Taming Coal: The Imperative for Rapid Demonstration and Scale…

         Taming Coal: The Imperative for Rapid Demonstration and Scale-Up
   Of Advanced Coal Gasification and Carbon Sequestration and the Reform of Coal
                       Mining and Waste Disposal Practices

                                        March 2007


The Current and Future Footprint of Coal

Coal-fired power generation is today one of the planet's most environmentally
destructive activities. It is responsible for most of the nation's sulfur dioxide emissions
which, even after recent regulatory reductions, will still take 15,000 lives prematurely in
the US each year by EPA's own estimate. It contributes substantially to nitrogen oxides,
which add to smog, haze, and crop and ecological damage. It emits most of the nation's
manmade mercury. Current coal mining practices have scarred land and threatened
water and habitat. Coal power generation consumes and discharges enormous
quantities of water, while generating nearly 100 million tons of toxic wastes each year,
the disposal of which is not regulated by the federal government. Finally, coal power
generation is responsible for nearly 40% of the planet's man-made emissions of CO2
that contribute to global warming.

Despite these problems, coal fired power generation is likely to be relied on for decades
to come and is projected to expand dramatically. World electric demand is expected to
triple by 2050, coming largely from developing countries like China and India. Most
analyses agree that this underlying demand growth will substantially outpace even the
most aggressive energy efficiency policies. Renewable energy, while it should and will
be widely deployed, faces significant physical, environmental and economic challenges
that will practically limit its share of total electrical supply for several decades. Natural
gas is relatively expensive and its reserves far more limited than coal. Finally, nuclear
power faces considerable hurdles of scale, economics and environmental opposition.
For these reasons, China is building as much new coal capacity each year as the entire
UK power grid, and coal power generation in India is projected to grow rapidly -
matching current US coal consumption by 2020 and China's current coal consumption
by about 2030. The United States faces both growing demand for electricity and an
aging power plant fleet; coal will remain economically attractive to meet some portion of
electricity demand growth and to replace some existing power plants.

Turning to climate, numerous analyses performed or commissioned by such bodies as
the Intergovernmental Panel on Climate Change, the European Union, the National
Commission on Energy Policy, academic institutions such as Harvard, MIT, and
Princeton University as well as environmental organizations such as Friends of the
Earth-UK have concluded that, even with aggressive energy efficiency, renewable
energy development and in some cases nuclear expansion, coal fired power generation
is likely to remain a significant part of any 2030-2050 global power supply. Accordingly,
each of these studies has identified the critical importance of transitioning coal use to
technologies that minimize health-related air emissions and allow for the removal and
storage of carbon dioxide, and to begin to demonstrate and scale up those technologies
on a commercial basis as soon as possible.

In short, the planet is unlikely to be able to live without coal for some time to come. But,
at the same time, the planet, from an environmental standpoint, can't stand to live with
coal as it is currently used to produce electricity. This leaves only one path forward: we
need to change how we use it ­ and we need to do so as quickly as possible.

What Is to Be Done?

An environmentally responsible coal policy would do the following:

           Ban the construction of new coal combustion plants due to their inherently
           unacceptable air, water, solid waste and climate impacts.
           Rapidly commercialize the use of integrated coal gasification combined cycle
           (IGCC) for electric power generation, because it has a much smaller
           environmental footprint for air emissions and waste than does coal
           combustion.
           Rapidly demonstrate the feasibility of large scale geologic storage of carbon
           dioxide and then require all new coal power plants to capture and sequester
           at least 90% of their coal carbon content.
           Demonstrate and deploy advancements such as underground coal
           gasification, that could further shrink IGCC's environmental footprint by
           substantially minimizing mining impacts and waste management
           Reform coal mining practices worldwide, impose effective federal regulation
           of coal plant solid waste disposal and reduce coal generation water use and
           associated impacts to the minimum practical levels.
           Increase the energy efficiency of IGCC power generation to the maximum
           practical levels over time.

Commercializing IGCC is of special importance. Because it is an inherently cleaner
process ­ the gas it produces from coal must be free of most contaminants to power a
gas turbine ­ IGCC reduces deadly sulfur and nitrogen oxide emissions to very low
levels ­ approaching those achievable by natural gas combined cycle power plants.
Gasification is the only coal power generation technology that can virtually eliminate
mercury air emissions and capture most of the coal mercury content in a concentrated
form that can potentially be sequestered from environmental release; IGCC is the only
way we can continue to use coal to produce power without adding significantly to the
global mercury burden. Total solid waste from gasification is typically half the volume
generated by conventional coal plants and gasification water use is substantially lower
as well.

