Energy costs killing southwest industries

Jim Constantopoulos: Guest Columnist

It is becoming increasingly clear that if industries in the southwest are to survive, something must be done to hold down energy costs. Of all fuels, natural gas requires the most immediate attention, because wholesale gas prices have tripled in the past four years. The key reason is that 90 percent of power plants that are planned or under construction in this country will use natural gas to comply with tougher air-quality standards.

Clean air is a worthwhile goal, but not at the price of economic disruption. A Senate bill, introduced with support from national environmental groups, would require coal-fired power plants to achieve a 90-percent reduction in emissions of sulfur dioxide, nitrogen oxides and mercury, along with compulsory limits on carbon dioxide. If the measure becomes law, it would push energy costs through the roof.

Although, as a clean-air measure, one cannot say no to lower emissions from coal plants, approval would have an unintended result. We cannot assume electric utilities will find a way to trap carbon dioxide, for no such affordable technology exists today. Coal gasification plants release less carbon dioxide per megawatt of electricity, but few utilities are prepared to spend billions of dollars for such plants.

So, it’s likely that coal plants would be compelled to switch to high-priced natural gas. Even if only a few plants made the switch, it would put upward pressure on gas prices, harming industries that use large amounts of gas. In recent years, a number of U.S. petrochemical companies have moved abroad to take advantage of lower energy costs, because competition with electric utilities for available gas supplies has pushed the price of gas even higher.

Congress needs to approve legislation that’s designed to achieve significant improvements in air quality but exempts carbon dioxide. Such an approach is taken in President Bush’s Clear Skies legislation, which has been stalled in a Senate committee. The measure calls for a 70 percent cut in sulfur dioxide, nitrogen oxides and mercury. Importantly, it would ease the cost of compliance by making use of a market-based system, in which utilities trade credits in order to meet a gradually lowered cap on emissions.

This proven “cap-and-trade” system has succeeded in reducing sulfur dioxide and nitrogen oxides by 40 percent since the early 1990s.

Success in controlling carbon dioxide, linked to global warming, will hinge on the availability of new technology. Research on ways to store carbon emissions underground is finally under way, but the results may not be known for some time.

The challenge is to work effectively to clean up coal plants, while pursuing research on carbon storage and encouraging the expanded use of renewable energy sources. Accordingly, the administration is asking Congress to provide almost $1 billion for construction of an advanced power plant that converts coal into gas, with technology to sequester carbon underground before it’s burned in the plant.

This system would allow the United States to make full use of its vast coal reserves, save natural gas for home heating and industrial processes, export clean-coal technology — and help slow and eventually reverse the buildup of greenhouse gases. With the right energy policy, we can have clear skies and a stronger economy.

Jim Constantopoulos is associate professor of geology in the department of physical sciences at Eastern New Mexico University. Contact him at: jim.constantopoulos@enmu.edu