Sep. 9--CHARLESTON, W.Va. -- The companies that mine coal and the companies that burn it are taking opposite approaches to a plan intended to prevent global climate change.

Coal companies are squarely against the so-called cap-and-trade legislation working its way through Congress that would limit the amount of greenhouse gases in the air. The gases, primarily carbon dioxide, are a major byproduct in the burning of coal.

But the electric companies that buy most of the nation's coal support Congress' plan, if only so they can lobby lawmakers to lessen its blow to their bottom line.

Coal and power are still married for the short term, especially in West Virginia, where nearly all electricity comes from coal-fired power plants. But in the long term, American power companies are ready to produce electricity with or without coal, whatever it takes.

"If you put us in the box and the only way we can do it is burn banana peels, you better be ready to see a lot of banana trees," said Mark Dempsey, vice president of external affairs for Appalachian Power in West Virginia.

The difference comes from a simple fact: Power companies can make power without coal. Already more than half the nation's electricity comes from sources other than coal.

Coal companies, on the other hand, have nearly nobody to sell coal to except power companies. More than 90 percent of the nation's coal is used to generate electricity.

"Coal is 100 percent of what they do, it is not 100 percent of us, but it is important to us," Appalachian's Dempsey said.

Appalachian Power's parent, American Electric Power, and other power companies are sitting down at the table with lawmakers largely as a way to shape any new laws to their advantage, including ways that could slow the pace of any legislation's effects, a move that also could help coal companies in the near term.

The cap-and-trade legislation, which is currently delayed in the U.S. Senate, would limit the emission of greenhouses gases and create a system for trading rights to release the gases, which scientists say are causing global climate change.

Power companies are doing this partially because they fear a 2007 U.S. Supreme Court ruling gives the federal Environmental Protection Agency the right to control the emission of carbon dioxide with or without the consent of Congress.

By lobbying Congress, power companies believe they can get a better deal than if the EPA comes up with its own plan.

"Our decision was that we felt like we would get a better regulatory system for greenhouse gases by working with the Congress than by taking a mandatory regulatory scheme that would be put forward by the EPA," Dempsey said.

David Kreutzer, an energy and climate change analyst at the D.C.-based Heritage Foundation, said there's an old Washington saying for the power companies' strategy: "If you're not at the table, you're what's for dinner."

The coal industry isn't so sure about the power companies' approach.

There's a "flaw" in the power companies' position, said Chris Hamilton, senior vice president at the West Virginia Coal Association, which represents most of the state's mining companies.

"There's several ways of getting a seat at the table," Hamilton said. "One of the ways is obviously to express an interest and support for a piece of legislation. The other way is to demonstrate opposition in relatively large numbers of voters and votes."

Coal companies don't think there is yet a workable way to implement cap and trade without doing serious damage to the economy as a whole.

"The coal industry has no other choice but to try to rally the troops in total opposition," Hamilton said.

He also said he did not buy the idea that the EPA would impose new limits on greenhouse gas emissions if Congress abandoned the cap-and-trade plan.

"I think it's shortsighted to think that EPA would promulgate a rule that is similar to a piece of legislation that is overwhelmingly defeated by Congress," Hamilton said.

The power companies lobbying efforts are largely directed at getting themselves free "allowances" in the cap-and-trade system.

The cap-and-trade system is set to reduce greenhouse gas emissions by more than 80 percent by 2050. The "cap" is the gradual limit on emissions the government would impose, with fewer and fewer emissions allowed in the years leading up to 2050.

The "trade" comes from a permit, or allowance, system. To emit gases, companies would have to have these allowances. The plan is for the government to sell those allowances, which would essentially be a tax on the emission of gas. Companies could sell the allowances to each other once they have them.

As less and less gas is allowed into the atmosphere, the supply of the allowances dwindles and the prices go up. The goal is to spur companies to move toward "green" energy.

As the allowance costs rise, power companies have the incentive to find ways to produce electricity that emits less carbon dioxide because it would become cheaper to, say, invest in a new windmill than to buy the allowances to continue burning coal.

At the same time, customers would see energy prices rise, which would reduce consumption and result in decreased emissions.

The power companies want the allowances to be free to begin with. By getting free allowances, companies would not have to pony up as much money to the government or to get allowances from other companies.

A version of the bill passed by the U.S. House of Representatives earlier this summer was already generous with allowances. From 2012 to 2026, Congress would each year give away 90 percent or more of the allowances, according to an analysis by the Heritage Foundation. In one year, the House plan calls for the government to give away 100.7 percent of the allowances, apparently because of hasty drafting by lawmakers.

The companies are also lobbying to change the emission cuts they have to make early on.

"We think that the proposed emission targets for 2012 and 2020 are too aggressive, and it's asking for those reductions when the technology does not even exist at this point," said Dan Genest a spokesman for power company Dominion, which has coal-fired plants in West Virginia.

But environmentalists say a version of the cap-and-trade system that was approved earlier this summer by the House of Representative is too weak.

