Coal could become a lifeline in Democrats’ reconciliation bill

Aging coal-fired power plants desperate for a lifeline can find one in the most unlikely places: Democrats’ climate-centric $ 3.5 trillion budget reconciliation bill.

The measure uses funding and tax breaks to ensure that Americans’ daily lives are powered primarily by the sun and wind, not fossil fuels.

And he aims for that to happen in a decade.

To go this fast, however, some observers say it is likely that some existing gas-fired, and perhaps even coal-fired power plants will remain in operation.

Democrats are urgently pushing the reconciliation bill because of this timeline, which scientists say is necessary to avoid the worst effects of climate change. This would require a rapid and unprecedented transition of the electricity grid.

The bill contains the Clean Electricity Performance Plan, at the heart of President Biden’s climate strategy to decarbonize the grid by 80% over the next nine years. The plan would provide funding for utilities to quickly develop clean energy resources on the grid and penalize those who go too slowly.

The hardest part of the transformation will be the remaining 20 or even 30% needed to achieve a carbon-free network. It is this last delicate stage where power plants that burn fossil fuels – albeit with modern carbon capture and sequestration (CCS) equipment – are needed.

“This would be one of the few existing policies that would result in the deployment of CCS on coal,” said Lindsey Walter, deputy director of the Climate and Energy program at Third Way.

Few carbon capture infrastructures are currently deployed. It is expensive and cannot compete with cheaper renewable resources.

Under CEPP, which is technologically neutral, funding for carbon capture projects would become available, Walter said. It could be used in conjunction with a more robust version of the 45Q tax credit – so named for the section of the IRS code in which it appears – for carbon sequestration.

It would give coal and gas power plants a boost that they wouldn’t have on the free market, she said. With 70-80% development, renewable resources become more expensive and require a network of expensive transmission lines that do not exist and that would take many years to plan and build.

Renewable resources are the “workhorses” of the transformation of the electricity grid that will take shape in the coming years, said Sasha Mackler, energy director of the Bipartisan Policy Center. But the success and speed of this change will also require a safety net or reliable power, he said.

To ensure grid reliability, the value of modernized coal and gas-fired power plants becomes much higher in the difficult final stages of construction, especially for the more difficult-to-decarbonize sectors such as manufacturing.

“As you go deeper and deeper there will be a need for low carbon, zero carbon resources that can provide that backup of the system that wind and solar do not provide on the grid. network, ”he said, adding“ there is a fundamental need for generation available when you need it in bad weather or colder seasons.

Carbon capture is one of a series of basic power options that also include hydro, nuclear and geothermal power. Mackler and others have also noted that the technology is always evolving and expect it to also become cheaper and more efficient to deploy by the end of the decade.

Also, they said, the more it is built, the more robust the market becomes.

Currently, the Home version of the CEPP only includes natural gas with carbon capture and storage. And that’s where Senator Joe Machin (DW.Va.) comes in.

As chairman of the Senate Energy and Natural Resources Committee and one of the few moderates currently refusing to support the bill, Manchin will have undue influence over the fate of CEPP. If he pushes the measure forward in the Senate, which is still uncertain, observers largely expect him to insert a provision that would support coal.

“For someone whose top priority is keeping coal plants open, this offers a longer-term lifeline than just the status quo,” said a source close to the negotiations, speaking in the background. plan to speak frankly about the closed-door talks.

“Winning on both sides”?

Manchin comes from a state that derives more than 90% of its electricity from coal. The coal industry, along with the natural gas industry, supports tens of thousands of jobs in West Virginia. And Manchin himself owns a business that profits from the coal industry by selling waste coal to an aging power plant.

He has repeatedly expressed his skepticism about transitioning from a grid largely powered by fossil fuels.

In July, Manchin wrote a memo to Senate Majority Leader Chuck Schumer (DN.Y.) this summer, with the aim of reducing the package to $ 1.5 trillion and seeking more natural gas, coal and carbon capture in clean energy fiscal policies. In the note, he said he wanted coal and natural gas coupled with carbon capture to be “possibly eligible” for clean energy incentives.

Nonetheless, Manchin has shown signs of easing his hardline stance in recent days, and progressives have indicated they are prepared to compromise on a smaller package. He met Biden again at the White House on Wednesday, a day after the president said “it looks like he’s moving.”

Passing the reconciliation bill, and in particular the CEPP, will give moderates and progressives something to take home with their constituents in next year’s campaign, said Walter of Third Way. It also comes as Biden must show that the United States can adopt aggressive climate policy to world leaders during the COP26 international climate talks in Scotland which begin in a few weeks.

“This is a victory for both sides, we have to meet our emissions targets, especially to enter the COP,” said Walter. “We would do well to come in and give Biden a strong position in the negotiations by putting in place the existing policies that actually get us to our emission reduction targets. At the same time, we understand the need for innovative clean energy technologies, such as carbon capture, that Joe Manchin cares about, and this would create a demand for them. “

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