Category Archives: Voices

The Challenges for CCS

By Tony Wood
Grattan Institute

Any hard-nosed assessment of the energy sector should conclude that there is no future for coal without carbon capture and storage (CCS). Yet for the last decade, governments, their agencies, and the coal industry have failed to support CCS development in a way that would be consistent with this existential threat. The result is that CCS has little credibility as a material contributor to reducing emissions with governments and those outside the fossil fuel industry. This is despite projections by reputable bodies such as the International Energy Agency (IEA) that show CCS does make a material contribution to delivering a low-emissions future at lowest cost. The prospects for bridging that gap rests with several demonstration projects or a major mobilization by a country such as China.


Reducing greenhouse gases and particularly carbon dioxide (CO2) is at the heart of the global commitment to addressing climate change. That means we either stop burning fossil fuels or prevent the CO2 from entering the atmosphere, or both. Neither is simple or cheap.

Hydropower, wind, and solar energy are making a significant and growing contribution to the former approach, although hydro is constrained by available sites, while wind and solar need major progress on storage technologies to get to the majority side of the supply ledger. Nuclear energy remains either too expensive or politically unacceptable in many parts of the world.

Reducing CO2 is the key to addressing climate change.

Attempts to turn CO2 into a solid material through mineralization have generally proven to be expensive or not scalable. Capturing and permanently storing the CO2 underground remains a tantalizing prospect that could significantly contribute to reductions in greenhouse gas emissions, while allowing the ongoing use of fossil fuels, coal and natural gas, for decades into the future. At the least, this prospect would allow us more time to develop cost-effective alternatives.

For most of the current century, the cost of wind and solar power has fallen as their deployment has grown. Government support through policies such as renewable portfolio standards and mandated targets or attractive feed-in tariffs have driven this growth in many countries. Actual deployment has consistently exceeded the projections of the most well regarded bodies such as the IEA, and this story has yet to reach an end. Yet the same agencies have consistently projected deployment of CCS that has turned out to be highly optimistic.

The IEA’s most recent World Energy Outlook1 includes a 450 Scenario that depicts a pathway to the 2°C climate goal committed to by the international community and reaffirmed as a minimum target in the Paris Agreement of December 2015. Under this scenario, the IEA’s analysis indicates that coal consumption will begin to decline from before 2020 and that, by 2040, coal accounts for only 16% of the world’s energy mix. Further, even the 12% of electricity output that is based on coal in this scenario depends on CCS for three-quarters of its produced power. With only one such operational plant in the world to date, and a couple close to commissioning, that projection seems a distant prospect.

Few governments have adopted policies over the last decade or so that would drive CCS development and deployment, and few show any appetite to do so today. The most common reaction from political leaders and energy industry executives is that CCS does not work, is untested, or is just too expensive to be taken seriously. The fossil fuel industry has consistently failed to mobilize financial or political support to counter this perception. Only a handful of demonstration projects have progressed beyond the drawing board, at the same time as supporters of renewable energy have successfully lobbied for large and ongoing government subsidies.

There is a little progress with the development of CCS, despite international organizations such as the IEA publishing forecasts about the key role CCS could play in reducing CO2 emissions and calls for governments to fund demonstration projects. CCS faces significant hurdles: the high costs that were associated with wind and solar a decade ago; capital intensity, shared by nuclear power, that creates high financial risk; and widespread opposition by environmentalists as a smokescreen to extend the life of fossil fuels when they should be confined to history. Its friends are few. So, where or what might give rise to change?


Growth in energy demand has been the central impetus behind increasing global greenhouse gas emissions for many decades. Decoupling of energy consumption from economic growth, together with low economic growth across the developed world, has constrained the need for large-scale energy production. Things have been different in developing economies. The People’s Republic of China (PRC) has been a major driver of increasing emissions this century, and its actions will be critical if climate change is to be effectively addressed. The PRC has ratified the Paris Agreement and is making progress toward a national emissions trading scheme as a central policy response. Even with lower economic growth in very recent years, the PRC continues to need more energy. Further, CO2 emissions from industrial production outside the power generation sector are major source of emissions for the PRC, and for which wind and solar do not provide a solution.

It the COP21 meeting in Paris, the PRC’s National Development and Reform Commission (NDRC) and the Asian Development Bank launched a CCS Roadmap2 that incorporates policy, legal, technology, financial, and public engagement as an integrated approach to CCS for the PRC. It demonstrates that CCS can contribute to meeting the country’s emissions reduction targets in the short, medium, and long term through specific actions during the period of the 13th Five-Year Plan and beyond 2020. The key messages in the Roadmap are:

  • CCS demonstration and deployment is essential for cost-effective climate change mitigation, not only in the power sector, but also for reducing emissions in carbon-intensive coal-chemical, steel, cement, and refinery plants.
  • The PRC can benefit from international experiences.
  • Unique low-cost CCS demonstration opportunities exist in the PRC, most notably in regions that offer prospects for CO2 capture from coal-chemical plants and enhanced oil recovery.
  • CCS demonstration faces formidable challenges in the absence of targeted support that should include financial support, enabling policies, and an appropriate regulatory framework.
  • Current low oil prices have reduced the incentive for enhanced oil recovery but the fundamental drivers in the PRC remain strong.
  • A phased approach to CCS demonstration and deployment is needed. Early-stage demonstration projects based on low-cost capture in parallel with intensive research and development and limited application in the power sector can bring down costs and deliver new knowledge. Success in the 10 years to 2025 can pave the way for wider deployment of cost competitive CCS from 2030 onward.

There is both strong interest and healthy debate around committing to a CCS Roadmap in the PRC, with several projects showing signs of tangible progress and the NDRC continuing to be actively engaged.


Reducing CO2 emissions from fossil fuel combustion requires pricing the environmental impact of the emissions (carbon pricing), valuing low-emissions technologies, or regulation. Carbon pricing has generally lacked ambition consistent with the global 2°C target, so the prices have fallen far short of levels necessary to drive major technology changes. Regulation to shut down older, more polluting plants has been applied but only in a few countries and then only gently. The driver in deployment of these technologies has been policies to support renewable energy via various forms of subsidy.

In developed economies, government support has existed for CCS technologies, primarily through funding for research and development or for demonstration projects. Yet failure has been more visible than success. European attempts to allocate a substantial block of funds by reserving permits for CCS projects never materialized; the UK process to fund demonstration projects has failed to progress at least twice; U.S. projects, notably FutureGen, suffered several false starts; and the Australia’s CCS Flagship Program failed to make substantial progress on any of its mooted projects. Governments can be criticized for failing to deliver and maintain serious support for CCS and industry for failing to step up with real commitment. And CCS projects do not come cheap.

Growth in energy demand continues in China.

Beyond the Boundary Dam project in Canada, a sole lighthouse on a barren coastline, the hope in developed economies may lie with a couple of U.S. power projects that may still be commissioned soon. So, most governments are no longer actively interested in CCS, if they ever were, and the power generation and coal and gas industries have failed to develop the compelling narrative that would convince a policy maker to risk significant political capital on the alternative.


Current policies and positions by governments and industry will repeat the history of the last decade. For CCS to be deployed at the scale for which proponents have argued and neutral bodies such as the IEA have projected, two things must change. First, governments must adopt credible, long-term climate change policies consistent with the commitments they have made under the Paris Agreement. Second, both governments and industry must themselves be sufficiently convinced of the case for CCS to deliver the major and consistent financial support for early-stage pre-commercial deployment to drive down the cost.

Not many years ago, governments were prepared to see CCS as one of a basket of technologies that would contribute to emissions reduction. On this basis, funding for demonstration projects as described above was established in several developed economies. These projects generally failed to proceed either because the funding was inadequate, the costs blew out beyond the proponents’ expectations, or the proponents themselves abandoned the projects.

Few, if any, political leaders or energy/resources ministers are advocates for CCS today. The political risks are high and CCS proponents have failed to convince politicians with arguments compelling enough to invest scarce political capital. This is despite the logic that suggests if CCS had received the same level of support as wind and solar technologies, the cost of CCS would have fallen as it did for those technologies. And, despite the threat to coal and gas that will follow if governments meet their commitments under the Paris Agreement, those industries have failed to put sufficient financial effort into CCS projects to change the game by demonstrating technical credibility and cost reduction potential.

Credible, stable climate change policies are rare around the world. Even when, as in Europe, emissions trading schemes have been implemented, design flaws or economic conditions have meant that carbon prices have failed to reach levels that would support the widespread adoption of low-emissions technologies. It has fallen to specific subsidy schemes to drive the adoption of renewable energy such as wind and solar power. The possibility that CCS could have delivered similar levels of emissions reduction at similar cost levels remains untested. The result is that politicians shy away from climate change policies that would lead to carbon prices high enough to deploy CCS technologies alongside wind and solar in a lowest cost mix, yet are prepared, often with community endorsement, to subsidize wind and solar power such that the overall cost is almost certainly higher.

The lack of substantial progress with CCS in developed economies leads many to look to the PRC as a possible savior. The PRC government has shown a preparedness to support low-emissions technologies across the spectrum of wind, solar, hydro, and nuclear; and several CCS projects, including enhanced oil recovery and some focused on the coal-chemical sector, are making progress. The current levels of air pollution in their major cities, much associated with fossil fuel combustion, also provide a strong driver to address non-CO2 pollution and greenhouse gas emissions within the same policy response.

The CCS Roadmap described above provides a possible way forward and one that might lead the PRC to a global leadership position on CCS technologies as was achieved with solar. Yet, it is far from clear that the PRC government is any more wedded to this prospect than were western governments over the last decade. Government representatives often share the western view that CCS is just too expensive and means less productivity from the fossil fuels that are burned. Cooperation across governments and with strong support from the coal and gas sector to finance real projects could provide a catalyst.

A compelling case for CCS may yet emerge from a combination of demonstration projects and the emergence of high-cost scenarios for alternative approaches in developed economies. The PRC may support CCS and achieve the major cost reductions envisaged in its Roadmap.


  1. International Energy Agency. (2015, 10 November). World energy outlook 2015. Paris: OECD/IEA.
  2. Asian Development Bank. (2015, November). Roadmap for carbon capture and storage demonstration and deployment in the People’s Republic of China,


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The Role of CCS in a Well-Below 2°C World

By Kamel Ben Naceur
Director, Sustainability, Technology and Outlooks Directorate,
International Energy Agency
Samantha McCulloch
Energy Analyst, International Energy Agency

The ratification of the Paris Agreement marked an historic milestone for the energy sector and confirmed a global target of limiting future temperature increases to “well below 2°C”. Achieving this will require a much faster and more extensive transformation of the energy sector than previously contemplated. All technologies and all options for reducing emissions will need to be embraced—with carbon capture and storage (CCS) being core among these. The Paris Agreement therefore presents enormous opportunities for the deployment of CCS technologies.

CCS provides a unique and important solution to emissions from current and future use of fossil fuels in industry and in power generation. It is the only technology able to significantly reduce emissions from coal- and gas-fired power plants. Crucially, CCS is also one of few technologies that can address emissions from industrial processes, including the production of steel, cement, and chemicals, all of which will remain building blocks of modern society. The Intergovernmental Panel on Climate Change (IPCC) has further emphasized the importance of CCS with bioenergy in delivering future “negative emissions” if more ambitious climate targets are to be achieved.1

The Paris Agreement is an enormous opportunity for CCS.

Fortunately, CCS technologies are now well understood and global experience in delivering large-scale projects continues to grow. The Sleipner CCS project in Norway has now been operating for 20 years, safely and permanently storing almost 17 million tonnes of CO2 deep under the North Sea. The International Energy Agency (IEA) has recently acknowledged this milestone and reviewed the progress achieved in developing and deploying CCS technologies in its report “20 Years of Carbon Capture and Storage – Accelerating Future Deployment”. The report also highlights the importance of CCS in achieving future climate goals.


