Is coal technology the key to climate regulations?

LAGUNA, NIGUEL, Calif.--What do you get when you put the CEO of a coal-dependent utility on stage with two environmental advocates to discuss whether coal can be clean? A surprisingly civil discussion with more than just straight "pro" and "con" positions.

The CEO of American Electric Power, Michael Morris, spoke on the same panel with Michael Brune, the executive director of the Rainforest Action Network, and David Hawkins, the director of climate programs at the Environmental Defense Council on Tuesday at the Fortune Brainstorm Green conference here.

AEP is the second-largest electricity generator in the U.S. and gets 73 percent of its power from coal. The company is now in the process of building a new coal-fired power plant in Arkansas and investing in a demonstration facility to store carbon dioxide from burning coal underground.

Carbon capture and storage, where carbon dioxide is isolated and pumped underground, is considered vital technology to making coal less polluting. Coal is the source of about half the electricity in the U.S. and about 70 percent around the world. At the same time, underground storage of coal--a major contributor to carbon emissions--is opposed because it is not proven and because coal causes many environmental hazards.

AEP's Morris believes that global warming from the build up of greenhouse gases like carbon dioxide in the atmosphere needs to be addressed through carbon regulations. But to think that coal will stay in the ground in naive in his view.

"It's a prism of answers with energy efficiency and renewable energy. But you're kidding yourself if you think you are taking coal off the board," he said.

The technology, being tested in AEP's demonstration facility, is not fully operational and needs to become more efficient. The company is seeking Department of Energy loans to build a larger facility. Energy Secretary Steven Chu is a "big believer," Morris said.

A climate change law that restricts carbon dioxide emissions is likely to come out in the next year, said Morris, who made clear he intends to meet emissions limits in large part with underground carbon storage.

He estimated that building carbon, capture and storage equipment on coal plants pushes the price of electricity up from three to four cents a kilowatt-hour to five to six cents.

To Michael Brune of the Rainforest Action Network, pursuing carbon, capture, and storage technology diverts valuable resources from cleaner sources of energy while making the climate change problem worse.

"The reality is there is no such thing as clean coal. There is not a single commercial plant in the U.S. that captures carbon emissions and stores them underground," he said. "Within the next 10 or 15 years, we could find a way, technologically speaking (to do it). I'm not saying it can't be done. I'm saying we shouldn't try."

Brune said the technology is not yet safe or economical. Coal also has several other bad pollutants, such as mercury, and the source of many environmental and health problems.

"Where does coal come from? It still comes from mountaintop removal...It still pollutes billions of gallons of water a year," he said.

By contrast, the NRDC supports investments for the development of underground storage of carbon dioxide from coal, said Hawkins. The reasoning has more to do with politics than the environment, though.

To pass a climate change law that sets the U.S. on a path of reducing carbon emissions in the coming decades, members of Congress from coal-dependent states need to be convinced, he said.

"We have two ways to do things. We can change the Congress or we can change the Congress' mind. We don't have time to change the Congress," Hawkins said.

The NRDC, like other environmental groups, is also fighting to address other environmental problems from coal, which Hawkins called "fixable problems."

The other reason to forge ahead with research in underground carbon storage is for the U.S. to take leadership in climate change to other countries, notably coal-dependent India and China.

"The way to get China and India to take this seriously is for the United States to treat this seriously," Hawkins said.