KEMPER PLANT Project is essential to US energy future

1. MISSISSIPPI’S INFORMATION SOURCE SINCE 1832
SATURDAY, AUGUST 10, 2013 » clarionledger.com PAGE 9A
Oppinion
LESLIE HURST » PRESIDENT AND PUBLISHER | BRIAN TOLLEY » EXECUTIVE EDITOR
MARSHALL RAMSEY
See more Marshall Ramsey cartoons at clarionledger.com/ramsey
When it comes to ener-
gy and the environment,
nothing seems more divi-
sive than coal. But that
appearance may be mis-
leading. Like his prede-
cessor, President Barack
Obama has strongly sup-
ported clean coal technol-
ogy paired with carbon
capture and sequestration,
or CCS. Nothing may
prove more important in
meeting our greatest ener-
gy and environmental
challenges. To succeed, we
must transition these tech-
nologies from demon-
stration projects into pro-
duction, a process that will
take not only engineering
smarts but also political
foresight.
Coal generates about 37
percent of all U.S. electric-
ity and about 41percent
globally. Over the past
decade, coal use has de-
clined in the United States
but picked up elsewhere —
in some cases, dramat-
ically so. China now con-
sumes nearly as much coal
as the rest of the world
combined, according to
the U.S. Energy Informa-
tion Agency. Since 2000,
Chinese electricity gener-
ation has increased by
more than 200 percent,
with much of it from coal-
fired power plants, and
demand is still growing.
The IEA also reports that
India will soon displace
the United States as the
world’s second-largest
coal consumer.
Looking ahead, global
energy consumption is
expected to double by
2050, with much of the
gains fueled by coal. So, it
came as no surprise when
President Obama made
the push for new coal
technologies a central part
of his climate change
strategy. And there is no
more important piece of
that effort than the coal
gasification and CCS pro-
ject currently under con-
struction in Kemper Coun-
ty.
The Kemper facility is
a long-awaited last step in
the Department of Ener-
gy’s collaboration with
industry to research, de-
velop and deploy technol-
ogies that utilize coal in
more efficient ways and
produce significantly
fewer emissions.
Some of the technology
there originated at the
National Carbon Capture
Center, which the Depart-
ment of Energy estab-
lished in 2009 in Wilson-
ville, Alabama, in part-
nership with Southern
Company, to accelerate
the development of new
CCS technologies.
CCS, which involves the
capture, transport, utiliza-
tion, and underground
injection of carbon diox-
ide, is critical to meeting
future energy needs while
also reducing greenhouse
gas emissions. Several
demonstration projects, in
which captured carbon
dioxide from a coal gasifi-
cation plant is pumped
into the ground to boost oil
production, have already
succeeded.
The United States can-
not slow the rise of atmos-
pheric carbon-dioxide
levels solely with regula-
tory policies at home. The
International Energy
Agency has projected that
cumulative greenhouse
gas emissions from non-
OECD countries (mostly
developing countries) will
exceed those of OECD
countries by 2035, with
coal-fired power genera-
tion comprising a signifi-
cant part of new emis-
sions.
The President’s Council
of Advisors on Science and
Technology concluded that
continued support for CCS
“is important not only for
the purpose of establish-
ing the technical and regu-
latory basis for CCS in the
United States, but also
because U.S. support and
success with this technol-
ogy will likely be influen-
tial in moving other coun-
tries such as China and
India toward CCS use.”
Just last week, we saw
this in a new climate
agreement with China. In
announcing the agree-
ment, the State Depart-
ment noted our two coun-
tries “account for more
than 40 percent of global
coal consumption” and
that “emissions from coal
combustion in the electric
power and industrial sec-
tors can be significantly
reduced” with CCS.
The Kemper County
project is seeing its share
of challenges. But this
project, as an example of
U.S. technology leader-
ship, needs to be under-
stood not just in terms of
what it means for Mis-
sissippi but also in the
context of national and
international efforts to
meet rising energy de-
mand while reducing
greenhouse gas.
Whether we meet to-
morrow’s rising energy
demand ultimately will be
determined by projects
like the Kemper facility. It
just may be that proving
out new coal technologies
at home and facilitating
their dissemination abroad
will come to represent the
greatest contribution the
United States can make to
global-scale reductions in
greenhouse gas emissions.