CCS plays a key role in moving the energy sector onto a pathway consistent with limiting future temperature increases to 2°C. Analysis by the IEA suggests that CCS could account for around 12% of the cumulative emissions reductions needed to transition from a “business as usual” (6DS) approach to a 2°C (2DS) target by 2050 (Figure 1).2 This amounts to 94 gigatonnes (Gt) of carbon dioxide (CO2) captured in the period to 2050, with around 55% of this (52 Gt) in the power sector and 42 Gt in industrial applications and fuel transformation.3 Coal-fired power generation is the single largest source of CO2 captured in the IEA 2°C scenario, with 40 GtCO2 captured in the period to 2050 and around 570 GW of global coal-fired generation equipped with CCS in 2050.

FIGURE 1. CCS is a key contributor in the 2DS.
Source: IEA (2016), Energy Technology Perspectives 2016

Shifting to a well-below 2°C target will likely require even greater deployment of CCS, particularly in industrial applications. In the IEA 2DS, the power sector is virtually decarbonized by 2050, while industry becomes the single largest source of emissions at around 45%, followed by transport (Figure 2). There are alternatives to CCS for further emissions reductions in the industrial sector. The potential for other options, such as energy efficiency and fuel or feedstock switching, to contribute to further emissions reductions is likely to be limited. Faster deployment of CCS in the power sector, including through retrofitting existing coal-fired power plants, could also contribute to achieving a well-below 2°C target.

FIGURE 2. Remaining CO2 emissions in the 2DS in 2050: further reductions in industry needed
Source: IEA (2016), 20 Years of Carbon Capture and Storage: Accelerating Future Deployment

The scale of the challenge associated with limiting future temperature increases to well below 2°C means that achieving “a balance between anthropogenic emissions by sources and removals by sinks” in the second half of the century, as outlined in the Paris Agreement, may not be the end-point for achieving climate goals. Analyses by key institutions, including the Mercator Research Institute,4 highlight that overall emissions will need to be negative in the second half of the century under the more ambitious pathways agreed in Paris. CCS in combination with bioenergy, or BECCS, will be important as one of the few technologies able to deliver “negative emissions”. This was highlighted by the IPCC in its Fifth Assessment Report, where it found that many climate models were unable to achieve concentration goals consistent with a 2°C or well-below 2°C target without significant deployment of BECCS.1


More than any other fuel, coal use will be substantially impacted as the energy sector transitions to a 2°C or well-below 2°C target. The successful and widespread deployment of CCS technologies will be a key determinant of the future role of coal as climate policies are strengthened globally.

In the IEA’s 2DS, around 75% of global coal-fired power generation capacity is equipped with CCS and provides around 3300 TWh of generation in 2050. The remaining unabated plants run at very low capacity factors. In a 2DS, the average emissions intensity of the global power sector must fall from more than 500 g/CO2 per kWh to around 40 g/CO2 per kWh in 2050. In a well-below 2°C case, this may need to be reduced even further.

This leaves virtually no room for unabated coal-fired power plants in the power mix, and even challenges the role for CCS-equipped coal plants in the long term. An ultra-supercritical coal-fired power plant with a CO2 capture rate of 90% would produce emissions of around 100 g/CO2 per kWh— substantially higher than the average global fleet in 2050, notwithstanding a major reduction from the more than 760 g/CO2 per kWh of an unabated plant. Opportunities to further reduce this include technological improvements related to plant efficiency, higher CO2 capture rates, and co-firing coal with biomass in CCS-equipped plants. The latter option, in particular, has the potential to yield zero-emissions coal plants which could be the key to a future role for coal in a well-below 2°C world.

Putting scenario analysis aside, today’s reality is that more than 1950 GW of coal-fired generation capacity currently operates globally, with a further 250 GW under construction and 1000 GW in various stages of planning. Around 500 GW of existing capacity has been added since 2010, and the average plant age for developing countries is around 15 years. Much of this fleet has a technical operating life that extends to 2050 and beyond, meaning that early retirements would be unavoidable to achieve a 2°C target. In practice, this would present significant social, economic, and political challenges, particularly with more than 40% of fossil fuel power generation publicly owned. CCS, including retrofitting, can provide an important and strategic alternative to early retirements, preserving the economic value of these investments while bridging the gap between today’s reality and the achievement of future climate ambitions.


CCS is far from being a new technology. Individual CCS technologies have been used in industry for decades, including the injection of CO2 for enhanced oil recovery purposes, which commenced in the U.S. in the early 1970s. Globally, 15 large-scale CCS projects are currently operating across a range of applications, with six more projects expected within the next 12 months. With all of this experience, it is evident that there are no insurmountable technological barriers to CCS deployment. The part of the equation that has been missing has been the financial incentives and climate policies necessary to support investment.

Over the past 20 years, policy and political support for CCS has fluctuated considerably and provided an uncertain foundation for investment (Figure 3).

FIGURE 3. Fluctuating policy and political support for CCS
Source: IEA (2016), 20 years of Carbon Capture and Storage: Accelerating Future Deployment. Figure adapted from SBC Energy Institute (2016), Low Carbon Energy Technologies Fact Book Update: Carbon Capture and Storage at a Crossroads.

Following the release of the IPCC Special Report on CCS in 2005 and the G8 leaders’ pledge to deploy 20 large-scale CCS projects before 2020, there was a considerable upswing in momentum. New international initiatives such as the Global CCS Institute were launched and around US$30 billion in public funding commitments were made globally, with the aim of supporting as many as 35 projects. However, by 2014 less than US$3 billion of this had been spent, and only seven projects have ultimately received support from these programs.

A number of factors have influenced this, including the failure of the Copenhagen climate negotiations in 2009 which saw climate change temporarily fall down the list of political priorities. Budget pressures following the global financial crisis also impacted public funding availability. Remarkable cost reductions in renewable technologies and advances in energy efficiency have arguably also captured the policy focus.

However, a major contributor was the fact that deploying first-of-a-kind, large-scale CCS projects also proved to be more complex, time consuming, and expensive than many governments and project proponents had anticipated. For every project that has successfully reached a final investment decision, two have been cancelled. This is not necessarily unexpected given the stage of the technology, the need for confidence in storage, and the size of the investment required. Yet it underscores the critical importance of increasing the number of projects under development and pulling through more investment with targeted support and stable policy frameworks.


The analysis by the IEA confirms that the successful implementation of the Paris Agreement will almost certainly require deployment of CCS across industry and power applications, as well as investment in bioenergy with CCS for “negative emissions”. This investment in CCS is not just for the long term, with substantial deployment of CCS needed in the period to 2030 under our lowest-cost scenarios. Enormous opportunities for CCS could therefore emerge as global governments act to implement their Nationally Determined Contributions (NDCs) in parallel with planning for their long-term (2050) climate strategies.A

The importance of accelerating CCS

Yet we must also recognize that the ratification of the Paris Agreement is just the beginning. A considerable gap exists between the level of effort represented in the NDCs pledged prior to Paris, and what is required to achieve the ambitions of the Paris Agreement. IEA analysis finds that the NDCs would put us on a pathway for temperature increases of almost 3°C and would not lead to an emission peak in the near future.5 The difference between this and a well-below 2°C target is immense, and could represent more than 40 years’ worth of current emissions.6

Given the gap between the NDC pathway and a well-below 2°C target, the fact that CCS was mentioned in only 10 out of 162 NDCs could be seen as both a symptom and a cause. CCS is a technology essential for achieving more ambitious temperature targets, but the lower the ambition the less of a role for CCS, particularly in the near term. A refocusing of efforts to deploy CCS will be essential as we work to bridge the gap between action and ambition globally.


More than 20 years of experience with CCS technologies and a growing number of large-scale projects confirms that there are no insurmountable technological barriers to deployment. The ratification of the Paris Agreement now provides the foundation for significantly strengthened climate action that could unlock enormous opportunities for CCS. Given the climate challenge ahead, CCS is a solution that’s simply too big to be ignored, particularly for emissions from industrial processes and today’s large coal-fired power fleet. The coal industry has a particularly strong interest in the widespread deployment of CCS, with the future role of coal in the energy mix inexorably linked to CCS in low-emissions development pathways.


  • A. The decision adopting the Paris Agreement (1/CP.21 paragraph 35) invites Parties to communicate, by 2020, “mid-century, long-term low greenhouse gas emission development strategies”.


  1. Intergovernmental Panel on Climate Change (IPCC). (2014). Climate change 2014: Mitigation of climate change. Summary for policymakers: Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, U.K./New York: Cambridge University Press.
  2. IEA (International Energy Agency). (2016). Energy technology perspectives 2016. Paris: OECD/IEA.
  3. IEA. (2016). 20 years of carbon capture and storage: Accelerating future deployment. Paris: OECD/IEA.
  4. Mercator Research Institute on Global Commons and Climate Change. (2016). Betting on negative emissions,
  5. IEA. (2015). World energy outlook special report: Energy and climate change. Paris: OECD/IEA
  6. Carbon Brief. (2016). Analysis: Only five years left before 1.5°C budget is blown, (accessed 24 Nov. 2016).


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Beyond HELE: Why CCS Is Imperative Now

By Brad Page
CEO, Global CCS Institute

It is now clear that the outcome of the Paris climate talks was a game changer, delivering a renewed global commitment to addressing climate change. No longer are we aiming to limit global warming to 2°C. We are now aspiring for well below that—perhaps as low as 1.5°C. Significantly, the agreement also sets out global ambition for carbon neutrality by mid-century. In the post-COP21 discussions, thinking has shifted from “how much do we do?” to “how do we do so much? “

But the numbers are confronting.

The targets set by the countries signing up to the Paris Agreement only put the world on a track toward about 3°C. For many countries, the targets they volunteered are more ambitious than they have previously been; for many others, they remain more easily achieved. For some, and especially among developing countries, the outlook is not as simple: Energy poverty must be addressed alongside economic growth and environmental stewardship. Although these are not mutually exclusive, addressing all three imperatives concurrently can be expensive in the immediate term.

But the atmosphere is not forgiving. We are already at 400 ppm of CO2 and on track to exceed 450 ppm. To achieve the Paris ambition, emissions most likely have to peak in the next decade and there is a growing likelihood that negative emissions technologies will be necessary.

Boundary Dam Power Station

Assuming that current and announced climate policies are implemented, the International Energy Agency (IEA) forecasts that, despite the extensive, worldwide government support for renewables and increasing energy efficiency, fossil fuels are expected to meet approximately 75% of primary energy demand in 2040, down marginally from the historic share of around 80%.1

Against this backdrop, energy access in developing countries is the path to improved living standards. The majority of increased fossil fuel usage will come from here, alongside an associated escalation in emissions, unless there are fundamental changes in approach.

Without doubt, visionary, bold, and innovative policy solutions are necessary. It will not be enough to single out popular technologies for support, and hope they will do the job. That is the path the world has been on for at least the past two decades and today we are farther away from our emission objectives, in absolute terms, than we were 20 years ago.

It is clear that renewables and energy efficiency will—must—play a significant and increasing role. Support for these will continue and their penetration will continue to increase from today’s base. But in the time available, this will not be enough.

Industrial processes account for approximately 25% of greenhouse gas emissions.2 Energy efficiency is relevant but the main, perhaps only, technology to address this problem is carbon capture and storage (CCS). Renewables offer very limited potential in this area.

In power generation, the installed stock of fossil fuel plants is so great that much of it will not be retired in the next 30 years. Additionally, Carbon Tracker reports3 that more than 2000 new coal-fired generators are planned for construction by 2030. This level of additional coal-fired generation capacity is completely inconsistent with the Paris Agreement unless it is accompanied by CCS.

To the extent that new coal-fired generators are constructed and operated, it is imperative they are of the highest efficiency available and operated to contribute positively to energy security while minimizing their emissions. HELE (high-efficiency, low-emissions) coal-fired generators need to be the minimum specification acceptable for new-build and replacement coal plants.

Fossil fuel demand growing and reserves robust
Source: IEA World Energy Outlook, 2015 (New policies scenario)
Source: BP Statistical Review of World Energy 2015

But will this be enough against the Paris Agreement backdrop? The short answer is no.

Coal-fired generation technology is mature, relatively low cost, and widely available. Continual research and development over many decades has lifted efficiency from 20% in old subcritical plants to as high as 40+% in the latest ultra-supercritical plants. These improvements in efficiency have also seen greenhouse gas emissions fall per unit of output by upward of 25%.

