From the rapidly
expanding suburbs along Colorado's Front Range to the
booming desert cities of Phoenix and Las Vegas, the
demand for electricity across the West is growing. As
much as 28,000 megawatts of new power plants and energy
efficiency are likely to be needed in the Interior West
by 2020 to meet the region's own electricity demands
and to continue to supply power to California and the
Pacific Northwest. That's enough to power the Denver
metro area five times over.
For the past 30 years, the region has relied primarily
on coal to power our homes and businesses. Today, despite
a boom in natural gas power plant construction over
the last decade, coal plants generate nearly 70 percent
of the electricity produced in the region. While these
plants have provided relatively low-cost, reliable power,
they have also come with a high environmental price
tag and much controversy.
As we move into the 21st century, an undeniable challenge
facing our region is how to meet our growing electricity
needs in ways that not only maintain a vibrant economy
but also protect our environment. Meeting this challenge
will require dramatically increasing our reliance on
clean, cost-effective energy efficiency resources and
renewable wind, solar, geothermal, and biomass power.
To the extent that coal plays a role in meeting new
power demands, we must find ways to minimize its environmental
impacts.
Old-style pulverized coal plants are not the answer.
In these plants, coal is crushed and then burned in
a boiler to make steam which spins a turbine to generate
electricity. Even with expensive air-pollution controls,
these plants emit significant amounts of sulfur dioxide
and nitrogen oxides, which cause health problems and
hazy skies; mercury, which can work its way up the food
chain to poison fish, other wildlife and even people;
and carbon dioxide, a major global warming gas.
The good news is that a newer, more advanced technology
holds enormous promise for allowing us to use our region's
abundant coal resources while protecting human health
and the environment.
Integrated gasification combined cycle technology,
or IGCC, is a process for gasifying coal and then burning
the gas in a turbine to produce electricity. Excess
heat, instead of being wasted, is recycled to make steam
to generate additional power. This dual process makes
IGCC power plants more efficient than pulverized coal
plants, so that it takes less coal to generate the same
amount of electricity. Because most of the impurities
in the coal are removed during the gasification process,
the technology also results in far less air pollution
and solid waste. IGCC power plants also use 30-50 percent
less water than pulverized coal plants, an advantage
in the arid West. But perhaps most importantly, IGCC
plants lend themselves to the capture and storage (or
“sequestration”) of carbon dioxide at much
lower cost than pulverized coal plants. This can help
us turn down the heat on global warming in an economically
sensible way.
IGCC technology is commercially established and marketed
by major companies such as General Electric, Shell and
ConocoPhillips. There are two full-scale IGCC plants
operating in Florida and Indiana, as well as facilities
in Europe and Japan.
But with all its promise, a number of challenges must
be overcome before IGCC plants are deployed in the West.
One challenge is cost. Analysts estimate that the cost
of generating electricity from an IGCC plant is currently
about 10 percent higher than from a pulverized coal
plant. However, the cost is roughly 20 to 30 percent
lower when the cost of capturing and sequestering carbon
dioxide is considered. Yet, despite the overwhelming
scientific evidence that fossil fuel combustion is contributing
to global warming, our government currently does not
require power plants to control carbon dioxide emissions.
Consequently, this important IGCC advantage goes unrewarded.
And, although many in the power industry believe that
carbon dioxide emissions will eventually be regulated,
uncertainties regarding the timing and stringency of
those limits have deterred western power companies from
moving rapidly ahead on IGCC.
A second challenge is that there is a limited track
record for using western coal in IGCC plants. The successfully
operating IGCC plants in Indiana and Florida use eastern
coals, which have different chemical and physical characteristics
than most coals found in the West. While there is no
reason to think that western coals cannot be reliably
and economically used in IGCC power plants, until someone
uses western coal in a utility-scale IGCC plant, uncertainties
regarding economics and operating performance will inhibit
investments in IGCC projects in our region.
To overcome these challenges, one or more IGCC power
plants using western coal need to be constructed. Deploying
such facilities will allow power providers to gain experience
with the technology and optimize its design and performance.
This can help drive down costs on future plants and
will demonstrate the viability of IGCC with western
coal.
Failure to deploy these facilities and prove western
coal's viability in IGCC not only poses threats to our
environment, it could also adversely impact many state
and local economies in the region. Beyond relying heavily
on coal to meet our own power needs, the Interior West
ships vast amounts of coal by rail to fuel power plants
in the Midwest and East, where western coal's low production
costs and relatively low sulfur content give it an economic
and environmental advantage over more expensive and
dirtier eastern and Midwestern coals. Western coal is
also burned in Interior West power plants to generate
electricity that is moved via large interstate transmission
lines to markets in California and the Pacific Northwest.
In 2004, the western coal industry shipped 525 million
tons of coal to utilities across the United States,
roughly 50 percent of the U.S. total. These coal sales
are currently an important component of many state economies
in the region. In 2004, western coal producers sold
nearly $4.5 billion worth of coal. Taxes and royalties
on these coal sales generated an estimated $868 million
in revenues to western state, local, and tribal governments.
Emerging trends across the country suggest that these
coal sales and their associated tax revenues are at
risk unless western coal is shown to be viable in IGCC.
Major electric utilities in the Midwest are already
planning to build IGCC power plants due to concerns
over possible future global warming regulation as well
as growing air quality problems in that part of the
country. These plants are being designed to use local
rather than western coals.
At the same time, the West Coast states of California,
Oregon, and Washington have been at the forefront of
state-based efforts to reduce greenhouse gas emissions
and address the problem of global warming. This raises
the distinct possibility that West Coast states will
seek to reduce or eliminate imports of electricity produced
by pulverized coal plants, with their high carbon dioxide
emissions. Indeed, California is currently moving ahead
on regulations that would require future purchases of
out-of-state coal power to come only from facilities
like IGCC plants that can prevent their global warming
pollution from entering the air.
Western Resource Advocates' recent "Western
Coal at the Crossroads" (pdf) study estimates that
nearly $1.4 billion in producer revenues and $275 million
in tax revenues is at risk from lost sales to Eastern,
Midwestern, and West Coast markets if the West fails
to demonstrate the viability of Western coal with IGCC.
By 2020, Wyoming alone could lose $223 million in coal
production revenues and $60 million in tax revenues
because of lost sales to Eastern and Midwestern markets.
Fortunately, energy policy makers are beginning to
take action to spur the deployment of IGCC power plants
in the West. Thanks to the efforts of Sens. Ken Salazar
from Colorado and Craig Thomas from Wyoming, the Energy
Policy Act of 2005 contains provisions that offer federal
grants and loan guarantees for IGCC projects developed
in the West. Recognizing the benefits of IGCC, the Colorado
General Assembly recently passed legislation that would
allow power companies to develop an IGCC plant, even
if the near-term costs were somewhat higher than other
resource options, provided the project is approved by
the Public Utilities Commission. In Wyoming, whose economy
is heavily dependent on coal production, the state's
Infrastructure Authority was recently granted the legal
authority to extend financial incentives to IGCC facilities.
Making the shift from conventional pulverized coal
technology to IGCC is not risk- or cost-free, but it
looks very much like a bargain, not only environmentally
but also economically, especially in future years, when
our nation almost certainly will come to recognize the
need to reduce carbon dioxide emissions.
About the Author
John Nielsen is the Energy Program Director at
Western Resource Advocates. |
