Climate Change and the Potential of Coal Gasification
Samuel C. Schon and Arthur A. Small III
Getting Out the Coal
A sharp rise in natural gas prices has led the United States — and especially the industrializing world — to continue relying on coal for electricity generation, as the price of coal has remained relatively stable. Coal currently provides approximately 50 percent of U.S. electricity, and, globally, it is the fastest growing fuel according to the BP Statistical Review of World Energy 2006. China, which is the world’s largest and fastest-growing producer and user of coal, mined more than 1.6 billion short tons in 2003, according to the U.S. Energy Information Administration — an increase of more than 25 percent since 1993.
The Texaco cool water gasification project in Southern California began in 1979, to explore the use of coal gasification technology for the commercial production of electricity. Now, such “clean coal” technology is becoming more attractive with skyrocketing energy prices and climate change concerns. Photograph is copyright of Bechtel Corporation.
Rapidly industrializing countries such as China and India are not the only places with a growing coal industry. The popular press recently noted the good relations between the coal industry and Germany, where at least eight new coal plants are planned. Demand growth is especially strong in the United States, where more than 100 new coal plants are under development or proposed.
In a world concerned with rising energy prices and supply security, coal has much to recommend it. In particular, abundant reserves are widely distributed around the world (see story, this issue). Furthermore, particularly in developed countries, the coal industry has reduced emissions and improved mining practices significantly. Acid rain, the environmental scourge of the 1980s, has decreased substantially in the United States as a result of significant reductions of sulfur dioxide emissions through the wider use of low-sulfur coals and advanced systems to remove sulfur.
Nonetheless, even with global energy price trends strongly favoring an increased use of coal, rising concern about human-induced climate change casts a long shadow over the industry’s continued growth. Coal is the most carbon-dense fossil fuel, making it responsible for producing more emissions of carbon dioxide, the primary greenhouse gas of concern, than other fuels; coal is responsible for twice the carbon emissions of natural gas per unit of electricity.
While plans to build many new coal plants are in the works to meet burgeoning global energy demand, significant uncertainty about future economic conditions remains.
In particular, plant developers will not know at the time of construction what future greenhouse gas regulations will be in place over the lifetime of the energy plant. Either through direct regulation or through mandatory cap-and-trade systems (in which companies gain credits toward emissions reductions that other companies can buy), greenhouse gas emissions pose an economic risk.
Some developers may consider hedging the risk of potentially costly increased greenhouse gas emissions regulations by investing in technologies that would allow their plants to be upgraded and retrofitted at lower costs in the future. “We have to be prepared for a scenario in which carbon emission reductions are much greater than today,” said Johannes F. Lambertz of RWE Power, Germany’s largest electricity generating company, in a recent press interview.
So-called “clean coal” initiatives seek to increase energy efficiencies, while reducing the greenhouse gas emissions from coal-fired power plants. These initiatives also promise to employ technologies that facilitate the capture of carbon dioxide and the permanent storage of the carbon. The most promising technology in this regard is known as integrated gasification combined cycle (IGCC). The evolution and maturity of carbon capture and so-called sequestration technologies cannot be anticipated precisely, but IGCC has the potential to deliver immediate benefits through reduced emissions of traditional pollutants and improved thermal efficiencies.
How it works
In the gasification process, coal is first ground up and combined with water to form a slurry. The plant then combines the slurry with pure oxygen derived from an air-separation unit in a gasifier, which uses a high-temperature, high-pressure environment to produce “synthesis gas.” This gas is mainly hydrogen and carbon monoxide along with impurities such as hydrogen sulfide, carbonyl sulfide and mercury. Subsequent processing, however, removes these would-be pollutants prior to combustion.
Once the synthesis gas is prepared, the combustion components of an IGCC plant are similar to a combined-cycle natural gas plant. The synthesis gas is fired in gas turbines, which produce electricity, while heat-recovery steam generators use the hot exhaust from the gas turbines to power steam turbines that produce additional electricity.
The Polk power plant uses coal gasification technology to provide electricity to the Tampa, Fla., area. Photograph is copyright of Bechtel Corporation.
IGCC plants of this design have immediate benefits over traditional pulverized coal plants. The higher thermal efficiencies of IGCC plants allow them to have lower greenhouse gas emissions compared with traditional coal plants. They also require 30 percent less water to operate and do not require limestone for removing sulfur from the gas.
