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What will new climate plan mean in Minnesota? Three experts read the tea leaves

Details of carbon reductions are yet to come, but Minnesota’s early investments in clean power may prove especially wise.

President Obama outlined his new climate change plan in a speech on Tuesday.
REUTERS/Larry Downing

First of two articles.

Perhaps we can all agree, as President Obama likes to say, that yesterday’s speech outlining a new American response to carbon pollution and climate change was a barnburner.

It was broad, it was detailed, it was passionate, it was stirring and, in my opinion, it fully paid off the IOUs the president laid down in his inaugural and State of the Union addresses earlier this year, promising to take climate policy seriously and to use the White House’s executive power to act where a gridlocked Congress will not.

Perhaps its only defect was the time and place of its delivery, which denied it the prime-time TV audience it absolutely deserves. (If you missed it, you can see it here.)

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The most contested part of the president’s new plan will be the reduction of carbon dioxide emissions from the nation’s electric generating plants, especially those fired with coal.

What that initiative will mean for Minnesota utilities and their customers depends on details yet to be determined by the U.S. Environmental Protection Agency — how steep the reductions will be, how much flexibility is allowed in meeting them, and how distant the deadlines are set.

However, certain things are clear at the outset, and one of these is that reducing carbon pollution from coal plants cannot be achieved by adding the same kind of smokestack controls formerly used to scrub sulfur dioxide, mercury and other pollutants out of the emissions stream.

Can’t capture carbon

Frank Prager, Xcel Energy’s vice president for environmental and public policy, told me “there is no back-end technology for removing carbon in a way that makes any sense economically, and there is no good way as yet to store the carbon you would capture.”

Nor is there any real likelihood that effective technologies for carbon capture and sequestration at existing coal plants will be developed soon, he said. That leaves Xcel and other utilities only three practical options for reducing carbon pollution: retiring coal plants, producing more non-fossil-fuel derived power from wind and other renewable sources, and reducing power consumption by customers.

Prager said Xcel is actually “pleased” that Obama has decided to use the Clean Air Act as the tool for reducing carbon emissions, in preference to other control scenarios, and was glad to hear the president’s comments on state-level successes, because he feels Xcel’s performance in Minnesota is among the best examples of that progress.

Since 2005, Prager said, Xcel has reduced its carbon emissions by 22 percent and is on track to achieve a 30 percent reduction by 2020 – and has managed to do so without raising rates to levels out of line with the national average.

A big share of that reduction resulted from repowering two of the company’s oldest, dirtiest coal plants – Riverside in Minneapolis, and High Bridge in St. Paul – with natural gas, conversions made attractive through legislative incentives that allowed the company an accelerated recovery of its investments in the projects.

“We’ve been out in front in Minnesota, and we’ve done amazing things,” Prager said, but future reductions will necessarily be more difficult and more expensive to achieve. Because of that, he said, Xcel will do its best to see that the EPA rules “reward early actions and reductions already achieved.”

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“We don’t want to be in a situation where EPA demands additional reductions from us, without taking into account what we’ve already done in Minnesota — that would be a disservice to us, and also to our customers, who also deserve the benefits from the investments we’ve been making for many years now.”

Future reductions more difficult

J. Drake Hamilton, the science policy director at Fresh Energy, echoed Prager’s point about future reductions being more difficult than past.

In the decade from 2000 to 2010, she said, coal’s share of electricity generated in Minnesota dropped from 63 percent to 51 percent as coal plants were taken down or repowered, as utilities responded to state targets for renewables, and as demand slackened. But the percentage has ticked up slightly since then, as higher natural gas prices moved utilities back toward coal.

“And we’re a little bit stuck now,” Hamilton said. “The utilities have had flat demand growth for the last few years. We don’t need new power plants. And it’s much more straightforward to invest in renewables when you’re growing and adding capacity to meet rising demand.”

The big question now, she said, is what will happen to the largest coal plants — like Xcel’s Sherco plant in Becker, Minn., or Minnesota’s Clay-Boswell plant near Cohasset — that were paid for long ago, or Great River Energy’s new Spiritwood plant, which hasn’t yet come online.

PUC will need to factor in the coming controls

Minnesota Power’s 15-year generating plan is now under review by the state Public Utilities Commission, and Xcel’s next plan is up for review in 2014, she noted, and the PUC will have to factor the coming controls into its analysis and approval process in some way even if all the details are not yet settled.

On the other hand, Hamilton said, thanks to Minnesota’s early and aggressive standards for renewable-energy development, “we know how to make this program work, because we’ve already done it, and grown about 3,000 new jobs in the process.”

Overall, Hamilton said she was “so glad the president has finally taken steps to clean up coal plants and close the loophole in the Clean Air Act, which meant there was no cost [to a utility] for emitting carbon dioxide. It’s a step that’s long overdue.”

However, she was disappointed to learn from a White House memo [PDF] circulated among clean-energy advocates yesterday that EPA has been given until June 2014 to issue proposed rules for reducing power-plant carbon emissions and until June 2015 to finalize those rules.

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“It was good to hear the president say there’s no more time to fritter away,” Hamilton said, but surely the timetable for action could be faster than the one that’s been given to EPA.

Recent coal investments

The view is a little different over at Great River Energy, Minnesota’s second-largest electricity generator after Xcel.

It, too, has been investing in renewables and conservation, and considers itself on target or ahead of schedule for meeting state requirements. However, it has also continued to invest in new coal capacity in ways that Xcel and Minnesota Power have not in recent years.

There’s the new Spiritwood plant, finished a couple of years ago but held offline until demand justifies flipping the ON switch, probably next year, according to spokesman Randy Fordice. And the company has invested heavily in a patented process called DryFining, which enables broader use of wetter, lower-energy lignite coal from North Dakota.

The process, which uses heat captured from coal combustion to dry incoming lignite before it reaches the boilers, improves combustion and reduces emissions of sulfur, mercury and other pollutants, but doesn’t do much to solve the carbon-dioxide problem.

Great River Energy relies on coal for 70 percent of the electricity it generates today, despite increased purchases of wind power and Canadian hydro power.

Great River presses for ‘legislated solution’

Fordice told me that that unlike Xcel Energy, his company opposes the use of Clean Air Act authority to reduce carbon emissions and continues to press for a “legislated solution,” but hasn’t come to agreement internally on what a perfect program might look like.

He said Great River Energy believes as a matter of philosophy that the Clean Air Act was not intended for the purpose of carbon control, but acknowledged that the Supreme Court seems to have settled the question in the other side’s favor.

Still, he said, the company and its member cooperatives continue to invest in renewables and conservation —”we’re actually doing a lot of what the president is calling for, already” — and is also heavily invested in the CapX 2020 project to upgrade the transmission grid carrying power across Minnesota, Wisconsin and the Dakotas.

“It seems like the utilities in Minnesota, and Great River Energy in particular, are well ahead in meeting the spirit of what was discussed yesterday,” Fordice said.

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Friday: The national picture.