It is entirely sensible that all new coal-fired generators should be ultra-supercritical. The additional electrical output per unit of fuel as well as valuable efficiencies in water consumption and emissions should make the latest technology (when viewed over the life of the plant) highly attractive. Nonetheless, although this technology represents a huge improvement in all aspects of performance over the average of the global-installed fleet, these plants remain relatively emissions intensive.

Even at 650–800 kg CO2/MWh, ultra-supercritical plants are about twice as emissions intensive per MWh as the latest combined-cycle gas turbines. Yet with the need to peak emissions within 10 years, gas turbines will be unacceptably high in emissions in the short run, unless CCS is part of their utilization.

While this picture leads to a conclusion that CCS is vital, the path to its widespread uptake is far from clear.

Over the decade to 2014, global investment in renewables was just short of US$2 trillion. Over the same period, investment in CCS was US$20 billion.4 How can such a disparity in investment exist if the world is trying to achieve what amounts to a complete energy system redesign—indeed, redevelopment—in the next 35 years?

In short, it comes down to the business case. When there is not a clear and enduring value for carbon dioxide, and policies instead are deliberately constructed to favour specific technologies, then capital will go to where the best reliable return can be achieved. For more than 20 years this has essentially flowed to renewable technologies: first on-shore wind, then solar, and, close on their heels, off-shore wind.

Doubtless this has led to a fast and continuing lowering of the unit price of all of these technologies. When all of the available clean energy technologies are needed to address emissions, this is clearly positive. However, when fossil fuels represent the overwhelming majority of primary energy demand and are projected to do so for another 15–25 years at least, then ignoring the key technology that can make fossil fuels “low emission” directly threatens the ability to arrest the climate challenge. As emissions need to peak in the next 10 years, this looks increasingly unlikely.

Those opposing CCS are vocal but their arguments warrant critical analysis.

Contrary to the views of some, CCS is not experimental. Currently 15 large-scale integrated facilities are operating in various countries around the world, capturing and storing 28 million tonnes of CO2 every year. Another seven are under construction (including two very large power plants) and, when operating in the next 2–3 years, these will increase capture and storage to 40 million tonnes per annum.5

SaskPower carbon capture and storage facility

Others say it is too expensive. “Compared to what?” should be the rejoinder. If the comparison is to unabated fossil fuel technology, then of course it is. In comparison to renewable or nuclear generation options, however, it is rarely more expensive. Successive studies6 have shown that CCS is generally more expensive than old hydro and on-shore wind but generally competitive with utility-scale solar PV, geothermal, and new hydro while being lower in cost than small-scale PV, off-shore wind, nuclear, and the many other nascent technologies—especially when the real cost of filling-in for intermittency is included. Yes, it is a high capital cost addition. But it also delivers dependable, secure, dispatchable baseload, and load-following power. From a system security perspective, few low-emissions alternatives compare favorably.

Another claim is that it simply perpetuates the use of fossil fuels. The alternative, and more realistic, approach is that the continued use of fossil fuels over the period of concern is going to happen anyway. And it will be in large volumes. This is reality. It is simply not possible in the space of one or two decades to switch off fossil fuels. Even if the world’s electricity system could be run exclusively on zero-emissions generation in the time period (highly unlikely, of course), the industrial sector—chemicals, fertilizer, steel, and cement production, for example—will continue to require carbon-based fuels. The industrial processing sector alone is 25% of global emissions and cannot be ignored if climate objectives are to be achieved. Only CCS can deal with these unavoidable emissions. Perhaps more significantly, much of the developing world will exploit its carbon-based fuels, coal key among them, to lift national and personal incomes and give their citizens a better way of life. Plans for new coal-fired power stations confirm this. CCS must be part of the plan for these power stations.

Increasingly it appears inevitable that negative emissions technologies—those that actively take CO2 out of the atmosphere—will be necessary to achieve 2°C, let alone 1.5°C. Few options exist in this area; forestry is obvious, but the time taken to embed carbon in trees is long compared to the rate at which emissions occur. Bio-energy production with CCS is the main alternative and is already a reality; the Illinois Industrial Project at Decatur in the U.S. represents precisely this. But the infrastructure, pipes and storage facilities, doesn’t simply turn up at will. It requires planning, permitting, and proper evaluation and construction, as well as a sound business case and preferably many users to minimize the cost per tonne transported and stored. The likely most efficient approach to this is to start early and decarbonize whole industrial clusters by providing common user infrastructure and rewarding those that choose to move to a low-carbon production model. This is again a question of policy, policy that needs to be long term in its thinking with cost minimizing as a key objective.

After Paris, one thing is clear: There’s no place to hide when it comes to decarbonizing the world. Countries have signed up to an agreement that includes provisions to prevent so-called “backsliding”. Future targets and commitments can only be more ambitious, and if the temperature objectives are to be achieved, then this is necessary and inevitable. Every sector of the global economy will be under close examination, including many (especially in the industrial processing arena) that, to date, have been largely left alone.

Time is short. The challenge is huge.

The overriding guiding principle for decarbonizing should be to do it at minimum cost. That isn’t the track the world has been on for over 20 years as many policies have led to abatement cost multiples above what was necessary.

CCS is consistently reported as having a key role in solving the decarbonization challenge at least cost. Combined with HELE in coal-fired power generation, increased efficiency in many industrial processes, and applied to bioenergy production, CCS can make the difference in whether or not the Paris Agreement objectives can be achieved.

But to do this we need worldwide policies that focus on delivering clean energy, not just those that, for whatever reason, are popular or preferred in any given period.


  1. IEA. (2015). World energy outlook 2015 New Policies Scenario,
  2. IPCC. (2015). IPCC Fifth Assessment synthesis report,
  3. Coalswarm. (2016, July). Global Coal Plant Tracker: Proposed coal plants by country (units),
  4. Bloomberg New Energy Finance. (2014). Carbon capture and storage: Perspectives from the International Energy Agency. Presented at National CCS Week in Australia, September 2014.
  5. GCCSI. (2015). Global CCS Institute status report 2015,
  6. GCCSI. (2015). The costs of CCS and other low-carbon technologies in the United States: 2015 update,


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Enhancing, Preserving, and Protecting North Dakota’s Lignite Industry

By Michael Jones
Vice President of Research and Development,
Lignite Energy Council
Technical Advisor, North Dakota Industrial Commission

North Dakota is part of the interior of the United States. Sometimes called the Peace Garden State because it shares a peaceful border with the Canadian province of Saskatchewan, the state is known for its sparse population and its abundant resources—productive farms and energy sources that help feed and power a vast region. However, its most important resource is the perseverance and ingenuity of its 750,000 residents.

North Dakota’s history is filled with examples of how its citizens rallied together to make decisions for the betterment of its farms and cities. A couple of examples are the state-owned Bank of North Dakota, which lends money to farmers who are just getting started or are expanding their operations. Another example is the state-owned North Dakota Mill and Elevator that added value to the state’s grain crops without transporting the wheat out of state to the Minneapolis-based flour mills. Both have been huge successes and annually return millions of dollars to the state’s general fund.

A similar success story took place in June 1990 when the voters in North Dakota passed a constitutional measure to increase revenues for a North Dakota Lignite Research and Development (R&D) program with a 10-cent tax on every ton of lignite mined.

The R&D program was advanced by the Lignite Energy Council, a regional trade association representing the power plants and lignite mines in North Dakota. The Council was established in 1974 and has provided a single voice, regionally and nationally, for the industry on most issues in North Dakota.

Coal Creek Station, the largest coal-fired power plant in North Dakota.

The lignite industry is one of North Dakota’s five largest industries and is generally regarded as its most stable. Since 1988, the industry has produced about 28 to 32 million tons of lignite annually. The industry provides some of the best paying jobs in the state with coal miners and power plant operators earning about twice the state’s average income. The industry also provides the state with about $200 million in tax revenue every biennium.

John Dwyer, then president of the Lignite Energy Council, wrote: “Through technological development efforts, these (lignite) resources also represent tremendous potential for future economic growth. Not only can research and development programs discover new and better uses for lignite, but they can also find cleaner, more efficient methods of using lignite in today’s markets.”1

These words seem even more prophetic today, given the challenges the industry faces following the August 2015 release of the Clean Power Plan (CPP), the CO2 emissions limit the U.S. Environmental Protection Administration (EPA) is attempting to impose. Although the CPP is currently under a stay order by the U.S. Supreme Court, the rule is a harbinger that CO2 will be regulated in the future.


As the U.S. and the world seek to reduce anthropogenic CO2 emissions while assuring adequate supplies of the affordable and reliable electricity needed to ensure strong economies, the state of North Dakota stands uniquely situated to be a leader in finding technical solutions for low-rank coals such as lignite.

North Dakota’s distinctive characteristics include:

  • A state–industry funded R&D partnership with a 30-year track record of success. These funds are distributed based on evaluations and recommendations through the Lignite Research Council, a governor-appointed advisory council made up of representatives of key stakeholders in the lignite industry;
  • Home to the Energy & Environmental Research Center (EERC), known internationally as a top lignite R&D organization;
  • Existing CO2 infrastructure including a pipeline and compressor facilities from the coal fields through the oil fields of western North Dakota. The lignite industry has been providing CO2 for enhanced oil recovery (EOR) since 2000.
  • The state’s enormous lignite resources. Only Australia has a larger known lignite reserve. At current production levels, North Dakota reserves would last more than 800 years.
  • A history of outstanding lignite mine reclamation and meeting all federal ambient air quality standards.
  • An energy-rich, business-friendly state that promotes all sources of energy including coal, oil, natural gas, hydro power, wind, ethanol, and other renewables.

Since its beginning in 1987, the North Dakota Lignite R&D Program has provided $63.5 million in state funds for more than 200 lignite R&D projects. The total investment to date for all projects is more than $650 million. So for every state dollar invested, more than nine dollars comes from other sources,—including industry, research entities, and the United States Department of Energy, demonstrating the truly collaborative nature of the research.

The North Dakota Lignite R&D program has three primary goals:

  1. Preserve the state’s existing lignite resources by concentrating on ways to increase efficiency and lower emissions.
  2. Expand the industry by looking at both traditional and novel uses of lignite and coal-combustion by-products, such as using fly ash as a substitute for Portland cement or converting lignite into activated char.
  3. Invest in marketing efforts that help expand the sales of lignite products, while also informing the public about the industry through active public affairs and public education programs.


North Dakota’s R&D program has yielded dramatic results over the years. The North Dakota lignite industry was a leader in identifying technologies to reduce mercury emissions from lignite-based power plants in the 2002–2005 timeframe. Over $27 million was invested in R&D activities that led to a reduction in the cost of retrofitting existing plants to comply with the EPA’s new mercury regulations.

Pilot projects originally funded through the North Dakota Lignite R&D program have also grown into major research projects that have been subsequently supported by the U.S. Department of Energy (DOE) and partnering utilities. An example is a $161,000 coal-drying study at the Coal Creek Station that resulted in a $13.5 million cooperative agreement from the DOE. Eventually, Great River Energy invested $182 million to retrofit the Coal Creek Station with coal dryers that lowered emissions and increased efficiency.


The Lignite Research Council has also been actively searching for a technology that would be used in near-zero CO2 power plants for more than a decade.

As part of the search, several North Dakota lignite industry representatives attended a project review briefing at the Power System Development Facility (PSDF) in Wilsonville, Alabama, in 2004. The PSDF is a DOE-sponsored advanced integrated gasification combined-cycle (IGCC) test facility operated by Southern Company Services.

The lignite industry engineers were given a briefing on the performance of moderate and high-sodium lignite from the Coteau Properties Company’s Freedom Mine, near Beulah, North Dakota, using an advanced pilot-scale transport gasifier. A previous test in May 2003 evaluated the performance of lignite from the Falkirk Mine in an air- and oxygen-blown operational mode. The transport gasifier, when incorporated into an IGCC configuration with a combustion turbine, provided high efficiencies and very low emissions and operated particularly smoothly with North Dakota lignite.

