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By Jeff St. John

For someone working on the forefront of efforts to make the "clean coal" buzzword a reality, Jonathan Barr's concerns over what President Barack Obama and a Democratic Congress will do to reduce greenhouse gas emissions may seem a bit odd.

Barr is vice president of sales and marketing for ADA-Environmental Solutions (NSDQ: ADES), a Littleton, Colo.-based company that started working Wednesday on a $3.2 million effort to develop technology to capture carbon dioxide coming out of coal-fired power plant smokestacks.

But while the future of that business – along with the business of storing the captured CO2 so it doesn't enter the atmosphere and increase global warming – depends on some kind of carbon tax or cap-and-trade system to make it worthwhile to the utilities that run coal plants, Barr doesn't want any such carbon limitations to come too soon.

A carbon cap-and-trade program would require polluters who can't meet emissions requirements to buy credits from those who can. Europe has such a program in place since 2003.

"We fully expect there to be CO2 limitations on the power industry and other emitting sources within the next five to ten years," he said. But pushing it too soon could lead to "huge economic costs to American power producers," who would then pass on those costs to ratepayers, he said.

Barr's sentiment highlights a key disagreement about how to speed up the development of cheaper carbon capture-and-storage technologies.

The field of carbon-capture-and-storage is still in the early development stages. Scientists and power plant operators worldwide have carried out pilot projects to test various technologies, which are costly to deploy and have not been proven for commercialization (see Canada to Beat U.S. to Carbon Storage and Vattenfall to Trap Carbon Emissions.)

Cheaper technologies are likely to be in place in five to 10 years from now, said Mark Taylor, an analyst with New Energy Finance. But those inexpensive technologies won't be available unless power producers are willing to invest money to develop them, he added.

A carbon cap-and-trade program would provide a powerful incentive for making those investments.

"Unless a cap or some sort of incentive is put in place, it's only going to go as far as DOE funds it," Taylor said.

Barack Obama, who was just elected two days ago, has called for creating a cap-and-trade program and boosting investments in technologies to reduce carbon emissions. The energy plan he touted during campaigning also included a goal of bringing carbon emissions to 80 percent below 1990 levels by 2050.

But just how fast the Obama administration and a Democrat-controlled Congress move on such plans is an open question.

And the Energy Improvement and Extension Act of 2008 signed into law last month contained a provision to provide about $1.4 billion over 10 years for carbon capture and sequestration projects, as part of about $18 billion in energy tax credits for solar, wind, electric cars and other green technologies.

Given the weakening economy and rising joblessness, Obama may focus first on policies and incentives that promote the growth of renewable energy and other green industries that can create jobs and economic activity, energy industry advocates and analysts told Bloomberg on Wednesday.

Ron Pernick, co-founder and principal of research firm CleanEdge, agreed that Obama might find it more urgent to focus on stimulating the economy first.

"If I call for a 25 percent renewable portfolio standard by 2025, and provide tax credits for green building deployment and efficiency upgrades and renewables deployment, and have matching grants or revolving loan funds [to help pay for them], those are all things that would create economic activity," Pernick said.

"But plenty of people have worked with carbon cap-and-trade systems and say you can create economic incentives out of that," he added, since those systems can generate a market for technologies that can help reduce greenhouse-gas emissions. "I don't think it's as simple as one versus the other."

Barr said the United States should wait for more proven and affordable carbon capture-and-storage technologies before setting up a cap-and-trade system.  He expects his company to spend the next two years developing the carbon capture technology, which is funded by the U.S. Department of Energy and several utilities, including Xcel Energy.

ADA-ES is looking into using powdery chemicals that can absorb the carbon dioxide from a coal plant's flue gas before being pulled into a pressurized vessel where the carbon dioxide can be removed.

The company is one of many in the field. Other players include Alston Power Inc. in Windsor, Conn., SRI International in Menlo Park, Calif., and Praxair Inc. (NYSE:PX) in Tonawanda, N.Y.

The Bush Administration's big effort along those lines, the FutureGen project, was scrapped last year on concerns that it could cost from $1.5 billion to $1.8 billion, versus earlier government estimates of $950 million (see DOE Pulls Back on FutureGen's Reins). A consortium of coal companies and utilities had said the FutureGen project would yield a "near-zero emission," 275-megawatt power plant by 2012.

The DOE has moved forward with a number of "regional carbon sequestration partnerships" formed in 2003 (See DOE to Spend $126M to Put CO2 Underground). The groups of universities, utilities and government agencies are researching ways to store underground the carbon captured from power plants and other sources. Six partnerships have received $408 million from DOE, with an additional $255 million from partners in the projects.

Source: Clean Coal's Chicken and Egg Problem