Further advancements in IGCC, such as underground coal gasification, would gasify the
coal directly within the deep unmineable formations. This process holds the promise of



                                                                                               2
potentially eliminating the environmental impacts of current mining practices and
significantly reducing the challenge of coal waste management.

Finally, IGCC is the key enabling technology for capture and storage of carbon dioxide
from coal power generation and will be essential to meeting any reasonable climate
stabilization target. While it is possible to retrofit a coal combustion plant with carbon
capture technology, it is expensive and inefficient to do so today, costing twice as much
as capturing carbon from a IGCC plant and reducing plant efficiency by as much as 40%.
While development of more cost-effective coal-combustion carbon capture alternatives is
important, current efforts are very early in the technology development stage, and it is
unclear whether and when cost-effectiveness will be fully demonstrated for this
technology. If we are to turn the world coal tide to a near-zero carbon footprint in the
next 20 years, IGCC power generation is likely to be the most availing path forward
based on current information.

Despite the fact that coal gasification has been widely deployed around the world in the
refining and chemical industries, only a few IGCC power generation plants have been
developed. Only two IGCC power plants have been developed in the US ­ both in the
context of government-supported demonstration programs and both using much less
advanced designs than those being proposed today. As with any new energy
technology, it will be necessary to build and operate many gasification plants on a
commercial basis to demonstrate the technology's reliability and reduce costs before
gasification will become widely accepted ­ much as occurred with the combined cycle
gas turbine in the 1980's. At present, there is widespread resistance to deployment of
this technology in the United States by many utilities and regulators, who cite its
untested status and high costs relative to new coal combustion plants. This is even truer
in countries such as China and India; those nations will be far more likely to adopt this
technology if developed nations like the United States do so first on a commercial basis.
In short, building the necessary "reference" plants in the United States as soon as
possible will substantially accelerate adoption of this technology worldwide.

Large scale demonstration of geologic storage is needed to support development of
national carbon sequestration programs. The Intergovernmental Panel on Climate
Change recently found that appropriately selected and managed geological reservoirs
are likely to retain more than 99% of stored carbon over 1,000 years. But carefully
planned, large scale demonstration projects will be needed to address technical issues
and the standards that must be developed to support a national geologic carbon
sequestration program. These projects will require substantial federal financial support.
Enhanced oil recovery from CO2 injection is the most likely near-term prospect for
carbon capture and storage projects that could occur in parallel with the large-scale
demonstration projects, due to economics, industry experience, and existing regulatory
structures.

It is desirable to include some form of carbon capture and sequestration as part of IGCC
power generation projects moving forward today to begin developing operational carbon
capture and sequestration expertise and to produce some of the knowledge needed to
support a national geologic sequestration program. However, due to the absence of a
US limit on carbon emissions, jurisdictions will likely vary in their willingness to support
full-scale sequestration from the start. This tension between the two independent goals
of advancing gasification commercialization and eventual full capture of carbon from
gasification plants will need to be addressed on a case-by-case basis.


                                                                                            3
Finally, public policy and private action must be taken to drastically reduce the life cycle
impacts of coal use. In addition to developing technology advancements such as
underground coal gasification, damage from coal extraction must be limited by
strengthening standards (such as banning of mountaintop removal practices, and
requiring stronger reclamation standards for other surface mines) and ensuring that all
standards are diligently enforced. Likewise, coal combustion and gasification wastes
must be treated as what they are - toxic ­ and regulated by federal law. And water use
impacts should be minimized ­ to potentially include applying such technologies as dry
cooling to reduce water use to very low levels.

CATF's Objectives in Proceedings Concerning IGCC Proposals

To advance the above goals, CATF will intervene in regulatory proceedings ­ where
appropriate - to support domestic IGCC projects that show promise of advancing the
technology in a constructive way. CATF's intervention will aspire to the following goals:

           Highlighting the importance of commercial projects being built today to
           demonstrate the viability of the coal gasification pathway worldwide to meet
           carbon limits;
           Advocating for maximum control of non-CO2 air emissions, including but not
           limited to oxides of sulfur and nitrogen, through the most advanced available
           technologies;
           Advocating for 1) reducing mercury air emissions to 1% or less of coal
           mercury content; and 2) capture of most coal mercury content in a
           concentrated form that can be permanently sequestered from future
           environmental release;
           Bringing forward evidence and proposed conditions to reduce the mining,
           water use and solid waste disposal impacts of the plant;
           Encouraging use of carbon capture and storage on an "early adopter" basis in
           connection with the project;
           Developing options to economically incorporate these environmental
           advances into the project, recognizing that the environment is not protected if
           proposed gasification projects become so expensive that they are abandoned.




                                                                                               4