A Roadmap for the Advancement of Low-Emissions Coal Technologies

By Ben Yamagata
Executive Director, Coal Utilization Research Council (CURC)

In the U.S., our vast, domestically secure supply of coal has fueled the American economic machine for many decades and our fleet of existing coal-fired power plants provides very inexpensive electricity.A This means that U.S. industry has a competitive edge over manufacturers in other countries that do not have reliable, abundant, low-cost electricity generated from coal resources, and consumers are able to keep more of their income to spend on other expenses. Further, our coal-based power generation is fully dispatchable—when you need it, it is there. In addition, affordable and reliable electricity generated by coal enables the expansion of electro-technologies, which are the basis of modern society.

Other sources of electric power have their attributes, but may not be available when you need the electricity if the sun is not shining, if the wind is not blowing, or if the costs of a fuel become volatile and unaffordable compared to consistently stable, low-priced coal resources. Coal conversion to electricity, liquid fuels, or chemicals assists the U.S. and many other countries to meet the ever-rising demand for energy, while clean coal technologies, including higher efficiency generation and carbon capture, utilization, and storage (CCUS), are pathways toward achieving sustainable energy, economic growth, and climate change policy goals. Similar to what has already been achieved for reducing criteria emissions (e.g., SO2, NOx, PM10) reducing CO2 emissions, and the associated control costs, will be driven by technology development, demonstration, and deployment.

CURC and EPRI have developed a Roadmap to support CCUS development without federal financing.

CURC and EPRI have developed a Roadmap to support CCUS development without federal financing.

The U.S. Coal Industry Faces Several Challenges

The availability of low-cost electricity is a key component to President Obama’s recently announced initiative to grow manufacturing in the U.S. As a general rule of thumb, a 10% reduction in the cost of electricity leads to a 1% increase in gross domestic product and employment.1 That equates to 1.5 million jobs. Rather than pursue public policies that result in the increased cost of coal-fueled electricity so that other higher cost sources of electricity become competitive, the focus should be on cost reductions while simultaneously achieving our country’s environmental goals. Technology development and widespread utilization of advanced technology is a proven mechanism to accomplish these dual goals of lower costs and environmental stewardship.

Today, coal’s challenges are associated primarily with the cost of complying with an array of recent and pending Environmental Protection Agency (EPA) environmental requirements as well as competition from low-cost natural gas. Although existing coal-fired power plants are highly competitive with other sources of electricity, the added cost of recently adopted environmental regulations (new-source PSD/BACT permitting), uncertainty over future regulations (CO2 emissions standards for new and existing plants under Section 111 of the Clean Air Act), and other factors have led to projections that approximately 60–80 GW of older coal-fired units (20–25% of the current 310-GW coal fleet) will be retired over the next several years—too soon to be replaced by coal-fueled power plants with CCUS.

Technology Is Key

Since the early 1970s, the Department of Energy (DOE) Coal RD&D program and DOE’s National Energy Technology Laboratory (NETL), in partnership with the private sector, have been responsible for developing innovative technologies for coal-fired power plants such as low nitrogen oxide (NOx) burners, selective catalytic reduction (SCR), flue gas desulfurization (scrubbers), and fluidized bed combustion, all of which are now in the marketplace and benefiting energy production and air quality improvements.2 In fact, today, three out of every four coal-burning power plants in the U.S. are equipped with technologies that can trace their roots back to DOE’s advanced coal technology program.

The successful development and use of technologies have allowed coal use to increase by more than 180% since the early 1970s while the emissions rates of SO2 and NOx have decreased by approximately 85%, as is shown in Figure 1.

FIGURE 1. Coal-fired generation emission rates have decreased dramatically due to the application of environmental technologies. Sources: EPA National Air Pollutant Emission Trends; EIA Annual Energy Review, EIA AEO 2011, Ventyx - Velocity Suite

Figure 1. Coal-fired generation emission rates have decreased dramatically due to the application of environmental technologies. Sources: EPA National Air Pollutant Emission Trends; EIA Annual Energy Review, EIA AEO 2011, Ventyx – Velocity Suite

The key to ensuring continued technology success is (1) adequate public support, (2) enhanced levels of funding targeted to specific technology areas, and (3) a regulatory and public policy framework that supports coal use.

