With the majority of its electricity still coming from coal-fired power plants, Minnesota Power and its customers will feel the effect of new regulations proposed by President Barack Obama.
Obama’s first-ever carbon-dioxide-cutting regulations for existing coal-fired power plants were unveiled Tuesday as part of the president’s sweeping climate change initiative.
A Minnesota Power official said it’s too soon to determine what impact the new rules will have on the Duluth-based utility. But even with a penalty on coal-fired electricity, Dave Macmillan, executive vice president for Minnesota Power, said the utility already is moving to cushion itself and its customers from a regulatory blow against coal.
“This may be coming sooner now, rather than later, but we’ve been expecting something like this for years,” MacMillan said. “We feel that our Energy Forward plan already has positioned us to deal with whatever is coming down the line, be it a carbon tax or carbon penalty.”
Because there is no proven or practical way to eliminate carbon dioxide from fossil fuel emissions, it’s likely the Environmental Protection Agency will somehow regulate it by setting reduction limits and then charging a penalty on carbon emissions, MacMillan said.
As recently as a decade ago, Minnesota Power generated 95 percent of its electricity from coal. That number has dropped to a little more than 80 percent thanks to the addition of wind energy from North Dakota.
Along with Minnesota Power’s Energy Forward proposal to convert some Minnesota coal units to gas and purchase large amounts of hydroelectric power from Manitoba, MacMillan said the utility also is eyeing adding even more wind power from North Dakota to its mix.
The goal is to have one-third of its electricity generated from renewable energy, one-third from natural gas and one-third from coal by the 2020s, MacMillan said. That substantially reduces the utility’s exposure to any carbon penalties, he noted. (Natural gas also produces carbon dioxide, although about half that of coal.)
Because of the constant, high demand from industrial customers in its territory — namely taconite plants and paper mills — Minnesota Power officials have said they need a reliable source of constant power, unlike wind and hydro that can fluctuate. That’s why the utility is planning to spend $350 million to add pollution control equipment to its Boswell 4 coal plant in Cohasset to make it compliant with all existing state and federal air pollution regulations.
Even though the new equipment won’t remove any carbon dioxide, MacMillan said the utility has crunched the numbers and that the best option for reliable, affordable power is to keep Boswell 4’s coal burner running.
“We’ve already assumed a carbon penalty; we’ve included it in some of the projections. It’s in the proposal we have before the PUC (Minnesota Public Utilities Commission) and it’s still the best option for our customers,” MacMillan said.
Page 2 of 2 - J. Drake Hamilton, the science policy director for Minnesota-based Fresh Energy, an advocate for increased use of renewable energy, said the president’s initiative means the true price of carbon will now be included in the cost of electricity for the first time. That cost will be high enough that it should spur utilities like Minnesota Power to plan on shuttering all of their coal plants sooner rather than later.
“We’ve already learned in Minnesota that energy efficiency, using less energy and adding more solar and wind energy can replace coal fired power plants,” she said. “Minnesota Power’s Boswell 4 plant produces something like 6 million tons of carbon dioxide each year. It’s the second largest source in Minnesota.”
Because Obama’s plan will call for real reductions in carbon, there’s no way to meet the regulations without closing the largest sources like Boswell 4, she said.
“When you include the real costs of its carbon, the human health and economic costs, it makes no sense to anyone, including their customers, to keep coal in the mix,” she said.
Obama released few details Tuesday, but is ordering his EPA to draft rules under the Clean Air Act to reduce carbon dioxide emissions — blamed for contributing to human-spurred climate change — in coming years. Most scientists who study the issue say that without a major reduction in C02 emissions, the Earth faces a rapidly warming climate with potentially grave consequences for nature and humans.