Carbon regulations to cost coal projects, bank says

Bank of America is estimating federal carbon regulations will cost coal-burning power plants between $20 and $40 per ton of carbon emissions, according to the Wall Street Journal. That’s more than twice the estimate being used by backers of the proposed Big Stone II power plant in their reports to the state.

A group of utilities led by Otter Tail Power wants to build a 500- to 580-watt coal-fired power plant near Milbank, S.D., just west of the Minnesota border. Before they can build, Minnesota regulators need to OK a set of new transmission lines that would carry electricity to customers in western Minnesota.

The anticipated cost of carbon regulations, such as taxes or a carbon cap and trade system, is critical because Minnesota law says regulators aren’t allowed to approve new projects if the same amount of energy could be supplied for less money using conservation or renewable energy sources.

In December, a report to Minnesota regulators from Big Stone II investors said they planned on paying $9 per ton of carbon emissions, while opponents argued the real cost was likely to be much higher. Bank of America’s announcement isn’t the first to predict carbon regulations will cost companies in the $20 to $40 per ton range, but it’s likely to cause some conversation because of the source.

Read More:
Carbon Regulation Will Cost Big Stone II, But How Much? (Minnesota Monitor, Dec. 6, 2007)
Big Stone II Coal-Plant Debate Turns To Carbon Regulation (Minnesota Monitor, Nov. 13, 2007)