Coal Star State

While America turns away from dirty energy, Texas could soon have 12 new coal-fired power plants. What gives?


One February night in 2007, a boisterous crowd from all around Texas—old-school ranchers and farmers, fresh-faced Baylor students, environmentalists new and old, big-city Democrats, and rural Republicans—packed a Waco auditorium to discuss the next round of an epic fight. The gathering would turn out to be the high-water mark of a campaign to halt a tsunami of new coal-fired power plants. A staggering 18 plants were on the table statewide, 11 proposed by one unpopular company, Dallas-based utility giant TXU Corp. Only China was doing more to expand the climate-choking reach of coal.

The Waco gathering signaled that what started as a lonely fight years earlier by environmental groups and citizens living near the proposed facilities had grown into a broad, deep coalition rarely seen in Texas. Dallas Mayor Laura Miller had assembled 36 cities and school boards representing some 7 million citizens. The cities, fearing the effects of millions of tons of new pollution on the state’s already fouled air, had pledged to take the plants on one by one with the help of Stephen Susman, one of the nation’s top trial lawyers. A tassel-toed gaggle of Dallas Republican businesspeople piled on as well, arguing that pollution from coal plants would jeopardize commerce.

That February night, Miller told the crowd they were “gathered together on the eve of a great battle that will decide the quality of the air we breathe for the next 40 years.” The audience rose and cheered when Miller announced that, earlier in the day, an Austin judge had struck down an executive order by Gov. Rick Perry “fast-tracking” the approval process for the coal plants.

The star of the night was Susman, who told the crowd that he’d become involved because government was ignoring “the greatest threat to mankind,” global warming. He unveiled the legal strategy he planned to use against TXU in permit hearings set for the next day. The attorney hinted at high-level documents showing TXU’s intentions: to build a coal fleet ahead of federal greenhouse-gas legislation, locking down billions of dollars’ worth of bankable carbon credits.

Six days later, two private equity firms made a stunning announcement: They were purchasing TXU in a $45 billion leveraged buyout, the largest in history. In a side-deal secretly hashed out among the buyout firms, the Environmental Defense Fund and the Natural Resources Defense Council, the new owners canceled eight of the 11 plants and committed to a suite of energy-efficiency and renewable-energy programs. (“Big Green Buyout,” screamed one headline.)

The tumultuous saga would later get the Hollywood treatment in Fighting Goliath: The Texas Coal Wars, a documentary narrated by Robert Redford. But unlike Hollywood stories, with their tidy endings, the Texas coal story never really ended; it just faded away.

Now a second wave of coal-fired power plants has quietly cropped up in the state. Twelve coal-fired power plants are either moving through the approval process or under construction in far-flung locales, including Abilene, Corpus Christi, and Bay City (See graphic below.)

“It’s deja vu all over again,” says Jo Cervenka, a rancher near Waco who’s been fighting the coal wars for years. Cervenka’s pleased that the “Ring of Fire”—the name her group gave to five TXU coal plants proposed to encircle the Waco area—never lit up. Still, two years after those plans were defeated, she’s watching with apprehension as the stacks go up, less than a mile from her home, on a coal-fired plant owned by LS Power.

Coal’s comeback in Texas comes as the rest of the United States moves in the opposite direction. At least 107 proposed coal plants have been scrapped nationwide since 2002. Recently, high-profile battles in Idaho, Georgia, Kansas, Iowa and Nevada doomed proposed coal-fired plants.

The nation’s turn against coal is in part motivated by the fuel’s contribution to smog, mercury contamination and ecological disasters like last year’s spill in Kentucky of more than 1 billion gallons of wet coal ash into Tennessee waterways and neighborhoods. These concerns are still the focus of grassroots opposition. But coal is increasingly in the crosshairs of governments and campaigners trying to tackle climate change. In 2007, the Supreme Court ruled that the EPA could regulate carbon dioxide and Congress is likely to pass legislation next year that would reduce U.S. greenhouse gas emissions 80 percent by 2050. As a result, building a new coal plant looks like a much more risky – and potentially expensive – bet than just a few years ago.

