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Mark Trahant
ICT

It’s a fair question: Is the climate package pending in the Senate the best we can do? Republicans hate it. Environmentalists are split. And the logic is, well, let’s just say inconsistent.

If you need evidence about that logic there are two examples.

The first one is simple. When asked on MSNBC about the bill, Sen. Joe Manchin, a West Virginia Democrat, said it’s all about decarbonization.

“This is not a green deal,” he said. Instead it’s aggressive energy expansion of fossil fuels “doing it cleaner, using new technologies.”

And that leads to the second point: How much money should the United States invest in coal as a “clean fuel” when the science, the engineering, the economics, and even the technology, all raise more questions than answers.

The Senate looks like it has its 50 votes to pass the legislation. The vote could come as soon as this weekend and Vice President Kamala Harris might be needed to break the tie. 

The Washington Post reported Thursday night that Sen. Kyrsten Sinema has agreed to support the measure albeit with changes. She has long supported a tax code provision that limits the tax cost of "carried interest" or the money that investment bankers earn from huge deals. The law currently rewards those deals by classifying that income as capital gains, a lower tax rate than regular income. 

Manchin’s proposal would have ended that arrangement, but Sienema would not budge. She has also demanded changes on a minimum corporate tax. 

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The timing for this legislation is extraordinary. The Climate Power coalition released a statement Thursday that showed record profits from oil companies.

“All told, oil and gas companies reported at least $114 billion in profits for Q2, returning at least $63 billion to their executives and wealthy shareholders through stock buybacks and dividend payments,” Climate Power said. “The earnings likely represent the most profitable quarter in the industry’s history … This all comes as the Senate debates the Inflation Reduction Act and highlights the political importance of passing this historic legislation.”

And this legislation is an all-of-the-above approach. It continues fossil fuel production (and even subsidies) while significantly boosting support for clean energy investments. One controversial element of that plan is a push to make coal a clean energy source through a carbon capture initiative. Carbon capture is the idea of collecting the C02 emissions from a coal-fired power plant and then pumping that into underground storage facilities.

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The legislation “would provide the most transformative and far-reaching policy support in the world for the economywide deployment of carbon management technologies,” says the pro-coal Carbon Capture Coalition External Affairs Manager Madelyn Morrison. This is a coalition of companies that support domestic energy – read coal – using new technology.

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The Manchin proposal “includes all of the Carbon Capture Coalition’s top legislative priorities for the 117thCongress.” That includes tax credits for carbon capture by producers and utilities.

The Navajo Nation-owned Navajo Transitional Energy Company is an investor in large-scale carbon capture through Enchant Energy Corporation in Farmington, New Mexico.

“With this investment in Enchant, NTEC is furthering our commitment to diversifying the company portfolio by acquiring shares in an enterprise focused on addressing the challenge of meeting climate goals through capturing and sequestering carbon emissions from existing power plants and industrial facilities in the western U.S.,” said Vern Lund, Navajo Transitional Energy’s chief executive. “We value the opportunity to be at the forefront of technological developments in this industry.”

Enchant’s first major project is the San Juan Generating Station and the company promises a 95 percent carbon capture rate that would make the plant “the lowest emitting coal plant in the world.”

However, a new report released this week calls that idea a myth.

“Enchant Energy and its allies claim that retrofitting the San Juan Generating Station (SJGS) in New Mexico for carbon capture could capture 90% or more of the CO2 emitted by the power plant. Real-world evidence suggests that this carbon capture rate is unrealistically high,” writes David Schlissel and Dennis Wamsted for the Institute for Energy Economics and Financial Analysis.

The report looks at Enchant’s plan because this one project represents an investment of almost $1 billion in funding from the federal government. And this comes at a time when “all but one of San Juan’s current owners have decided that the plant is no longer economical to operate and should be retired this year.”

Schlissel and Wamsted say the biggest problem is trying to retrofit an old plant that is just not economically viable, especially when the cost of energy production is already dropping from the competition, green sources such as wind and solar. Proponents of coal, including Manchin, argue that green sources do not have the battery bandwidth to store energy for later consumption.

“Electricity provided by the new wind, solar and storage capacity can be expected to be increasingly less expensive than power generated” from San Juan Generating Station, according to the report. It cited the cost of electricity from solar declining at the same time as the number of green energy sources are expanding. And even more price declines are expected in the coming years as the current supply chain issues are resolved.

On the other hand, even with federal subsidies, the price of coal continues to increase. Plus more work will have to be done on the plant itself.

“San Juan Units 1 and 4 are already 45 and 40 years old, respectively,” the report said and any retrofitting for carbon capture is at least five or six years away.

Schlissel and Wamsted’s report makes the case in economic terms. “The only scenario in which the plant’s capacity factor is likely to increase over the long term, even in a minor way, is a completely wasteful one in which Enchant runs the plant simply to produce and capture more CO2 and earn more 45Q tax credits or direct payments from the federal government,” they wrote. “But even in this scenario, it is hard to see that Enchant and any investors would make substantial profits on a sustained basis if the power produced by SJGS were being sold at a significant discount from the cost of production, as can be expected given the declining prices of solar, wind and battery storage facilities.”

In other words: coal can’t compete on economics or the environment. But it does have the promise of a billion dollar taxpayer subsidy.

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Mark Trahant, Shoshone-Bannock, is editor-at-large for Indian Country Today. On Twitter: @TrahantReports Trahant is based in Phoenix. The Indigenous Economics Project is funded with a major grant from the Bay and Paul Foundations.

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