Federal loans finance push to build new coal plants

By Steven Mufson
The Washington Post/Seattle Times

WASHINGTON — A Depression-era program to bring electricity to rural areas is using taxpayer money to provide billions of dollars in low-interest loans to build coal plants even as Congress seeks ways to limit greenhouse gas emissions.

That government support is a major force behind the rush to coal plants, which spew carbon dioxide that scientists blame for global warming.

The beneficiaries of the government’s largesse — the nation’s rural electric cooperatives — plan to spend $35 billion to build conventional coal plants over the next 10 years, enough to offset all state and federal efforts to reduce U.S. greenhouse-gas emissions over that time.

The Office of Management and Budget wants to end loans for new power plants and limit loans for transmission projects in the most remote rural areas. But the powerful National Rural Electric Cooperative Association deployed 3,000 members on Capitol Hill last week to push Congress to keep the program intact, arguing that the loans for new coal plants are needed to keep electricity cheap and reliable in rural areas.

Environmentalists have also targeted the program. They say it removes any pressure for the rural co-ops to promote energy efficiency or aggressively tap renewable resources. Rural co-ops rely on coal for 80 percent of their electricity, compared with 50 percent for the rest of the country, and electricity demand at rural co-ops is growing at twice the national rate.

The money comes from the Agriculture Department’s Rural Utilities Service, an outgrowth of the Rural Electrification Administration created in 1935 by President Franklin Roosevelt to bring electricity to farms.

More than 70 years later, the goal of providing electricity to rural areas has long been accomplished, but the federal government is still making the subsidized loans.

Rural-utility cooperatives are owned by their customers; they are nonprofit organizations. There are more than 800 co-ops that distribute electricity and more than 50 that own power-generating plants.

James Newby, assistant administrator of the Rural Utilities Service, estimates that federal loan rates are 2 to 2.25 percentage points lower than the rates for commercial loans. Some budget experts say the favorable federal loans have reduced the cost of new power generation by 15 percent.

But many of the utility co-ops that are considered rural provide electricity to expanding suburbs, such as the Dallas-Fort Worth metropolitan area, the Atlanta area and parts of northern Virginia. Others are expanding to meet growing commercial, residential and tourism demands.

“Rather than declare the mission accomplished and disband the expensive subsidy program, Congress continued it and allowed it to become even more generous,” a 2004 Heritage Foundation report said.

Ronald Utt, co-author of the report and a former official at the OMB, calls the program a “remnant of the New Deal.” “Poverty is no longer a characteristic of the agricultural community as it was during the Depression … and as areas have grown, the basic clientele are well-to-do people who have nothing to do with agriculture,” Utt said.

Glenn English, chief executive of the National Rural Electric Cooperative Association, said rural areas still need help to meet growing power demands at reasonable costs and that burning coal makes sense. He said per capita income of co-op members and consumers is 15 percent below the national average.

The key to the longevity of the Agriculture Department’s programs for rural utilities has been the co-ops’ powerful political voice.

More than 30,000 members gave an average of $41 last year to the co-op association for political contributions. Given their geographic scope, the co-ops can mobilize letter-writing campaigns across a vast number of states and congressional districts.

Among those asking for federal loans:

• The Seminole Electric Cooperative in Tampa, Fla., is planning a $1.8 billion, 750-megawatt coal plant that would boost the utility’s generating capacity by 60 percent. The co-op applied for a $1.4 billion loan. If approved, the interest rate for the heavily indebted co-op, which Standard & Poor’s says has less than a month’s worth of cash, would be as low as the rates for the most rock-solid corporate bonds.

• A group of rural cooperatives plans to build two, 700-megawatt plants in western Kansas.

• The East Kentucky Power Cooperative, which is fighting the Justice Department over alleged violations of the Clean Air Act, has received approval for Rural Utilities Service loans to pay for new coal-fired capacity.

English acknowledged that global warming has shifted the debate.

But, he said, any climate-change legislation should show leniency toward the rural co-ops. “Rural electric generating cooperatives … are in economic situations that make it very hard for them to invest in cutting-edge technologies,” he wrote in a letter to the House Energy and Commerce Committee.

In March, 10,000 rural-utility executives and spouses attended their annual meeting in Las Vegas.

English rallied the association’s members to fight proposed laws on climate change that might hurt the rural co-ops. Such proposals would mean higher electricity rates, he said, and that would anger voters.

“So are we supposed to tell members of Congress that you’ve got to be willing to sacrifice your seat for the sake of energy efficiency?” he said. “I don’t think the political community wants to take out the knife and commit hara-kiri.”