The technology is now employed by Southern Company at its Kemper County Project in Mississippi. Despite many challenges with cost and schedule, the new plant is expected to begin operations later this year. The facility will use a Gulf Coast lignite as its fuel source.

In the exploration for new technologies, North Dakota lignite interests began researching a first-of-its-kind natural gas power generation technology being built in Texas.

In October 2014, NET Power, LLC, the developer of the new technology, announced the funding sources for a first-of-its-kind natural gas power plant. The 50-MW demonstration plant would validate the world’s first natural gas power generation system that produces no air emissions and includes full CO2 capture without requiring expensive, efficiency-reducing carbon capture equipment. This is accomplished because the natural gas is combusted in oxygen and recycled CO2. The combustion occurs at supercritical CO2 conditions, meaning the CO2 behaves like a liquid and is nearly pure after combustion.

The $140 million project, which broke ground in March 2016, includes ongoing process engineering, plant engineering, procurement and construction, a full testing and operations program, and commercial product development. Commissioning is expected to begin in late 2016 and be completed in 2017.

This novel supercritical CO2 power cycle, known as the Allam Cycle, is projected to match or lower the current cost of electricity from natural gas combined-cycle plants, while inherently capturing all CO2 and other air emissions. The cycle produces CO2 as a pipeline-quality by-product, as opposed to conventional power plants, where CO2 is produced as an exhaust-gas mixed with other gases and emitted through a stack.

North Dakota energy companies are interested in this technology because the Allam Cycle can work with North Dakota lignite if it is gasified on the front end of the plant.

A preliminary technical and economic study indicates that the owners of power plants using this technology could derive two revenue streams: one stream from the power generation and the other from the sale of CO2, which is valuable to enhance the oil production from partially depleted oil-bearing formations. This combination means that electricity produced from a new Allam Cycle plant could be competitive with electricity produced from conventional coal-based power plants.

North Dakota is an ideal place to build a lignite-based power plant using the Allam Cycle for several reasons:

  1. The state has a history of successfully gasifying Fort Union lignite on a commercial basis that dates back to the opening of the Great Plains Synfuels Plant near Beulah, North Dakota, in 1984. A 205-mile pipeline to transport carbon dioxide from the Synfuels Plant to the oil fields near Weyburn, Saskatchewan, was completed in 2000. To date, more than 32 million tons of CO2 have been stored in the partially depleted oil fields and used for EOR. The pipeline runs through western North Dakota oil fields and has six taps that can be used for additional domestic EOR.
  2. The EERC in Grand Forks, North Dakota, has undertaken two separate studies examining how North Dakota lignite can be gasified and integrated into the Allam Cycle design. The Lignite Research Council with the EERC has twice funded studies, which are known as Phase I and Phase 2 of the Pathway to Low-Carbon Lignite Utilization.
  3. North Dakota’s electric demand is expected to grow along with the oil fields in North Dakota. Projections for electricity demand growth are estimated to be between 2.5 and 5 GW. This demand is for stable baseload generation, the kind typically furnished by lignite-based power plants. The CO2 produced by Allam Cycle generation can also be marketed to oil companies in the nearby Williston Basin.

    NET Power’s Allam Cycle.


    The Lignite Research Council is committed to finding a CO2 solution for our industry and supporting a development pathway for the Allam Cycle—or other low-carbon emission footprint technologies—benefiting both the North Dakota lignite industry and the oil and gas industry. The Allam Cycle is one example of the many technologies holding much promise economically and environmentally. The Lignite Energy Council will support this research and other projects that continue to carve out a role for North Dakota’s vital lignite industry.


    1. North Dakota Lignite Research Council. (1990). Technology development: North Dakota’s lignite future [promotional flyer]. Bismarck, ND: North Dakota Lignite Research Council.


    The content in Cornerstone does not necessarily reflect the views of the World Coal Association or its members.
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Lessons from the “Golden Decade” of Coal for China’s Energy Revolution

By Qian Minggao
Professor, China University of Mining and Technology

China is abundant in coal resources, but holds limited oil and natural gas resources. In the past decade, China’s GDP has grown 8–10% annually, and it is the second largest economy in the world. Nearly 70% of its economic growth and primary energy demand has been met by coal. The consumption of coal increased from 1 billion tons in 2000 to nearly 4.2 billion tons in 2014. This four-fold increase within 15 years is known as the coal sector’s “golden decade” (2000–2010).1

The extensive production and consumption of energy during this golden decade brought about many advances and improvements in the quality of life for hundreds of millions of people. However, this rapid advancement has also created problems. As a result, in recent years the extensive consumption of coal has been criticized, and there has been debate about better “coal control” and even “decarbonization” with proposals for a low-carbon economy. In 2014, China proposed a national plan for an “energy revolution” in terms of consumption, supply, and technology.2 The dominant position of coal is being reevaluated as the country moves toward adjusting the energy mix and reducing coal production capacity.

The increasing consumption of fossil energy in China to meet energy demand has resulted in greater environmental challenges. The construction and development of some coal mines has resulted in environmental problems. China is working to resolve these problems, but issues remain. Internal costs become easily converted into social costs, and only part of the costs of coal mining can be absorbed by the mining company.

Renewable energy is still small in scale compared to coal in China.

China will continue to rely on coal for the foreseeable future, with alternatives such as renewable energy remaining relatively small in scale. Given the country’s extensive consumption of coal, enormous challenges exist in the areas of safety, mining,3 and clean utilization, requiring more studies on planning and the efficient use of resources. A key element in sustainable coal mining is to seek to maximize the economic and social benefits of coal, coal-bed methane, water, and other useful resources. The coal industry in China is part of the energy revolution undertaking reform and innovation. Companies and research institutes are studying methods and technologies to improve the efficient utilization of coal in mining and power generation.


During the rapid development of the coal industry in the golden decade, there arose production safety, environmental, and economic issues.

Production Safety

Geological conditions, technological standards, and levels of safety and protection vary in different mines. During the last few years, several major mining accidents have occurred in unsafe mines. In 2002 the output of township and village coal mines accounted for 39% of national coal output, the fatality rate per million tons was as high as 4.64, and the number of deaths occurring under these two kinds of ownership accounted for 71% of the fatalities in coal mining reported nationally.4,5 In comparison, the output of national high-yield and efficient mines accounted for a quarter of national coal output and the fatality rate per million tons was 0.06. Shenhua Group’s Shendong mining area had an output of 100 million tons with a fatality rate per million tons of only 0.02; this figure fell further to 0.003 in 2014, and is one of the lowest in the world. 5,6

Environmental Capacity Exceeded

Coal mining activities alter the environment, impacting air quality as well as land and water resources. China’s coal industry grew rapidly, at the rate of 200 million tons annually, to meet the energy demand of economic development (2004–2014) (Figure 1). It was a challenging task to improve coal production technologies and meet the national energy demands. The rapid expansion did not allow an opportunity for resource planning. China’s coal fleet expanded quickly and was not equipped with modern emissions control technology.

FIGURE 1. Annual coal production and growth rate of China from 2004 to 2014.

Carbon dioxide emissions, particulates, dust, and other emissions from increasing coal usage have resulted in environmental issues. The international community has called for more policies and measures to mitigate CO2 emissions. A further air quality issue is mitigation of smog formation from coal-fired power stations.

Resource Economy Issues

Chinese coal mines operate under different financial conditions, depending on whether they are state or privately owned. Some private mines may cut costs, which can result in environmental and safety problems. Coal mining costs are a part of the total economic and environmental costs. In several cases the external costs are not fully met. Consequently, prices are kept low in exchange for profits, while the losses from external costs are borne by society. For instance, in some township and village coal mines (mainly privately owned) and poorly financed state-owned coal mines, resources are obtained improperly, and low production costs (55 yuan/ton) are achieved. As a result, these mines have higher mortality rates due to lack of investment in resource planning and safety measures. Internal costs are thereby converted into social costs. Some state-owned coal producers have invested in the establishment of a specialized research institution and in research and development of clean coal technologies. However, other coal companies do not have those resources, especially for smaller township and village coal mines. Due to a lack of regulations these companies do not reinvest in solutions to the industry’s technological issues or invest back into the local economy.

Resource Advantages Are Not Converted Into Economic Advantages

During the life cycle of a coal resource, there will be high costs at the beginning of the mine and at the end of its life when reclamation and environmental remediation take place. Regions rich in resources should reinvest their profits into the rehabilitation of the mine at the end of its economic life. However, there are currently no regulations concerning this. The issue of lack of investment into long-term sustainable solutions was highlighted at the fourth session of the 12th National People’s Congress held in January 2015 in Shanxi province: “Shanxi’s development is inseparable from coal, but due to the prolonged, massive, high-intensity and extensive mining of coal (that provides for a quarter of the national coal output), and especially when restoration and treatment are not in place after mining, Shanxi, which is already an ecologically fragile province, has had to pay a huge price; consequently, it has become one of the provinces with the worst environmental issues in China.” In the national ranking for GDP growth, Shanxi slipped to last place in 2014 and finish second to last in the first half of 2015. The economic benefits from coal mining are not being invested within the province to resolve environmental issues.

In order to achieve scientific and sustainable development, the coal industry must reinvest profits in clean coal technologies. A portion of the profits could be invested in training staff to study resource and environmental economics and sustainable coal mining management. In the long term, this investment also would aim to improve the coal industry’s public image with the wider community. This is an issue worth considering for those who are involved in coal technology, economics, and management work.


In June 2014, the Chinese government proposed an energy revolution in terms of consumption, supply, technology, and system management. The energy revolution approach was in response to concerns over high CO2 and other emissions.

In 2012, China’s GDP exceeded Japan’s for the first time; however, Japan only consumed 660 million tons of standard coal equivalent in that year compared to China’s 3.25 billion tons of standard coal equivalent.7 This is related to China’s rapid development, economic model optimization, and lack of innovative technologies. Therefore, it is necessary to improve the economic model, encourage scientific and technological innovation, and grow economically through high-tech products with low energy consumption in order to reduce energy consumption. Coal will remain the primary energy source in China and to address the long-term sustainable use of coal must be part of the proposed energy revolution.

Coal Mining Equipment

Equipment manufactured for the coal sector provides a high level of mechanization and automation with fewer miners on site. For example, China Coal Technology and Engineering Group provided a complete set of fully mechanized mining machinery to a Russian company in 2015. Consequently, productivity in the mine increased, with fewer accidents. It is mandatory for mines to provide equipment to ensure the safety of miners. Coal companies must also provide comprehensive training and research to improve employer’s safety and environmental protection.

Emissions Control

Historically, major industrial countries have had a severe impact on the environment; in many developed countries, coal is no longer a major part of the energy mix. China produces annually around 4 billion tons of coal—more than half of the world’s coal output. The installed capacity of coal-fired units is close to 800 million kW, and coal-fired power generation accounts for 75% of the total power generated in the country; coal also accounts for more than 40% of cargo transported by rail.5

Analysis of geographical regions in China shows a close correlation between the presence of haze and coal usage. Hence it is necessary to ensure more efficient use of coal usage in order to better control the haze issue.8

Without restructuring its energy mix, it is likely that the consumption of coal in China will continue to rise in order to meet the target of doubling the GDP from 2010 to 2020. Therefore, it is important to undertake further scientific research in order to formulate policies and regulations to improve energy use and reduce emissions.

In recent years, some large coal-fired power plants in China have achieved excellent environmental results through the use of ultra-low emissions technology in their coal-fired power generators. With supercritical and ultra-supercritical high efficiency low emissions (HELE) technologies, coal-fired units can achieve “ultra-low emissions”. For instance, in 2015, Unit 2 at Shenhua Group’s Luoyang Guohua Mengjin Power Station was modified with supercritical technology. This resulted in improvement in several areas: smoke control technology reduced emissions by about 319 tons/year, sulfur dioxide control technology by about 267 tons/year, and nitrogen oxide control technology by about 761 tons/year.9

Other examples of improvement in emissions control after modifications include Unit 4 (300,000 kW) at Guohua Sanhe Power Plant (Figure 2) in 2015. Unit 4 set a new record in China for ultra-low emissions by coal-fired units, with only 0.23 mg/m3 emitted. Unit 3 passed through a 168-hour test run and achieved 2 mg/m3 of emissions in December 2015; Waigaoqiao No. 3 Power Plant’s coal consumption was 273 g/kWh from January to May 2015. The average concentration of sulfur dioxide emissions was 14.95 mg/m3, and the average desulfurization efficiency was above 98%; the actual concentration of flue gas emissions was below 1 mg/m3; and the concentration of nitrogen oxide emissions was only 15.9 mg/m3.