It already "has too many handouts and giveaways that it won't provide the incentives needed" to reduce emissions, said Jim Kotcon, the energy committee chair for the state chapter of the Sierra Club.

Critics of cap and trade say that by increasing the cost of energy, the plan threatens to send American jobs overseas. They say, for instance, that it would cost more to produce steel in the United States than in China because the energy prices in China would be cheaper.

But Kotcon said cap and trade will create new "green" jobs.

"It will have a major impact on the fossil fuel industry but those (who) are employed in energy-efficiency jobs or renewable energy will see significant benefits, provided it works as it should," Kotcon said.

Don Blankenship, the chairman and CEO of coal producer Massey Energy Co., also has doubts about the strength of Congress' plan. Blankenship does not believe carbon dioxide is responsible for any global climate change, but he thinks the current legislation would be ineffective, even though he disagrees with its goals.

"The way they are watering cap and trade, it won't do much for CO2. It will just tax your utility bill," Blankenship said.

Contact writer Ry Rivard at ry.

riv...@dailymail.com or 304-348-1796.

--Power companies are favoring cap-and-trade legislation but trying

to shape its provisions

By RY RIVARD

DAILY MAIL CAPITOL REPORTER

The companies that mine coal and the companies that burn it are taking opposite approaches to a plan intended to prevent global climate change.

Coal companies are squarely against the so-called cap-and-trade legislation working its way through Congress that would limit the amount of greenhouse gases in the air. The gases, primarily carbon dioxide, are a major byproduct in the burning of coal.

But the electric companies that buy most of the nation's coal support Congress' plan, if only so they can lobby lawmakers to lessen its blow to their bottom line.

Coal and power are still married for the short term, especially in West Virginia, where nearly all electricity comes from coal-fired power plants. But in the long term, American power companies are ready to produce electricity with or without coal, whatever it takes.

"If you put us in the box and the only way we can do it is burn banana peels, you better be ready to see a lot of banana trees," said Mark Dempsey, vice president of external affairs for Appalachian Power in West Virginia.

The difference comes from a simple fact: Power companies can make power without coal. Already more than half the nation's electricity comes from sources other than coal.

Coal companies, on the other hand, have nearly nobody to sell coal to except power companies. More than 90 percent of the nation's coal is used to generate electricity.

"Coal is 100 percent of what they do, it is not 100 percent of us, but it is important to us," Appalachian's Dempsey said.

Appalachian Power's parent, American Electric Power, and other power companies are sitting down at the table with lawmakers largely as a way to shape any new laws to their advantage, including ways that could slow the pace of any legislation's effects, a move that also could help coal companies in the near term.

The cap-and-trade legislation, which is currently delayed in the U.S. Senate, would limit the emission of greenhouses gases and create a system for trading rights to release the gases, which scientists say are causing global climate change.

Power companies are doing this partially because they fear a 2007 U.S. Supreme Court ruling gives the federal Environmental Protection Agency the right to control the emission of carbon dioxide with or without the consent of Congress.

By lobbying Congress, power companies believe they can get a better deal than if the EPA comes up with its own plan.

"Our decision was that we felt like we would get a better regulatory system for greenhouse gases by working with the Congress than by taking a mandatory regulatory scheme that would be put forward by the EPA," Dempsey said.

David Kreutzer, an energy and climate change analyst at the D.C.-based Heritage Foundation, said there's an old Washington saying for the power companies' strategy: "If you're not at the table, you're what's for dinner."

The coal industry isn't so sure about the power companies' approach.

There's a "flaw" in the power companies' position, said Chris Hamilton, senior vice president at the West Virginia Coal Association, which represents most of the state's mining companies.

"There's several ways of getting a seat at the table," Hamilton said. "One of the ways is obviously to express an interest and support for a piece of legislation. The other way is to demonstrate opposition in relatively large numbers of voters and votes."

Coal companies don't think there is yet a workable way to implement cap and trade without doing serious damage to the economy as a whole.

"The coal industry has no other choice but to try to rally the troops in total opposition," Hamilton said.

He also said he did not buy the idea that the EPA would impose new limits on greenhouse gas emissions if Congress abandoned the cap-and-trade plan.

"I think it's shortsighted to think that EPA would promulgate a rule that is similar to a piece of legislation that is overwhelmingly defeated by Congress," Hamilton said.

The power companies lobbying efforts are largely directed at getting themselves free "allowances" in the cap-and-trade system.

The cap-and-trade system is set to reduce greenhouse gas emissions by more than 80 percent by 2050. The "cap" is the gradual limit on emissions the government would impose, with fewer and fewer emissions allowed in the years leading up to 2050.

The "trade" comes from a permit, or allowance, system. To emit gases, companies would have to have these allowances. The plan is for the government to sell those allowances, which would essentially be a tax on the emission of gas. Companies could sell the allowances to each other once they have them.

As less and less gas is allowed into the atmosphere, the supply of the allowances dwindles and the prices go up. The goal is to spur companies to move toward "green" energy.