a power plant. Operating carbon capture infrastructure requires large amounts of power, which could be provided by using around 30% of the coal plant’s output – so a coal plant with carbon capture would need to burn substantially more coal to generate the same amount of electricity. (Alternatively, carbon capture infrastructure could be powered by a separate gas unit, as NRG did at the Petra Nova power plant until it suspended operations in May.)
Peabody’s efforts to promote coal carbon capture go well beyond front groups like EPN; the coal mining company has pursued public relations campaigns and lobbying efforts, both directly and through a variety of industry associations.
Peabody is a member of several associations that promote coal carbon capture projects and policy, including the Carbon Utilization Research Council, the Carbon Capture Coalition, and the Global CCS Institute. Peabody is also a member of coal industry trade associations that push for coal carbon capture, including the National Mining Association, American Coalition for Clean Coal Electricity, and World Coal Association.
Peabody Energy also directly lobbies on carbon capture policies. Recent lobbying disclosure forms show that lobbyists working for Peabody have lobbied Congress regarding Wyoming Senator Barasso’s “Use It Act,” 45Q tax credits for carbon capture, the Carbon Capture Modernization Act proposed by Senators John Hoeven of North Dakota and Tina Smith of Minnesota, and more.
Peabody gave “clean coal” awards for six years – until utilities stopped accepting them
Beginning in 2014, Peabody presented “clean coal” awards at the annual PowerGen International Conference. Those awards went to coal carbon capture projects including NRG’s Petra Nova carbon capture project, which NRG mothballed earlier this year, and Southern Company’s Kemper Project, which Southern canceled following billions of dollars in cost overruns a few months after receiving Peabody’s award in 2017. Peabody also gave “clean coal” awards to coal plants that did not test carbon capture, such as the Longview plant in West Virginia, which declared bankruptcy for the second time this year.
But in 2018, a Peabody executive emailed a former colleague to say that it could be the last year for the “clean coal” awards, because it’s “hard these days for utilities to take the praise publicly.” Peabody did grant the awards in 2019, but none went to utility companies. The public relations campaign now seems to have ended; Peabody appears to have recently deleted the page on its website about its “clean coal” awards.
Cheap renewable energy undermines the case for coal carbon capture
Many U.S. electric utilities appear unlikely to pursue carbon capture at the coal plants they operate. In 2018, Reuters reported:
A Reuters survey of the top 10 U.S. power companies showed eight have no plans to purchase and install carbon capture and storage (CCS) equipment, citing high costs and uncertain demand, while the other two declined to comment. Another three utilities that are well-placed to adopt the technology – because of their proximity to existing carbon pipelines and coal reserves – also said they have no plans to tap the newly enriched subsidy.
AEP, Duke Energy, Southern Company, Dominion Energy, Exelon, Xcel Energy, PG&E, Edison International, Black Hills Energy, Rocky Mountain Power, and Oklahoma Gas and Electric all told Reuters they had no plans to pursue carbon capture projects, while NextEra and PSEG did not comment. More recently, some companies like Duke and DTE have said that they expect carbon capture and storage to help them achieve net-zero carbon goals, though they did not specify whether they expect to use the technology for coal plants, gas plants or both.
Executives at other utilities have also explained why their companies won’t pursue carbon capture at their coal plants; the Vice President of New Mexico’s largest utility, PNM, said the company decided against carbon capture at its San Juan coal plant after studying that option, pointing to higher costs, increased water consumption, and other risks.
Video by Farmington Daily Times
Electric utilities’ waning interest in coal carbon capture reflects not only the problems at coal carbon capture demonstration projects, but also the major shifts in the relative costs of renewable energy compared to coal. Over the last decade, wind power costs have declined by 70%, while solar power costs declined by 89%. Cheap renewable energy means that utilities can now reduce their operating costs by replacing coal plants with renewable energy – and even increase their earnings at the same time, according to analysts with Morgan Stanley and Moody’s Investors Service. In contrast, carbon capture projects would increase a power plant’s operating costs while also requiring significant upfront costs, as Illinois Congressman Sean Casten noted last week.
19/ In the power sector, CCS is literally the ONLY low-CO2 technology that costs more to build AND costs more to operate. (e.g., Solar: expensive to build, but effectively free to operate. CCGT: cheap to build, but depends on low gas prices to economically operate.)— Sean Casten (@SeanCasten) August 13, 2020
Peabody itself appears to recognize that its efforts likely won’t succeed in maintaining its customers. A decade ago, Peabody’s former CEO boasted: “We have hundreds of billions of tons of coal in the United States and trillions of tons of coal in the world. And we will use it all.”
Now, Peabody acknowledges that it will not be able to sell much of the coal even in its largest mine. During the company’s quarterly earnings call this month, Peabody executives told investors that the value of its North Antelope Rochelle mine in Wyoming, the largest coal mine in the world, had fallen by $1.4 billion. Peabody’s Chief Financial Officer explained: “Lower long-term natural gas prices, changes in timing of coal plant retirements and continued growth in renewable generation led us to change our long-term life-of-mine assumptions.”