The Chinese government’s recent energy directive10 states: “We will implement the State Council’s Action Plan on Air Pollution Prevention and Control in accordance with the requirements of green development, and fully promote ultra-low emissions and world-class energy consumption standards across the country by speeding up the upgrading and modification of coal-fired power plants; these are important measures to promote clean fossil energy, improve air quality and ease resource constraints.”

FIGURE 2. Guohua Sanhe Power Plant, Unit 4.

The government has decided to implement ultra-low emissions and energy-saving modifications on all coal-fired units by 2020. As a result, all operating coal-fired power plants will have an average coal consumption of less than 310 g/kWh. New power plants will have an average coal consumption of 300 g/kWh. Those that fail to meet the mandatory standards will be closed. In eastern and central China, these standards are to be met earlier, in 2017 and 2018. Upon completion of the modifications, about 100 million tons of coal can be saved every year. CO2 emissions can be reduced by 180 million tons, and the total discharge of major emissions in the power industry can be reduced by about 60%.1


In response to the “energy revolution”, the coal industry in China should focus on reform in the areas of technology, economics, and management, with support from government leadership and the wider community. First, the coal industry should propose its own ideas on development, seeking consensus in the industry with formulation of top-level scientific and technological designs that are compatible with national demand. To improve research in the economics and management of coal mines, the industry should establish several high-level research institutions in eligible companies as well as at colleges and universities. Second, coal companies need better resource planning during both the opening and closing of a coal mine. To ensure the long-term sustainable use of coal requires consultation with the local community to gain their support. Improved government planning and coordination are also necessary to efficiently produce coal throughout China. The ongoing consumption of coal provides challenges in development of methods to improve mining, transport, and utilization of coal in a sustainable manner. Support to better understand the coal life cycle will allow China to better manage its coal resources.


  1. Xi Jinping. (2014, 13 June). General Secretary’s speech to the Sixth Meeting of the Central Leading Group for Financial and Economic Affairs [in Chinese].,
  2. BP. (2015). BP statistical review of world energy,
  3. Xu, J., Zhu, W., Lai, W., & Qian, M. (2004). Green mining techniques in the coal mines of China. Journal of Mines, Metals and Fuels, 52(12), 395–398.
  4. Huang, S., & Dou, Q. (2004). China coal industry yearbook 2003. [in Chinese]. Beijing: Coal Industry Press. pp. 8−15.
  5. Liu, L., Liu, Y., & Liu, M. (2005). Statistical analysis of deaths in coal mines in China in 2002–2003 [in Chinese]. Coal Science & Technology, 33(1), 7−9, 76.
  6. Hao, G. (2012). Coal mine safety management and risk control. Video Lecture of the State Administration of Work Safety.
  7. Beijing Times. (2011, 26 February). China becomes top energy consumer, energy consumption 5 times of Japan [in Chinese].,
  8. Yanzhao Evening News. (2014, 9 December). Commentary: Hope for the “coal combustion reply” to accelerate the tackling of haze [in Chinese],
  9. Yang, Y., & Zheng, Z. (2015, 12 April). Commissioning of the first coal-fired unit with “ultra-low emissions” in Henan Province—Truly achieving cleaner emissions in coal-fired plants than gas-fired plants [in Chinese]. Henan Daily,
  10. National Energy Administration. (2014). Energy Development Strategy Action Plan (2014–2020), General Office of the State Council of the People’s Republic of China, [in Chinese].


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The Need for Increased Momentum for CCS After COP21

By Andrew Purvis
General Manager Europe, Middle East, and Africa, Global CCS Institute
Ingvild Ombudstvedt
Senior Advisor Policy and Regulatory EMEA, Global CCS Institute

As a result of the 21st Conference of the Parties (COP21) in Paris in 2015, 178 parties to the UN Framework Convention on Climate Change (UNFCCC) adopted a goal to hold the increase in global temperature to “well below” 2°C, “pursue efforts” to limit the temperature increase to 1.5°C above pre-industrial levels, and further achieve a balance between anthropogenic sinks and sources of greenhouse gases in the second half of the century.1 To achieve these targets, all emissions-mitigating measures and mechanisms will be needed. Efforts to decarbonize will be needed from both the parties to the agreement and the energy and industrial sectors. This will require increased momentum for energy efficiency and a continuing transition from fossil fuels to renewables. It also highlights the critical role of carbon capture and storage (CCS).2

CCS is broader than just a contribution to emissions abatement for energy production. The industrial process sector accounts for 25% of global emissions and CCS is the only technology that can achieve deep emissions reductions in industries such as steel, cement, and fertilizer production.3 Recently completed CCS feasibility studies in Norway, complemented by work carried out in potential CCS capture hubs such as Teesside (northeastern England) and Rotterdam (southern Netherlands), highlight the necessity of CCS for the industrial sector.

Port of Rotterdam, gateway to storage projects in the North Sea. (Courtesy of ROADMaasvlakte CCS Project C.V.)

Decarbonization requires the application of many different technologies according to circumstance and economics. CCS is vital, in terms of costs and necessity, to achieve emissions targets. Delaying CCS implementation will result in a significant increase in costs. Rather than being an expensive option, independent studies have shown that CCS in power generation applications is already cost competitive with many renewables, when the subsidies provided to renewables are removed.4


CCS is relevant and crucial for a wide range of industries. Application of CCS to electricity production and many industrial processes is key to meet both emissions reduction objectives and the reality of continued fossil fuel use.

Global consumption of fossil fuels continues to increase, driving increases in CO2 emissions. Forecasts of global energy demand growth indicate this reliance will continue for decades to come. The energy sector accounts for around two-thirds of greenhouse gas emissions and, according to the International Energy Agency (IEA) in its 2015 World Energy Outlook, coal, oil, and gas will remain important fuel sources for electricity generation for the foreseeable future.5

In power production, renewables will be increasingly important, but with over 2000 new coal-fired power stations as well as many gas-fired plants planned to be operating before 2040, CCS is also vital. Energy demand is growing continuously, with the biggest growth in non-OECD countries in which 59% of the electricity was generated by coal in 2013. Despite the decrease in demand for coal in several large economies, like China which went from a 74% to a 70% share in 2014, world demand and consumption is still increasing.6 It is therefore unrealistic to expect fossil energy production and consumption to cease overnight. CCS is a technology that will help deliver continued access to affordable energy while reducing emissions in both developing and developed countries. This increases the importance of large-scale deployment of CCS.


Europe has lost the position as a leader in the deployment of large-scale CCS projects to which it aspired several years ago. However, the importance of CCS technologies at large scale is recognized and robust R&D efforts by a number of European bodies continue, as do efforts to enhance the European policy and regulatory framework governing CCS. Below, we detail some projects, developments, and countries’ efforts that are worth accentuating.


Norway is well known for its petroleum industry, but also for basing most of its own electricity production on hydropower. Thus, while exporting large quantities of oil and gas, Norway has also emerged as a strong supporter of CCS—thereby aligning concern for energy security with consideration of the consequences for climate of economic growth, and the government’s goal of securing an efficient and climate-friendly energy supply.7 In 1996, Statoil began injecting CO2 on the Norwegian continental shelf, as part of the natural gas production process at the Sleipner field. Later, the company also started injecting CO2 at Snøhvit in northern Norway. These two projects have established Norway as a leader in Europe on CCS. The country has reinforced this position with new feasibility studies initiated by the Norwegian Ministry of Petroleum and Energy (MPE) on behalf of the government and the Mongstad CO2 Technology Centre (the world’s largest test laboratory for capture technologies, in operation since 2012). Also, Statoil has recently submitted plans to Norwegian and UK authorities to develop the Utgard field, which foresee gas and condensate being piped to Sleipner and processed using CCS technologies.8

On 4 July, the MPE published a report on the newly conducted Norwegian CCS feasibility studies.9 The overall goal of the study was to examine the technical feasibility and total cost of at least one full-chain CCS project.10 Three industrial stakeholders have conducted feasibility studies examining CO2 capture as part of the study. Different ship transport options were also examined, adding variables such as location, amounts of captured CO2, and replicability into the assessment. Studies of CO2 storage at three different sites on the Norwegian continental shelf also were carried out.11

The MPE report concludes it is technically feasible to realize a full-chain CCS project in Norway. Further, the studies demonstrate that all of the alternatives studied have the potential to significantly reduce barriers to deployment and costs for future projects.12, A

There are several positive outcomes from the study, beyond the feasibility of a full-chain CCS project. Norwegian authorities are actively maintaining momentum with their national policies for CCS and have identified and engaged competent private industry stakeholders, emphasizing that CCS is necessary for the delivery of climate targets at the lowest cost possible.

United Kingdom

CCS in the UK has not come to an end. Despite cancellation of the UK CCS competition, which was to make available £1 billion capital funding, and additional operational funding to support the design, construction, and operation of the UK’s first commercial-scale CCS projects. While this resulted in the termination of the White Rose and Peterhead projects last year, several activities continue.

The UK government is undertaking an ongoing examination of a reoriented approach to CCS for both power and industrial processes, and the government is considering advice from Lord Oxburgh’s CCS Parliamentary Advisory Group.13,14 While awaiting the results of these ongoing processes, three CCS projects under development are worth highlighting: the Caledonia Clean Energy Project, the Don Valley Power Project, and the Teesside Collective Project.

The Caledonia Clean Energy Project has received £4.2 million in joint funding from the UK and Scottish governments. The plan is to construct a new coal-fired power plant equipped with carbon capture technology to capture 3.8 million tons (Mt),15 or 90% of the total CO2 emissions per year.16 The Don Valley Power Project, co-funded through the European Energy Programme for Recovery, has been seeking to develop CCS on a new power station.17 Up to 1.5 Mt of CO2 per year would be captured.18

A CCS hub and cluster network brings together multiple CO2 emitters and/or multiple storage locations using shared transportation infrastructure. The Teesside Collective is such an infrastructure project developed by a cluster of industries in northeastern England, partially funded by the UK government,19 that aims to prevent the emission of up to 5 Mt of CO2 per year in the 2020s.20 These ongoing projects prove that private stakeholders are willing to move forward, and that both the power and industrial sectors are willing to innovate and engage on CCS development and deployment. The cluster approach will further be an important aspect of driving down costs in the future.

The Netherlands

In the Netherlands, the Rotterdam Capture and Storage Demonstration (ROAD) project is widely known as Europe’s most advanced CCS project in progress. The project involves the retrofit of a 250-MWe post-combustion capture and compression unit to a newly constructed 1070-MWe coal-fired power plant located within the Rotterdam port in the industrial Zuid-Holland area. The ROAD project plans to capture 1.1 Mt of CO2 per year and store it in a depleted gas reservoir under the North Sea. Co-financed by the European Commission, the government of the Netherlands, and the Global CCS Institute,21 the project is in the define stage of development planning and its next step is to make a Final Investment Decision,22 which is expected by the end of 2016.

The Rotterdam Capture and Storage Demonstration (ROAD) project. (Courtesy of ROADMaasvlakte CCS Project C.V.)

A related project is examining developments in the Port of Rotterdam. This is the largest seaport in Europe and, as part of the ambitious Port Vision for 2030, seeks to develop an integrated industrial cluster with Antwerp to become a leading European hub for cargo. Although CCS is not a specific goal under the Port Vision, the Port of Rotterdam will be interlinked to the CCS industry through projects like ROAD23 and CO2 infrastructure already in use delivering CO2 from industrial sources in Rotterdam to greenhouses.24 ROAD is among the first CCS projects in Rotterdam’s port and industrial complex, which plan to use the port as their gateway to storage sites in the North Sea,25 and there are expectations that more of the industry located in the cluster will implement CCS in their activities over time.


