Kentucky seeks to preserve role for coal in state's energy future

bestep@herald-leader.comNovember 30, 2013 

Weatherizing homes and using more renewable energy could be part of Kentucky's program to lower carbon-dioxide pollution, but the model the state favors also would preserve a role for coal in electricity production.

That's an important consideration because Kentucky gets more than 90 percent of its electricity from power plants that burn coal.

The U.S. Environmental Protection Agency is studying limits on carbon-dioxide emissions from existing power plants.

The concern among many Kentucky officials is that the EPA will propose limits that the state's utilities could not meet at their current coal-fired units, requiring them to make costly changes that could drive up the price of electricity.

The state Energy and Environment Cabinet has produced a report urging the federal agency to take a different approach.

The issue is determining the best way to achieve cuts in carbon emissions.

For future power plants, EPA has proposed limits on the amount of carbon dioxide emitted from each generating unit. That is called a rate-based approach.

The proposed limits are 1,000 pounds of carbon dioxide emitted per megawatt hour of electricity produced at large new natural-gas plants, and 1,100 pounds at new coal plants.

The lowest emission rate any existing coal-fired plant in Kentucky can reach is 1,750 pounds, said John Lyons, the assistant secretary for climate policy at the Energy and Environment Cabinet.

That shows why state officials and the utility industry are concerned about what approach EPA will propose.

"If it's a rate-based approach, it'll be devastating," Lyons said.

The impact of such a rule would vary depending on the limits.

Utilities in Kentucky have already switched from coal to natural gas for some generating capacity because of low gas prices.

However, the state contends in its report to EPA that a traditional rate-based limit on carbon emissions would likely force utilities to replace all the coal-fired generating units in Kentucky with natural gas-fueled units, at great cost.

The state's paper on the issue identified the impact to manufacturing as a particular concern.

As one of the nation's top coal producers, Kentucky has consistently had one of the lowest electricity costs in the country.

That has contributed to the development of manufacturing, including factories such as aluminum smelters and paper mills that use large amounts of electricity.

Kentucky has the most electricity-intensive manufacturing sector in the country. That means it uses more electricity for each dollar of gross product created than any other state, according to the analysis by the Energy and Environment Cabinet.

A separate 2012 report by Aron Patrick, an analyst at the cabinet, predicted that a 25 percent increase in electricity prices would cost the state 30,000 jobs, mostly in manufacturing.

The state has asked EPA to consider an alternate approach to cutting carbon emissions that would not force the end of coal-fired power generation.

That approach is called a mass emissions model, which would set targets for the entire sector of fossil-fueled power generation to cut carbon pollution, but not limits on individual boilers.

That would give utilities flexibility to cut emissions through measures such as residential energy-efficiency programs that would reduce demand for electricity; using more renewable energy such as solar power and landfill gas; and taking part in carbon credit-trading programs, according to the state's technical paper on the issue.

A mass-emissions approach would recognize the differences in each state's electricity production and use, and avoid forcing Kentucky and other states to switch from reliance on coal to natural gas, merely trading one fossil fuel for another, the state's paper said.

"We're trying to preserve our low electricity rates," Lyons said. "That will require some portion of our electricity generation to be from coal."

One issue in such an approach would be how to calculate the amount of emissions reductions produced by lower electricity demands based on efficiency programs.

Kentucky asked EPA to come up with a method to figure that out.

The state included a major reforestation program in its calculations of how credits could cut carbon emissions.

However, EPA has said that would not be acceptable because planting trees would not be tied directly to cutting emissions from utilities, Lyons said.

The technical paper projected that Kentucky could increase its use of renewable energy mostly by buying wind power from out of state, combined with wind, solar, hydroelectric and landfill-gas power from in the state.

The state already has cut carbon emissions through energy-efficiency programs, and is on track to meet its goal of meeting 18 percent of its electricity needs through efficiency programs by 2025, according to the cabinet.

Lyons said the state's technical paper, released last month, is not a formal proposal. It is designed to further the discussion with EPA over the coming carbon limits for existing plants.

EPA is under a deadline to propose new rules by June 2014. After comments on the proposals, EPA would put forth a final rule in June 2015, and states would then have a year to come up with plans to meet the rules.

The continued role of coal will be a key issue in the debate.

Some environmental groups want to see coal eliminated as a fuel for generating electricity, in favor of cleaner alternatives, because coal plants are a major source of carbon in the atmosphere.

Most researchers agree atmospheric carbon is contributing to a warming planet and climate change, which can have destructive effects.

The risks include rising sea levels, more heat waves and drought and increased severe weather events, according to EPA.

As part of its "Beyond Coal" campaign, for instance, the Sierra Club has advocated closing coal power plants.

However, the organization recognizes the economic impact carbon limits would have on Kentucky, said Dan Sawmiller, head of the campaign in Kentucky and Ohio.

There will be some coal-fired generation in Kentucky's energy picture, he said.

Sawmiller said Kentucky has made good energy-efficiency efforts and commended the state for including such programs as part of an effort to reducing carbon emissions.

"There are definitely some positive aspects of this plan," he said. "There is a path forward for Kentucky."

Bill Estep: (606) 678-4655.Twitter: @billestep1

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