Monday, July 30, 2007

Lawsuit Takes Aim at Proposed Montana Coal Plant and Federal Financing of New Coal Plants

A trio of environmental groups has taken aim at a proposed 250 MW pulverized coal plant near Great Falls, Montana in an effort to block the plant's construction and end federal financing of coal plants for rural electric cooperatives.

As reported in May (see previous post), a Depression-era program to help electrify rural areas is still providing low-interest loans to rural electric cooperatives to build new coal-fired power plants.

This government program, the Department of Agriculture's Rural Utilities Service, is often the only source of financing for rural electric cooperatives with less than perfect credit ratings and is a major force behind the rush to build dozens of new coal plants in the U.S.

These new conventional, or pulverized coal plants spew carbon dioxide, the main greenhouse gas and contributor to global warming.

The suit, brought by the Montana Environmental Information Center, Citizens for Clean Energy and the Sierra Club, argues that the USDA's Rural Utilities Service did not consider greenhouse-gas emissions in its analysis of seven coal-fired power plants it is financing across the country, including the 250 MW Highwood Generating Station near Great Falls, according to Northwest utility industry newsletter, Clearing Up (subscription required).

In May, RUS agreed to provide 85% of the Highwood plant's $600 million price tag on behalf of the Southern Montana Electric Generation and Transmission Cooperative, an association of small Montana electric cooperatives.

President Franklin D. Roosevelt formed the Rural Utilities Service (RUS) in 1935 during the Great Depression to help electrify rural America and the program has continued providing low-interest loans for power plant construction to this day. The lawsuit argues that the program is outdated and is no longer fulfilling it's mission.

RUS is currently financing seven coal-fired power plants in Idaho, Wyoming, Missouri, Oklahoma, Florida and Kentucky, Clearing Up reports, totaling 3,441 MW.

"While rural communities now generally have access to affordable electricity, RUS still has considerable funds at its disposal to spend in areas that in many cases are no longer rural," the suit says. RUS has provided over $1 billion in low-interest loans for projects serving booming suburbs of Atlanta, GA and Tampa, FL for example, just one sign of how much things have changed since the RUS was created over seven decades ago.

The suit alleges that RUS did not consider the impact of greenhouse gas emissions spewing from the pulverized coal plants the program is financing and the impact those emissions will have on global warming. The suit's plaintiffs claim that RUS is therefore in defiance of the U.S. Supreme Court's recently ruling in Massachusetts v. EPA that affirms that greenhouse gases are a pollutant and that "the harms of climate change are serious and well recognized" (see previous post).

The Highwood plant alone would emit 2.8 million metric tons of greenhouse gases annually, according to the suit, and annual emissions from two other RUS-financed plants in Missouri and Florida would total 12.5 million metric tons.

"RUS has never fully considered how financing coal plants ... contributes to climate change," the lawsuit said.

A powerful lobbying force, the National Rural Electric Cooperative Association is fighting to keep the federal financing program intact amidst opposition from environmentalists. The organization recently deployed 3,000 members on Capitol Hill to lobby Congress in support of the program. The Cooperative Association argues that the loans for new coal plants are needed to keep electricity cheap and reliable in rural areas.

Environmentalists counter that the subsidized loans and artificially cheap power removes any pressure for the rural co-ops to promote energy efficiency or aggressively tap renewable resources. They also point out that rural coops already rely on coal for 80 percent of their electricity, compared with 50 percent for the national average, and electricity demand at rural co-ops is growing at twice the national rate.

Federal financing, if necessary, could also be directed to low-emitting, climate-friendly energy sources or increased energy conservation and efficiency, rather than dirty, coal-fired power plants.

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