Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Biden’s Carbon-Capture Plan Hands Lifeline to Coal Plants

Commodities Nov 03, 2021 04:44
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Bloomberg. A Caterpillar Inc. 326F excavator operates at the Kentucky Utilities Co. Ghent generating station in Ghent, Kentucky, U.S., on Tuesday, April 6, 2021. Coal's slow downfall is gaining momentum across the U.S. as clean energy becomes cheaper and wins widespread support, but lawmakers in mining states from Wyoming to West Virginia are determined to fight back with a series of roadblocks to President Joe Biden’s plan to cut greenhouse-gas emissions. Photographer: Luke Sharrett/Bloomberg 2/2

(Bloomberg) -- Coal-fired power plants would be eligible for billions of dollars in extra tax breaks under President Joe Biden’s economic legislation if they install carbon-capture systems, an incentive that environmental groups say may delay the retirement of dozens of facilities. 

Power plants that capture their carbon dioxide emissions would be eligible for a tax credit of as much as $85 per metric ton under the draft of Biden’s $1.75 trillion spending plan released by the House last week. That’s an increase from a rate of $50 a metric ton in current law.

The change could result in a single 1,000 megawatt coal plant receiving $6 billion in payments over 12 years, according to an analysis of the proposed credit by the environmental group Sierra Club, which estimates the increase could result in a quarter of the nation’s coal-fleet delaying retirement. 

“The provision, as written, delays the transition from fossil fuels -- and emissions reductions -- in the electric sector by throwing a decade-long lifeline to uneconomic coal plants,” the Sierra Club said in an analysis of the credit. “Even with the lower costs of renewable energy that will be spurred by Build Back Better, utilities will find carbon capture with these payments to be too attractive to pursue clean energy alternatives.” 

Among the group’s concerns is a tweak to the credit that would change the requirement that carbon capture systems be operational by 2026 to simply under construction by 2032 to qualify. That change could extend the life of coal-fired plants by a decade since carbon capture facilities can take years to construct, according to the Sierra Club. And any coal plant that does use the credit to install carbon capture technology would still have the same emissions profile of an unmitigated natural gas plant since the credit only requires electric-generation facilities to capture 75% of their emissions, the group said.

The increased credit, which is backed by a coalition that includes utility DTE Energy (NYSE:DTE) Co. and miner Peabody Energy Corp., is one of dozens of energy and climate programs included in the House’s draft of Biden’s Build Back Better plan that includes $555 billion in climate spending. The increase in the carbon-capture credit has been seen as necessary to win the support of West Virginia Senator Joe Manchin and other Democrats who hail from states flush with coal and gas reserves.

Coal plants have been retiring early in the face of competition from cheap natural gas and cleaner renewable energy sources. The credit may have the unintentional affect of delaying some of those from shutting, the Sierra Club says.

Earlier: Fossil Fuel’s Answer to Climate Change Just Got Cheaper 

The proposed increase comes as high costs have kept carbon capture technology in the U.S. from getting off the ground. No carbon capture projects for power generation currently exist in the U.S. 

The Sierra Club is concerned that even utilities that end up opting not to install carbon capture technology will delay the retirement of plants by years while it’s under consideration. Last year two coal fired power plants in North Dakota and New Mexico announced plans to scrap planned retirements while they consider the economics of installing carbon-capture technology using the credit. 

“We’ve seen the subsidy at the current level being used in Public Utility Commission proceedings as a reason to stay online,” Pat Drupp, the Sierra Club’s deputy legislative director, said in an interview. “It’s a very lucrative subsidy.” 

But the Clean Air Task Force, a Boston-based environmental group, estimates that the increase in the credit would result in an 125 million metric ton reduction in carbon dioxide emissions a year by 2031. 

“Unless Congress ups the amounts, capture isn’t going to be adopted voluntarily by high-emission sources,” said John Thompson, the group’s technology and markets director. The credit is important because it can also be used by sectors that are hard to de-carbonize such as refineries, cement and steel, Thompson said. 

“I don’t see how looking at carbon capture is going to extend the life of coal plants,” Thompson said.

©2021 Bloomberg L.P.

Biden’s Carbon-Capture Plan Hands Lifeline to Coal Plants
 

Related Articles

Gold Treads Water at Mid-$1,800 as All Eyes on Fed 
Gold Treads Water at Mid-$1,800 as All Eyes on Fed  By Investing.com - Jun 24, 2022

By Barani Krishnan Investing.com -- Bulls in gold logged a second weekly loss as the yellow metal treaded water at mid-$1,800 levels amid a keen watch on the Federal Reserve’s next...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email