Loans for Coal Plants Suspended

  • Published on March 11th, 2008

George Washington dollar billWow — the feds are suspending a major loan program for rural coal power plants, citing the risks of global warming regulations and rising construction costs at the rate of 30 percent a year. Coal plants are a big source of carbon dioxide (CO2), a major contributor to global warming and the electricity source for rural utilities is about 60 percent coal.

Abigail Dillen with EarthJustice — a law group that sued to to block the loan program because of the reasons above — put it this way:

This is a big decision. It says new coal plants can’t go to the federal government for money at least for the next couple years, and these are critical times for companies to get these plants built.

The suspension isn’t indefinite, but no loans will be issued this year and none are likely in 2009. That means at least four proposed coal plants in Kentucky, Illinois, Arkansas and Missouri are out of luck unless they want to look into more expensive loans on the open market or private funding. Kansas and Wyoming have canceled coal plants in the last few months because of construction costs and global warming concerns.

This decision comes on the heels of banks announcing closer scrutiny of projects that involve global warming emissions and are thus likely to be risky when regulations and/or fines are imposed down the road. The head of the National Rural Electric Cooperative Association also said that the federal government is responding to “nervousness” among lenders over carbon legislation before Congress.

So if the global warming implications make building coal plants too risky, then the state (or the feds) need to also set policies to encourage the development of rural renewable energy and efficiency. Some states are doing this (like Minnesota, with rural community-owned wind power provisions) and there should be more out there. As we move to placing a higher cost on dirty power, so too must we also balance that demand with increased attention on renewables and (especially) energy efficiency.

Forbes.com

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  • Eric

    Idiotic. Nobody's gonna build "green" power. There just won't be any power plants built in the US and we'll end up buying our power in Mexico and Canada. Ask people from California how much sense it makes to rely on other people for your power.

  • Daryl

    Please do build wind power in Tornado Alley, that is progressive forward thinking. It will give tornadoes something besides trailer parks to aim for.

    Global Warming theory states, more powerful and frequent storms, right in the "end of days" chapter.

    Perhaps I could suggest a Biomass powered generator using agriculturial run off water and unused crop mass. The enriched nitrogen water could then be recycled for crop water through a regional closed water system like a city water supply. The water could also be steam pumped to an elevated storage system and gravity feed hydro could supplement the generators.

    Just as a alternative to 100's of hectres of towers at the mercy of the real and dangerous weather in the region.

  • Ranjit Arab

    It's nice to see what just the threat of federal global warming regulations has done to push us in the proper direction.

    As a resident of Kansas, I'll take whatever argument works to prevent the expansion of the Holcomb plant (although for me the water pollution was enough).

    Still, the threat alone of regulation will ring hollow if it's not backed up soon. We have to keep on Congress–and our next president–to follow through with all the tough talk. That, of course, is easier said than done…

    Anyway, nice post. I'm glad that the "market" is finally speaking up about the long-term risks of such investments.

    –Ranjit