Senators from states with significant coal production said Thursday they were concerned that a pending bill instituting a so-called "clean energy standard" could ruin the industry.
The bill (S.2146) introduced by Senator Jeff Bingaman, Democrat-New Mexico, would require the largest utilities to obtain by 2015 nearly a quarter of the electricity they sell from clean energy sources, including renewables, natural gas, nuclear power and coal with carbon dioxide capture and storage. It is backed by the Obama administration.
At a hearing of the Senate Energy and Natural Resources Committee, Senator Joe Manchin, Democrat-West Virginia, said the bill could phase out the use of coal, given that carbon capture and storage has yet to be commercially viable. Coal currently accounts for nearly half of US electricity production and is a cheap energy source.
"Until we develop the fuels of the future, you've got to use the fuels you have," said Manchin, whose home state is the second largest US producer of coal. "We'd be the first nation not to use its own resources to its own benefit. You're rooting out the one abundant energy source that you have."
David Sandalow, the US Department of Energy's acting undersecretary, responded that the bill does not favor one energy technology over another, but simply sets a goal for clean-electricity generation and leaves it up to utilities to meet that goal. As an intended side-effect, the bill would stimulate investment into energy innovation, he said.
"A clean energy standard is technology neutral," he said. "West Virginia wind, West Virginia hydro and West Virginia coal can come in under a CES. It is designed to bring in capital off the sidelines and provide long-term signals to the market. Clean coal is a fundamental part of how to meet a CES."
The bill's clean-energy requirement begins at 24% in 2015 and increases by 3% per year through 2035, and utilities would receive credits based on how much zero- or low-carbon electricity they sell.
Utilities would be required to accumulate a certain number of credits to meet the clean energy standard or make "alternative compliance payments" that start at 3 cents/kWh in 2015 and scale up by 5% above the rate of inflation annually.
An analysis by the Energy Information Administration, DOE's independent statistical arm, found that the bill would have no major impact on electricity prices through 2020.
The analysis also found that coal-fired electricity generation would likely decrease by 54% by 2035 under the bill.
Senator John Barrasso, a Wyoming Republican whose home state leads the nation in coal production, suggested that if the bill is passed, the Obama administration ought to consider rolling back Clean Air Act requirements it recently imposed on utilities to reduce greenhouse gas emissions, which he said would hurt US competitiveness and drive up energy costs.
"Is the administration willing to repeal these regulations, instead of wrapping the country in more regulations?" Barrasso asked Sandalow.
"We are not looking to amend the Clean Air Act," Sandalow responded. "The Clean Air Act has a 40-year history of protecting public health in this country, keeping the air clean and of increasing GDP."
Bingaman said his bill is designed to give the utility industry more regulatory certainty and encourage it to invest in clean-energy technologies.
"It's intended to support homegrown innovation and manufacturing and keep America competitive in the global clean-energy economy," he said. "It provides a realistic and predictable market pull on advanced energy technologies. If we really want energy innovation to flourish here at home, we need long-term policy signals."
But Senator Bob Corker, Republican-Tennessee, said the bill would be a misguided shift away from coal-fired generation.
"We might as well say to Appalachia and Wyoming that you need to be planning for a different future," he said. "We have advantages over other nations. It just seems that Washington is constantly trying to move away from the great strengths that we have, just to be like some other European place. Let's invest in efficiencies, but let's also use these tremendous resources we have in this nation."