U.S. trying to weaken G-8 climate pledge

By Juliet Eilperin
The Washington Post/Seattle Times

WASHINGTON — Negotiators from the United States are trying to weaken the language of a climate-change declaration set to be unveiled at next month’s G-8 summit of the world’s leading industrial powers, according to documents obtained Saturday.

A draft proposal being debated in Bonn, Germany, this weekend by senior officials of the Group of Eight includes a pledge to limit the global temperature rise this century to 3.6 degrees Fahrenheit and an agreement to reduce worldwide greenhouse-gas emissions to 50 percent below 1990 levels by 2050.

The United States is seeking to strike that section, the documents show.

Many scientists have warned an increase of more than 3.6 degrees this century could trigger disastrous consequences such as mass extinction of species and accelerated melting of polar-ice sheets.

The documents show that U.S. officials also are trying to eliminate draft language that says, “We acknowledge that the U.N. climate process is the appropriate forum for negotiating future global action on climate change.” Industrial and developing countries have used the United Nations as the forum for crafting climate agreements for years.

Neither the White House Council on Environmental Quality nor the State Department could be reached for comment Saturday.

Since taking office in 2001, President Bush has consistently advocated more climate research and voluntary energy-efficiency measures as the way to address global warming.

The G-8 leaders are scheduled to sign off on the global-warming declaration, “Growth and Responsibility in the World Economy,” during their June 6-8 summit in Heiligendamm, Germany. German Chancellor Angela Merkel, along with departing British Prime Minister Tony Blair, have been pushing for a strong statement on climate change as part of the June meeting, and newly elected French President Nicolas Sarkozy said in his acceptance speech last week that global warming is his top priority.

The U.S. representatives in Bonn, however, are trying to soften the message of the climate-change document by deleting sections that would call on the industrialized world to modify activities linked to recent warming. They also proposed striking one of the document’s opening phrases: “We underline that tackling climate change is an imperative, not a choice. We firmly agree that resolute and concerted international action is urgently needed in order to reduce global greenhouse gas emissions and sustain our common basis of living.”

Philip Clapp, who heads the advocacy group National Environmental Trust and has read the document, said U.S. opposition to the draft declaration could strain the country’s relationship with its allies and jeopardize the world’s ability to cut greenhouse-gas emissions in the coming decade.

“The administration is proposing to eliminate any statement that acting on global warming is urgent and all measures that will begin to reduce global-warming pollution, including any proposal to improve the energy efficiency of our economy,” he said. “A continued U.S. refusal to take a lead in combating global warming will set back progress for years.”

Bush administration officials are also resisting calls for efficiency targets in the declaration, this in particular: “Therefore we will increase the energy efficiency of our economies so that energy consumption by 2020 will be at least 30 percent lower compared to a business-as-usual scenario.”

Clapp said it is difficult to predict how the negotiations will play out. “The question is, who blinks?”

Fans of plug in cars build their power base

By Hal Bernton and Mike Lindblom

The Seattle Times

Sometime in the future, your car may make your round-trip commute with electricity generated from rooftop solar cells.

When you want to venture east of the Cascades for a weekend winery tour, an internal-combustion engine — powered by biofuels — would kick into action.

This vision has helped propel plug-in hybrid cars from a footnote in automotive technology into a serious alternative that car manufacturers are working to bring to market within the next five to 10 years.

Meanwhile, a grass-roots network of plug-in converts — professors, students, garage mechanics and others — is already fashioning the first generation of these vehicles in hopes of prodding the industry into faster action. They say these cars can get more than 100 miles per gallon for some travel.

“We have proved that we can make good-enough plug-in hybrids now, and don’t have to develop a whole new vehicle,” said Felix Kramer, founder of the California Cars Initiative, which converts standard Toyota Prius hybrids to operate as plug-in cars.

Kramer spoke at a Monday conference that drew more than 300 people — including automotive-industry representatives, federal and state officials — to the Microsoft campus in Redmond. The conference was sponsored by the Cascadia Center of Discovery Institute, a Seattle-based think tank.

Auto-industry officials maintain there are still significant obstacles to mass-producing these vehicles. And electric energy may not be renewable. It often comes from coal-fired and gas-fired power plants that still rely on fossil fuels.

But interest in this technology has intensified as gas prices climb to record highs and concerns about global warming increase.

Some local governments are planning to purchase fleets of plug-in hybrids that could stimulate the markets and further refine the technology.

“We’re committed to plug-in hybrids,” said King County Executive Ron Sims.