In the EU, several efforts are underway after COP21 to maintain the momentum the Paris Agreement gave to global emission reductions efforts. These include both proposals to reform the Emissions Trading Scheme (ETS) and the development of the integrated European Strategic Energy Technology Plan (SET-Plan). Part of the ETS reform has been finalized, through the establishment of a new market reserve, to gradually decrease the number of allowances in the system and therefore increase prices. Remaining elements of the reform include reducing the number of emission allowances permitted to be issued, revising the system of free allocation to focus on sectors at highest risk for carbon leakage, and launching a new Innovation Fund to support low-carbon innovation, including CCS.

The ETS Reform and Reforming the Innovation Fund

One of world’s largest carbon markets, the EU-ETS represents an important element in the implementation of EU climate policy. The scheme works as a cap-and-trade system, in which a cap on emissions is imposed with opportunities to trade emissions allowances. The carbon price, the price per ton of CO2 being emitted or traded, associates a financial value with reducing or avoiding emissions. A sufficiently high carbon price would create an incentive to invest in low-carbon technologies like CCS.26

In July 2015, the European Commission proposed legislation to revise the EU-ETS, and on 31 May 2016, Ian Duncan, Member of the European Parliament (MEP) and EU-ETS rapporteur, published a draft ETS reform proposal.27 The goal of the reform is to revise the EU-ETS for the period 2021–2030. For the EU to reach its targets for emissions cuts, the overall emissions cap will need to significantly decrease. The Commission’s proposal recommends that the overall number of emissions allowances decline at an annual rate of 2.2% from 2021 onward, compared to the current 1.74%.

The proposal also aims to revise the system of free allocation to focus on sectors at highest risk of relocating their production outside the EU (so-called “carbon leakage”), as well as urging member-states to implement policies and financial measures to avoid carbon leakage within the legal limits of state aid. The proposal suggests a model for compensation to the industry if the carbon price reaches certain levels, and emphasizes that more harmonized rules for indirect cost compensation are needed.28 Strong, predictable policy action is needed urgently to stimulate CCS deployment in order to fulfill EU’s climate targets.

As part of the EU-ETS, 300 million allowances were included in a New Entrants’ Reserve (NER300) and monetized to raise money to support the deployment of low-carbon technologies such as renewables and CCS.29 White Rose, based in the UK, was the only CCS project to be awarded funding through the NER 300 mechanism.30,B The legislative proposal further suggests the establishment of an Innovation Fund (extending NER300), which would be funded through the sale of 400 million allowances.31 However, the process on ETS revision is not finalized, and is expected to be voted on in February 2017 as part of the EU-ETS reform.

The Market Stability Reserve

Since 2009, the EU-ETS has built up a surplus of emissions allowances, which risks undermining the orderly functioning of the carbon market in the short term. This led to a reduction in the carbon price, and thus a disincentive to invest in technologies to reduce emissions. Long term, this could limit the ability of the ETS to cost effectively meet more demanding emissions reduction targets and the deployment of critical technologies such as CCS would be delayed. As part of a long-term solution, the Commission decided in 2015 to introduce changes to reform the ETS by establishing a market stability reserve that would be operational by January 2019.32,33 This would allow the supply of allowances to be flexible based on economic conditions and would be expected to set a more stable and predictable carbon price.

The SET-Plan Process

“Research, innovation, and competitiveness” were collectively identified as one of the five dimensions of the EU Energy Union Strategy, a project of the European Commission to coordinate the transformation of European energy supply. The SET-Plan aims to accelerate the development and deployment of low-carbon technologies, and demonstrating CCS is explicitly included as one of 10 identified actions to transform the energy system, creating growth and new jobs in the EU.34,35

SET-Plan Action 9, which aims to demonstrate CCS in the EU and to developing sustainable solutions for carbon capture and use (CCU), is currently subject to a public consultation process that began in Spring 2016. As a result of the process, stakeholders have agreed on a number of draft targets for CCS and CCU. The next step is for the stakeholders to develop a detailed implementation plan for the delivery of these targets.36


Reports of the death of CCS in Europe have been greatly exaggerated, with projects in continued operation in Norway, and projects in development in Norway, the UK, and the Netherlands. Nonetheless more needs to be done if CCS is to make the contribution that it must if secure, affordable, and climate-friendly energy and industrial production are to be delivered. Policy action is needed urgently to facilitate CCS deployment or else the Paris Agreement temperature targets are at risk of not being achieved.

Governments must continue efforts to develop strong and stable policies, and in response industry needs to advance R&D and new projects.



  1. UN Framework Convention on Climate Change. (2015). Adoption of the Paris Agreement. FCCC/CP2015/L9/Rev.1,
  2. Intergovernmental Panel on Climate Change. (2014). Climate change 2014: Synthesis report: Summary for policymakers,
  3. International Energy Agency (IEA). (2013). Technology roadmap: Carbon capture and storage. Paris: OECD/IEA. P. 5.
  4. National Audit Office, UK. (2016, July). Sustainability in the spending review,
  5. IEA. (2015). World energy outlook 2015,
  6. IEA. (2016). Tracking clean energy progress 2016; Energy technology perspectives 2016, Excerpt IEA Input to the Clean Energy Ministerial, p. 28,
  7. Ministry of Petroleum and Energy, Norway. (2016). White paper on Norway’s energy policy: Power for change [press release],
  8. Statoil. (2016). Statoil has submitted the Plan for Development and Operation of the Utgard discovery in the North Sea,
  9. Ministry of Petroleum and Energy, Norway. (2016, 4 July). Gode muligheter for å lykkes med CO2-håndtering i Norge [in Norwegian],
  10. Ministry of Petroleum and Energy, Norway. (2016). Mulighetsstudier av fullskala CO2-håndtering i Norge [in Norwegian], (Feasibility Studies for Full Scale CCS in Norway), p. 7
  11. Ministry of Petroleum and Energy, Norway. (2016). Mulighetsstudier av fullskala CO2-håndtering i Norge [in Norwegian], p. 8
  12. Ministry of Petroleum and Energy, Norway. (2016). Mulighetsstudier av fullskala CO2-håndtering i Norge [in Norwegian], p. 5
  13. Parliamentary Advisory Group on Carbon Capture and Storage. (2016, September). Lowest cost decarbonisation for the UK: The critical role of CCS,
  14. House of Commons Energy and Climate Change Committee. (2016, 29 June). The future of carbon capture and storage in the UK,
  15. Department of Energy and Climate Change, UK. (2015, 27 March). Jointly funded Industrial Research & Feasibility study for Caledonia Clean Energy Project,
  16. Global CCS Institute. (2016, 15 September). Caledonia Clean Energy Project,
  17. National Grid. (n.d.). Don Valley,
  18. Global CCS Institute. (2015, 17 December). Don Valley Power Project,
  19. Teesside Collective. (n.d.). What we do,
  20. Teesside Collective. (n.d.). Decarbonising Teesside is crucial to decarbonising the UK,
  21. Rotterdam Capture and Storage Demonstration Project (ROAD). (n.d.). Introduction,
  22. Lewis, B., & Bartunek, R-J. (2016, 19 July). Rotterdam offers burial at sea for greenhouse gases. Reuters (India edition),
  23. Port of Rotterdam. (n.d.). Port Vision 2030,
  24. OCAP CO2 v.o.f. (2012). Factsheet,
  25. ROAD. (n.d.). Objectives,
  26. European Commission (EC). (n.d.). EU ETS handbook,
  27. European Parliament, Committee on Industry, Research and Energy. (2016, 26 April). Draft opinion on the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments (COM(2015)0337 – C80190/2015 – 2015/0148(COD)), 582.103+01+DOC+PDF+V0//EN&language=EN
  28. European Parliament, Committee on Industry, Research and Energy. (2016, 26 April). Draft opinion on the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments (COM(2015)0337 – C80190/2015 – 2015/0148(COD)), 582.103+01+DOC+PDF+V0//EN&language=EN
  29. EC. (2016, 22 September). Climate Action: NER 300 programme,
  30. Carbon Capture & Sequestration Technologies Program. (2016, 21 April). White Rose* Project fact sheet,
  31. EC. (2016, 22 September). Climate Action: Revision for phase 4 (2021–2030),
  32. EC. (2016, 22 September). Climate Action: Structural reform of the EU ETS,
  33. Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading schemes and amending Directive 2003/87/EC,
  34. EC. (2016, 27 September). Strategic Energy Technology Plan,
  35. EC, Strategic Energy Technologies System. (2016, 27 September). Towards an integreated SET-Plan: Accelerating the European energy system transformation,
  36. 35. EC. (2016, June). SET-Plan Draft Declaration of Intent on strategic targets in the context of Action 9.


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The Essential Role of Coal in Past and Future Economic Growth

By Roger Bezdek
President, Management Information Services, Inc.

The recently published book The Rise and Fall of American Growth, by Dr. Robert Gordon, has taken the policy establishment in Washington, D.C., by storm.1 An eminent economist at Northwestern University outside of Chicago, Gordon’s thesis is that the incredible technological innovations of the period 1870–1920 were a “one time in history” series of events that cannot be replicated. Innovations such as electricity, telephones, indoor plumbing, air conditioning, cars, airplanes, radio, sanitation, and refrigeration transformed the U.S. and the world. They were responsible for the extraordinary growth in GDP and incomes in the U.S. and globally over the past 150 years—especially the “golden period” of 1945–1970.A According to Gordon, no other period in history has brought similar comparable progress, or is likely to again.

His controversial conclusion is that U.S. growth has been much slower since 1970 and will continue to be slow in the future. Thus, the U.S. and the rest of the world should become accustomed to productivity and growth rates of less than 1% annually instead of nearly 3%—a huge difference. Further, he contends that governments can take little action in terms of monetary, fiscal, tax, or other policies to measurably change this.

This is a pessimistic message with profound economic, social, and political implications. The debate Gordon has generated focuses on whether he is correct that the world faces an inevitable future of weak economic growth, or if the “techno-optimists”, such as Brynjolfsson and McAfee, predicting a bountiful future (robots, artificial intelligence, nanotech, space colonies, flying cars, etc.) are correct.2


A critical issue not being discussed is that nowhere in Gordon’s book does he give credit to fossil fuels or coal for the economic miracle of the past 200 years. None of the disruptive, revolutionary economic and technological innovations he identifies would have been possible without abundant, reliable, affordable energy. This is especially true of the electricity generated from coal, which powered the 19th and 20th centuries and will continue to power the 21st century, albeit likely at a lower percentage of the total energy mix in the U.S. and most other developed nations.

Gordon combined the historical UK/U.S. growth record with a forecast and overlaid a curve showing growth steadily increasing to the mid-20th century and then declining to 0.2% annually by 2100 (see Figure 1). He translated these growth rates into corresponding levels of per capita income, which for the U.S. in 2007 was $44,800 (2005 US$). The per capita income for the UK in 1300 was $1150 (2005 US$), and it took five centuries for that to triple to $3450 (2005 US$) in 1800, and over a century to then double to $6350 (2005 US$) in 1906—his transition year from UK to U.S. data. Even with the slowdown in the growth rate after 1970, the forecast level implied in Figure 1 for 2100 is $87,000 (2005 US$), almost double that of 2007.1

FIGURE 1. Growth in real per capita GDP, 1300–21001

A key implication of Gordon’s work, which, unfortunately, he does not recognize, is the essential role of fossil fuels—especially coal—in this economic miracle over the past two centuries (see Figure 2). Between 1850 and 2010, the world population increased 5.5-fold; world energy consumption increased 50-fold; coal consumption increased over 700-fold; world per capita energy consumption increased eight-fold; and nearly all of the world’s increase in energy consumption was comprised of fossil fuels.3

FIGURE 2. World population and per capita and total energy consumption, 1850–2010, as a percentage of 2010 levels4

Comparing Figures 1 and 2 shows that without adequate supplies of accessible, reliable, and affordable fossil energy, little of the technological and economic progress of the past two centuries would have been possible.

