US groups fight government funding of coal power plants

www.environmental-finance.com
27 July 2007

New York, 26 July: US environmental groups are suing the government over plans to finance coal-fired power plants, accusing it of failing to account for future greenhouse gas emissions.

The US Department of Agriculture provides low-interest loans to utility cooperatives through its Rural Utilities Service (RUS). But the Sierra Club, Citizens for Clean Energy and the Montana Environmental Information Centre stated in a 20 July suit that this makes no sense, since President Bush has recognised the climate issue, both parties in Congress are working on global warming legislation, and the Supreme Court declared in April that "the harms associated with climate change are serious and well recognised".

Those groups filed a complaint against the RUS in federal court, seeking to stop funding of a 250MW coal-fired plant in Montana. That plant would be constructed by Southwestern Montana Electric Generation & Transmission Cooperative, which supplies local co-ops. The Highwood Generating Station would emit 2.8 million tons of greenhouse gases annually, the plaintiffs say. According to the suit, the RUS violated the National Environmental Policy Act because it decided to fund the plant without assessing environmental impacts and without considering alternatives.

The cooperative does not plan to include carbon capture, but said it would add controls when required, noted Abigail Dillen, attorney with Earthjustice, which is representing the groups. But that could add $33 per megawatt hour (MWh) to the $57/MWh expected cost of power from the $720 million plant, she said, citing a 2007 Massachusetts Institute of Technology study on carbon capture. It could also reduce plant output by 40%.

"The whole point [of the RUS] is to benefit customers with low rates," said Dillen, in Earthjustice's Bozeman, Montana, office. But she pointed out that utility Northwestern Energy recently signed a contract to buy Montana wind energy for $31/MWh, or $42/MWh with "firming" power to augment wind's variable production.

Earthjustice and Sierra Club oppose RUS plans to fund at least seven other coal plants across the US, representing more than 3,400MW. DoA spokesman Jay Fletcher said the department has not yet responded to the suit and would not comment. Southwestern Montana EG&T did not respond to request for comment.