Indiana energy plan tied heavily to clean coal, alternative fuel

Washington (Platts)--14Aug2006

Indiana Governor Mitch Daniels on Friday unveiled a long-awaited state energy
plan that keys heavily on the development of clean-coal technology, including
the construction of new integrated gasification combined-cycle and fluidized
bed combustion plants.

Among the goals of the plan, which has been in development for the past year,
is to substitute Indiana coal and biomass for current coal, natural gas and
petroleum imports to supply the state's energy and to "reduce energy
dependency and increase reliability."

Daniels wants to produce electricity, natural gas and transportation fuels
using clean coal and bioenergy technologies.

"Our energy industry must grow," he said in a statement. "With new forms of
energy production, such as biodiesel, ethanol and clean coal, we will preserve
and grow jobs and incomes."

The Indiana coal industry warmly embraced the plan. "It's aggressive. ... I
think this guy means it," J. Nathan Noland, president of the Indiana Coal
Council, told Platts.

Currently, 75% of the state's energy expenditures leave Indiana to pay for
imports of coal, natural gas and oil, Daniels said. Coal provides more than
90% of the state's electricity generation, but more than 50% of coal burned in
the state's power plants comes from outside of Indiana.

Indiana has more than 17 billion short tons of coal reserves -- enough to last
485 years at current consumption rates, Daniels said. But much of that coal is
high in sulfur, requiring clean air technologies to use productively.

Indiana mines presently produce about 35 million st annually. That total
should eclipse 40 million st in two or three years, Noland said, as more mines
begin production.

"We've got five new underground mines in some phase of planning or permitting
right now," he said. "I'm seeing coal operators really looking at expansion,
which we haven't done for many, many years."

Indiana should not concentrate on reclaiming coal markets lost to the
low-sulfur Powder River Basin, Noland said he's told the governor. Instead,
the state needs to "develop new markets" in coal-to-liquids and coal
gasification.

Referring to the PRB, Noland said, "There's enough business for all of us."

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