Finding a path through a carbon-constrained future
The U.S. Environmental Protection Agency’s Clean Power Plan has raised more questions than answers since the rule’s finalization in August 2015.
Regardless of the court’s ultimate decision on the rule’s legality, Basin Electric’s leadership understands the cooperative must evolve to continue growing in a carbon-constrained world.
During a preconference titled "Finding a path through a carbon-constrained future" Nov. 9, energy industry experts spoke about the status of litigation against the Clean Power Plan, what a Donald Trump presidency might mean for the rule, and some projects to help utilities navigate a carbon-constrained future.
Pat Day, partner with Holland & Hart, represents Basin Electric and other petitioners in the battle against hasty implementation of the rule.
“It’s really quite accurate to say that Basin Electric’s leadership is at the forefront of this controversy in this litigation and in the political arena,” Day says.
Day expects a decision by the D.C. Circuit Court of Appeals in Washington, D.C., in the first quarter of 2017, with three possible outcomes:
- The entire rule could be vacated, as the petitioners have requested.
- The rule could be upheld in its entirety, as the EPA has requested.
- The court could find error in portions of the rule and send it back to the EPA to address those specific errors.
Day says his best guesses were that the D.C. Circuit Court will vote to uphold the rule, upon appeal to the Supreme Court, a 4-4 split decision would mean the District Court’s original decision to leave the rule intact would stand.
Legislation: Under a new president
According to Mike Eggl, Basin Electric senior vice president of Communications & Administration, Republican President-Elect Donald Trump’s position has historically been to dramatically scale back the EPA and repeal the Clean Power Plan. Those actions would need to pass through Congress, Eggl says, and with Republican majorities in the U.S. House and Senate, “the possibility for legislation is there.”
On the international stage, climate change compliance obligations under The Paris Agreement went into effect Nov. 4.
“The international ball is rolling,” Eggl says. “How does that get reversed? We have some indication that the president-elect would pull out of the accord process. It can be done, but that in itself is not an easy process.”
Options for the future
Bill Brown, NET Power CEO, spoke about the Allam Cycle, which consists of gasifying lignite coal to produce synthetic natural gas, which would then be used along with oxygen and carbon dioxide (CO2) to drive a turbine generator.
“When the Clean Power Plan came up, we got a call from the EPA the following week, and they thought the Allam Cycle actually has a shot at helping them save the planet,” Brown said. “The Allam Cycle appeals to both sides of the aisle.”
Brown says a demonstration plant could potentially be built in North Dakota and connect to Dakota Gasification Company’s Great Plains Synfuels Plant by 2020. The technology could provide Dakota Gas another source of marketable CO2 to be used for enhanced oil recovery or other purposes, and provide Basin Electric a more efficient and CO2 emission-free way of generating electricity using lignite coal.
“The Allam Cycle is a technology that will allow us to meet every single climate target we have, without having to pay more for electricity, and we thank all of you for partnering with us to help make that true,” Brown says.
John Jacobs, Basin Electric senior vice president of Operations, highlighted Basin Electric’s long history of leading the charge on innovative technologies.
“Basin Electric has never been averse to serial number one, when it makes sense,” he says.
Jacobs spoke about the status of the Integrated Test Center (ITC). The ITC will provide space for researchers to test carbon capture, utilization and sequestration technologies using coal-based flue gas from the Dry Fork Station, a Basin Electric and Wyoming Municipal Power Agency coal-based power plant near Gillette, WY.
Those doing the research there will be part of the NRG COSIA Carbon XPRIZE, an international competition to find a use for carbon that generates the most revenue.
The ITC is scheduled to be complete in summer 2017.
“We’re really excited about it. Basin Electric will be involved in the ground floor of this testing,” Jacobs says.
Stacey Dahl, Minnkota Power Cooperative manager of external affairs, spoke about Project Tundra, a post-combustions carbon capture effort that involves use of an amine-based solution sprayed into the flue gas.
The project is based on an existing carbon capture project in Texas called Petra Nova, the world’s largest post-combustion capture project.
“The trail really has in large part been blazed in an effort like this, but we’re interested in applying it to a North Dakota-based solution,” Dahl says. “We really are in a place where we’re primed to help find a solution.”
Options for carbon limitations
Terry O’Clair, director of the North Dakota Department of Health’s Division of Air Quality, discussed his idea of a state implementation plan to comply with the Clean Power Plan. He says the way the rule reads, it is not certain whether or not North Dakota will get credit for all the wind towers that are being built, which he feels is not right. “If we get penalized for coal resources, we should get credit for wind resources,” he says. “These are important things we need to consider when we develop our energy policy.”
O’Clair says the bottom line is that if the state is given the proper time, as well as credit for its wind energy development, we should be guardedly optimistic that North Dakota will survive in a carbon-constrained world.
Dave Miller, director of research and commodity services, Iowa Farm Bureau Federation, reviewed the Iowa Farm Bureau’s experience with its carbon credit trading program. The program’s goal was to create a nationwide network that allowed farmers to access a market-based program for carbon credit trading and sequestration.
Toward the end of the program in 2009, there were 16 million acres of land enrolled in the carbon credit market by 9,000 farmers, ranchers and landowners. They had contracts in forestry, no-till farming and rangeland management and preservation.
“Soil is a tremendous sink for carbon,” Miller says. “It is low cost, effective and good for society. There is nothing negative about adding organic matter into the soil profile - it builds the soil for generations to come, improving its productivity.
Former North Dakota Public Service and Federal Energy Regulatory Commissioner Tony Clark addressed several challenges the country is facing when dealing with a carbon-constrained future, one of the biggest being the need for infrastructure development during a time when increasing regulations make it difficult to build it.
Following the election of a new president, the future of the Clean Power Plan is uncertain. If it is upheld, there will likely be more flexibility with timelines, a greater focus on reliability and fewer last-minute surprises, such as what happened with the construction of the Dakota Access and Keystone pipelines. And, it is now likely that carbon markets will be developed on a state-by-state basis, especially on the East Coast.
One of the biggest questions discussed on this panel was whether the carbon issue is going away. The consensus was that it will not go away entirely, but that the new administration may have bought us more time to implement the Clean Power Plan’s regulations.
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On Aug. 3, 2015, the Environmental Protection Agency released its Clean Power Plan.
On Oct. 23, 2015, the Clean Power Plan was published in the Federal Register.
On Feb. 9, 2016, the U.S. Supreme Court granted Basin Electric and several other petitioners' Motion to Stay the Clean Power Plan.
Go to the Clean Power Plan 111(d) page for our review of the plan and why it won't work for Basin Electric.