Lawmaker pushes utility tax breaks

October 30, 2010
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LANSING — A new bill by Rep. Joel Sheltrown, D-West Branch, would allow tax breaks for utility companies that capture greenhouse gas emissions from power plants. But environmentalists counter that the proposal would only promote “dirty” energy.

Currently, installation of carbon capture equipment does not qualify for state tax breaks. Sheltrown’s bill would allow power plant operators to offset high installation costs by applying for tax abatements from local governments.

David Barnes, a professor of sedimentology at Western Michigan University, said that carbon sequestration equipment captures carbon dioxide emitted from biomass-burning power plants and pumps it underground for secure and permanent storage.

It reduces the amount of greenhouse gases released into the air, he said, which is important because scientists say excessive carbon dioxide emissions contribute to global climate change.

Ken Bradstreet, the director of communications and government affairs for Wolverine Power Cooperative, said the carbon capture equipment planned for a new Rogers City coal-fired power plant would cost more than $200 million, with $175 million covered by federal grants.

Bradstreet said that Wolverine applied for a grant in anticipation of federal legislation setting carbon-capture requirements. The bill died in Congress this summer.

No power plants in Michigan currently use carbon sequestration technology.

Barnes conducted federally and privately funded studies to determine if carbon capture is environmentally and financially feasible. He found a “high likelihood” of feasibility but said it would be expensive.

Barnes said no laws in Michigan prohibit carbon dioxide emissions, and the high cost means there isn’t enough incentive yet for utility companies to install the technology.

“Carbon sequestration installation ranges from retrofitting old power plants, which is very expensive, to constructing new plants with the sequestration equipment in the original design,” Barnes said.

The financial burden does not end with installation costs. It takes additional energy to separate the carbon dioxide from other chemicals before the gases can be stored underground, according to Barnes.

He said two proposed coal-fire power plants in Rogers City and Holland were to have carbon sequestration machinery. The state denied both permits because regulators didn’t see sufficient need to warrant building them. According to Sheltrown, a lawsuit is pending to overturn the state’s decision and he expects the Rogers City plant to be built.

Barnes said that although burning coal isn’t a permanent energy solution, Michigan will be relying on such plants for 30 to 50 years. “The reality is that we’re likely to be dependent on burning biomass for energy for a long time.”

Sheltrown said, “Those who worry about carbon footprints ought to be in favor of it.” But they’re not — at least not Michigan Sierra Club’s executive director, Anne Woiwode.

“This bill is badly misguided. It suggests that untested technology is a solution,” said Woiwode. “Two years ago, scientists said that carbon sequestration technology was 10 years away from models that might work.”

A U.S. Department of Energy study said cost-effective technologies to capture carbon dioxide will be commercially available by 2020.

WMU’s Barnes said that to prove viability on a commercial scale, the technology must be tested. But Woiwode said there are smarter ways to invest taxpayer funds in meeting long-term energy needs without relying on coal plants.

“Michigan is turning into a clean energy leader. If we go back to promoting coal, we’re just shoring up a bad idea,” Woiwode said.

“Power plant companies have their head back in the 1950s. Instead of trying to fix the problems with an outdated technology, Michigan should be looking to promote clean energy,” Woiwode added. She said it’s an unproven and expensive technology.

However, Barnes said it’s nearly impossible to eliminate all uncertainty in the natural world and that there’s only a 1 percent chance of leakage from underground storage facilities. “We have 99 percent security, and the adverse affects of carbon dioxide in water would not be catastrophic — but you still don’t want it to happen,” said Barnes.

In 2009, a small-scale test in Otsego County pumped 60,000 tons of carbon dioxide into an underground saline formation. Barnes said the test was successful and research is ongoing.

Sheltrown’s bill is pending in the House Energy and Technology Committee.

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