Friday, August 01, 2008

Italy Inaugurates a Cheaper and Cleaner Alternative to Expensive Gas and Oil

Sources: Financial Times, Bloomberg

Europe’s third largest power utility and Latin America’s largest private generator accomplished the long awaited first step to reduce carbon dioxide emissions and dependency on expensive oil and gas. On Wednesday, Enel SpA completed the world’s cleanest and most efficient coal-fired power station. The station was converted from an oil-fired plant and is the first of three scheduled for renovation; however, Claudio Scajola, economic development minister, believes Italy is home to six or seven oil-fired plants that can be converted. After purchasing Endesa SA, a Spanish power company, Enel’s second quarter profit rose 78 percent, thus making the transformation of all six or seven stations a financial possibility.

Despite the fact that the new plant emits less greenhouse gas than other coal and oil plants, the Italian company is already investing 320 billion euro over the next four years in carbon capture and storage development. This system would trap the carbon dioxide emissions from the coal plant and store it below ground. The new plant is expected to produce 0.7 ton of carbon dioxide per megawatt hour as compared to 1.0 ton emitted by a normal coal station.

Notwithstanding the Italian government’s desire to reduce high oil and gas energy prices, environmentalists hold the utility company should be building more gas powered stations that emit only 0.4 to 0.7 ton of carbon dioxide per megawatt hour. As Italy ranks first in the industrialized world for oil and gas dependency, Italian consumers are currently paying 30 percent higher electricity bills than he average European. Thus the government, in responding to public appeal, felt compelled to back the new coal power station over a new gas power station. Still, the newly-elected Italian government plans to redirect 25 percent of its energy needs to renewable energy and another 25 percent to nuclear sources in the coming years.

1. Is changing from one fossil fuel to another the best way to save on energy costs and reduce pollution or is it simply a quick fix? Will this clean coal power station be recreated in other countries to reduce costs?
2. Will the capture and storage method of carbon dioxide be developed swiftly enough to prevent more damage from greenhouse gases? If it is in place soon, how will other environmentally friendly energy development projects be affected?

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