Don Blankenship, who was quoted in the story,  is very much a minority voice in the coal industry. His company, Massey Energy,  is in fact not even among the top four coal producers nationally, much less internationally. His views on climate change are considered to be extreme even among the coal industry.

Better for Marketplace to highlight the work of Mike Morris of American Electric Power, among the nation's largest electric utilities and the largest consumer of coal in the Western Hemisphere. Today, AEP is cutting the ribbon on a large demonstration of carbon capture and storage technology in West Virginia, a technology Blankenship dismisses out of hand. AEP is also investing in wind generation even as it works to keep coal relevant in a low-carbon economy.

Those of us who know Morris know he is no bleeding heart — he is as flinty as they come. Yet, in supporting national clean energy cap and trade carbon legislation, and in matching his advocacy with investments in low-carbon technology, he is demonstrating the kind of leadership that West Virginia and the nation need.

Marketplace should do a better job appreciating just how increasingly irrelevant folks like Blankenship are to the national conversation about our clean energy future.

Updated 11/2: Corrected to remove references to NPR. Marketplace is produced by American Public Media.

On Monday, CONSOL Energy – one of America's leading coal companies – announced they would build America's first coal-to-liquid plant in West Virginia. The press release from coal country announces that a strategy for sequestering carbon dioxide pollution produced by liquefying coal will be part of the project. That's important because an EPA study found that diesel fuel from coal could result in double the greenhouse gas emissions of diesel fuel from oil.

Many Americans are feeling real economic distress with gasoline above four dollars a gallon. Economic hardship and energy security play to coal's strength as a traditionally low cost, domestic, and plentiful energy resource. Deploying the technology to convert it to gasoline and diesel fuel seems like a no-brainer. But it's not so simple.

Perhaps yesterday's announcement is a sign that coal-to-liquids has turned a corner. I don't expect anyone in West Virginia to invite Al Gore over for barbeque and beers anytime soon, but it is a sign of how far we've come in the global warming debate that CONSOL is explicitly acknowledging that the future of coal-to-liquids is tied to reducing the global warming pollution the technology creates. This is an important first step if coal-to-liquids is ever to be a viable strategy for meeting America's future energy needs.

As the debate over national energy policy bubbles along, the golden rule is that we should not create one mess in the process of cleaning up another. Attempting to solve economic or energy security problems at the expense of the environment is really no solution at all, particularly when you consider the warnings of our nation's leading military commanders. A 2007 report by CNA Corporation stated that global warming effects destabilize societies and make the world a more dangerous place.

And so, in the spirit of the golden rule, here are four questions that I hope CONSOL can answer as they embark on their quest to develop coal-to-liquids at a commercial scale:

1. What is the plan for carbon dioxide? The press release talks about carbon capture and storage, which is a promising strategy for preventing carbon dioxide pollution in the atmosphere. But all too often, coal project proponents talk about building the power plant or coal-to-liquids facility today, and getting around to the carbon capture and storage part "tomorrow". Is CONSOL committed to making development of their coal-to-liquids facility contingent on capturing and storing the carbon dioxide it produces from Day One of operation? If so, then this is real progress.

2. How will the coal be mined? Blowing the tops off mountains and dumping the spoils into creek beds is not a happy thing, and a nation reluctant to allow additional offshore drilling, even with gas at four dollars a gallon, will not be enamored of technologies or companies that literally flatten everything in their path. Broad commercial acceptance of coal-to-liquids depends on finding a fundamentally different way to mine coal than some of the industry's current practices. Perhaps it's also time to admit that some seams are simply played out.

3. What about the water? Coal-to-liquids is a water-intensive process, and water scarcity is no longer an issue exclusively confined to the arid west. Proponents of coal-to-liquids as a viable alternative to foreign oil must be honest about the amount of water required to make the stuff (approximately 10 gallons of water for every gallon of fuel produced), and tell us where we will get the water and how much it will cost.

4. And speaking of cost, the final question is whether coal-to-liquids is really the best way to harness coal in meeting the energy needs of our cars and trucks. With innovations in plug-in hybrid technology, we may be just three to five years away from being able to use electricity to partially power our cars, minivans, pickup trucks, and SUVs. A Department of Energy study, issued by Pacific Northwest National Labs in November 2007, suggests we have the ability to displace up to 52 percent of current oil imports with hybrid electric vehicles recharged by our national electric grid.

   Given that 50 percent of our nation's electricity comes from coal, and given the strides in making future coal plants capable of capturing and storing carbon dioxide, I wonder whether there is much future for coal-to-liquids at all. Maybe at best it's a transition strategy, the way the 8-track tape player had a brief moment on the way to today's iPods and MP3 files. It would be interesting to hear CONSOL's views on this, and perhaps the views of American Electric Power, the nation's largest coal-burning utility, as well.

The answers to these four questions will give us some idea whether coal-to-liquids will ever be a viable option for a national energy strategy.

A little over a year ago, Environmental Defense, the Natural Resources Defense Council (NRDC), and Ceres sent a letter to the three lead banks financing the TXU deal we helped broker. We said the banks no longer could ignore CO₂ in their investment decisions.

Today we are seeing the culmination of this effort. The three banks – Citigroup, J.P. Morgan Chase, and Morgan Stanley – have announced that they will require utilities seeking financing to prove the new plants would be economically viable under an expected federal cap on greenhouse gas emissions.

This will make it much harder for utilities to build conventional coal plants.

The banks, in consultation with Environmental Defense, NRDC, and some leading power companies, developed three Carbon Principles to manage the risk in financing utilities:

The Carbon Principles:

• Energy efficiency. The banks will encourage clients to invest in cost-effective demand reduction through energy efficiency. Demand reduction will be considered in financing new fossil fuel generation.
• Renewable and low-carbon energy technologies. The banks will encourage clients to invest in cost-effective renewable energy and distributed technologies. Production increases from renewable and low-carbon energy generation will be considered in financing new fossil fuel generation.
• Risks in fossil fuel generation. Due to evolving climate policy, investing in CO₂-emitting fossil fuel generation entails uncertain financial, regulatory, and environmental liability risks – for example, the cost of purchasing carbon credits. Banks will assess and reflect these risks in financing new fossil fuel generation.

In addition to the Principles, the consortium has developed an Enhanced Due Diligence framework to help lenders better understand and evaluate the carbon risks associated with coal plant investments.

The Carbon Principles and Enhanced Due Diligence framework are a good first step in assessing electric generation options in light of the pressing need to substantially reduce national greenhouse gas pollution. But they are only a first step.

If the banks thoroughly implement the Enhanced Due Diligence process and act on their findings, we will see a change in the direction of investments. In fact, all financial institutions should be using these Carbon Principles and Enhanced Due Diligence framework.

But even if the Principles and framework become business-as-usual, we will not have gotten where we need to go. To stop global climate change, we must have federal legislation that caps carbon emissions.