Cutting Through Haze of Governor’s Stance on Coal

Gov. Arnold Schwarzenegger, the environmentalist, hates the pollution caused when coal is burned to make electricity.

But Schwarzenegger, the businessman, likes the low-cost, plentiful electrons produced by coal-fired generators from Wyoming to Nevada.

Over the last year, the governor has enthusiastically embraced both positions, issuing seemingly contradictory executive decrees, legal agreements and statements. Now he’s getting pressure from pro- and anti-coal factions in his administration and across the West to reconcile his stances. All the vying parties hope to influence energy policy in California, the region’s biggest electricity market.

The governor, like others in the state, has a split personality on coal, said Gary Ackerman, executive director of the Western Power Trading Forum, an industry group for electricity sellers. “They want the cheap power and they also want renewables” such as wind and solar energy, which are more expensive.

The Schwarzenegger administration’s mixed message on whether to support Western coal has at varying times worried and buoyed environmentalists, California businesses and officials in coal-rich neighboring states. All have hefty stakes in what the governor decides.

Schwarzenegger can try to lower California energy costs -- among the highest in the nation -- by building transmission lines to import coal-generated power from Wyoming, New Mexico and other mountain states. Or he can make the Golden State a leader in efforts against global warming by reducing greenhouse gas emissions.

Squaring the two is no easy task, players on both sides of the coal issue agree, and they aren’t comforted by the administration’s assurances that conflicting aims will be worked out.

California energy regulators, meanwhile, have interpreted the governor’s greenhouse gas policy as incompatible with allowing the state’s utilities to buy more power from coal plants that use even the best available pollution controls.

Businesses counter that California already depends on out-of-state coal generation for about 21% of its electricity needs, and much more is needed to lower the state’s dependence on natural gas, whose price has more than doubled since 2002.

“We need to diversify beyond natural gas, or we cannot be competitive,” said Justin Bradley, director of energy programs for the Silicon Valley Leadership Group, an organization of high-tech companies.

For months, confusion has been mounting over where Schwarzenegger and the sometimes warring groups in his close staff stand on coal. In April he signed a memorandum of understanding with the governors of Wyoming, Utah and Nevada to create a partnership to build the Frontier Line, a $3-billion-plus transmission project that would bring electricity generated from both coal and wind power to California.

“We need abundant, available, reliable power, and we need it now,” Schwarzenegger said in a statement.

Environmentalists were rankled by the governor’s apparent support for coal-burning power plants, which still produce greenhouse gases even though many other pollutants are scrubbed out of smokestacks. They persuaded Democrats in the Legislature to strike preliminary Frontier Line funding from the state budget.

The environmentalists’ fears turned to glee just two months later when Schwarzenegger signed an executive order “establishing clear and ambitious targets to reduce greenhouse gas emissions in our state.”

State energy regulators, taking a cue from the governor, endorsed his greenhouse gas policy and came down hard on making electricity by burning conventionally pulverized coal.

In October, the state Public Utilities Commission unanimously approved a resolution telling Southern California Edison Co. and other regulated investor-owned utilities that they could sign long-term contracts to buy power from coal-fired plants only if they were as clean as the most modern natural-gas-fueled generator. What’s more, the PUC said that any carbon dioxide emitted from a plant would have to be pumped into the ground instead of the atmosphere.

This technology, which turns coal into gas before burning, produces electricity that costs 20% to 40% more than electricity from conventional coal power plants.

A commercial-scale pilot plant is not expected to be ready until 2012 at the earliest, and some coal experts suggest that gasification may not work efficiently at the high elevations where it’s mined in the West.

Last month the California Energy Commission took similar action, approving a comprehensive plan that sets the same stringent greenhouse gas standards.

Members of both commissions stressed that they wanted California to spur industry to develop new anti-pollution technology, much in the way automobile manufacturers were forced to curtail tailpipe emissions by meeting ever-tighter government standards.

“Our policy sends a clear message to developers of current coal projects that they are going to need to reach a bit further to more advanced technology,” Energy Commissioner John Geesman said.

Environmentalists hailed the commission’s plan as an important victory.

“The Schwarzenegger administration has come out very strongly that it’s clean coal or nothing,” declared Eric Heitz, president of the Energy Foundation in San Francisco.

Such an all-or-nothing approach could severely damage California’s business climate, warned Dorothy Rothrock, vice president for government relations at the California Manufacturers Assn.

“I don’t think we should sacrifice the California economy on the altar of solving global warming,” she said. “Does it solve global warming if you chase economic growth to other countries and other states?

“The governor has got to acknowledge the cost associated with energy in California today and bring the costs down. That means some conventional coal,” she said.

Trying to reconcile the governor’s two positions in a way that satisfies all camps is complicated, acknowledges Joseph Desmond, the governor’s top energy advisor and a strong proponent of importing Western coal-based electricity.

Offering few details, he said that Schwarzenegger was committed to meeting “both the environmental and the economic energy goals.”

But officials in mining states say they’re perplexed by the tug of war over coal in California. Wyoming is considering a lawsuit that contends that California would violate the interstate commerce clause of the U.S. Constitution if it tried to prohibit imports of conventional coal-based electricity.

“There appears to be some one-upmanship activity going on out there” in California, said Steve Waddington, executive director of the Wyoming Infrastructure Authority.

“We’ve been given assurances by the governor’s office that this is not a definitive policy [against coal-power imports] ... but on its face, it is what it is. It precludes conventional coal generation from being contracted on a long-term basis.”

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Paying for power

States with the highest electricity rates(in cents per kilowatt-hour)

Hawaii;17.38 cents

New York;12.74 cents

New Hampshire;12.20 cents

Massachusetts;12.01 cents

Connecticut;11.94 cents

Alaska;11.57 cents

Rhode Island;11.44 cents

California;11.39 cents

Vermont;11.09 cents

New Jersey;10.76 cents

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Data are for 2005 and are combined residential, commercial, industrial and transportation rates.

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Source: Energy Information Administration