03/30/2009 03:12 pm ET | Updated May 25, 2011

Can't Stand the Light of Day: Ohio liquid coal drops application for federal loans

Visit NRDCs Switchboard Blog

I saw a fascinating press release from Baard Energy today. They are a company attempting to build the first large-scale liquid coal refinery in the U.S. Oddly, the press release announces that the company is dropping its pursuit of $2 billion in loan guarantees from the Department of Energy to help finance the project. Interestingly, the company blames NRDC and Sierra Club for forcing them to pull the plug on its request for public support. From the release:

According to Mr. Baardson, the company learned that recent NRDC and Sierra Club legal challenges against permits issued by the Ohio Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers will likely delay for years any funding from a DOE guarantee.

"This is upside down," Mr. Baardson explained, "Under the DOE guidelines, lawsuits will likely have to be settled before we can be assured that the loan guarantee funds would be made available.  The DOE will also require a full environmental impact statement and this would give groups such as the NRDC and Sierra Club even more opportunities to challenge and delay the issuance of any loan guarantee."

To me, this case is an example of how the law and the economy are supposed to work: our legal challenge to the Baard proposal has illuminated the real risks, economic uncertainties and implicit inequities of the proposed plant. Far from being "upside down," the legal process is doing exactly what it is intended to do---ensuring that the environmental and public health needs are appropriately addressed before huge sums of taxpayer money are needlessly squandered on projects like this one. There is no place in the coming clean energy economy for a filthy refinery such as this and the economics will likely bear this out.  The legal process is demonstrating that Mr. Baardson's dream proposal cannot survive the light of day, as my co-worker Shannon Fisk deftly summarized:

If the project cannot get money from the Department of Energy program designed to support advanced coal technology, then the State of Ohio and banks who have been asked to front the money in this economic crisis should really do some serious risk assessment. Baard blames environmentalists for their financial problems, but an environmental review is no threat to a viable project. 

That last bit is central. There is a huge disparity between what Baard Energy and their liquid coal cronies claim about this facility and what they ask for in the regulatory process. Despite the repeated label of "clean coal," Baard has not committed to using carbon capture and sequestration (CCS) technology or otherwise limiting the facility's high CO2 emissions.

In addition, in contrast to Baard's public claims that they will use cleaner biomass in the facility, their permits potentially authorize fueling the facility entirely with high sulfur coal, which emits large amounts of sulfur dioxide, particulate matter, and other pollutants that endanger public health and the environment in the communities around the refinery. There is nothing clean about this facility and that will continue to hinder them with investors who bother to look under the hood and kick the tires...

And cleanliness of the refinery aside, does it make any sense to invest vast sums into a fuel source that emits twice the CO2 of typical gasoline? As we have covered elsewhere on Switchboard, the intelligence and defense communities have already recognized that climate change offers the biggest security risks to our national interest since the Cold War---why on Earth would we embrace a fuel source that speeds this?

The short answer is that we won't.

Baard Energy's whining aside, their money problem is not the result of our legal efforts to protect the public interest. Their money problems are the result of bad timing and a bad technology that is counter to the public interest.

We are at a point where our economy is clearly tied to our moving into a clean energy economy. Public investment, in terms of loan guarantees, tax breaks, and out-right investment in research, development and infrastructure, must be clearly tethered to clean energy, not tethered to dirty, uneconomic risks like Baard.

This post originally appeared on NRDC's Switchboard blog.