The CURC–EPRI Technology Roadmap

CURC, together with the Electric Power Research Institute (EPRI), has developed a Technology Roadmap (Roadmap) that defines the research, development, and demonstration necessary to ensure that the benefits of coal utilization in the U.S. continue into the future. The Roadmap represents a plan for developing technologies that convert coal to electricity and other useful forms of energy as well as into manufacturing feedstocks. Our Roadmap and accompanying analysis concluded that several coal technology advancements, if developed, will achieve specific cost, performance, and environmental goals thereby benefiting the nation’s environment, economy, and energy security.

One of the most significant benefits from the proposed technology improvements identified in the Roadmap is the increase in efficiency of power generation; see Figure 2 for a proposed timeline for efficiency improvements. This improvement in efficiency reduces all emissions, including CO2. Improvements in overall power plant efficiency for combustion-based systems as well as significant cost reductions in gasifiers and improved gas turbines are projected to result in a levelized cost of electricity (LCOE) for these advanced coal-fueled systems with CCS that is lower than today’s coal-fueled power plants without CCS.

Figure 2. Improvements in U.S. power plant efficiency obtainable through successful R&D

Figure 2. Improvements in U.S. power plant efficiency obtainable through successful R&D

Additional benefits of successfully implementing the Roadmap, which are highlighted in Figure 3, include (1) aggressive reduction of water use/discharge, (2) significant reductions in traditional air pollutants and CO2, (3) enhanced energy and economic security resulting from production of low-cost power using coal, our largest U.S. domestic energy resource while using captured CO2 to recover crude oil, and (4) deploying coal-based technologies for the production of liquid fuels and other marketable products.

Importantly, the Roadmap also strongly recommends that the DOE continue supporting the current suite of select CCUS demonstration projects and, in the future, make authorizations to encourage additional demonstrations and deployment of “second generation” and transformational coal technologies.

Figure 3. Improvements in the control of conventional pollutant and water conservation based on the Roadmap Notes: 2010 “State of the Art” Baseline Data: Reductions reflect a range of values for both PC and IGCC technology changes after 2010. Note that the reductions are already achieved through 2010, the baseline for the projected additional reductions, are very significant. CO2: 0% (no carbon controls in use), NOx and SO2: 90–99% reduction, PM: 99.6% reduction, Mercury: 90% reduction, Water withdrawal reduction (as a result of cooling towers): 98% reduction.

Figure 3. Improvements in the control of conventional pollutant and water conservation based on the Roadmap
Notes: 2010 “State of the Art” Baseline Data: Reductions reflect a range of values for both PC and IGCC technology changes after 2010. Note that the reductions are already achieved through 2010, the baseline for the projected additional reductions, are very significant. CO2: 0% (no carbon controls in use), NOx and SO2: 90–99% reduction, PM: 99.6% reduction, Mercury: 90% reduction, Water withdrawal reduction (as a result of cooling towers): 98% reduction.

Continued demonstrations are singularly important. Given the prospect that the market alone will not be sufficient to undertake additional demonstrations of the technologies currently undergoing planning and construction, CURC strongly recommends that authorizations be made to encourage additional demonstrations and deployment of technology at or near commercial scale.

Without this continued activity during a period when few, if any, new coal-fueled power plants are projected to be built, we would lose momentum in maturing the technologies under demonstration. Further, without the prospects of additional commercialization and use, expertise and know-how will rapidly dissipate and infrastructure and even physical resources (sufficient coal resources and capacity to construct) will disappear with significant uncertainty as to whether these resources can be reconstituted.