Worried that new regulations could imperil coal’s viability, states have begun for the first time to turn down new plants because of their CO2 emissions. In 2007, a Kansas state agency denied air permits for two coal-fired power plants that would have produced 11 million tons of CO2. In Nevada this year, LS Power indefinitely postponed plans for a massive, 1,600-megawatt coal station; instead, the utility will focus on transmission lines to move renewable power from rural areas to cities.

“There is one big aberration: Texas, which is marching in a completely different direction from the rest of the country,” says Bruce Nilles, National Coal Campaign director for the Sierra Club. “This is ground zero. This is the last stand of the coal industry in a major way.”

Nilles was taking a break from a national gathering of environmental attorneys and activists at the University of Texas at Austin in October. Now that the “second wave” threatens the state with 12 more coal plants, national groups have begun putting resources and organizers back into the state, seeing an opportunity to break Big Coal for good. In Austin, the greens had gathered to talk about their strategy for challenging the plants in court—and for pumping anti-coal activism in Texas back up to 2007 levels. Opponents will have to grapple with a central question: What explains Texas’ coal contrarianism? One answer lies with the state’s deregulated electricity market, which puts decisions about new power-generating facilities almost entirely in the hands of private investors. The market has a clear message for these power developers: Coal is profitable. Natural gas dictates the prices paid to operators of coal and nuclear plants in the state; when gas prices climb, coal and nuclear can reap huge profits. Then there’s the Texas Commission on Environmental Quality. The state’s regulatory agency has been friendly to coal companies, consistently issuing air and water permits despite steep environmental and health costs. Texas Republicans, who control all three branches of state government, have paid little attention to climate change—except, in some cases, to deny the science behind it.

Plant Company Location Power
(Millions of Tons/Yr)
1. Oak Grove TXU Bremond 1,200 16.6
2. J.K. Spruce II City Public Services San Antonio 750 7.4
3. Sandy Creek LS Power Riesel 800 7.5
4. Formosa Plastics Formosa Plastics Point Comfort 300 3.0
5. Sandow 5 TXU 581 5.4
6. NuCoastal NuCoastal Power Point Comfort 300 2.6
NuCoastal has agreed to offset 100 percent of their CO2 emissions.
7. White Stallion White Stallion Energy Center, LLC Bay City 1,200 10 (est.)
8. Tenaska Trailblazer Tenaska Energy Sweetwater 900 0.75
Tenaska has proposed to capture 60 percent of their CO2 emissions.
9. Limestone 3 NRG Energy Jewett 745 7.4
10. Las Brisas Las Brisas Energy Center LLC Corpus Christi 1,200 10.4 (est.)
11. Coleto Creek South Texas Electric Cooperative Goliad 650 6.0
12. Summit Summit Power Penwell 400 – *
Summit Power has not yet submitted an application, so there are no published estimates of CO2 emissions from this plant.

The Texas coal rush threatens to throw a monkey wrench into the nation’s long-delayed efforts to stem global warming—so much so, Nilles says, that “it makes it impossible.” If all 12 proposed plants are built, they would add upwards of 80 million tons of carbon dioxide, the main greenhouse gas, to the atmosphere every year. That would be more than the entire country’s increased emissions in 2007.

Coal backers point out that the 12 plants’ CO2 output would cause just a 1-percent increase in U.S. carbon emissions. (In Texas, carbon emissions would go up by 12 percent.) That may not sound like much but in a race to drastically cut emissions in time to avoid runaway climate change, it’s a lot. Eighty million tons is enough to easily wipe out the efforts of other states. For example, the Regional Greenhouse Gas Initiative, a cap-and-trade system devised by twelve Northeastern and Mid-Atlantic states, aims to cut their carbon emissions from the power sector by 20 million tons by 2019.

If Texas were a country, it would already rank No. 7 in worldwide CO2 emissions. Texas leads the nation in coal consumption and greenhouse-gas emissions. The state’s 17 existing coal-fired plants account for more than one-third of the state’s carbon emissions.

“The tragedy is, we were beginning to make a dent in our CO2 emission in Texas,” says Tom “Smitty” Smith, a veteran environmentalist and consumer advocate with the nonprofit Public Citizen. Between 2005 and 2006, the state saw a 3-percent drop in carbon emissions, according to federal data, thanks to growth in wind power and energy-efficiency measures. Now Texas’ carbon-reduction efforts could be thrown into reverse. Unlike the “coal wars” heyday of 2007, there is not so much an uproar as a low rumbling. Though environmental groups are trying to jumpstart things, those fighting Big Coal this time are mostly doing it plant-by-plant, in often lonely battles in small towns across the state.

