Boucher's Gambit


A “clean” bill on carbon tech won’t stay clean for long.

Fortnightly Magazine - July 2008

An interesting development in the climate change debate occurred this summer in the U.S. Congress. It wasn’t the Senate’s work on the Lieberman-Warner Climate Security Act; that was a complete palaver and an embarrassment for American democracy. No, it was a bill quietly introduced by Rep. Rick Boucher (D-Va.), chairman of the House Energy & Air Quality Subcommittee.

On June 12, Boucher introduced the Carbon Capture and Storage Early Deployment Act, with support from a bipartisan group of legislators in coal-dependent states, as well as industry companies and organizations. The Boucher bill would create an industry-funded and industry-managed organization to finance development and deployment of carbon capture and storage (CCS) technology. It would follow the model of the Propane Education and Research Council, which former Massachusetts Environmental Secretary John Bewick discussed in a recent Fortnightly feature story (Cultivating Clean Tech,” May 2008).

Specifically, the bill would mandate a referendum among U.S. electricity distributors, asking whether they’d be willing to add a carbon surcharge to retail electricity bills (averaging $10 to $12 a year per customer), with the proceeds used to create a CCS development fund. If 75 percent or more of utilities answer “yes,” then the Electric Power Research Institute (EPRI) would be asked to form an independent corporation and board of directors that would figure out how to spend the $1 billion-a-year CCS fund. The fund and the corporation would be dissolved after 10 years, unless Congress renewed the legislation.

At first glance, this approach seems to address many of the issues raised in Bewick’s article. First, it creates a nationwide structure to finance R&D on an equitable and predictable basis. Second, it keeps the money out of government hands, putting the industry in charge of setting priorities for development. Third, it allows lawmakers to avoid raising taxes, instead putting the onus on the industry to assess the carbon “fee.”

Given all that, the bill stands at least some chance of being enacted—which would be good news for both the global climate and the coal industry, whose futures might depend on the ability to sequester greenhouse gas emissions.

But looking more closely at the bill, an important question arises: why should such a groundbreaking initiative focus so narrowly on CCS while excluding other technologies aimed at accomplishing the same goal, perhaps more effectively and affordably?

Protecting Coal

One of the most obvious ways to reduce GHG emissions is to improve the efficiency of coal-fired power plants. If we can get more power out of the same amount of coal, then we’ll have less carbon to capture for each kilowatt-hour generated.

Of course, coal’s opponents don’t like this answer. They’d rather eliminate coal-fired generation completely. But given coal’s vital role in the economy, advancements to improve the efficiency of coal combustion—with such technologies as ultra-supercritical burners—should rank among the industry’s top priorities. As the Boucher bill is written, however, it would exclude any R&D for combustion technologies.

Likewise the bill would disallow R&D for electricity storage technology, arguably the single most important tool for addressing the dual challenges of climate change and energy security. Cheap, lightweight, efficient energy cells would drastically reduce GHG emissions by getting the most out of non-dispatchable, carbon-neutral, domestic power sources. In the bargain, they’d displace a large share of the petroleum imported to fuel transportation. But the Boucher bill ignores energy storage.

And what about nuclear energy? Finding a safe and economical way to recycle spent nuclear fuel would solve the nuclear industry’s biggest long-term problem. Also, it would clear an important psychological and political hurdle to new nuclear development (see “Is Yucca Enough?”). Nuclear represents the only existing climate-friendly baseload power technology that could replace a large segment of the coal fleet.

Why then does Boucher’s bill exclude anything related to nuclear, renewables or even efficiency and conservation?

A couple of possible reasons leap to mind.

First, by focusing its mission on CCS, the fund might have a better chance of accomplishing something useful. If all possible green technologies claim a piece of the $1 billion pie, then none of them will get more than a small bite—perhaps not enough to make a difference.

However, that argument seems debatable. The job of the prospective EPRI corporation will be to determine which R&D investments will deliver the greatest bang for the buck. Providing a full technology menu seems more likely to yield breakthroughs than arbitrarily limiting that menu to a single item.

Furthermore, as long as the industry is going to the trouble of establishing an R&D surcharge, why not collect $20 a year from ratepayers instead of $10? Most customers won’t notice the extra 83 cents in their monthly bill, and an additional $1 billion would give EPRI the resources it needs to develop the best of all possible technology solutions, rather than just CCS.

This leads to the second obvious reason for limiting the fund to CCS. Namely, among all the possible solutions, CCS is the only one that, if successful, would result in more coal being burned. All the other technologies would displace coal consumption, either by making the fleet more efficient or making other resources more competitive. So coal producers and coal-state legislators have good reason for heaping the R&D funds on CCS, while other technologies fight over scraps.

Credit Without Blame

The Boucher bill comes hot on the heels of an ugly legislative charade over cap-and-trade legislation, the aforementioned Lieberman-Warner bill. Rather than engage in serious debate, Senators on both sides of the aisle used Lieberman-Warner as a platform for grandstanding. Republicans filibustered to prevent it from moving forward, ostensibly because Democrats were holding up President Bush’s judicial nominations. Meanwhile, Democrats refused to allow Republicans to offer amendments to the bill, and inserted poison-pill language that made the legislation unpalatable to almost everyone. Even Senators who support GHG regulation said the bill had no chance of being enacted.

So what does Lieberman-Warner have to do with the Boucher bill? The most obvious connection is timing. In the wake of the Lieberman-Warner mess, the Boucher bill looks like a slam-dunk by comparison. Its voluntary industry-referendum approach provides attractive cover for legislators who want to claim credit for addressing climate change, but not the blame for taxing coal out of the market and driving up energy prices.

However, other players in the energy debate seem unlikely to sit by and watch an R&D funding mechanism emerge that excludes their technologies. They will insist on expanding the Boucher fund’s mandate—as they should—and that will complicate the debate. The longer the debate goes on, the more players will get involved, and the less chance the bill will have of being enacted.

Nevertheless, the Boucher bill represents an important step forward in the climate-change policy debate. By proposing an R&D fund created from the carbon surcharge, the approach would direct resources where they belong—on developing technologies to solve the GHG emissions problem. When lawmakers and the industry are ready to focus on a full range of solutions—rather than just those that will rescue the threatened coal industry—the groundwork laid by the Boucher bill might provide a workable path forward.

Or it might produce nothing but another legislative stalemate.