The stimulus legislation that President Barack Obama signed into law may have left coal out in the cold for many reasons, Standard & Poor's asserted in a recent analysis.
Can coal be ‘clean' in terms of air quality, climate change concerns and residues like fly ash that have recently drawn media attention? Credit Analyst Todd Shipman asked.
Shipman noted that electric power companies want to go back to the future by turning coal into a synthetic gas.
What is new-and what is driving the push for IGCC [integrated gasification combined cycle technology]-is the advantage gasification has over familiar pulverized coal plant that burns crushed coal on a boiler to create steam to drive a turbine, he said. It is designed to more readily and economically capture the polluting emissions and carbon at the beginning of the process, rather than struggle to gather those emissions at the smokestack.
Backing the development of IGCC to lead the U.S. electric utility industry into the 21st Century should be a natural for environmentalists, he asserted. Coal is our most abundant domestic source of energy, it's needed, along with nuclear, to provide the base load capacity essential to the U.S. power grid, and the technology exists to turn it into electricity without fouling the atmosphere or significantly contributing to the Earth's greenhouse gases.
HOUSE SUBCOMMITTEE HEARING ON COAL'S FUTURE
However, both Shipman and witnesses before the House Energy and Commerce Energy and Environmental subcommittee Tuesday advised that carbon capture is more theoretical than reality at this point, both in terms of technology and costs.
Absent greater incentives through government subsidies, regulatory policies, or shifting construction risks to vendors, ‘clean coal' is likely to remain an elusive part of the future of electric generation, Shipman concluded.
In his opening statement, Rep. Henry Waxman, chairman of the Committee on Energy and Commerce, declared, The United States and other countries are recognizing that there is simply no way we can continue using coal the way we do today if we intend to tackle climate change in a meaningful way.
States, energy companies, and particularly the investment community have all begun to understand this new reality, the California Democrat said. With EPA regulation of carbon pollution imminent, new coal facilities are facing longer delays and more cancellations.
Nevertheless, Waxman said, he believes technologies that could allow for the continued use of coal while substantially cutting carbon dioxide emissions hold great promise. ...The challenge ahead of us is putting all the pieces together in a way to enable the cost-effective production of low-carbon electricity from coal.
David Crane, CEO and President of NRG Energy, testified that while his company is a leading developer of zero carbon technologies, a climate change bill that charges a price for carbon pollution and a set of complementary policies are needed to make the decarbonizing of the U.S. power sector work.
Crane outlined five main barriers that he says impede the use of carbon capture and storage (CCS) technology:
1) Lack of carbon prices, which means carbon capture equipment produces no commercial useful commodity.2) Early carbon capture equipment is still like to cost too much to install and operate without additional policy incentives.3) Only sporadic and very limited government incentives exist to bring high and uncertain carbon capture costs within reach.4) There are no clear or final regulations to define the legal obligations of the developer, owner and operator and ensure long-term risks will be commercially manageable.5) It's more economic to build an efficient new coal plant or natural gas plant.He urged Congress to adopt the USCAP Blueprint recommendations which include:
• Quickly pass cap and trade legislation• Establish a commercial friendly, environmentally responsible regulatory and legal framework for CCS;• Quickly roll out an early demonstration program of five to ten large-scale projects;• Provide strong, performance-based incentives for the rapid, competitive deployment of a very large number of additional scale facilities;• Create a backstop emission standard to prevent any significant subsequent deployment of new coal plants without carbon capture and storage technologies; and• Provide more incentives to repower existing coal plants-especially the most inefficient and heavy emitting ones-with much lower carbon alternatives.Hal Quinn, president and CEO of the National Mining Association, told the subcommittee, Coal has also been the world's most rapidly growing fuel for each of the last five years. It's available in every continent, totaling more than 930 billion tons of recoverable reserves in about 70 counties. ...Coal generates 41 percent of the world's electricity.
My second point is equally simple: Neither this nation or the global community can address climate concerns effectively without advanced clean coal technologies, including and most importantly, carbon capture and storage technologies (CCS), Quinn said. As costly as CCS development and deployment will be, both here and abroad, the cost of not deploying this technology in a carbon-constrained economy will be higher still.
Quinn then stressed the United States must do much more to support and accelerate the development and deployment of CCS technologies. ...The $3.4 billion in clean coal technologies, including CCS, provided for in the American Recovery and Reinvestment Act is a good first step. But we need to push technology as hard and as fast as we can, and that will require further investment by government and industry.
His fourth point stressed climate change policies must harmonize the timing when controls are placed on emissions with the availability of critical CCS technologies needed to reduce them. Meanwhile, we must accelerate the deployment of these technologies both here and abroad.
Quinn warned the consequences of getting CCS policy wrong could be dire. The period of time between when promising technologies are developed and their successful commercialization is often referred to as ‘the valley of death.'
By extension, industries may confront a ‘valley of death' if they are trapped in the period between a mandate requiring a certain level of performance and the availability of technology enabling them to meet that requirement, Quinn explained. Industries caught in this twilight zone may atrophy and spiral into a decline for which there is no realistic opportunity for rebuilding.
To those who demand a moratorium on any new coal-fired generating plants until CCS is fully deployable, Quinn responded that the nation veers closer to a crisis in the electricity supply if much needed electric generating capacity is not generated in the near term.
Quinn warned that such a moratorium would also stop CCs development dead in its tracks. ...As with any technological advances we must walk before we can run.