You won’t hear much talk about global warming in Bay City, a sleepy town of 18,000 on the coastal plain an hour and a half southwest of Houston’s suburban sprawl. Instead, a small band of Matagorda County citizens is trying to spark some debate—any debate—over the White Stallion Energy Center, a 1,320-megawatt coal- and petcoke-fired power plant slated for a 1,200-acre spread along the Colorado River just south of Bay City. In England, judges are letting Greenpeace activists go free after vandalizing coal plants. In Bay City, environmental activists are trying to get the local Tribune to publish pollution estimates for White Stallion.

Matagorda County has something of a split personality: On the one hand, it has a thriving ecotourism trade. One of the nation’s best birding sites, Matagorda does an increasingly brisk trade in kayaking and bay tours. On the other hand, it’s home to a number of petrochemical plants and the South Texas Project, a huge nuclear plant built in the ’70s to provide electricity for San Antonio and Austin.

Eva Malina, a schoolteacher whose family owns a 5,000-acre cattle ranch near the proposed site, is among those convinced that White Stallion developers chose Matagorda County because “they thought they would get no resistance.” Malina’s father was one of the locals who led the unsuccessful charge against the South Texas Project. Three decades later, she says residents of the county have come to “feel it’s futile, that things are going to happen anyway. That’s what happened with the South Texas Project. There were marches and protests, people objected, and we got it anyway.”

Loosely organized as the No Coal Coalition, the activists are trying to rebuff claims by White Stallion Energy Center LLC, a private outfit of Kentucky-based power generation developers, that their project would be a “clean coal” facility. The company’s Web site claims the plant will use the “most environmentally advanced, cleanest, commercially proven, emission-lowering technology available.”

Such claims have gone largely uncontested by local elected officials, who uniformly support the power plant. But the pollution estimates contained in the company’s draft permit tell a different story. If built, White Stallion would produce significant amounts of sulfur dioxide, which causes acid rain; nitrogen oxides, primary ingredients in smog; particulate matter (soot), which can cause asthma, heart problems, and premature death; mercury, a potent neurotoxin that can be passed from mother to child in the womb; and an estimated 10 million tons of CO2.

The estimated emissions put White Stallion in the middle of the pack compared with Texas’ 11 other proposed coal plants—better in some respects, worse in others, but still much dirtier than natural gas, wind, solar, or nuclear energy sources.

“I’m bothered by the fact that never have I heard anyone in this town discuss the health effects of putting in this coal-fired power plant,” says Bob Malina, Eva’s husband and a retired anthropologist who has studied the deleterious effects of lead on children’s development in Oaxaca, Mexico. Malina points out that mercury exposure during pregnancy can cause a host of problems in young children, including mental retardation and brain damage.

“There is a complete lack of advocacy for children by the adults who make the political decisions for the community,” Malina says. He’s tried to force the issue, he says, but his Yankee accent—Malina’s originally from Brooklyn, N.Y.—makes it all too easy to paint him as an outsider.

James Arnold, a vocal member of the No Coal Coalition, couldn’t possibly be taken for an outside agitator. Arnold has spent all of his 68 years in Matagorda County—mostly on the water, as a commercial fisherman and oysterman for 40 years, but more recently as a semi-retired ecotourism entrepreneur. He runs a guide service that takes people out on the extensive Matagorda Bay and estuary system for sightseeing, birdwatching, oystering and fishing. For years, Arnold has pushed the political and business establishment to promote ecotourism. White Stallion, he believes, threatens the success they’ve had so far.

“I had people out here from England,” Arnold says, “and they were more concerned about the emissions from burning coal than the citizens of Matagorda County are.”

Arnold shares the Britons’ concern. “Most people can’t imagine the changes I’ve seen in this county,” he says, pointing to altered patterns of bird migration, plummeting productivity in the bays, changing weather patterns and drought. There are myriad culprits, he says, but “it’s all related to climate change.”

Business and political leaders in Matagorda see it differently. If you ask Owen Bludau, executive director of the Matagorda County Economic Development Corp., he’ll tell you that all energy sources have environmental impacts. He’ll quote President Barack Obama’s chief of staff, quoting John F. Kennedy: “Rahm Emanuel said that in government, your choices are bad or worse, and in a way in energy, our choices are either bad or worse.”

