California Says No To Coal Power

The California Energy Commission has decided that due to the state’s desire to curb green house gases that the state’s investor owned utilities (IOUs) will not import any electricity generated by coal from out of state sources. This decision was adopted with California’s Integrated Energy Policy for 2005. While the actual policy has yet to be formalized, the policy does provide a premliminary standard for greenhouse gases,

Global Climate Change

California must continue to be highly aware of the environmental impacts of its energy policies. As the world̢۪s 17th largest emitter of greenhouse gases, California must incorporate its efforts to reduce greenhouse gases into its energy policies. In June 2005, Governor Schwarzenegger established greenhouse gas emission targets intended to reduce greenhouse gas emissions by 2010 to 2000 emission levels, by 2020 to 1990 levels, and by 2050 to 80 percent below 1990 levels. The Governor̢۪s Climate Action Team, led by the California Environmental Protection Agency, is charged with developing the program that will achieve the Governor̢۪s targets. The first report of the Climate Action Team is due to the Governor and Legislature in January 2006.

The state is exploring a number of strategies to reduce greenhouse gas emissions. The CPUC now requires that investor-owned utilities use a carbon dioxide adder of an initial $8 per ton in their long-term procurement plans, encouraging them to invest in lower emitting resources. In addition, the CPUC unanimously adopted a resolution directing its staff to develop an investor-owned utility greenhouse gas performance standard “that is no higher than the greenhouse gas emission levels of a combined-cycle natural gas turbine” for all procurement contracts longer than three years. In the case of coal-fired generation, the capacity to capture and store carbon dioxide safely and inexpensively is essential for meeting these standards. The Energy Action Plan commits that the agencies will “ Ensure that energy supplies serving California, from any source, are consistent with the Governor’s climate change goals.” The Energy Commission endorses the CPUC’s setting a greenhouse gas performance standard for investorowned utilities and agrees that an offset policy must await a formal greenhouse gas regulatory system and must include a reliable and enforceable system of tracking emission reductions. The Energy Commission looks forward to working with the CPUC to implement a greenhouse gas performance standard as part of the 2006 procurement proceeding.

While more specific recommendations must necessarily await the January 2006 report from Governor Schwarzenegger̢۪s Climate Action Team, the Energy Commission recommends the following:

  • A greenhouse gas performance standard for utility procurement should be set no higher than emission levels from new combined-cycle natural gas turbines.
  • Additional consideration is needed before determining what if any role greenhouse gas emission offsets could play in complying with such a standard.

While this does not outright ban electricity generated from coal plants, the requirements that coal fired plants emissions be as clean or cleaner that combined cycle natural gas fired plants pretty much ensures that there will be few coal plants that meet the condition. This could be bad news for planned coal plants in Wyoming, Nevada and Idaho. I’m not sure, but I bet this is also bad news for the $3 billion transmission line from Wyoming to Arizona. If the proposed plants were going to be using that transmission line to send coal generated electricity to California, then these new rules might make such a transmission line unneccessary.

Further, given the higher prices for natural gas due to increased demand and the problems along the Gulf of Mexico, it is likely that electricity prices in CA (already some of the highest in the nation) will go even higher.

FILED UNDER: Economics and Business, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. John Burgess says:

    And California’s imposition of its own rules, once again, will drive up the cost of both competitive fuels–by artificially raising the demand for them in CA–and for coal–by artificially driving the costs up.

    Not dissimilar to the way it screws around (along with other states) the efficient production and distribution of gasoline, with its own set of boutique standards.

    Or the price of cars that must meet unique CA standards, for that matter.

  2. McGehee says:

    Once it’s in the system, electricity is fungible. Coal plants in other states can sell their power to places that don’t have California’s draconian standards, and gas-fired plants in those places can sell their power to California instead of locally.

  3. Steve Verdon says:

    The idea though was to take advantage of CA’s high prices. This new rule will largely prevent that. Basically this new policy has introduced alot more uncertainty into the Western U.S. power situation.

  4. Bithead says:

    Enron apparently taught them nothing.
    Idiots.

  5. Only those evil capitalistic corporations are affected. Nice friendly efficient socialistic Ministries of Plenty (like the LA DWP or City of Anaheim) are not affected by this.