A Strategic Path Forward: The CURC Three-Part Technology Program

What is needed to best ensure that coal continues its place in America’s clean energy future? The answer is an affordable technology-focused program that results in cost-competitive, environmentally superior, and reliable ways to use coal well into the future (2050 and beyond). The three-part technology program is designed to achieve these goals by initiating and supporting with public- and private-sector partnerships the following:

  • Near term: by applying technology solutions to the existing fleet of coal-fired electric generating plants to better ensure efficiency, output, reliability, and emissions control.
  • Mid-term: by authorizing the construction of 10 GW of advanced coal plants that are highly efficient and superior in ability to control emissions and that will install carbon capture systems when that technology is commercially available. A second program that provides financial incentives for the capture of CO2 to recover crude oil, through EOR, while directing tax receipts and royalties (not new taxes) from that recovered crude oil to pay for the CO2 capture systems.
  • Long term: by focusing federal appropriations toward a RD&D program that has the goal of cost competitive, environmentally superior, and transformational uses of coal for the future.

One element of the three-part program—the Accelerated CO2 for EOR program—would encourage the capture of CO2 from coal-fueled facilities to then be used for the enhanced recovery of crude oil that remains trapped in reservoirs after primary and secondary production has been completed. Between 20 to 60 billion barrels of oil remain in numerous reservoirs in the U.S. This projection does not include the Bakken shale reservoirs where some estimate that only 3 to 5% of oil is currently recovered and billions of barrels of oil remain.3 This program element allows for progress to be made on carbon capture, even when federal budgets for technology development are limited. The potential for CO2-EOR is huge (see Table 1 and article by Vello Kuuskra in this issue).

Table 1. The potential for CO2-EOR is enormous in the U.S. *Notes: Base case economics use an oil price of $70/bbl (constant, real) and a CO2 cost of $45/tonne ($2.38 Mcf) delivered at pressure to the oil field.

Table 1. The potential for CO2-EOR is enormous in the U.S.
*Notes: Base case economics use an oil price of $70/bbl (constant, real) and a CO2 cost of $45/tonne ($2.38 Mcf) delivered at pressure to the oil field.

CO2 is the primary means by which this oil can be recovered. There are other sources of less costly anthropogenic (captured) CO2 currently available, but if industry determines it is beneficial to recover the bulk of these remaining domestic oil resources, then coal-derived CO2 is required because there are not sufficient alternative sources of CO2 available to recover the quantities of crude oil available.4

Importantly, in these times of severe federal budget deficits, the Accelerated CO2 for EOR program is specifically designed to be self-financing. The key element of this proposed program is that oil would not have been recovered but for the use of captured CO2. Review of existing, naturally occurring sources of CO2 has established this proposition. Further, our modeling estimates that each dollar of support granted to a CCUS project (the costs to capture CO2 are currently more than the CCUS project can recover from the sale of the captured CO2) can be recovered over a 10-year timeframe or less from the “use of” tax receipts and any federal government royalties paid by a taxpayer on its income from the recovered crude oil. These are not “new” taxes. The taxes and royalties would have been paid under existing law but the oil itself would not have been recovered but for the use of captured CO2.

Key elements of the Accelerated CO2 for EOR program are listed below:

  • Direct financial support to qualifying CO2 capturers for a limited number of CO2 capture projects (the equivalent of 5–10 GW) where the captured CO2 is sold for EOR (includes coal to electricity, coal to liquids or substitute natural gas, coal to chemicals feedstocks, coal for polygeneration);
  • Limit the program to a 10-year qualifying period although each qualified project, once operational, would receive assistance for a specific period of time (e.g., 15 years) after project start-up;
  • Both existing (retrofit) and new, greenfield coal-fueled projects would be eligible to participate in the program;
  • Qualifying projects must meet certain coal fuel input and performance requirements and capture a minimum of 46% of the CO2 emissions that would otherwise be emitted from the unit;
  • The price paid for captured CO2 will be tied to the price of crude oil;
  • Financial support from the government for entities participating in the program would be tied to qualifying tons of CO2 captured and used for EOR;
  • The subsidy rate ($/ton CO2) would be determined through a mechanism under which the future price of a barrel of oil and a resultant market price for CO2 are estimated and a per ton CO2 subsidy rate is determined;
  • Recognition of federal tax receipts/royalty revenues from the crude oil program through the use of captured CO2 justifies (“pays for”) the subsidies made; no new taxes are levied, only a recognition that tax receipts would not have been collected but for the use of the captured CO2.

