ccording to the American Heritage Dictionary, a suicidal act is one that is “dangerous to oneself or to one’s interests; self-destructive or ruinous.” By this standard, the coal boom that is currently sweeping America is the atmospheric equivalent of a swan dive off a very tall building. At precisely the moment that scientists have reached a consensus that we need to drastically cut climate-warming pollution, the electric-power industry is racing to build more than 150 new coal plants across the United States. Coal is by far the dirtiest fossil fuel: If the new plants are built, they will dump hundreds of millions of tons of carbon dioxide into the atmosphere each year for decades to come — virtually guaranteeing that the U.S. will join China in leading civilization’s plunge into a superheated future.
Like most stories about energy, corruption and greed, this one is centered in Texas. TXU, an electric-power company based in Dallas, has announced plans to build eleven new coal plants in Texas by 2011 — a move that a trade publication calls “one of the most ambitious generation capacity expansions in recent power industry history.” Texas already dumps more carbon dioxide into the atmosphere than any other state in the nation. TXU’s new fleet of coal plants would more than double the company’s current pollution, spewing 78 million tons of planet-heating pollution each year — the equivalent of 11 million SUVs.
In an industry that usually counts its profits in pennies, coal is the new green. Power companies in Texas can make upward of twenty dollars per megawatt-hour by burning coal, which produces electricity far more cheaply than natural gas. Indeed, hefty profits from coal plants are a big reason why TXU’s net income in the third quarter of 2006 was more than $1 billion — nearly as much as Google and Apple combined.
But coal is only profitable because its pollution-related costs — blasted mountains, increases in asthma and heart attacks, neurological damage from toxic mercury, environmental chaos caused by global warming — are all offloaded onto the public. That’s why TXU is rushing to build so many new coal plants: In the next five years, Congress is widely expected to crack down on global warming by placing limits on carbon-dioxide emissions, making coal less profitable. If TXU can sneak its plants in under the regulatory wire, it could be exempt from new regulations — allowing the company to dump massive amounts of carbon for free. John Wilder, the company’s CEO, said recently that he expects TXU’s new coal plants to generate profits of $1 billion a year.
In 2001, the energy task force headed by Vice President Dick Cheney used the threat of blackouts to justify a call for up to 1,900 new coal-fired power plants. In Texas, the playbook is the same. The Electric Reliability Council of Texas, which runs the state’s power grid and which, until recently, was headed by a TXU executive, has warned that starting around 2009, the state’s power supplies will be running low. According to TXU, the solution is simple: Burn more coal.
“We believe wind, solar and nuclear power are all important,” says Kimberly Morgan, a company spokeswoman. “But all these sources have problems — the wind doesn’t blow all the time, solar is still very expensive, and nuclear power, which we’re a strong supporter of, takes too long to get permitted. Conservation is also necessary, but on its own, it’s not enough. We’re already too dependent on natural gas. So that leaves coal as the best, most affordable way to generate power in Texas.”
But building old-fashioned coal-fired plants to meet rising power needs is a nineteenth-century solution to a twenty-first-century problem. The projected power shortage in Texas, for example, is mostly an issue on hot days when AC usage spikes — a problem that could largely be handled by getting serious about energy efficiency (per-capita energy use in Texas is among the highest in the nation) or by pushing alternative sources of power (the state has plenty of sun and wind). “Texas may be where we find out how much the world has changed in recent years,” says Dan Dudek, chief economist for the advocacy group Environmental Defense. “Are we serious about dealing with global warming, or are we just messing around?”
Perversely, it was Hurricane Katrina that spurred TXU’s push for more coal. For many Americans, Katrina was a wake-up call to the dangers of global warming. After all, scientists have convincingly demonstrated that warmer oceans contribute to the intensity, if not the frequency, of hurricanes. For John Wilder, however, Katrina represented an opportunity. When the hurricane disrupted energy production in the Gulf and drove up the price of natural gas — which is used to generate seventy percent of all electricity in Texas — Wilder went looking for another source of power. But instead of turning to solar or wind or even nuclear, he decided to burn more coal.
Wilder, who worked for years at Royal Dutch Shell, is known in the industry as a brilliant numbers guy and a fierce advocate of deregulation. When he took the top job at TXU three years ago, the company was near bankruptcy, having lost $4 billion investing in overseas power generation. Wilder sold the art at corporate headquarters, spun off assets, outsourced 2,700 jobs and refocused TXU on generating power for its 2.2 million Texas customers. In his first year on the job, the company’s stock price tripled. Wilder did pretty well himself: He was the eleventh-highest-paid executive in America in 2005, raking in over $55 million — more than twice the compensation of former Exxon Mobil boss Lee Raymond.
To get around regulations for new coal plants, Wilder cultivated a key ally in Texas: Gov. Rick Perry, a conservative who has long carried the water for big business in the state. A month or so after Katrina hit, the Galveston Daily News reported, a TXU senior executive met with Perry’s chief of staff. The governor was concerned about rising electricity rates in the aftermath of Katrina, especially with an election coming up. TXU agreed to delay some of its price hikes until after voters went to the polls — and two weeks later, Perry issued an executive order fast-tracking permits for the new power plants that TXU and other coal companies want to build. The decree means that instead of submitting to lengthy regulatory scrutiny and public comment, TXU’s plants could be slipped through in a matter of months. TXU and other coal-industry interests repaid the favor by donating heavily to Perry’s reelection campaign, contributing more than $130,000.