Paula J. Dobriansky is a senior
adviser at the Bipartisan Policy
Center. Paul J. Saunders is
executive director of the Center
for the National Interest.
Vaughan C. Turekian is an
adjunct professor at Georgetown
University.
KEMPER PLANT
Project is essential
to US energy future
By Paula J. Dobriansky,
Paul J. Saunders
and Vaughan C. Turekian
Guest columnists
From a casual reading of real estate news, one
might conclude that the U.S. housing bust is over. Na-
tionally, home prices have risen for 16 months
straight and are about where they were in 2004.
But for 9.7 million homeowners, happy times
aren’t here again. Those are the wretched borrowers
— almost 20 percent of households with a mortgage
— who owe more than their homes are worth. Their
negative equity totals $580 billion.
That sum is suddenly the object of a battle royale.
On one side are the biggest U.S. banks, the bond mar-
ket and the real estate industry. On the other are
those underwater homeowners, a couple-dozen com-
munities where they mostly reside and a San Fran-
cisco venture-capital firm, Mortgage Resolution
Partners, proposing what it claims is the ideal fix, in
three easy steps.
Step one: Cities invoke eminent domain to seize
underwater mortgages embedded in investor-owned
bonds. Step two: Using private money, cities pay off
the investors on those loans at a discount on their
face value. Step three: The mortgages are refi-
nanced with smaller loans, turning the negative into
positive.
All this is the brainchild of Cornell law school pro-
fessor Robert Hockett, who outlined the plan in a
Federal Reserve Bank of New York paper. His logic
is sound enough: Negative-equity households would
be discouraged from defaulting; banks and bond-
holders would save money in the long run by avoid-
ing foreclosures and short sales. Housing dead zones
such as Richmond, Calif., a blighted, blue-collar city
of about106,000 on the east side of San Francisco Bay
—andtheepicenterofthisfight—mightevenspring
back.
Trapped homeowners
Richmond wants to be the first to use eminent do-
main this way. Many of its residents are out of work
— the unemployment rate is above 11 percent — and
trapped. They can’t take jobs elsewhere because
they can’t sell their homes or refinance at today’s low
rates. As of May, 2,759 owners had negative equity,
according to CoreLogic Inc.
But eminent domain is a powerful tool and should
be used sparingly. It wouldn’t serve the U.S. well if
this gambit frightened off the steady stream of in-
vestors needed to purchase the mortgage securities
that allow homebuyers to borrow at attractive rates.
Perhaps more important, Fannie Mae and Freddie
Mac are threatening to stop doing business in cities
that resort to eminent domain. Without buy-in from
the two government- controlled home-loan finan-
ciers, which hold about 10 percent of private-label
mortgage securities (the type at stake here) and
whose guarantees the new mortgages would need,
the idea may be doomed.
Even more practically, the interests that oppose
eminent domain will surely fight all the way to the
Supreme Court, stranding Richmond’s homeowners
for several more years. This week, mortgage-
backed-bond trustees, including Pacific Investment
Management Co. and BlackRock Inc., asked a feder-
al district court to block the city from even attempt-
ing the ploy.
This isn’t to say we accept the argument that seiz-
ing mortgages would be unconstitutional. Govern-
mentshaveusedeminentdomaintoclearthewayfor
roads and other public-works projects that serve the
publicinterest.TheSupremeCourtin2005expanded
its use, allowing cities to condemn private property
on behalf of commercial developers for projects
such as hotels and office buildings along a neglected
waterfront. Why wouldn’t that reasoning apply to a
city wishing to rehabilitate its housing stock?
Nor do we accept that seizing mortgages would
necessarily harm the pension funds, college saving
plans and workers’ 401(k) retirement accounts that
hold mortgage bonds. Even though eminent domain
would be used mostly in cases where homeowners
are current on payments, the likelihood of default is
high on any underwater loan. This is especially true
now that interest rates are rising on adjustable loans,
which most underwater mortgages are.
Recovery chances
Banks and bond funds are disingenuous when
they say they are acting to protect investors, when
investors would be better off in the long run if de-
fault incentives were reduced. The typical recovery
value after a default on loans such as those in Rich-
mondhasbeenlessthanhalfoftheprincipalbalance.
