Coal is cheap and plentiful, generating 45% of America's electricity. But it's also the dirtiest source. With regulators about to impose major carbon caps, meeting America's energy needs via coal depends on cleaning it up inexpensively.
Easier said than done. "Clean coal" is very expensive and the industry wants big government subsidies for tech research that could bring down costs over time.
By early fall the Environmental Protection Agency is expected to propose rules to cut power plants' greenhouse gas output. Utilities may shut many smaller coal plants as a result.
Meantime, cleaner-burning natural gas supplies have soared and prices have fallen, thanks to plentiful shale. Wind and solar generating capacity is growing rapidly on the backs of subsidies and mandates, though from a low base.
But Japan's Fukushima meltdown has made nuclear power pol itically radioactive again. Just replacing aging nuclear plants in coming decades will be difficult.
Far from being phased out, coal-fired generation should climb 25% from 2009-35, according to the Energy Information Administration, though its share of electricity will likely dip to 43%. But that assumes no carbon curbs.
With those curbs and cheap natgas, more than 20% of coal plants could be retired.
"For coal with CO2 capture and storage to be competitive against other options, like in the near-term natural gas that emits about half the CO2 of a coal plant, you'd have to capture 50% of the CO2 from the coal plant," said John Novak, federal and industry activities director at the Electric Power Research Institute. "And that'll cost you money."
Clean Coal Isn't Cheap
Revis James, director of EPRI's Energy Technology Assessment Center, says an advanced coal plant with highly efficient CO2 capture would produce electricity at a cost roughly double that of a normal coal plant today.
Even absent CO2 curbs, building modern coal facilities will depend on whether something else is cheaper.
"At $4 a million Btus, then natural gas combined cycle is going to be the lowest-cost option," said Novak. "If it's $6 or more, then a state-of-the-art coal plant will be the lowest-cost option without CO2 capture and storage."
Natgas is trading near $4.37.
Capture and storage plants are in the pipeline. Southern Co.'s (NYSE:SO - News) Kemper County, Miss., facility is supposed to capture 65% of CO2 partly by breaking coal down into component gases before firing.
"It's going to capture the CO2 and use it for enhanced oil recovery, burning the synthetic gas that remains to generate electricity," Novak said. But he added, "The only reason they're doing it is that they're getting incentives."
Another technique is oxycombustion, which also leads to a high-concentration CO2 stream that can be treated.
"Instead of with air, you're combusting coal with oxygen so you have no nitrogen in the combustion process," Novak said.
Oxycombustion and carbon storage will go into FutureGen 2.0, a planned upgrade to a Meredosia, Ill., coal plant that aims to cut more than 90% of emissions. It's a nonprofit joint effort involving the Energy Department and a bevy of coal suppliers and power producers: Alpha Natural Resources (NYSE:ANR - News), Anglo American (OTCPK:AAUKY), Consol Energy (NYSE:CNX - News), PPL Electric Utilities (NYSE:PPL - News), Peabody Energy (NYSE:BTU - News), Rio Tinto (NYSE:RIO - News) and Xstrata Coal.
The project, initially proposed in 2003, has been beset by delays and higher costs.
But more government "participation" will be needed to advance technology to make clean coal competitive, says Steve Miller, CEO of the American Coalition For Clean Coal Electricity.
Without $50 billion-$100 billion in subsidies in legislative proposals last year, Novak says, amid CO2 curbs "coal would drop off the mix ," replaced by natural gas.
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