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Dallas-based Luminant Calls Obama's Proposed Carbon Limits on Power Plants "Unworkable"

Dallas-based Luminant Calls Obama's Proposed Carbon Limits on Power Plants "Unworkable"
Peter Ryan

Following through his pledge to confront a changing climate, which an international body of scientists now says with 95 percent certainty is caused by human activity, President Barack Obama's administration has announced limits on greenhouse gases emitted by power plants.

Nearly half of all energy-related greenhouse gas emissions come from power plants, particularly coal-fired ones. According to The New York Times, new power plants would be required to reduce their emissions to 1,000 pounds of carbon dioxide per megawatt hour for natural gas-powered plants, and 1,100 for coal. The story also indicates carbon limits for existing power plants are in the offing.

Dallas-based Luminant, Texas' biggest generator of electricity, was critical of the carbon limits. "These rules dictate unworkable standards for new coal plants and reflect EPA's picking of winners and losers among fuel sources, which is not authorized under the Clean Air Act," Luminant spokesman Brad Watson tells Unfair Park in an emailed statement.

Asked whether any of Luminant's newest power plants could meet the limits as they've been described so far, Watson replied simply, "No."

That major players in the industry like Luminant are reacting with alarm is no surprise. Limits for existing plants have yet to take shape, but those for new plants would require costly retrofits. With profit margins shrinking for existing coal-fired power plants due to the low wholesale price of electricity, there's little financial incentive to comply. As we noted earlier this week, Luminant just applied to idle units at yet another of its coal-fired plants because operating it from December to June would be a money-losing enterprise.

Indeed, along with robust power prices, the profitability of coal-fired plants (especially aging ones like Luminant's Big Brown and Martin Lake, the state's biggest polluters) depends upon their ability to externalize the byproducts of their operation cheaply -- in other words, to dump pollutants into the air. Martin Lake is already being sued by the U.S. Department of Justice for allegedly making major changes to the plant without installing new pollution controls, in violation of the Clean Air Act. Increase the cost of pollution and you'll see coal-fired plants shuttered across the country.

Watson says the kind of carbon-capture technology required to meet new requirements isn't proven or ready for large-scale, national deployment. Energy Future Holdings spokesman Allan Koenig adds that the company will spend $500 million "in environmental capital expenditures" between 2013 and 2017.

Complicating all of this for Luminant is the threat of looming bankruptcy. According to a DMN story, its creditors are meeting today in a "last-ditch effort" to determine whether they can hash out who gets what, how big a hit some of them will take, and if they can even agree on what the company is worth. Last time we checked, it was worth less than its liabilities.

An already complicated situation for Luminant and EFH just got much, much tougher.


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