Potential GHG Measures may put Coal and Gas Interests in Conflict
Submitted by James Smith, Beirne, Maynard & Parsons, L.L.P. (Houston)

Several provisions in the greenhouse gas (GHG) Bill passed by the United States House of Representatives, along with possible amendments from the United States Senate, indicate a desire and expectation for increased coal usage, based on carbon capture and sequestration (CCS) technology. Basically, CCS technology involves eliminating carbon dioxide emissions from burning coal, and storing or sequestering those emissions below ground, thus eliminating their escape to the atmosphere.

Coal producing and coal consumption interests are very interested in encouraging this approach; however, CCS technology is not proved at this time.

The issues regarding CCS have technical, political, and international ramifications, and may put coal interests in conflict with natural gas interests. First, the natural gas industry representatives point out that CCS, an untested and unproved technology, may not provide the advantages toward limiting GHG that the coal industry claims or that coal state politicians desire. In contrast, the relatively small carbon component from burning natural gas is scientifically without question, and natural gas represents a largely domestic resource that can add to domestic energy security as well as to limiting GHG emissions. Thus, many natural gas industry advocates suggest that energy legislation should do more to encourage natural gas development, and not pin hopes on coal using the unproved CCS technology.

The domestic political issues generally revolve around geography and party affiliation. Several large eastern coal producing and consuming states, such as Pennsylvania, Virginia, West Virginia and Ohio, include many Democratic senators who will play important roles regarding final GHG legislation. In contrast, many of the significant natural gas producing states have only Republican senators who, to date, do not appear to be significantly involved in negotiating the Senate’s GHG legislation. Also, many western coal producing states are also significant natural gas producers. It appears that, for those senators who will actually be involved in negotiating a GHG Senate Bill, the importance of coal may be significantly greater than natural gas.

A further complication involves international relations. Global warming, by definition, is an international issue, and steps to lower total GHG emissions will require steps taken internationally, and particularly in China. Coal appears to be the dominant source to meet China’s future energy requirements. Natural gas and other sources will probably play a much smaller role in the expected huge increases in China’s energy consumption, which will accompany the expected rapid growth of the Chinese economy. Coal producers argue that encouraging a CCS oriented approach will force the development of CCS technology, which can play an important role in limiting GHG emissions not just in the United States, but internationally, and especially in China. Of course, natural gas producers point out that, while CCS could theoretically enhance the appropriateness of coal internationally, this is still an unproved technology, and the theoretical advantages in China do not change the state of the science.

While natural gas producers can point to the clear current advantage of natural gas in its significantly lower GHG emissions per unit of energy, domestic and international political forces may encourage legislation that will favor coal and attempt to force development of CCS technology, in a way that many natural gas producers will view as unfair.

For further information on the history, status and potential impact of greenhouse gas legislation click here.

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