  6. Mateo says:

    Thanks for the swell input, but California will be just fine without your wonderful coal power. Wind power is cheaper anyway, and we’ve proven to the world that you can cut costs far more rapidly by enforcing efficiency standards.

    Enjoy your mercury contaminated streams and sick kids in Virginia, we’ll keep our reputation for being the most desirable state in the country. And our cleantech sector will be laughing all the way to the bank while the neanderthals who think coal is still king get left holding the bag for global warming.

    Suckers.

  7. Steve Verdon says:

    Mateo,

    Uhhhmmm, did you know that most of LADWP’s electricity if via coal? Didn’t think so.

  8. Mateo says:

    Steve,

    Uhhhmmmm, did you know that, in two weeks, we are shutting down – forever – the Mohave coal station in Nevada, that by the end of 2009, LADWP will have divested all of its interest in IPP, Reid Gardner and Navajo Generation, and that there are currently solid bids for over 2000MW of wind to serve the California market, and plans for an additional 1000MW of geothermal, solar and wind power – to say nothing of the state’s efficiency targets, and a pending vote to bond for up to 10GW of residential solar?

    Didn’t think so.

    But then, you’re in Virginia. Good luck with that, hope it works out for ya.

  9. Steve Verdon says:

    Mateo,

    You think Mohave will be shut down forever? The actual fact is that it might be shut down permanently. There are a number of issues that need to be resolved, but people are trying to resolve them. So, you are either ignorant of the facts or deliberately lying.

    Second, Mohave is not an LADWP generating station (i.e., they are not the majority stakeholder). So really this is a non-sequitur.

    2000MW of wind to serve the California market, and plans for an additional 1000MW of geothermal, solar and wind power

    This is nothing considering CAs current demands and growth rates.

    to say nothing of the state’s efficiency targets, and a pending vote to bond for up to 10GW of residential solar?

    And what will all those residential customers do on a cloudy day, at night, etc.? Assuming this boondoggle actually goes through.

    You can keep wishing there is a pony somewhere inside the “alternative electricity generation” business, but currently there isn’t.

  10. Mateo says:

    Steve,

    Whatever.

    Mohave will be shut down December 31. You can look it up. LADWP buys power from Mohave. You can look that up, too. And another thing to look up – California has reduced its power consumption 10% over the last 4 years.

    2000MW of wind is the equivalent to two or three new coal plants. And that wind power will be built in the next couple of years – a lot faster than your groovy coal plants, which take 3-7 years, assuming the government gives them the right subsidies and exempts them from human health laws. And don’t even let’s get started on nukes. Talk about a boondoggle.

    Wind power, solar power, and geothermal, coupled with efficiency, will easily meet California’s power needs for the foreseeable future. You are clearly out of touch with what the investment community believes – or have you asked your banker lately whether he’d rather finance a coal plant, a nuke plant, or a wind farm? Yeah, didn’t think so. Good luck with that; most investment funds are pouring billions into clean tech. Can’t say the same for your dinosaur-era technologies.

    But, since you are a Republican, I know how painful the facts are. There are people who can help you with this; if you like, I can recommend a few therapists – there’s a lot of them in California. I’m sure it’s very painful to be on the wrong side of history, but you will recover, some day.

  11. floyd says:

    mateo; i enjoy a good laugh as much as the next guy , but did you say california has a reputation as the most desirable state in the country, what’s second? massachusetts?[lol]did you ever venture outside california ; and listen?[lol]

  12. Mateo says:

    Floyd,

    California will grow by 15 million people over the next decade; our economy is the sixth largest on earth. How big is the economy where you are? I’m sure that, given the presence of giant intellects like yours, your state, wherever it is, must be a real magnet for growth.

    Tell you what – let’s try an experiment: you get your state to secede from the U.S., and I’ll get California to secede, and let’s see who’s cold, hungry, unemployed and homeless in 6 months.

    And yeah, I’ve lived in a half dozen states. And I listen. And I can tell you, Republicans all sound the same – you get downright apoplectic when confronted with the facts. (Apoplectic, since I can see you were wondering, means “very upset.”)

    Again, there are many qualified professionals who are available to help people with personality disorders and deep denial. Seeking counseling is not a sign of weakness. Best of luck.