Bloomberg View

Tallying Up the True Price of Clean Coal


Construction on Southern Co.’s Kemper County power plant near Meridian, Miss., on Feb. 25

Photograph by Gary Tramontina/Bloomberg

Construction on Southern Co.’s Kemper County power plant near Meridian, Miss., on Feb. 25

The federal government is touting a new power plant in Mississippi as an historic advance in the fight against climate change. The facility, built in Kemper County by Southern Co. (SO), is the first large-scale coal-fired U.S. power plant built to capture carbon. To do that, it will convert coal into gas, then use the gas to power turbines, creating electricity. Instead of venting the resulting carbon dioxide into the atmosphere, the plant will turn it into a liquid, which will then be used to extract hard-to-access oil from nearby fields. U.S. Department of Energy Secretary Ernest Moniz calls Kemper the plant of the future and says the country could use 100 more of them. Perhaps. But there are good reasons to be skeptical.

The first question is whether the new technology will work as promised. Southern recently delayed to next year the date it expects the plant to become operational, citing among other things “unanticipated installation inefficiencies.”

Second is cost: The project’s initial 2006 price tag of $1.8 billion has risen to $5.2 billion. The energy it produces will cost more than $6,800 per kilowatt, compared with $5,500 for nuclear energy and $1,000 for a modern natural gas plant. Kemper’s ratepayers will thus see a 22 percent increase in their utility bills. Should local residents bear so much of the cost of developing a new technology, when it’s the country and the world that benefits?

Before Kemper becomes a model for future plants, the federal government will need to address those concerns. Successful operation will go a long way toward quelling legitimate worries about the technology. It will also counter critics in industry and Congress who say the Environmental Protection Agency’s proposed emissions caps on future power plants are unrealistic.

Costs matter, too: Moniz argues that future Kemper-style plants will be less expensive, as the technology is perfected. Yet that doesn’t address who will pay for what will continue to be more expensive than traditional coal-fired power production. Measured against the risks of global climate change, and the scale of action needed to ensure against those risks, Kemper is a reasonable bet. Before government and industry place any more of them, however, they have some questions to answer.

To read Ted Leonsis on the Partnership to Build America Act and Pankaj Mishra on India’s next leader, go to: Bloomberg.com/view.


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • SO
    (Southern Co/The)
    • $44.91 USD
    • 0.02
    • 0.04%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus