Looking Closely at Coal
Location: New York
Author: Ken Silverstein, EnergyBiz Insider, Editor-in-Chief
Date: Monday, June 9, 2008
Coal will continue to be the engine that carries the nation forward. But it
will have to be re-invented to comport with changing environmental and
economic standards.
That is the tone set by the National Coal Council, which in a presentation
to the U.S. Department of Energy says that "clean coal" will become the
foundation of national energy policy. It provides energy security and
economic prosperity -- all at a time when the global demand for power and
gas is expected to continue rising.
The coal group has a tough job ahead. The international community is focused
on reducing global warming pollution and on promoting the use of alternative
fuels. As such, state regulators in this country are clamping down on
proposed coal facilities while key investment bankers have said they will
compute the cost of carbon emissions when deciding how much to charge for
such loans.
But pragmatics suggests coal will remain central to both the U.S. and global
economies. New ideas must therefore come to the fore, which will invariably
lead to more inventive uses of coal. Market-based economies are built on the
free flow of capital and the formation of new innovations. With the right
incentives and under the proper conditions, enterprises will introduce
relevant products and services. Innovation is needed in the energy sector,
where fuel shortages and high prices rule the day.
To put the matter in perspective, this country comprises about five percent
of the world population but uses about 30 percent of the energy. Clearly,
China and India will be bidding on the same resources as the United States.
Prices will invariably rise. In fact, the U.S. Energy Information
Administration projects oil consumption to increase by a third through 2030
while electricity demand will rise by 50 percent over the next decade. Coal,
now, provides more than half of the fuel used for electric generation.
"Coal is an essential part of the world's energy future," says Georgia
Nelson, chair woman of PTI Resources and National Coal Council Chair.
"Recent energy events remind us that much of the world remains behind the
energy eight-ball. The urgency is reflected in $4 per gallon gas, families
doing without essentials to keep the lights on, and more than 2 billion
people around the world that lack adequate access to electricity or have no
electricity at all."
The coal report, titled 'Coal: America's Energy Future,' points out that oil
prices have risen from $56 per barrel in 2006 to more than $130 a barrel
right now. That escalation not only affects transportation prices but it
also increases cost of production for steel, materials and labor. Meantime,
the rising demand for oil and natural gas also means that power generators
and industrial plants will be hard up for basic feedstock that helps fuel
the American economy.
Solutions Exist
Oil is the primary commodity that moves world markets. If oil prices go up
by 100 units, natural gas costs would rise by 60 units while coal prices
would increase by 40 units, say experts. A rise in oil prices provides the
opportunity for all other commodities to demand more money. Coal is then
left in the driver's seat because it is the cheapest and most abundant
alternative. And the Energy Information Administration projects its use to
climb over the next two decades.
Solutions exist, and many involve coal. There is coal-to-liquids, which is a
technology that takes coal and breaks it down to form a fuel oil. While a
lot cheaper per barrel than oil, it is an expensive undertaking -- one that
necessitates oil prices stay high to motivate investors to risk their
capital. And some of the most highly publicized undertakings are coal
gasification plants, which are power facilities that are expected to cleanse
all the impurities from coal before it is burned and sent out the
smokestack.
"Like many other countries, the U.S. is experiencing population growth and
economic expansion that is putting significant pressure on our electricity
and energy supply," says Peabody Energy Senior Vice President Fred Palmer.
"There is an urgent need to use our technological resources to tap the broad
potential in clean coal. This includes using coal-to-liquid technologies as
a national security imperative to provide an adequate fuel source for our
military and civilian aviation industries."
At the same time, the Electric Power Research Institute and its utility and
coal supporters tout the plug-in hybrid as a way to circumvent the gas pump.
After years of research, the hope is that the first few vehicles that could
be re-charged from a wall socket will be on the road by 2010.
The environmental community is skeptical of coal-based power. For starters,
many say that the term "clean coal" is oxymoronic. Others, though, are
willing to see if the pending technologies will bear fruit and namely the
ability to capture and bury carbon dioxide that is tied to global warming.
In the meantime, however, they are asking Congress to place mandatory
restrictions on those emissions -- a view that bucks those held by most
utility and coal companies. They are espousing voluntary rules until the
technologies to permit such progress are commercialized.
Certainly, many viable options exist to help wean the global dependence on
oil and natural gas. And, for better or worse, coal is one of them. "Once we
get past the choosing of one fuel form over another, there are a lot of
synergistic opportunities," such as blending coal with biomass, says Mike
Eastman, technical analyst for the National Energy Technology Laboratory in
Pittsburgh. "We can still improve the environment and we can still have a
powerful economy."
At a time of rising energy demand, it would negligent to disregard coal's
potential. But if the fuel source is to step up, the industries that burn it
must be obligated to use the best available technologies to minimize
emissions.
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