The process of gasification allows an IGCC plant to “clean up” the synthesis gas prior to combustion rather than “scrub” the more voluminous flue gas after combustion. Thus, IGCC plants can achieve dramatically reduced emissions of nitrogen oxides, sulfur dioxides, mercury and particulate matter compared to pulverized coal plants — and with lower costs for emissions control.
Use of IGCC technology could also affect the coal market. Increasingly rigorous environmental regulations in the United States have led many pulverized coal plants to switch to low-sulfur, cleaner burning coal, particularly from the Powder River Basin of Wyoming (see story, this issue), depressing demand for higher sulfur, and therefore less desirable, coals. IGCC plants can exploit this price differential by using the less expensive high-sulfur coals, because the gasification process removes sulfur and other impurities efficiently.
In the works
IGCC plants were initially hobbled by technology integration problems, particularly related to the reliability of gasification units. These technical problems have largely been overcome, and IGCC plants are nascent entrants to the mainstream utility market.
According to General Electric (GE), an IGCC plant can have the same reliability, availability and maintenance performance as a natural gas combined-cycle plant. And GE expects to offer to utilities similar operational guarantees for IGCC equipment as for their natural gas turbines.
Toward this end, GE and Bechtel, a global engineering firm, have formed an alliance to offer “a standard commercial offering for optimized integrated combined-cycle gasification projects in North America.” Both Cinergy and American Electric Power (AEP) have signed letters-of-intent with GE and Bechtel to initiate scoping and feasibility studies for IGCC projects. AEP has publicly announced its intention to construct up to 1,200 megawatts of IGCC capacity and has begun applying to the Public Utilities Commission of Ohio for funding.
ConocoPhillips has formed a similar alliance with Fluor, a large engineering firm, to promote their IGCC offering called “E-Gas Technology,” which they plan to provide to Excelsior’s Mesaba Energy Project proposed for northeastern Minnesota in partnership with DOE. Other major utilities, such as Duke Energy, have also expressed interest in building IGCC plants. It is unclear which, if any, of these projects will come online first, but it is likely that IGCC will play a crucial role in the future of the industry under increasing regulatory constraint.
As China’s economic development advances and the citizenry become more affluent, it is reasonable to assume that societal demand for environmental quality will increase (see Geotimes, October 2005). The first signs of a growing demand for environmental quality may be visible in the April 2005 protests against polluting industries in the village of Huaxi in the Zhejiang Province that left police cars overturned and buildings vandalized. It is likely that under increased political pressure, emissions of these pollutants from power plants will be more tightly controlled in the future.
New IGCC plants may be a crucial means of limiting the growth of China’s emissions from burning coal, while enabling the continued use of China’s extensive coal resources to meet growing energy needs. However, this growth would entail significantly higher capital costs than currently implemented technologies because most pulverized coal plants in China currently lack advanced emissions control technologies.
Even in the United States and Western Europe, where some notable “clean coal” projects are slated, numerous conventional pulverized coal plants are also planned. This development would seem to indicate that the industry as a whole does not consider future strict regulation of carbon dioxide an entirely credible threat.
While AEP, the largest coal-fired generating company in the United States, plans to develop IGCC facilities in the near-term, Peabody Energy, the largest coal producer, is planning to build two large pulverized coal plants and does not consider newer combustion technologies to be economical at this time. Similarly, TXU, another large utility company, is planning 11 new pulverized coal plants and does not consider newer technologies viable alternatives at this time.
Investment decisions to build conventional plants now can also be viewed as efforts to establish capacity prior to the implementation of a cap-and-trade system for carbon dioxide. Historically, cap-and-trade systems have allocated emissions permits to existing polluters, which creates an incentive to build such plants before the program is implemented. After the establishment of such a trading system, however, IGCC plants will have a competitive advantage relative to traditional coal combustion technologies.
Going forward, industry investment in clean coal technologies — particularly mature IGCC technology — will be a useful barometer of industry’s perceptions regarding potential greenhouse gas regulation and how that could affect coal consumption in the future.
Schon is a graduate student in the department of geological sciences at Brown University in Providence, R.I. E-mail: Samuel_Schon@brown.edu. Small, a trained economist, is an associate professor in the department of meteorology at Pennsylvania State University in University Park.