This program contains tremendous potential benefits to the U.S. in terms of increased tax revenues, jobs, substantial increases in domestic oil production, and likely concurrent reductions in imported oil (along with significantly reduced exported dollars to pay for such imports). In addition, encouraging the construction of new coal-fueled facilities equipped with CCUS technology or the retrofitting of such technology on existing coal-fueled power generation provides commercial projects that will allow for the capture and storage of CO2 from the use of coal. And finally, this type of program helps to ensure the use of coal, America’s most abundant fossil fuel resource.

One final note, in addition to the technology and cost challenges facing CO2 capture technology, challenges exist for CO2 storage approaches as well. There are significant unresolved “legal framework” barriers to CO2 storage in saline formations, including exposure to significant liabilities and risks for scores of decades after closure of the power plant. The good news is that, assuming these barriers are adequately addressed, the North American continent has promising storage sites for thousands of years of CO2 emissions from electric power generation.B Again, not all power plants are located in close proximity to potential CO2 use in EOR applications and because the source of CO2 (i.e., power plant) is not in close proximity to any EOR field then storage in saline formations could be the only option. This means that these legal framework barriers must be addressed concurrent with the development of CO2 capture technologies.

Conclusions

Successful development of advanced coal technologies can best ensure that coal remains an option for the generation of electricity and other useful energy products and chemical feedstocks. Maintaining this diversity in fuel choice is a hedge against volatile fuel prices (e.g., natural gas prices) or potential scarcity of long-term supply of competing fuels, thereby better ensuring electricity generators can continue to provide reliable, uninterruptable, and affordable electricity for American consumers. Residential, commercial, and manufacturing consumers of power will reap the benefits of maintaining fuel options and for coal—technology is the pathway toward providing that insurance.

NOTES

  1. As of 2012, coal continued to provide 37% of the electricity generated and consumed in the U.S. The Energy Information Administration (EIA) projects in its latest Annual Energy Outlook (2013) that coal will continue to provide approximately 40% of U.S. electricity needs through 2040 (the end of the EIA projection period).5 With respect to the U.S. market for new power plants, the DOE/EIA’s most recent Annual Energy Outlook projects that the overall electric power sector (including all fuels) will shrink from 1006 GW of capacity in 2013 to 986 GW in 2020.5 The EIA also projects that once 6 GW of coal units now under construction commence operation (by 2015), essentially no additional coal units will be built until after 2035, and only 1.5 GW by 2040. These projections assume current regulations and do not reflect any future regulations limiting CO2 emissions. U.S. continued reliance upon coal may be met with the existing, and aging, coal fleet.
  2. The DOE/NETL atlas of geology favorable to CO2 storage has identified deep underground saline geologies which could accommodate 2–20 trillion tonnes of CO2. This range is enough to store the CO2 from the entire U.S. coal-fueled fleet operating for 1000 to 10,000 years.

 

REFERENCES

  1. O. Deschenes, Climate Policy and Labor Markets, Working Paper 16111, National Bureau of Economic Research, June 2010, www.nber.org/papers/w16111
  2. U.S. Department of Energy, Fossil Energy Research Benefits: Return on Investment, June 2012, energy.gov/sites/prod/files/roi_factcard.pdf
  3. P. Behr, Shale Oil: Oil Boom Masks Technological Limits that Could Stifle Long-term Bakken Potential, 6 June 2013, www.eenews.net/energywire/2013/06/06/stories/1059982389
  4. P. DiPietro, NETL, Office of Strategic Energy Analysis and Planning, 9 March 2012, PowerPoint presentation
  5. U.S. Energy Information Agency, Annual Energy Outlook 2013, www.eia.gov/forecasts/aeo/

 

The author can be reached at bny@vnf.com.

The content in Cornerstone does not necessarily reflect the views of the World Coal Association or its members.