“Clean” coal, says Bludau, is not the worst option. Last year, White Stallion took him on a tour of a coal-fired plant in Kentucky, and he came away impressed. “It was very clean,” Bludau says. No pollutants could be seen coming out of the stacks, he says, and a pair of peregrine falcons were living on-site. “That surprised me.”

Two years ago, Bludau and the econ
mic development corporation were less impressed when wind developers came calling. The board rejected a plan for a wind farm in Matagorda, according to minutes of the meeting, because of “the size of the towers and the amount of acres required.”

Bludau concedes that the No Coal Coalition has “valid concerns” about White Stallion, but notes that it’s up to TCEQ to make the ultimate call. Which is precisely the problem, coal-plant opponents argue.

Texas’ process for approving new plants is “rigged in favor of the applicant,” argues Ken Kramer, director of the Lone Star Chapter of the Sierra Club. The state agency has yet to reject a coal-plant permit, or even order major modifications. Even in cases where administrative law judges, after months of expert testimony from both sides, have recommended denial of an air permit, TCEQ’s commissioners—all of them appointed by Perry—have rejected the judges’ findings and issued the permits anyway.

“It’s clear to us that we’re probably not going to win in the TCEQ process,” concedes activist Smith. White Stallion’s application is being considered by an administrative law judge, who can be overruled by the TCEQ commissioners if he opposes the plant. The efforts of the No Coal Coalition, like those of South Texas Project opponents in the ’70s, could come to naught.

Along with their neighbors’ apathy, White Stallion opponents have faced a statewide climate less conducive to widespread anti-coal agitating than that of the mid-decade coal wars. Without the TXU bogeyman, anti-coal forces have struggled to regain public attention—and to organize a similarly effective fight against the 12 newly proposed plants.

“Part of the problem is the enemy has become more diffuse,” says Smith. “It’s not just TXU anymore.” This time around, eight companies are hoping to build coal-fired plants—and none of them has TXU’s potential to rally opponents. Meanwhile, the heavyweight coal opponents who celebrated their success in 2007 have been far less vocal during this second wave. Texas Business for Clean Air has shifted its attention to changing policy in the state Legislature. The Texas Clean Air Cities Coalition, organized by former Dallas Mayor Miller, is challenging some of the proposed sites, but now lacks Miller’s dynamic leadership. The news media’s attention has drifted elsewhere.

Activists’ fondest hopes may lie with the Obama administration. “If we can get the new EPA to crack down” on TCEQ’s industry-friendly permitting process, says the Sierra Club’s Cyrus Reed, “we may be able to change the dynamics.”

Obama’s EPA has already cracked down on TCEQ in other areas, telling the agency that its public-participation process is inadequate, declaring its permitting process for big petrochemical facilities deeply flawed and threatening to revoke the agency’s authority to issue air permits if it doesn’t fix the problems.

Environmentalists have also blasted TCEQ for ignoring the pollution effects of new plants on urban areas downwind. Under the agency’s rules, if a coal plant is proposed within an air-quality “non-attainment” area like Houston-Galveston, it’s subject to rigorous regulation. If the plant is just outside of a non-attainment area, as White Stallion is, it’s a different story. The plant has been designated “ozone-neutral” by TCEQ, though it’s less than 20 miles from the edge of the Houston-Galveston zone.

Some Houston officials are not pleased. “Just as we’re making progress, we could be set back by somebody right outside our non-attainment area,” says Elena Marks, director of health and environmental policy for Mayor Bill White.

In April, the EPA signaled that it might get involved in the latest Texas coal tussle. Agency officials wrote a letter to TCEQ about the White Stallion proposal, criticizing regulators for not taking into account Houston’s air quality and threatening to take action if an “appropriate” ozone analysis wasn’t undertaken.

The state’s response? Such a study, TCEQ wrote back, would be “costly, take up to a year to complete, and still not provide information to definitively address EPA’s concerns.”

If Texas has a light hand for regulating ozone and other pollution generated by burning fuels, the hand of the state has stayed completely off the wheel where carbon dioxide is concerned. Even as evidence has mounted that Texas could experience catastrophic effects from human-caused global warming, the state’s regulatory agencies and top elected officials have refused to even acknowledge the threat.

