Saturday, May 31, 2008

Clean Coal: More Expensive, Less Desirable

A 'clean coal' technology has been proposed that will provide power to generate electricity without emitting global warming pollution. The idea is that modified coal power plants would capture the polluting gas, carbon dioxide, pump it into open spaces underground, and store it there permanently. The technology has been promoted by coal mining and power companies, and has been supported by President Bush and the three presidential candidates. However, carbon dioxide capture, storage, and safety remain unproven, and the cost of building clean coal power plants is proving to be prohibitive.

The cost of the FutureGen clean coal project in Illinois rose from $1 Billion to $1.8 Billion, including $1 Billion in government subsidies. Fearing that the already high cost would further increase, the U.S. Energy Department canceled the FutureGen project. Another clean coal plant proposed in Edwardsport, Indiana would cost an estimated $2.35 Billion, a $365 Million increase from earlier estimates.

Here in the Buffalo area, an ailing economy and the need for new jobs are driving demands to build a clean-coal power plant in Tonawanda, NRG's proposed Huntley plant. The cost last year was estimated at $1.5 Billion. The current cost and status of the Huntley plant are not clear, and NY State is moving away from coal power to decrease pollution. Recently, in nearby Rochester, NY, a coal-fired power plant was shut down and converted to use natural gas, which generates less carbon dioxide than coal, and doesn't emit mercury pollution.

Coal's future looks bleak on Wall Street. Citigroup and Merrill Lynch have downgraded coal company stocks across the board. Morgan Stanley, Citigroup, JP Morgan Chase and Bank of America said lending for coal-fired power plants will be contingent on utilities demonstrating they would be economically viable under future federal rules on emissions. A federal tax on carbon dioxide emissions is inevitable. Together with the high cost of cleaning coal, the tax will make coal a more expensive and less desirable source of energy.

Fortunately, clean energy sources, like wind, solar, hydro, and geothermal, provide alternatives to burning coal. Clean energy sources do not emit carbon dioxide pollution, and are environmentally safe and renewable. Low-cost, reliable hydropower from Niagara Falls is attractive to manufacturing companies and is creating new jobs in Western NY. Wind turbine towers are sprouting up across the region. A national shift to clean energy sources will create millions of new jobs in construction, engineering, manufacturing and other areas, and will reduce global warming pollution. It will be a win-win situation for Americans and the planet.


Larry Brooks said...

How much of that $1.5B cost for Huntley is government subsidy? And how much solar or wind generating capacity could that much money buy? 680 MW?

Dave said...


Most of that $1.5 billion (and it could be $2 Billion) is the cost of constructing the facility AND the Air Separation plant(s) to supply it with O2 instead of air. The subsidies come from allowing the CO2 pollution to occur, and also from the long term power purchase agreement that would take place between NRG and the New York Power Authority (NYPA). The price stability (very hard to find in NY) would protect it from competition from lower cost generation, such as onshore wind turbines.

There may also be certain subsidies from either NY State or the Dept. of Energy for this initial trial plant (though other such projects have been done on a slightly smaller scale). But the main subsidies are the essentially cost free allowance to pollute our atmosphere with fossil fuel derived CO2, not including the costs of coal mining (like mountain top removal), and the preferential stability that a Power Purchase Agreement gives (wind projects get no such treatment from NYPA in NY). That will lower the financing insecurity, and save the owners billions in higher interest costs that would otherwise happen if N+RG has to sell this power on the NYISO at whatever rate NYISO goes for at any given time - the so-called free enterprise route.

As for the $1.5 billion in capital, that could buy 750 MW of installed onshore wind capacity - a very decent sized wind farm, or set of farms. With an average of 33% output (typical NY value), this would deliver an average of 250 MW of power. However, most of the costs would be involved in paying down the debt - no fuel costs for wind turbines. That avoids this terrible fate:
The Huntley plant was built for $40/ton coal, and so far this year, prices are now near $108/ton, with this just the early part of summer. The coal price spike is due to oil and natural gas prices going up, as well as the devaluation of the dollar, which allows Europeans (Euro currency) to buy our coal cheap (to them) and the increased demand just spikes U.S. prices. The one virtue of coal used to be its cheapness - and that is also fading away.

Dave Bradley
Buffalo Wind Action Group

Larry Brooks said...

Thank you so much for that information. Based on that, it seems clear that the better investment of capital in this community would be onshore wind turbines. I will be sure to advocate for that--and I encourage others to do so--at every opportunity.