Coal Gasification Could Unlock Coal's Future

The future of coal generation is about two months away. That’s when Duke Energy will fire up its 618-megawatt coal gasification plant in Indiana, which can also run on natural gas. While the project has endured cost overruns and heavy criticism, the company says that it will be clean, efficient -- and well worth it.

Coal has come to a fork in the road: Relying on the older, less efficient plants is now a war-torn path that has been beaten down by a heavy stream of regulations and a flood of newfound shale-gas. Betting on the future means making investments in new technologies that are able to burn coal more efficiently. 

Duke Energy’s coal fleet is among the oldest in the country. It is replacing most of that with combined cycle natural gas plants, which release about half the emissions as coal and which are relatively painless to permit. At the same time, natural gas prices are comparable to those of coal, right now. 

However, if natural gas prices rise because of the added industrial demand -- and they will -- utilities will need to be diversified. Duke’s thinking: Indiana has a plethora of coal reserves, which if used in combination with emerging coal generation technologies, can be clean as natural gas.  

“We have chosen to build this integrated coal gasification technology because this is a more acceptable way to burn coal,” says Lew Middleton, a spokesperson for Duke Energy. “This allows us to take advantage of a relatively inexpensive and abundant resource right here in Indiana.” 

The major obstacle along the way has been the huge price tag. Back when the idea was first proposed in 2007, it was to tally about $1.9 billion. But it has now racked up about $3.5 billion in bills, with the cost generally split between the public and private sectors. Customers’ monthly rates will also rise to defray the expenses. Middleton says that the initial estimates jumped because the price of raw materials has risen: steel, concrete and wires. 

Turning coal into natural gas has a long history. But doing so at commercial scale and then selling that power into the retail electricity markets is a new thing. Duke’s Indiana plant, meanwhile, has the potential to capture and bury carbon dioxide. 

Tough Sell

Could Duke's venture become a harbinger of things to come? Because of the utility's access to Indiana coal, it fits with Duke's goals, says Middleton, who adds that this plant is expected to become the company’s most efficient means of generating electricity. 

However, each region of the country has different attributes and they would need to make their own economic evaluations, he says. Some areas, in fact, are considering these investments, although high upfront costs and environmental opposition are issues in certain places.   

Consider: Power plant developer Tenaska proposed a coal gasification facility in Illinois, arguing it was a 40-year endeavor. But after fighting green groups determined to thwart a coal plant and Exelon Corp. that opposed the public subsidies, it relented. Tenaska, instead, will build a natural gas unit that it says could later be modified to gasify coal. 

“It makes absolutely no sense to take coal and make synthetic natural gas out of it,” says Paul Grimmer, chief executive of Eltron Research in Boulder, Colo. “The processes are too expensive. But if you see a huge run-up in natural gas, it may then make sense.”

How does coal gasification work? It removes the sulfur dioxide, mercury and carbon dioxide from the "syngas" before it is combusted. And because the "syngas" is cleaner than raw coal, lower quantities of nitrogen oxide and particulate matter are produced during the combustion or burning process. The carbon is more concentrated, which makes it easier to capture. 

All the potential developments come with a price tag. But if fewer tonnages of coal are burned, the economic and environmental values will add up and become clearer. For each unit of coal that is input into the coal gasification system, 60 percent of it is supposed to come out as pure energy. That is compared to about 35 percent for a traditional pulverized coal plant. 

FutureGen, in which the U.S. of Department of Energy is providing $1.1 billion, or 80 percent of the necessary funds, is another coal gasification project in Illinois. It is expected to be 200 megawatts. The plan is to use oxygen to help burn the coal in such a way that is would nearly eliminate many harmful emissions. The plant would also help concentrate the carbon so that it could be captured.

Coal gasification comes with risks. But diversifying the nation’s electric generation is prudent and it’s something that would hedge against gyrating natural gas prices.

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