Let's be clear from the start about where I stand: I believe this country needs coal in its energy portfolio. And I am greatly concerned about our nation's drift toward reliance on natural gas for electric power generation.
Consider Wisconsin, where my company does business. Figures from the state Public Service Commission list nearly 9,000 MW of capacity recently built, approved, or in some stage of the approval process. All of it is gas-fueled except for 50 MW of wind generation. The reality is not all of that capacity will be built. But consider what could happen to the price and reliability of electric power if we rely so heavily on a single fuel.
That has to change - and it is changing. Over the past 18 months or so, Wisconsin utilities have announced plans to build about 3,000 MW of new coal-based generation. My company, Wisconsin Energy Corporation, is leading the way with plans for three new coal-based units, totaling 1,800 MW, under a 10-year, $7 billion initiative we call "Power the Future".
POWER THE FUTURE
I'd like to outline our Power the Future initiative. The plan has four basic components:
First, we plan to build 2,800 MW of new generating capacity. That includes two 500 MW intermediate-load, combined-cycle, gas-fired units. It also includes three new 600 MW coal-based units, using supercritical pulverized coal and IGCC technology.
Second, we plan to improve existing power plants and retire older plants. By upgrading our coal-based generation and closing plants that have become obsolete, we will increase efficiency and reliability while improving environmental performance.
Third, we plan to upgrade our distribution system. We will add 18 new substations, build 2,500 miles of new rural distribution, rebuild some 6,000 miles of existing distribution, and add new control technologies that improve reliability.
Fourth, we will continue investing in conservation and renewable energy.
Power the Future commits our company to getting 50 percent more energy from renewable sources than state law requires. We will increase our renewable capacity from 127 MW to 400 MW over the next 10 years. We also will increase our commitment to cost-effective energy conservation measures.
The benefits of Power the Future are compelling.
The first principle: Decisions we make about power generation must be based on a sound energy policy.
Regional power shortages toward the end of the 1990s awakened this country to the need for more power plants. The focus immediately turned toward natural gas - not as a policy decision but as a matter of convenience. Power was needed as soon as possible. Gas plants could be built quickly and cheaply. And gas plants were politically easy - the public perceived them as environmentally clean.
Unfortunately, the quick, cheap and easy solution is seldom the best. And almost exclusive reliance on natural gas to generate power would be, in the long run, a costly mistake. Natural gas certainly has many positive aspects, but a sound energy policy must include coal-based power generation - and there are four fundamental reasons why.
Number one, economy, environment and energy supply must be kept in balance. If one of those three takes precedence, the others may suffer.
Number two, fuel diversity is essential. Simply stated, we cannot afford to put all of our eggs in one basket. A diverse fuel mix protects customers from fuel shortages that can hurt reliability and drive up prices. At present, natural gas prices are somewhat volatile. Coal prices are low and relatively stable - and expected to remain so for the foreseeable future.
Number three, an energy policy must address the long term. A wholesale shift toward natural-gas-fired generation is the epitome of short-term thinking. It gets new power plants into service quickly for perceived environmental benefits. Yet soaring orders for gas equipment strain manufacturers' capacity to build it. And questions remain about long-term gas supplies and prices. Plus, using natural gas for electricity generation competes for natural gas supplies required to serve other needs. Instead, we need a long-term approach that sustains a diverse mix of power plants, built in a prudent manner by utility and non-utility generators in a competitive market.
Number four, we need to leverage domestic resources. Domestic fuel is inherently more reliable than imported fuel - political unrest in other countries cannot disrupt the supply. The United States has the world's largest proven reserves of coal. Domestic coal can meet our energy needs for 250 to 350 years. On the other hand, proven natural gas reserves appear adequate for about 60 years, based on current consumption - and consumption is projected to rise by nearly 10 trillion cubic feet in the next 15 years. Coal-based generation, is already attractive. It will look even better as technology drives down its cost, and as gas prices continue to rise.
This four-part strategic
approach works well not just for Wisconsin but for the nation. In fact,
it aligns closely with the National Energy Policy developed by the Bush
Administration. That policy is guided by three basic principles:
The policy specifically cites the importance of fuel diversity and the necessity of keeping coal in the nation's energy picture.
The second principle: The challenge of winning favor for coal is social and political - not just technical.
Continued acceptance of coal-based generation depends on cleaner and more efficient combustion technologies - clean coal, advanced coal, or whatever you choose to call them. But the mere existence of these technologies will not be enough. Ultimately, coal must win the battle of public perception.
For years, the public has been told, quite simply, that natural gas plants are "clean" and coal plants are "dirty." Our challenge as proponents of coal is to make sure the public sees the whole picture, in all its complexity.
I don't think the public appreciates how much progress we've made in coal-plant emissions - even aside from the new combustion technologies. The US Department of Energy reports that the nation's air is becoming cleaner, even as utilities use more coal.
The nation's utilities increased coal consumption by 60 percent between 1980 and 1998. Yet in that time power plants reduced sulfur dioxide emissions by 23 percent and nitrogen oxide emissions by 12 percent. Under today's stricter air standards, embodied in the 1990 Clean Air Act Amendments, further reductions are occurring. New coal technologies can speed up that progress.
The third principle: Public acceptance of coal depends on the creation of informed consensus among a broad base of interests.
I mentioned earlier the need to balance economy, environment and energy supply. The best way to make that happen is to bring diverse and balanced interests into the discussion. That is what we have done with Power the Future - since the very earliest stages of its development. By doing so, we have increased the chances Power the Future eventually will be approved by the state Public Service Commission.
A plan like Power the Future probably would fail if proposed in a "top down" manner by a single utility. Wisconsin Energy looked at Power the Future as a strategic initiative to benefit the entire state. It was therefore essential to bring a wide range of interests to the table.