resistance or regulatory delays may put off or even curtail potential fossil-fuel developments.

The key issue areas to address are

  1. Capture and storage of CO2

  2. Environmental and safety management necessitated by the increased use of coal, should the scale of coal-to-synthetic-natural-gas or coal-to-liquid programs grow significantly

  3. Environmental management of oil shale and tar sands

  4. Safety management of LNG terminals, increased tanker traffic, and extended networks of natural gas pipelines

  5. Water use.

These five areas are discussed in turn below.

Capture and Storage of CO2

The major environmental issue facing fossil fuels today is the emission of greenhouse gases, particularly CO2. Technologies discussed in the section above titled “The PC/IGCC Competition,” such as pulverized coal combustion and coal gasification, offer a mechanism for capturing CO2 in new coal-fired power plants. While natural gas–based electricity generation is already attractive for reasons spelled out in the section above titled “The Competitiveness of Natural Gas,” the lack of regulations that would provide a greater incentive to mitigate CO2 emissions, as well as great uncertainties about the cost of CCS, further discourages investment in coal plants.

In the CO2 context, there may be lessons to be learned from reviewing the strengths and limitations of regulations of other air pollutants. For example, cap and trade programs are one of a number of methods for establishing a price on greenhouse gas emissions. Trading systems for atmospheric pollutants have a long history in the United States, and examples of their successes are described in Annex 7.A. Another method of establishing a price on carbon is levying a tax or a fee on CO2 emissions.

The section above titled “The PC/IGCC Competition” explains why most PC and IGCC plants with CCS will be built after 2020, but there can easily be opportunities to capture CO2 from other sources. As such, one new environmental challenge may be pipeline transport of CO2 from its source to where it can be stored

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