Loans for Coal Plants Suspended
Wow — 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.