High-Tech Coal Plants Planned

CNN Money is reporting the Feds plan high-tech coal plant

Eight utilities, coal companies join Energy Department in $1B project; location due by 2007.

The Department of Energy is set to announce a nearly $1 billion coal-fired power plant that would remove many of the pollutants associated with coal and turn some of them into useable industrial products, according to a published report.

The Wall Street Journal reports the plant will cost $950 million and will be built with $250 million in investment from a group of eight companies, including major coal and electricity producers. A location for the plant is expected to be found by 2007 and the plant is due to start operations by 2012, according to the report.

The newspaper reports that the goal is to capture 90 percent of the plant's carbon dioxide once it begins operation and later raise that to 100 percent of the greenhouse gas, which is believed to cause global warming, using advanced technologies.

The cost of operating the plant would be only about 10 percent above current market costs, according to the report. The plans call for the carbon dioxide waste to be injected into deep underground rock formations, but other waste products, including hydrogen, sulfur dioxide and nitrogen oxides could be gasified and sold to industry.

The plant is to be named FutureGen and is expected to produce about 250 megawatts of electricity, making it a medium sized generating station, the newspaper reports.

The United States has an abundant supply of coal, unlike its far more limited supply of oil or natural gas. Two of the companies that are contributing to the plant are from China and Australia, which also have abundant coal reserves.

The six U.S. companies that will contribute to the plant include utilities American Electric Power (Research) and Southern Co. (Research) and coal producers Consol Energy (Research) Inc., of Pittsburgh; Foundation Coal (Research), Peabody Energy (Research) and Kennecott Energy, which is owned by Australian mining company Rio Tinto Group (Research).

In addition, Australian mining conglomerate BHP Billiton (Research) and China Huaneng Group are participating.

Stateline.Org is reporting Pa. Leads Push for New Coal Plants.

High energy prices are leading coal-rich states such as Pennsylvania and West Virginia to change government policies and put up money for a new generation of coal-fired power plants. In addition to revving their economies with new energy jobs, the new power plants will help wean the United States from its petroleum dependency, say the governors of those states.

The governors of Montana and Wyoming also are promoting their state's coal reserves -- in the media and in talks with energy companies -- as a new source of fuel for the country and a new source of revenue for rural communities.

"We all witnessed the extraordinary havoc wreaked on our energy supply by Hurricanes Katrina and Rita. Our current system of centralized supply is obviously more vulnerable than most of us ever imagined," Pennsylvania Gov. Ed Rendell (D) said at a Dec. 1 news conference in Washington, DC.

The two Gulf Coast storms temporarily shut down oil rigs and refineries that provided nearly half of the nation's gasoline and 19 percent of natural gas supplies. Winter natural gas prices are projected to increase as much as 70 percent in some regions, according to the federal Energy Information Administration. Natural gas powers a growing amount of electricity generation, so the cost of that energy also will rise.

While greater use of domestic coal would be a step towards energy independence, environmentalists question the air-pollution benefits of �clean coal� and oppose increased mining.

Rendell�s plan, unveiled Nov. 28, would provide state-backed financing to transform older power plants into ones that produce and burn synthetic natural gas made from coal through a chemical process called gasification. Using gasified coal can reduce carbon dioxide and other greenhouse gases blamed for global warming by as much as 30 percent, Rendell said.

"This new initiative is designed to help Pennsylvania import jobs and not fuel. It is a homegrown solution to keeping jobs and investment in the state," the governor said.

Earlier last month, Rendell announced a separate initiative to construct a $612 million power plant that not only will produce electricity, but also will convert some of the state's 250 million tons of waste coal into 40 million gallons of synthetic diesel fuel per year. The privately built project is being supported by a $47 million state tax credit, created by a 1999 bill to spur waste coal removal. The state and a consortium of private companies have committed to buying all of the plant's fuel for 10 years after it begins operating.

The process, called liquefaction, will help reduce the massive piles of mining leftovers that are polluting some 6,600 miles of streams and rivers, said William Rathbun, a spokesman for the Pennsylvania Department of Environmental Protection.

In October, West Virginia Gov. Joe Manchin III (D) outlined broad plans to spur coal liquefaction in his state. He has directed state economic development, energy and environmental agencies to help plan, finance and build new coal processing plants.

Manchin also re-established the state's defunct Public Energy Authority to work with researchers and energy companies to develop a comprehensive plan for converting the state's coal supplies into alternative fuels. In addition, West Virginia environmental officials and utility regulators are working to streamline the state's permitting process for new-generation coal plants.

"West Virginia is one of several states that are rich in natural resources, and it is time that we stepped up to the plate to and took responsibility for doing our part to address the nation's growing energy crisis," Manchin said.

Montana Gov. Brian Schweitzer (D) is actively wooing commercial partners and the U.S. Department of Defense for a venture to convert coal to liquid fuel and boost the economy of small towns in his state. No specific plans have been announced, but in October Schweitzer hosted a conference for politicians, academics and energy company representatives to discuss the future of energy in the West.

Wyoming Gov. Dave Freudenthal (D) is also talking with energy companies about a possible liquefaction plant in his coal-rich state, and a state legislative commitee has begun considering how best to compete with other states for new energy business initiatives.

Plans to build new power plants that would burn gasified coal were announced in Florida and Minnesota last year as part of President Bush's 10-year, $2 billion Clean Coal Power Initiative.

Environmentalists are skeptical about expanding the use of coal, which already provides more than half of the nation's electricity. While technologies to reduce pollutants at coal-fired power plants may improve the air quality, there are still impacts on streams and rivers from mining, said Antonia Herzog, a climate specialist with the Natural Resources Defense Council.

The auto fuel created from coal does not burn any more cleanly in cars and trucks, and the process of converting the coal into the liquid fuel creates additional greenhouse gases, she said.

The technology for converting coal to synthetic oil products has been around since the 1920s but is looking economically attractive once again with crude oil at $50 to $55 a barrel. Coal can be converted for a cost equivalent to about $35 per barrel, according to the National Mining Association. Forty percent of South Africa's transportation fuel comes from converting coal, and China is spending an estimated $6 billion on new coal-to-liquid fuel facilities, according to the mining association.

The fast-rising costs of natural gas, increasingly used to generate electric power as well as heat, also makes cleaner-burning coal a more attractive option, said Luke Popovich of the mining association.

That's not a bad deal.
I would like to get a $billion plant for $250 million.
Where do I sign up?
But why just coal? Why overlook nuclear power plants?

Whether or not one thinks this is a government handout, doesn't this make far more sense than sinking $300 billion in Iraq?
Hmmm let's see.
Would I rather have 300 efficient power plants or an Iraq quagmire?
Then again, almost anything makes sense on a relative basis compared to Iraq.

Here is the bottom line:
As long as politicians want to spend money (and the urge to spend is no doubt unstoppable), can't we at least try and get something for it other than death, destruction, and loss of worldwide goodwill?

The problem of course is the government will want its quagmire and coal spending too.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/