The Associated Press March 29, 2010, 8:37AM ET

Colo. gas-coal fight could preview national battle

A plan to clean up Colorado's air is pitting two powerful industries -- natural gas and coal -- against each other in what could be a warm-up for a national fight over how to confront climate change.

The plan, moving quickly through the Legislature, would require Xcel Energy Inc., the state's largest utility, to either replace several aging coal-fired power plant units in the northern Front Range with cleaner natural gas plants by 2018 or refit those smokestacks with emissions-restricting technology or other green fuels before the U.S. Environmental Protection Agency imposes tougher air quality rules.

The bill has bipartisan support and the backing of Democratic Gov. Bill Ritter. Environmentalists who long fought more drilling by Colorado's natural gas industry are working alongside their erstwhile foes.

"Kudos to Xcel, Gov. Ritter, Colorado's natural gas producers and environmental leaders for pioneering the road to a clean, robust and independent energy economy. All of America should follow its lead," Robert F. Kennedy Jr., president of the environmental group Waterkeeper Alliance, wrote in The Denver Post on Thursday.

Xcel says some of its coal plants along the Front Range could operate with retrofits and others could be replaced by natural gas, provided the utility gets a good price from gas providers. The bill would allow Xcel to lock in prices in deals lasting up to 20 years; if market prices drop below negotiated rates, Xcel could still charge customers a higher price.

Xcel says expected EPA restrictions on haze, mercury and ozone could cause customer rates to rise 4 to 6 percent but that a comprehensive plan to address all the pollutants could cost less.

The coal industry is fighting back. The American Coalition for Clean Coal Electricity is spending nearly $2 million on advertisements warning consumers gas is more expensive than coal. Lobbyists and unions also argue it could cost jobs in coal mines and plants, which are more labor intensive than natural gas ones.

With health care legislation now passed, coalition spokeswoman Lisa Camooso Miller said Congress could now turn its attention to passing some kind of limits on carbon. Rather than give an edge to gas, the coal industry wants the federal government to help the private sector develop commercial-scale technology to capture the carbon produced by burning coal. Such processes only exist on a small scale currently.

"We believe that you can have affordable electricity and a clean environment. It's already happening now," she said.

The bill's backers note that most of Colorado's coal is exported and that its mines could continue operating.

Colorado's proposal was developed with help from gas producers in the state, including Anadarko Petroleum Corp. and EnCana Corp., said Jim Hackett, Anadarko's CEO and chairman of America's Natural Gas Alliance, a Washington-based trade group.

Hackett believes new domestic gas discoveries will lower its price and make it an attractive alternative to coal. He also hopes other states and Congress look to natural gas when considering controls on carbon emissions.

"I think it's the right answer for Colorado and it's the right answer across America," Hackett said.

The coal industry wants the federal government to help it develop commercial-scale technology to capture the carbon produced by burning coal. Such processes currently exist on a small scale.

Under rules proposed by the EPA in January, counties could be forced to clamp down on emissions from industry and automobiles or face government sanctions, most likely the loss of federal highway dollars.

The EPA plans to select specific emissions figures by August. Counties and states will then have up to 20 years to meet the new limits; by early 2014, they'll have to submit their plans to do so.

Despite concerns about environmental damage that can be caused by gas drilling, Pam Kiely, a lobbyist for Environment Colorado, said cleaning up the air is an urgent priority and that gas can help.

"We're optimistic with the protections we have in place (that) Colorado is ready to do this right," Kiely said.


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