Notably, even with Gordon’s pessimistic assumption that economic growth will decrease to 0.2% annually by 2100, the forecast line in Figure 1 rises rapidly. Further, although GDP is becoming more energy efficient in most countries, even modest economic growth will require large increases in energy supplies both in the U.S. and, especially, in developing nations. World economic growth over the past two centuries was powered largely by coal and other fossil fuels. This raises the question: What energy sources are required to enable the world to continue to increase income, wealth, productivity, and standards of living and to lift billions of people worldwide out of poverty?


The answer to the question is that fossil fuels, including coal, will remain essential global energy sources. Population and income growth are the major drivers behind the growing demand for energy. World population is forecast to reach 8.8 billion by 2035, world GDP is forecast to double, and an additional 1.5 billion people will require access to energy.5 As the world economy grows, in excess of one-third more energy will be required over the next two decades to meet the increased level of demand. According to the International Energy Agency (IEA)5 and the U.S. Energy Information Administration (EIA),5 fossil fuels, including coal, will continue to meet most of the world’s increasing energy needs over the next two decades. These fuels, which represented 81% of the 2010 primary fuel mix, will remain the dominant source of energy through to 2040 in all of the IEA scenarios and account for about 80% of total energy supply in 2040. The demand for coal is projected to increase substantially in both absolute and percentage terms over the next several decades. This provides the opportunity for continual global economic growth, increased incomes, higher living standards, and poverty reduction.

The electric power sector is forecast to remain among the most dynamic areas of growth among all energy markets. Electricity is the world’s fastest-growing form of end-use energy consumption, as it has been for many decades. Power systems have continued to evolve from isolated, noncompetitive grids to integrated national and even international markets. The strongest growth in electricity generation is forecast to occur among the developing, non-OECD nations. Increases in non-OECD electricity generation are expected to average 2.5% annually from 2012 to 2040, as rising living standards increase demand for home appliances and electronic devices, as well as for commercial services, including hospitals, schools, office buildings, and shopping malls. Developing countries will use the least expensive form of electricity that is available, which is usually generated from coal. Thus, we are witnessing the work of coal in action to help develop economies around the world, which is what Gordon missed in his book.

As shown in Figure 3, EIA forecasts that world net electricity generation will increase 70%, from 22 trillion kWh in 2012 to 37 trillion kWh in 2040.5 The world’s energy growth will continue to be in the power sector as the long-run trend toward global electrification continues. Figure 4 shows that the global share of energy used for power generation is forecast to increase from 28% in 1965 to 45% by 2035. More than a third of the growth in power generation takes place in regions where a large part of the population lacks modern access to electricity—India, other developing Asia, and Africa. These regions and countries are deploying coal for their electricity needs, thus coal will remain a key source for electricity production.

FIGURE 3. World net electricity generation by energy source, 2012–20405 (trillion kWh)

FIGURE 4. Electricity as a share of total global primary energy6

Indeed, greater utilization of fossil fuels may be required than is currently forecasted. For example, the IEA states that, even with the anticipated increase in economic growth and fossil fuel utilization, in 2030 nearly one billion people will be without electricity and 2.3 billion people will still be without clean cooking facilities.

In his concluding chapter, Gordon discusses various factors that may inhibit future global economic growth, including changing demographics, excessive debt levels, and faltering educational systems. He also identifies several policies that may increase economic growth, including less regulation. Unfortunately, none of the regulatory reforms he recommends deal with energy, energy access, or energy innovation. For example, he never discusses the harmful impact of the increasing widespread trends in the U.S. and globally toward constraining fossil fuel development, deployment, and utilization. He thus errs by failing to recognize the threat that increasing, harmful energy regulations could have on future fossil fuel production, energy costs, technological innovation, and economic growth.

Reliable and affordable energy alone may not be sufficient for creating the conditions for economic growth, but it is absolutely necessary.7 It is impossible to operate a factory, run a store, grow crops, or deliver goods to consumers without using some form of energy, and energy means fossil fuels both now and in the future.

A modern high-efficiency, low-emissions coal-fired power plant.

Access to electricity is particularly crucial to human development as electricity is indispensable for basic industrial, commercial, and residential activities, and cannot easily be replaced by other forms of energy. Individuals’ access to electricity is one of the most clear and undistorted indications of a country’s energy poverty status.8 Long-run causality exists between electricity consumption and five basic human development indicators: per capita GDP, consumption expenditure, urbanization rate, life expectancy at birth, and the adult literacy rate.8 In addition, the higher the income of a country, the greater is its electricity consumption and the higher is its level of human development and, further, as income increases, the contribution of electricity consumption to GDP and consumption expenditure increases.9 Thus, electricity access is increasingly at the forefront of governments’ preoccupations, especially in the poorest countries, and Figure 3 shows that fossil fuels, including coal, will continue to be required to generate the world’s electricity.

There are strong energy, environmental, and financial rationales for upgrading coal-fired power plants to achieve higher efficiencies, reduced CO2 emissions, lower criteria emissions, and increased flexibility. One technology for achieving this is carbon capture and storage (CCS), which can capture up to 90% of the CO2 produced by coal-fired power plants.10 The CO 2 is captured at the plant and then transported by pipeline for storage in geological rock formations. Another way to achieve these objectives is to improve plant control systems, and recent advances in sensor hardware and control software have made control system upgrades feasible.11 According to the IEA Clean Coal Centre, state-of-the-art process control software can produce significant efficiency improvements, 20% lower NO x emissions, and improved load dynamics and steam temperatures and result in rapid payback times for coal plant investments.12 Similarly, the U.S. Department of Energy has estimated that, applied to the U.S. coal fleet, incremental improvements in plant efficiency and reliability provided by control system upgrades will generate significant annual savings and reduced CO2.12

Modern life has grown from reliable, affordable energy.


Robert Gordon has convincingly shown that the process of economic growth and increasing standards of living is not a given and that maintaining the economic progress that the world has become accustomed to may be much more difficult than is generally assumed. Gordon’s otherwise commendable book is marred by three serious flaws: He fails to identify the critical role of energy in past economic growth, he fails to appreciate the essential role of energy in future economic growth, and his recommendations for regulatory reform fail to identify the reforms necessary to prevent fossil fuels from being artificially constrained in the future.

The extraordinary world economic and technological progress over the past two centuries would not have been possible without the use of coal and other fossil fuels. Further, vast increased quantities of coal and fossil fuels will be required in the coming decades both to sustain continued economic progress and to lift billions of people out of poverty. Coal was the essential energy source of the 20th century and it will continue that role in the 21st century. Just as the developed nations once relied on the most affordable and reliable energy to which they had access, the developing nations in the world are doing so. A major threat to continued global technological and economic progress is regulation that may restrict coal development and utilization resulting in billions of people continuing to be forced to live with energy deprivation and economic poverty.


  • A. Although his focus is primarily on the U.S., Gordon also compares developments in the U.S. with those in other nations.


  1. Gordon, R. (2016). The rise and fall of American growth: The U.S. standard of living since the Civil War. Princeton, NJ: Princeton University Press.
  2. Brynjolfsson, E., & McAfee, A. (2011). Race against the machine: How the digital revolution is accelerating innovation, driving productivity, and irreversibly transforming employment and the economy. Lexington, MA.: Digital Frontier Press.
  3. Tverberg, G. (2012, March). World energy consumption since 1820,
  4. Hughes, J.D (2012, 2 May). The energy sustainability dilemma: Powering the future in a finite world. Talk presented at Cornell University, Ithaca, New York. Video available at
  5. International Energy Agency. (2015, November). World energy outlook 2015. Paris; U.S. Energy Information Administration. (2016, 11 May). International energy outlook 2016,
  6. BP p.l.c. (2016). BP energy outlook: 2016 edition. Outlook to 2035. Available at:
  7. Bezdek, R., Hirsch, R., & Wendling, R. (2010). The impending world energy mess. Toronto, Canada: Apogee Prime Press.
  8. Kanagawa, M., & Nakata, T. (2008). Assessment of access to electricity and the socioeconomic impacts in rural areas of developing countries. Energy Policy, 36, 2016–2029.
  9. United Nations Development Program. (2016). International human development indicators,
  10. Niu, S., Jia, Y., Wang, W., He, R., Hu, L., & Liu, Y. (2013). Electricity consumption and human development level: A comparative analysis based on panel data for 50 countries. International Journal of Electrical Power & Energy Systems, 53, 338–347.
  11. Folger, P. (2013, November). Carbon capture: A technology assessment. R41325. Congressional Research Service, Washington, DC.
  12. Lockwood, T. (2015, June). Advanced sensors and smart controls for coal-fired power plant. IEA Clean Coal Centre, ISBN 978–92–9029–573-0,

The author can be reached at

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Developing Conventional and Alternative Energy in China

By Zuo Qianming
Chief Analyst of Coal Industry, Cinda Securities Co., Ltd.

Energy is the foundation of China’s economy; thus, it impacts every facet of national, economic, and social development. China’s economy is entering a period of new economic growth and energy demand after a downturn. There are numerous perspectives on the best pathway to develop various sources of energy, especially on how best to increase alternative energy sources instead of fossil fuel-based energy. During China’s energy transition, it is important that various energy strategies be thoroughly considered.

Energy is strategically linked to the development of the global economy and society. In 2014, the global consumption of primary energy grew by 0.9%, lower than the average growth rate of 2.1% over the previous decade.1 Although China’s energy consumption had been expanding, there was a clear reduction in energy consumption in China as a result of the global economic downturn.

The combustion of conventional fossil fuel energy, especially low-quality coal in unabated systems, can result in air quality issues. In addition, the emphasis on decarbonization is growing.2,3 Scientists and policymakers are examining options to develop alternative energy sources. However, alternative energy development is closely tied to policy-based subsidies, which can come at a high cost and impact to the economy. Moreover, intermittent alternative energy sources, such as wind and solar, are not able to be stored economically. Thus, in China, alternative energy sources are used for auxiliary energy and cannot replace fossil fuels, especially coal, at present.

Fossil fuels and renewable energy working together side by side

In the “New Urbanization Plan of China (2014–2020)”, an active, steady, firm, and orderly urbanization strategy was proposed. By 2020, the strategy suggests 60% of permanent residents will live in urban areas, and as the pace of industrialization and urbanization quickens, energy demand will rapidly grow. The use of fossil fuel energy and alternative energy sources are not mutually exclusive. Both types of energy can be developed to meet China’s increasing energy demand and will be needed in an increasingly urbanized country.


According to the “National Economic and Social Development Statistical Bulletin 2015” published by the National Bureau of Statistics of China, China’s energy consumption for 2015 grew by 0.9% year on year to 4.3 billion tonnes of standard coal equivalent, the lowest growth rate since 1998. The output for raw coal fell for the second consecutive year by 3.3% year on year to 3.75 billion tonnes. Coal consumption fell by 3.7%. Total power generation for the year was 5.81 trillion kWh of power, with 4.24 trillion kWh of coal-fired power, a drop of 2.7% year on year. The national installed capacity for coal-fired power in 2015 was 990 GW. The average plant availability time was the lowest since 1978, falling by 410 hours year on year to 4329 hours.4

In my opinion, the current low energy demand is a temporary transition period of the energy mix due to structural adjustments, rather than a long-term trend. The transition from conventional to alternative power conversion reflects the changing lifestyle of people and a move of energy consumption from the manufacturing to the services industry. Emerging industries are growing in size. The establishment of new businesses is driving innovation in China, especially the services industry. In 2015, China’s services industry grew by 8.3% from the previous year, and it contributed 50.5% to the GDP; this figure was 2.4 percentage points higher than the previous year and 10 percentage points higher than secondary industries such as the mining, manufacturing, and construction sectors.

China’s electricity consumption per capita reached 4058 kWh in 2015,5 significantly above the global average of 3268 kWh.6 High energy-consuming industries have begun to reach their peak, but electricity consumption is expected to continue to maintain a high level.