There is hope that the Northwest — with Microsoft and other high-tech companies providing plenty of brain power — could emerge as a hub of innovation to spur development of plug-ins.

The cars, for example, could be equipped with metered smart chips that could allow the batteries to sell back small amounts of electricity to the grid. Motorists might be able to earn several thousand dollars a year and also help stabilize the regional power system.

The plug-ins attempt to build on the success of the current generation of hybrid cars, such as the Toyota Prius. In the first four months of this year, the Prius surpassed the Camry to emerge as the top-selling Toyota in the Northwest, according to Buzz Rodland, of Rodland Toyota in Everett.

“This is an astounding achievement,” Rodland said.

The Prius has a small electric battery that, working on its own, can power the vehicle for only a couple of miles. The Prius has no plug-in battery, so the battery maintains its charge with the aid of the car’s gasoline-powered internal-combustion engine. Some see the plug-ins as an end unto themselves, while others see a step on the way to all-electric vehicles, some of which were on display Monday.

Auto-industry officials say one of the biggest obstacles to plug-in hybrids is the further development of long-lasting, lightweight lithium batteries at an affordable price.

“My challenge right now is that I have to get a battery pack, and I am working my butt off to ensure that we do have a battery pack,” said Nick Zielinski, an engineer for General Motors. GM is developing a plug-in Saturn and an ambitious new vehicle known as the Chevy Volt, which could run on electricity or biofuels.

Zielinski hopes the vehicles could be available within the next five to 10 years.

Others say current technology is sufficient to launch plug-in technology. University of California students have worked with their professors to build prototypes. And a small cottage industry has emerged to convert, with the aid of additional battery packs, a standard Prius into plug-in vehicles that can get substantially better gas mileage.

The conversions, however, void the Toyota warranty for the vehicles.

“The official me says you shouldn’t be doing this,” said Bill Reinert, a Toyota engineer. “The unofficial me says these guys are cool, but the official me has to win out.”

A study released earlier this year by the Richland-based Pacific Northwest National Laboratory said that if the current U.S. car, pickup and sport-utility vehicle fleet was converted to plug-in technology, the electrical system could power most of these cars for 33 miles per day. The plants would have to run more intensively, generally using more fossil fuels.

The study found the conversion would reduce greenhouse-gas emissions, in some regions by as much as 40 percent. But the increased use of coal to generate electricity would cause substantial increases in a significant pollutant — sulfur oxides — in the areas around the power plants.

Some imagine a future where panels of photovoltaic solar cells sprout on top of homes and office buildings to provide new sources of clean power for plug-in hybrids or all-electric cars.

“Today’s sun will give you tomorrow’s driving,” predicted Andrew Frank, a University of California at Davis professor.

Climate change: Scientists say there is hope

By Laurie Goering

The Seattle Times

BANGKOK, Thailand — A U.N. panel that has laid out doomsday global-warming scenarios offered some good news Friday: Climate change can be limited, and scientists think it can be done at a reasonable price.

Just as important, the report says, existing technology will do most of the job, if policymakers act quickly. And average citizens can make valuable contributions by adopting small lifestyle changes.

Skeptics, including the Bush administration, said the most stringent recommended measures could strain the world economy. Others doubted the worst-polluting nations would cooperate.

“It’s not realistic from a political standpoint, and it’s not realistic because those targets are incredibly expensive,” said Robert Mendelsohn, a Yale University economist.

Even supporters of the plan were daunted by the speed and scale of action required by the report to stabilize carbon emissions at roughly current levels.

Still, scientists and government delegates involved in the report said they hoped it would serve as a basis for climate discussions at a Group of Eight summit in June and at a U.N. climate summit in December.

The new report

A summary of the new report says the world must significantly cut emissions of carbon dioxide and other greenhouse gases by:

Sharply improving energy efficiency in buildings, vehicles and kitchen appliances.

Shifting from fossil fuels to nuclear, wind, solar and other renewable energy sources.

Capping agricultural emissions.

Summary: www.ipcc.ch/SPM040507.pdf


The latest report by the Intergovernmental Panel on Climate Change, released Friday, “addresses a fundamental concern of Americans: Can we do something about this?” said Peter Altman, a climate expert at the National Environmental Trust, a nonpartisan nonprofit established to inform citizens about environmental problems and how they affect health and quality of life. “The answer is a resounding yes.”

