Saving the planet was never going to be easy. Avoiding the most catastrophic effects of climate changes will require cutting carbon emissions by 50 to 80 percent over the next four decades, scientists say. After years of deadlock, 2009 was shaping up to be the year the world got its environmental act together. Now it's looking like the global environment may be one of the biggest losers in the current financial crisis.
Lower prices for oil—which some analysts predict will hit $25 a barrel—is bad news for investors in green energy. But the big winner is likely to be dirty coal. It already accounts for about 40 percent of the world's emissions of carbon dioxide, the leading cause of global warming. The fuel is plentiful, and its price has fallen about one third since last summer's peak to $80 per ton. In China, the world's largest coal burner, prices have fallen by half and are likely to plummet further. All the top emitters of greenhouse gases depend mainly on coal for electric power. Dirty coal is now getting cheaper relative to other fossil fuels, such as natural gas and oil.
New "clean coal" plants would capture carbon and store it away underground, or at least to extract as much energy as possible for each kilogram of carbon pollution. The problem is that clean-coal plants are a lot more expensive than conventional "dirty coal" technology, and the financial crisis is obliterating schemes that would have paid the extra cost. Before the crisis, a team at Stanford University found that the world was investing only about 1 percent of what's needed on advanced coal technologies to meet carbon-emissions targets. Now a spate of canceled projects darkens the picture.
There are lots of ways, in theory, to build low-emission power plants. One option is to turn coal into a gas and burn it in an ultra-efficient turbine. This "gasification" approach is not only highly efficient but it also produces nearly all of its carbon dioxide pollution in a concentrated stream that could be pumped safely underground, where it won't warm the atmosphere. So far, few investors are building plants that offer a model for how the technology would be deployed at scale. Before the crisis, a few power companies tried to build just the efficient gasification units, which are cheaper than the whole integrated plant, but most of those plans have evaporated in the last month. Only one large plant is still going forward in the United States, and that one won't include carbon storage.
Another route is to burn coal in pure oxygen without gasification, which also yields pure waste that can be pumped underground. A 30-megawatt demonstration plant is operating in Germany. A consortium of utilities is also testing a technology to remove CO2 from plant emissions, but no investor is willing yet to build a full-scale project. These options could double or triple the cost of a power plant.
A 300-megawatt plant that cut emissions nearly 90 percent would cost $1 billion to $2.5 billion, and the United States would need about 1,000 such plants to match its current coal-power output. China would need another 1,000. Since the 1960s, when U.S. utilities last made major investments in new plants, their average bond rating has fallen from AA to BBB, and now the credit crisis has made it all but impossible to finance any new plant, much less an expensive, clean one. The European Union has no money for its plan to build a dozen "zero-emission plants." The price of CO2 in Europe is too low to attract investors to this technology. The latest scheme to fix the problem—a giveaway of emission credits to investors who build clean-coal plants—is falling victim to the financial crisis, which has halved the price of emission permits, and thus the value of emission credits. The U.K. has been holding a contest for public funds to jump-start clean-coal technology. In November 2008 BP pulled out of the competition, citing its inability to form a successful consortium. Early in 2008 the U.S. government killed its investment in advanced coal due to exploding costs.
Environmentalists, in their opposition to coal of any kind, may provide the coup de grâce. Greenpeace, riffing on James Bond, is hawking a "Coalfinger" spoof on the Internet and is deep in a campaign to stop all new coal plants. U.S. environmental groups recently announced a campaign to expose clean coal as a chimera. Thanks to such efforts, in the United States it's now nearly impossible to build any kind of coal plant, including tests of clean technology. As the world economy recovers, nations will once again turn to their old stalwart, dirty coal.