One reason for banks’ reluctance to modify mort-
gages is that they collect fees as loan servicers. The
banks also receive revenue on second mortgages
from many of the same homeowners. If eminent do-
main worked, and other cities followed suit, the $580
billion negative-equity pot would shrink — along
with both sources of revenue. Some banks would also
have to declare losses on the second loans if forced to
sell them at a discount.
It strikes us that the ideal middle path would be to
adapt the refinancing concept Richmond has in mind
—withoutactuallyseizingloansthrougheminentdo-
main. If banks and asset managers aren’t willing to
modify loans, and there is value to be unlocked by
doing so, then they have a financial obligation to ne-
gotiate. If the two sides can’t agree on a fair value,
then eminent domain wouldn’t work, either.
The disposal of toxic mortgages will always be
about negotiating a price that works for both sides of
the transaction. Isn’t that what Wall Street does ev-
ery day?
— Bloomberg
OTHER VIEWS
Negotiating better than taking
As an elected official given
the privilege to represent the
citizens of Jackson and Hinds
County, I take offense to the
comments made in the June 28
letter to the editor “Jackson is
an Embarrassment.”
The comments made in that
letter to the editor were purely
subjective and prejudicial.
We live in the age of the
“information highway.” There
is more information about
virtually any topic imaginable
available for public consump-
tion than ever before, and yet,
people base their opinions on
media sound bites and memes
uploaded to the Internet.
We have become a society
of opinionated, half-read con-
sumers buying into anyone’s
propaganda that sounds re-
motely intelligent but lacks
credibility and unbiasedness.
Even in an opinion, one should
be properly informed. Other-
wise, we as a society run the
risk of being enslaved in will-
ful ignorance.
Jackson is jabbed and
punched regularly from all
directions. Comments like
“Jackson is an embarrass-
ment” and “as you know, Jack-
son is a dangerous city” are
sensationalized and cartooned
in the media and sometimes
even initiated by the media.
Jackson is constantly under
the microscope and criticized
by people who don’t live, work
or shop in Jackson.
Many of these self-pro-
claimed societal critics have
never set foot in a Jackson
neighborhood, board meeting,
council meeting or community
event to share their “expertise
on building and sustaining a
community.” Criticism is
priceless if you are seeking a
solution; otherwise, it’s just
directionless propaganda with
the intent to harm. So, if you
are part of the problem, can
you really be part of the solu-
tion?
If you listen to the media
and other hyper-opinionated,
non-Jacksonians, you would
have to believe everything
about Jackson is out of control
— our water is dirtier, our dogs
are more dangerous and our
mosquitoes are deadlier than
any other jurisdiction.
And yet, no one seems to
want to acknowledge that
many of our nonresidential
critics own property in Jack-
son, travel to Jackson regular-
ly utilizing our resources and,
yes, some commit criminal
acts.
So, I ask you, what is the
motivation behind the criti-
cism?
I challenge you to dig a little
deeper and look a little closer
at the very ones who are in-
volved in this Jackson-bashing
campaign. Could there be an
economic advantage to “down-
ing” Jackson?
Look at who owns property
deeds in Jackson and many of
the surrounding bedroom com-
munities. Jackson has always
been here, but for other sur-
rounding bedroom communi-
ties to grow and thrive, people
must leave Jackson. Even the
early settlers packed up and
left their homes because they
were promised something
better, something different.
But they first had to be con-
vinced that their “home” was a
bad place.
Does Jackson have some
issues to work through? Yes,
but scaring people into aban-
doning their homes and places
of business for selfish econom-
ic advantage and being cultur-
ally and/or racially divisive is
not the solution to what ails
Jackson.
This is a time for hard work-
ers and great thinkers to roll
up their sleeves and get down
to the business of city and
county government. So, I urge
each of you to consider the
source and remember that
much of the negativity you
hear about Jackson is rooted in
opinion and bears no objectiv-
ity.
I love Jackson and Hinds
County and everything in
them, and I am not embar-
rassed to say it.
Robert Graham is a Hinds County
supervisor and Jackson resident.
Jackson has issues to work through but isn’t an embarassment
ROBERT GRAHAM