Pollution from coal mining

History

The history of Carbon Capture and Storage Throughout the centuries nations have been relying on coal which uses around 25% of the world energy supply and accounts for roughly 40% of all carbon emissions[1]. Since countries are becoming more concerned about climate change and the environmental impact of CO2 buildup in the atmosphere which accounts for 82% of all greenhouses gases in the atmosphere between 1991 to 2000[2] , environmentalists have been looking for different solutions such as Carbon Capture and Storage which stores CO2 in natural storage. Coal has been the primary focus since it produces the most CO2 per unit of energy compared to the all other fossil fuels. The nations that rely the most on coal are the United States, Russia, China, India, and Australia. Different solutions have been promoted, such as switching to different energy sources, but solutions such as CCS allow nations to decrease their carbon footprint while still allowing them to continue using coal for energy supply[3].

CCS is not a new concept and has been used for decades to inject Co2 into natural underground storage such as old oil and gas fields allowing the natural carbon cycle. But it was only recently that Carbon Capture and Storage has been taken to the next level by building power plants with cutting edge technologies to improve the reduction and control of carbon. Nowadays, policy makers are focusing on the reduction of CO2 in Coal. In 2003, President Bush announced his commitment to FutureGen, a project with the Department of Energy (DOE) which would build the first coal power plant that that will have near zero emission coal that would capture and store CO2 beneath the earth by using advance technologies such as coal gasification, electricity generation, emission control, carbon dioxide capture and storage; technologies that haven’t been tested in one single plant[4]. In 2008, at the G8 Tokyo Summit, nations agreed to support the launching of a large scale of Carbon Capture Storage with the future plan of creating at least 20 CCS projects by 2010. More recently in 2009, the first factory to launch Coal Carbon Capture in West Virginia began operating. This factory is still going through further studies and it doesn’t have much data collected on its effectiveness. But as the pilots projects continue, the DOE has the goals of achieving widespread deployment of CCS in 8 to 10 years from now[5]. The future of Carbon Capture and Storage will be depend on its efficiency to capture energy and on its cost.

Coal Mining

Economics of Coal Mining

Coal is a fossil fuel primarily used for electricity production. Any solution has impacts economy wide. There are towns that were created around a coal mine. There are states, like WV, that are coal states. Despite the economic reliance on coal, there is also a social movement against coal surrounding the environmental impact. Of the possible solutions, one discussed is the use of Carbon Capture and Storage. (CCS)

CCS and Cap and Trade

Cap and trade functions by capping the emissions and bringing the cap down over time. Each company would be given a certain number of allowances. Some emitters will be able to reduce their emissions at a lower cost and will do so. Others will not be able to reduce their emissions at a lower cost, and will have to buy more allowances from the ones that can. As a result, the buyers and sellers will create a market.

Example

The buyers and sellers would benefit from this market. One projection for the price of using CCS to abate a ton of carbon is $25 by 2030. [6] Not all companies will be able to abate for this cost. Pretend there are two companies with the ability to abate for $25 and $28. The company that can abate at the lower cost will abate more than their share. These extra credits can then be sold to the higher cost abater. The cost they will settle on will be between $25 and $28.

They both benefit from trading. The $25 abater would get a profit for their dedication to reducing their carbon footprint. The $28 abater will be able to reach their reduction level at a price cheaper than if they were required to abate on their own.

Spurs Innovation

The low and high cost abaters recognize that there is an incentive to reduce their emissions at the lowest cost possible. The desire for lower costs and the declining cap will make it necessary for new cheaper ways to be created to abate carbon. As a result, money will be invested in perfecting and cheapening CCS technology.

Possible Consequences

The market is imperfect and subject to fluctuations. Although there is an economic incentive, implementing cap and trade with CCS technology could have obstacles to overcome. Since cap and trade with CCS would be a new factor in the US market, people could have issues with complying at first. The investment in perfecting CCS technology could have a slow start. If the investment does not come as planned and the cap keeps increasing the amount companies have to pay for coal, it could have economy wide consequences.

“Buffett sees Burlington Northern as a growth vehicle to earn more on the billions in cash Berkshire has on its books carrying coal, wheat and other resources across the nation.”[7] This quotation refers to Warren Buffett’s purchase of Burlington Northern, a rail road. One of the possible consequences of an increase in the cost of coal is a decrease in the demand for it. If there is a decrease in the demand for coal, then there is a decreased need for the railroad to move it. As a result, not only will the coal industry be hurt, but also the railroad and transportation industry.

Charlie