Government Support For Coal Plants Erodes, Environmentalists Claim Victory
Environmentalists are claiming victory in their efforts to at least temporarily shelve federal financial support for rural coal-fired power plants the critics believe contribute to climate change. An official of the Rural Utilities Service, an arm of the U.S. Department of Agriculture and a key financial player in such facilities, recently revealed that service would be "precluded from financing base load generation plants" both this year and likely next.
The government's decision has already helped lead to the demise of at least one coal-fired plant and has raised financing questions about several others.
An early word came in a Feb. 19 letter from James M. Andrew, administrator of utilities programs for the RUS, to the head of a Montana electric cooperative that had hoped to win financing from the agency for its Highwood Generating Station, a coal-fired plant. In the letter, Andrew pulled the plug on the federal service's involvement in the 250-megawatt project. The letter also mentioned the "uncertainty" posed by pending litigation.
Later, officials of the federal agency told news outlets, including the Great Falls Tribune, that the White House's Office of Management and Budget had put loans for baseload generation on hold. Separately, the USDA recently announced it was accepting applications for $220.9 million in loan and grant applications for renewable energy and energy efficiency projects.
The government's retreat from coal projects could have far-reaching implications, according to Earthjustice, an Oakland, California nonprofit law firm representing envronmental groups that had filed a lawsuit against the government's involvement in the Montana plant. That litigation had also raised concerns about other projects financed via the USDA agency. Earthjustice, in statement in early March, said the federal agency's move would affect at least five other proposed coal plants in Kentucky, Illinois, Arkansas, Texas and Missouri. Would-be operators of the Missouri plant have already suspended plans for the project.
"This is a big decision," Abigail Dillen, a Earthjustice lawyer said in the statement. "It says new coal plants can't go to the federal government for money at least for the next couple years, and these are make or break times to get these plants built."
"We're counting it as a victory" in the lawsuit, said Brian Smith, an Earthjustice spokesman.
The Missouri plant appeared to be an early victim of the federal decision. On March 3, the cooperative that had planned to build the facility announced it was "delaying indefinitely" the project, citing the lack of financing from the utilities service, as well as regulatory uncertainty.
Regarding the Montana project, Andrew's letter cited "the uncertainty of the litigation now filed." But a spokesman for the service said the primary reason for rejecting the plant's funding was its quickly escalating expense. The utility service, which traces its roots to the Depression-era Rural Electrification Act, helps provide funding for projects serving rural areas by issuing loans and loan guarantees.
"The decision was based on one very significant and primary factor and that was cost," said the spokesman, Jay Fletcher. He said when the plant was proposed in 2004 it carried an estimated price tag of $450 million, a figure which had since grown to $750 million. Opponents of the Montana project had also cited the plant's price tag, contending that affordable wind power alternatives were available. An official of the Montana cooperative could not be reached for comment, but the Great Falls newspaper reported the utility would seek private financing.
Meanwhile, officials at the East Kentucky Power Cooperative were grappling with fallout from the service's funding decision. The cooperative has plans for a new 268-megawatt coal plant, new gas-fired peaker plants and transmission lines deliver the power. Elements of the project had already been targeted in a separate court challenge brought by environmentalists.
While the Kentucky lawsuit does not mention global warming implications of the plant, that's clearly one of the concerns of the plaintiffs. In a statement they warned:
"Coal-fired power plants emit large quantities of harmful soot, heavy metals such as mercury, and greenhouse gases into the environment. This pollution can result in an increase in respiratory problems, heart disease, and other health impacts. Coal prices are also rising; economists say that the price has risen 400 percent in the past six years, and the risks of increased regulations on dangerous carbon dioxide emissions are likely to drive those costs much higher."
The lawsuit, however, was brought on more technical grounds, in effect charging that the National Environmental Policy Act was violated because the environmental impacts of a 36-mile transmission line project were not considered together with the two proposed power plant units the lines would serve. The RUS that the transmission project would pose no significant impact to the environment. A separate environmental impact statement for the generating units is being prepared, according to the lawsuit.
Anne Mayberry, also a spokeswoman for the federal program, declined to comment on the lawsuit targeting the Kentucky facilities. However, Nick Comer, a spokesman East Kentucky Power, said both the cooperative and the federal agency had followed the law. The cooperative has described the generating project as using "clean coal" technology. But according to local news reports, environmentalists who in February proposed a greater reliance renewable energy, have criticized that as doing little to reduce carbon dioxide emissions.
Comer said that the cooperative continues to study renewable and alternative energy sources and already has projects generating power from landfills. But he noted that the region served by his cooperative -- which also lies close "to a lot of coal mines" -- is growing faster than the national average. Comer said it was too early to tell what the loss of federal financing might mean, although he said the possibility of going to the private market was being discussed.
"Coal," Comer said said, "has to be part of the picture."
(Department of Energy photo showing construction of clean coal plant in Florida)
