Drawing coal's battle lines

HOUSTON, TEXAS - An environmental group's protest in downtown Houston put a spotlight on the debate over coal - which generates half the nation's electricity but also contributes to climate change.

The Sierra Club said it is launching a national campaign against coal-fired plants by Houston-based Dynegy and punctuated the announcement with a rally outside the company's headquarters. Dynegy, which has as many as six coal-fired plants in its construction plans, responded that it must meet the growing demand for electricity in the short term while long-term alternative energy sources are still being developed.

"It would take a lot of wind to meet those needs," Dynegy spokesman David Byford said. "This is really part of a larger national debate on the country's future and meeting its energy needs." About 40 protesters carried picket signs and chanted "dirty coal has got to go" to mark the start of the campaign.

"The tide is turning against coal-burning power plants," said Bruce Nilles, director of the Sierra Club's National Coal Campaign. "Dynegy is a conspicuous exception to that trend."

Nearly a year ago, Dynegy was talking about building eight coal plants, and CEO Bruce Williamson met with environmentalists to discuss alternatives. Since then, the company dropped plans for two coal plants, Byford said.

Dynegy has two coal-fired plants under construction. One is near Waco, and the second is in Arkansas. Proposed plants in Georgia, Iowa, Michigan and Nevada are in various stages of planning and permitting, Byford said, but they ultimately might use othe fuels.

"It's very flexible," he said. "It's dependent on what customers are asking for." He said the company had planned to build a coal plant in New Jersey but switched it to natural gas because it could be built faster to meet an immediate demand for electricity. Coal is central to discussion of U.S. energy and environmental policy, because coal-fired power plants emit air pollutants as well as the greenhouse gas carbon dioxide. Dallas-based TXU had proposed 11 new coal plants in Texas, drawing bitter opposition from environmentalists, and reduced its proposal to three plants last year as it was acquired by a private equity firm.

And Williamson, the Dynegy CEO, met with Sierra Club members last year after his company acquired the generating capacity of LS Power Group, including plans for eight coal-fired plants. He said then, as Byford did, that the company might not develop all the proposed coal-fired plants. Expected legislation almost certainly will influence those decisions by Dynegy and others.

Congress is working on a cap-and-trade mechanism that would put limits on greenhouse emissions from coal plants and other facilities while allowing companies to trade emissions permits. The top presidential candidates - Republican John McCain and Democrats Hillary Rodham Clinton and Barack Obama - all support versions of the cap-and-trade proposal.

Earlier in February, three major Wall Street banks - Citigroup, JP Morgan Chase and Morgan Stanley - announced they will review more carefully financing requests for power plants that emit greenhouse gases because federal regulation could make them financially riskier.

That could make it more difficult to get financing for coal plants, said Rebecca Tarbotton, director of the Rainforest Action Network's Global Finance Campaign. Byford said the company already has secured financing for the Arkansas and Texas projects under construction but hasn't yet sought financing for the other four plants.

The industry, meanwhile, is developing technology that shrinks carbon dioxide emissions or stores the gas underground, speakers said at the Cambridge Energy Research Associates' conference in Houston.

Rice University energy economist Peter Hartley said the Sierra Club's campaign oversimplifies the problem and solution.

"Most sides in this debate want to shout one way or the other when it's really more nuanced," he said. "Nothing is a silver bullet." The extent to which carbon dioxide contributes to climate change is debatable, he said. Plus, solar, wind and geothermal power are years away from being viable and reliable large-scale energy sources, he said.

A better short-term fix would be to tax energy to encourage better efficiency and conservation, Hartley said, with the revenue devoted to research on clean energy production.

But Ron Hayden, a Sierra Club member who protested at Dynegy, said "clean coal is a disinformation campaign."