Not surprisingly, TXU’s plan has kicked up a shit storm in recent months — and not just with environmental activists. More than thirty cities and towns representing nearly 7 million people in President Bush’s home state have joined forces to fight the new coal plants. There have been prayer vigils and hunger strikes. TXU shareholders, disturbed by the financial risks of the project, have raised concerns about the rapid coal expansion. Big investment banks like CitiGroup and Morgan Stanley have been warned by environmental groups of the “reputational risks” of financing the project. It has even split Texas’ clubby business establishment: Albert Huddleston, a Dallas oil baron and a major Republican donor, has filed a lawsuit to stop the plants.
“If TXU hadn’t been so audacious, nobody would have paid much attention to their plans,” says Laura Miller, the mayor of Dallas. “But the way they’ve pushed these plants is so brazen, so in-your-face, that it made people realize they’ve got to do something.”
Pissing off Miller was not a smart move. A former investigative journalist who got elected mayor by campaigning against her city’s billionaire boys club, she is now taking aim at Big Coal. Miller, a mother of three, spends many of her evenings and weekends traveling to small towns in rural Texas near the sites of the proposed plants, urging residents to join the Texas Clean Air Cities Coalition, which she formed to make sure that citizens have a voice in the permit process. She has also raised more than $500,000 to study how the new plants would affect the state’s already miserable air quality. Dallas is currently the eighth-most-polluted city in the nation, and Houston is fourth. And because many power companies in the state burn low-grade Texas coal, the state ranks first in the nation in mercury emissions from power plants. Mercury, a potent neurotoxin, can damage the brains and nervous systems of fetuses and small children.
TXU tries to greenwash these concerns away. They ferry toxicologists to city council meetings, where they claim that mercury isn’t really so dangerous. They talk about the hundreds of millions of dollars they are investing in “clean coal” research. They make vague proclamations about voluntarily cutting smog-causing emissions by twenty percent across the board in Texas, but fail to mention that federal law will soon require those cuts anyway. When pressed, TXU executives respond that much of the criticism levied against them is unfair or ill-informed. “I think a lot of the negative reaction to our plan is from people who don’t fully understand the issues, or simply have a knee-jerk reaction against coal,” says Morgan, the TXU spokeswoman.
More infuriating to Miller and others is the fact that the company plans to use old technology in its new plants, rather than embrace the newer and cleaner method known as coal gasification. “If they’re going to burn coal, at least they could do it right,” says Tom Smith, who heads the Texas office of the consumer advocacy group Public Citizen. Although gasification is slightly more expensive — about ten percent — the advantages are many: better efficiency, water consumption, less air pollution. And because the process removes pollutants before the coal is burned, it’s much simpler to capture and store carbon dioxide before it reaches the atmosphere.
A dozen or so gasification plants are in the works around the nation, and the technology is championed by a number of industry heavyweights, including Bechtel, Siemens, Shell and GE. But Wilder dismisses this new technology as “a gleam in someone’s eye.” Instead, TXU touts the possibility of one day being able to capture carbon dioxide from conventional plants — an idea that, at the moment, is decades away from being ready for commercial deployment. It’s a common rhetorical trick in the industry: Ignore technology that is here today — and keep churning out pollution — while touting solutions that may never exist.
The irony is, TXU’s plan to build more coal plants may not only wreck the environment — it could also wreck the company. Although the plants would be obscenely profitable if they were up and running today, Wall Street analysts point out that TXU’s business model includes a number of risky financial assumptions about future power demand and plant construction costs. But the biggest gamble may be the company’s view that it will be able to dump carbon dioxide from the plants into the atmosphere for the next fifty years without paying any significant penalty. But what if, instead of being exempted from future regulations, the plants are forced to pay for all 78 million tons of pollution they generate each year? And what if the rapid advance of global warming drives up the price of carbon dioxide far beyond the projected range of five dollars to twenty dollars a ton? No wonder venture capitalists like Vinod Khosla, a Silicon Valley pioneer who is now investing in bio-fuels and solar thermal technology, see conventional coal plants like the ones TXU is building as an unwise financial risk. “You’ve got to be crazy to build a traditional coal-fired power plant these days,” Khosla says.
So far, though, TXU executives don’t seem worried. They expect to get approval for its eleven new plants this summer and begin construction soon after. And they’re already talking about expanding beyond Texas with another fleet of new coal plants in other states. By pushing ahead so heedlessly, they are essentially betting the company on the belief that most Texans — and most Americans — would prefer to risk epic storms, droughts, crop failures and polluted air rather than fight to save the planet. It’s a deeply cynical move, and one that exposes the need for new federal laws and institutions to keep politically influential corporations like TXU from strip-mining the future for their own short-term gain.
A few weeks ago, Jim Marston, the director of state climate initiatives for Environmental Defense, met with Mike McCall, the senior executive in charge of the coal-plant expansion for TXU. Marston hoped to find some common ground with McCall, some acknowledgment that TXU is willing to address the growing public concerns about the new coal plants. It never came. “He basically patted me on the head and said, ‘We have this all figured out,'” Marston recalls.
Afterward, Marston realized that he had encountered such breathtaking arrogance in a power-company executive only once before. It took him a while to remember who it was: the former CEO of Enron, Jeff Skilling, now serving twenty-four years in federal prison.