“The political leadership has no clue,” says Gerald North, an atmospheric scientist at Texas A&M University who frequently makes presentations to the public on climate science. “The governor and TCEQ and all these people are in total denial.”

The entire faculty of A&M’s department of atmospheric science has signed a letter endorsing the latest findings of the Intergovernmental Panel on Climate Change, the global authority on the issue. The panel found that the world can expect at least 3.6 degrees of warming by 2100 if nothing is done to reduce greenhouse gas emissions. “Such a climate change brings with it a risk of serious adverse impacts on our environment and society,” write the 21 faculty members, including the Perry-appointed state climatologist.

But it’s not Texas climate scientists that the TCEQ commissioners and Perry are listening to. In September, the leaders of three state agencies—TCEQ, the Public Utility Commission, and the Railroad Commission—convened a “Cap and Trade Summit” at the state Capitol to warn of disastrous economic fallout from congressional action on climate change. The daylong event opened with Perry and featured representatives from the coal, gas, oil, manufacturing, and utility industries, as well as climate-change skeptics from industry-funded think tanks. Not a single climate scientist spoke.

That omission was intentional. E-mail messages obtained by the Observer show that the conference organizer, PUC Chairman Barry Smitherman, explicitly ordered participants not to discuss the science of climate change—while noting that he was a “skeptic.” He also tapped Phillip Oldham, a lobbyist for the Texas Association of Manufacturers, to find speakers.

“The skeptics in the scientific community are very loud and well-paid and well-publicized,” says North. “There are about half a dozen of these guys, and there are about a thousand on the other side. The thousand are grinding away in their labs and at their computers, and you have these six guys who are out on the stump having the time of their lives. It’s amazing.”

North points to a growing body of regional climate modeling that suggests much of Texas is likely to become a lot hotter and drier during this century. One study, published in Science in 2007, suggests that a transition to Dust Bowl conditions in the American Southwest is pending, with a permanent drought expected by 2050. Meanwhile, sea-level rise could also swamp the Texas coastline, inundating much of Galveston Island, Padre Island, and land around the Houston Ship Channel. An A&M study published this summer warned that damage to the state’s coastal communities could triple by 2080 because of intensified hurricanes (linked to warmer Gulf waters) and higher sea levels.

By mid-century, the damage to Texas’ rivers and lakes could be catastrophic as well. Freshwater reaching the coast—critical in the life cycles of shrimp, crabs and game-fish—could be reduced by 30 percent during normal conditions and 85 percent during droughts. (That’s according to an analysis by George Ward, a professor in the University of Texas at Austin’s Center for Research in Water Resources.)

In light of these grim predictions, North argues that it’s foolhardy to build more coal-fired power plants. “Why would you do it if you don’t have to?” he asks. “What it’s going to do is change Texas. We’re going to have problems with water here; we’re going to have problems with higher temperatures.”

Environmental groups have tried, without success, to raise the carbon issue in TCEQ hearings. “The TCEQ has absolutely shut us out in every case so far,” says Elena Marks.

Environmentalists are trying to force TCEQ’s hand. In October, Public Citizen sued the agency in state court, arguing that TCEQ’s refusal to even hear testimony on carbon dioxide’s connection to climate change violates the Texas Clean Air Act.

In December, governments from around the world will meet in Denmark to try to hammer out a new climate-change agreement. Congress is expected to pass greenhouse-gas legislation next year that will put a price on carbon, making coal less attractive as a fuel—and profit—source. The companies hoping to open coal plants in Texas are likely banking on the bill including a “grandfather” clause for companies receiving their air and water permits by a certain date.

Like it or not, critics of Texas’ coal revival say, a carbon-constrained world is a reality. Rather than prepare for the inevitable, the state’s regulators and elected officials have chosen to play the part of wrecking crew, ignoring or denying the science behind climate change and attacking efforts to get greenhouse gasses under control.

“The train has left the station,” Marks says. “It doesn’t matter anymore whether you believe in [global warming] or not. The powers-that-be in this country believe in it and are going to regulate it.” And Texas? “From a planning, economic, and political perspective, I think they’ve wasted a real opportunity to be a part of the future.”