By rapidly ramping up use of renewable-energy sources such as solar, wind and hydroelectric power, making cars, homes and factories more energy efficient, producing electricity with natural gas rather than coal and sequestering carbon dioxide below ground, worldwide temperature increases could be limited to about 3.6 degrees Fahrenheit, low enough to avoid potentially disastrous droughts, severe storms and sea-level rise, the report’s summary said. By comparison, global temperatures have risen about 1.5 degrees since the beginning of the Industrial Revolution in the 18th century.

Previous reports

The new Intergovernmental Panel on Climate Change (IPCC) report follows two earlier U.N. climate statements this year:

The first concluded that human activity, particularly the burning of fossil fuels, is almost certainly driving global warming. Summary: www.ipcc.ch/WG1_SPM_17Apr07.pdf

The second laid out expected effects of climate change, including more severe and erratic weather, rising sea levels, more flooding and droughts, species extinctions and changes in agricultural production. Summary: www.ipcc.ch/SPM13apr07.pdf

Just as important, substantially cutting greenhouse-gas emissions to levels scientists think would stem increases in warming would cost nations at most 0.12 percent of economic growth each year through 2030, scientists said.

“The bottom line is, all it takes to beat this problem is the political will to put the solutions in hand to work and to invest in clean-energy solutions for the future,” Altman said. “To do this at about a tenth of a percent of GDP per year is a very low-cost investment for something with tremendous payoff.”

GDP, or gross domestic product, measures the value of all goods and services produced within a nation and is considered the best barometer of the country’s economic fitness.

Bush administration officials, who along with representatives of 120 other countries and 2,000 scientists approved the report’s policy summary, praised it for highlighting “the importance of deploying a portfolio of clean-energy technologies.”

But they said trying to cut greenhouse-gas emissions by 50 to 85 percent by 2050, in line with the report’s most ambitious scenarios, would have economic consequences.

The report’s primary instrument for reducing such concentrations is a system in which governments would cap emissions and charge polluters for every ton of carbon dioxide beyond that point. That would force companies to cut emissions and invest in energy efficiency and alternative fuels.

The price per ton would reach as high as $100 by 2030. By then, the system could cost up to 3 percent of the world’s gross domestic product, the report said.

James Connaughton, chairman of the White House Council on Environmental Quality, said the highest-cost scenario “would, of course, cause global recession, so that is something that we probably want to avoid.”

Those costs, however, could drop significantly if the world reaps other benefits from reduced emissions, including more healthful air, greater energy security as reliance on foreign oil drops and export opportunities as newly developed technology is sold and adopted elsewhere, the report’s authors said.

The report, the third in a series of U.N. climate-change studies this year, is the first aimed at analyzing solutions.

It suggests major drops in emissions are possible through switching to natural gas rather than coal as a source of electricity, using hybrid and fuel-efficient vehicles, incorporating active and passive solar design into buildings, using more insulation and energy-efficient appliances in homes, improving industrial energy efficiency and encouraging the use of renewable energy sources.

Capturing and storing carbon-dioxide emissions also could lower atmospheric concentrations of the gas, the authors said.

Nuclear power, a controversial alternative to fossil fuels, probably will not gain wide acceptance, if only because of its high cost compared with other options, the report said.

The document also examines a range of policies shown to be effective in promoting emissions reductions, from fuel, road and auto taxes to energy-efficiency standards for appliances, subsidies for renewable energy, mandatory fuel-efficiency standards, investment in public transportation and tax credits.

Voluntary agreements by industries to cut emissions, a favored measure in the United States, for the most part “have not achieved significant emissions reductions beyond business as usual,” the report notes, although a few recent efforts have been exceptions.

Probably the easiest and cheapest way to cut greenhouse-gas emissions, the report’s authors said, is to focus on improving energy efficiency.

But other key strategies will be ensuring that massive expected growth in developing nations, is cleaner and more sustainable, and that people everywhere cut consumption and emissions without waiting for politicians to act.

That could mean everything from putting on a sweater rather than turning up the heat to buying a hybrid car, choosing a house on a public-transportation line or hanging laundry out to dry rather than throwing it in a dryer.

“It does require lifestyle changes but not any sacrifices,” said Jayant Sathaya, a senior energy-technology scientist at the University of California, Berkeley, and one of the report’s authors.

The report warns that failure to take quick action to cut greenhouse-gas emissions could lead to concentrations of in the atmosphere more than doubling from the current 425 parts per million by 2100, increasing worldwide average temperatures up to 11 degrees.

A recent European study suggests that if countries fail to stem climate change quickly, they eventually could spend between 5 and 20 percent of their income each year trying to combat its effects.

Materials from The Washington Post, The Los Angeles Times, The Chicago Tribune and The Associated Press are included in this report.