Figure 1 shows residential electricity is increasing based on the GDP per capita and power consumption of key representative countries in 2013.7 These countries’ use of electricity from different sectors such as information technology, transportation, software, and the services industry is increasing. There is reason to infer that China’s future demand for energy will gradually increase with the expansion of the services industry.

FIGURE 1. Electric power consumption per capita and GDP per capita in 20135

China is developing strategies such as the “Silk Road Economic Belt”, and the “21st-Century Maritime Silk Road” initiatives and the “Made in China 2025” plan. As a result, the building of infrastructure for major thoroughfares in the future and the massive replacement of manpower with machines will require additional energy.

Increasing urbanization and improving standards of living with higher demand for modern technology are likely to result in additional consumption of electricity per capita. According to the China Electricity Council, the demand for electricity in China will peak post-2030.8 Electricity consumption per capita is forecast to at least double from current levels, as summarized in Table 1. Therefore, it is important to make strategic choices in the long-term energy mix.

TABLE 1. Forecast of electricity consumption in China6


The development of more intermittent electricity sources in China will require considerable planning to ensure continued grid stability. Thus, both conventional and alternative electricity sources will play an important role.

Coal Remains Dominant

Countries consider several factors when comparing energy options, such as energy security, economic, environmental, and social impacts. It is important to maintain a balance that ensures the long-term impact of using China’s domestic energy resources is not detrimental to its economic and social development. China’s coal-based energy mix is defined by its abundance of coal and lack of oil and gas. According to the 2014 National Coal Resource Assessment, China had 5.9 trillion tonnes of potential coal resources. Coal accounts for about 94% of the country’s fossil energy reserves. This figure is far higher than the global average of 55%. For the same calorific value, the price ratio of coal to petroleum and natural gas is 1:8.3:3.2, making coal the most affordable energy source.9

The development of alternative energy, including renewable energy, has proven to be relatively slow. In 2015, coal consumption accounted for 64.0%, petroleum 18.1%, and natural gas was 5.9% of the energy mix. The cumulative contribution from all alternative energy sources, including solar, hydro, wind, and nuclear power, accounted for only 12%.

According to the China Electricity Council, during the period of the 13th Five-Year Plan (2016–2020), about 200 GW of installed alternative capacity will be added. The proportion of alternative energy in the energy mix is predicted to be 15% by 2020. Table 2 shows development remains relatively slow.

TABLE 2. Power generation capacity of alternative energy to 2020 in China

A key factor in the long-term plan of meeting energy demand in China is to continue the improvement and deployment of clean coal utilization. The first step in China’s clean coal approach is retrofitting coal-fired power plants using ultra-low emission technologies, which results in reducing the concentration of particulate matter (PM) discharge to as low as 2.7 mg/m3 in comparison to the emissions limit of 5 mg/m3 for gas-fired power plants. The SO2 concentration is also being reduced to 23.2 mg/m3—again lower than the emission limit of 35 mg/m3 for gas-fired power plants. Similarly, the concentration of NOx is made as low as 31 mg/m3, in comparison to the emissions limits of 50 mg/m3 for gas-fired power plants.

In eastern China, the cost of power generation in coal-fired power plants with ultra-low emissions is 0.45 yuan/kWh, and the cost of power generation by natural gas is 0.9 yuan/kWh. Although the modifications with ultra-low emission technologies increased the cost of power generation from coal-fired power plants by 1.8–2.6 yuan cents/kWh, the plants remain highly competitive in the market.

For new plants, the latest industrial pulverized coal boiler system has an average efficiency of 90%, only 11 mg/m3 of PM is discharged, and no more than 100 mg/m3 of SO2 is discharged. NOx emissions are limited to 200 mg/m3, and the advantages are significant as compared to conventional chain grate boilers. In addition, technologies are also being developed for coal-water slurry, briquette, lignite, and CO2 capture, use, and storage.

Therefore, a coal-dominated energy mix can fit into China’s current and future development. As the “golden decade” for growth in coal consumption closes it is clear that the coal industry will remain and play a vital role in sustainable development through higher efficiency and lower emissions.

Increasing Alternative Energy in China’s Energy Mix

In the long term, fossil energy is non-renewable. China’s massive economy is highly reliant on energy, thus alternative energy, including renewables, must be developed to maintain the economy.

China’s commitment to peak CO2 emissions by 2030 is a challenging one. Increased renewable energy and non-fossil energy can help achieve this peak. China aims to enhance the proportion of these energy sources to 20% in its energy mix by 2030. Recognizing the longevity of coal’s role, in the “Energy Development Strategy Action Plan (2014–2020)”, China will simultaneously continue the development of high-efficiency, low-emissions fossil energy and gradually reduce the percentage of coal consumption. For example, by 2020 coal consumption will be kept within 62% of total primary energy consumption.

There will be a higher percentage of alternative energy consumption in the future. Meanwhile, to some extent the total consumption of conventional energy will continue to increase. The meaning of development is not merely presented in terms of “quantity”; there are other important elements to consider such as system reform, structure optimization, higher efficiency, and industrial progress. Other factors considered in China’s energy planning and development are the energy mix, stage of development, environmental requirements, carrying capacity of resources, as well as technical and economic feasibility.

Complementary Development of Energy Resources

The reform of the power sector with the development and deployment of smart technologies for the energy sector will require increased coordination to complement the use of various energy resources.

Solar, nuclear, and wind energy can be complementary with coal-based polygeneration. For instance, in coal-based polygeneration, a large amount of hydrogen is required. This hydrogen could be obtained from these alternative energy sources to power technologies such as the electrolysis of water, thermochemical water-splitting cycles, and high-temperature pyrolysis in nuclear reactors. Achieving onsite utilization of clean energy can result in avoidance of energy grid integration network problems that can result from intermittent renewables. The supply of energy can be made more stable and sustainable by building auxiliary service mechanisms and thereby achieving “load shifting”. Coal-fired power could even be backed up through auxiliary services.

In some cases, coal production sites may need to utilize alternative energy. In 2015, China specified in its electric power system reform scheme that power generation will be included from renewable energy, such as wind and solar energy. The coal industry can also leverage its advantages of high power consumption in coal mines, stable loads and available grids by making use of abandoned industrial sites, land surface of mines and its surrounding areas to actively explore and develop wind and solar power generation. Maximizing the use of land resources effectively can reduce the cost of power generation.

Alternative energy in China is increasing.

The State Council of China recently published “Opinions on Reducing Overcapacity in the Coal Industry to Achieve Development by Solving the Difficulties”.10 The following is stated in the document: “We will promote industrial adjustment and transformation, and encourage the use of abandoned coal industrial sites and their surrounding areas to develop wind power and photovoltaic power generation as well as modern agriculture.”


In summary, taking into account various factors, such as the country’s stage of development, energy resource endowment, and energy costs, the development of alternative energy and conventional energy should be coordinated to provide a stable and reliable energy supply to support the sustainable development of China’s economy and society. An energy directive for “coal-based, diversified development” is needed. The low-emissions utilization of conventional fossil energy and push to increase the proportion of non-fossil energy through developing renewables, nuclear, and hydrogen as supplements is an optimal strategic choice. This strategy will enable China to follow a path of sustainable development while ensuring energy security and meeting long term energy demand and supply.


  1. BP. (2015). BP statistical review of world energy June 2015,
  2. Li, J.F. (2013). Decarbonization is the developing trend of world energy. China Power Enterprise Management, 2013, (12), 83-86.
  3. Xie, K.C. (2016). Green transformation of coal industry. China Coal Industry, 2016, (2), 6-7.
  4. National Bureau of Statistics People’s Republic of China. (2015). National economic and social development statistical bulletin 2015,
  5. China Coal Industry Network. (2015). China’s coal industry reform and development briefing 2015,
  6. BP. (2016). BP statistical review of world energy 2016,
  7. IEA. (2014). Electric power consumption (kWh per capita), data,
  8. China Electricity Council. (2015). Current situation and prospects of China’s electric power industry,
  9. Sina. (2015). China enters slow growth in coal consumption, but its dominant position unchanged,
  10. The State Council of China. (2016). Opinions on reducing overcapacity in the coal Industry to achieve development by solving the difficulties,


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Calling All Technology Developers: XPRIZE’s US$20-Million Competition for Breakthroughs in CO2 Conversion

By Marcius Extavour
Director of Technical Operations,
NRG COSIA Carbon XPRIZE, Energy & Environment, XPRIZE

Incentive prize competitions are powerful tools for inspiring and showcasing technical breakthroughs, and engaging a broad community of stakeholders around a common goal. XPRIZE creates and manages the world’s largest global, high-profile incentivized prize competitions that stimulate investment in research and development worth far more than the prize itself. The organization aims to motivate and inspire brilliant innovators from all disciplines to leverage their intellectual and financial capital for the benefit of humanity.

Carbon sunglasses

The NRG COSIA Carbon XPRIZE aims to incentivize innovators across the world to develop breakthrough technologies that convert CO2 into valuable products.

XPRIZE conducts competitions in five Prize Groups: Learning, Exploration, Energy & Environment, Global Development, and Life Sciences. Active prizes include the IBM AI XPRIZE ($5 million), the Shell Ocean Discovery XPRIZE ($7 million), the NRG COSIA Carbon XPRIZE ($20 million), the Google Lunar XPRIZE ($30 million), the Qualcomm Tricorder XPRIZE ($10 million), the Global Learning XPRIZE ($15 million), and the Barbara Bush Foundation Adult Literacy XPRIZE ($7 million).

California-based XPRIZE has been creating and managing global prize competitions for over 20 years. Most recently, XPRIZE has brought the prize model to the energy domain with a global competition for post-combustion conversion of CO2 emissions. The NRG COSIA Carbon XPRIZE is a US$20 million global competition to convert CO2 into valuable products. This competition is the latest and largest push in a CO2 utilization field that is gaining attention, investment, and technology acceleration worldwide. The XPRIZE competition will plug into and support global CO2 conversion networks embodied by the EU Horizons 2020 €1.5 million prize, the Smart CO2 Transformation (SCOT) network, and other similar efforts throughout Asia, Africa, and South America focused on the technology, policy, and finance of low-carbon emission solutions.


The NRG COSIA Carbon XPRIZE is a 4.5-year global competition open to any team that can demonstrate the conversion of post-combustion CO2 into valuable products. The winning team will convert the largest quantity of CO2 into one or more products with the highest net value. Judges will take into account production costs, energy consumption, market prices of product(s) produced, and market volumes of product(s) produced. Since the competition is intended to encourage sustainable solutions that may ultimately be deployed at scale, there are also limits on freshwater consumption and total land footprint.

The competition itself will proceed along two parallel tracks. In Track A, teams will convert CO2 in the flue gas from a coal-fired power plant; in Track B, teams will convert CO2 in the flue gas from a natural-gas-fired power plant. The deadline to register (US$8000) and submit a technology and business plan is 15 July 2016; teams that register before 30 April 2016 will pay a reduced registration fee (US$5000).

The competition will consist of three rounds. Round 1 is a technology and business viability assessment, during which teams submit an electronic document which are evaluated by independent judges on their technology, process, team, and business and operational plan. Judges will select up to 30 teams to advance to Round 2, the semi-finals. During the Round 2 pilot-scale competition, teams will have one year to demonstrate an operating process at a scale on the order of 200 kg of CO2 per day at a facility of their choosing, using real or simulated flue gas as input. Judges will review team data and performance, and select up to 10 teams to advance to Round 3, the finals. In Round 3, the demonstration-scale competition, finalist teams will demonstrate their technologies at a scale of approximately two to five tons of CO2 per day at one of two new test facilities built specifically for the competition.

Track A finalists will demonstrate at a test facility adjacent to a coal-fired power station in Wyoming, U.S. Track B finalists will demonstrate at a test facility adjacent to a natural-gas-fired power station in Western Canada (site to be announced).



Technology developers at various technology readiness levels are invited to participate in the competition.

All XPRIZE competitions set audacious, but achievable, targets that aim to drive teams to innovate and demonstrate tangible, transformative solutions. By articulating a clear goal that is beyond anything that has been demonstrated to date, XPRIZE challenges scientists, engineers, entrepreneurs, and all creative thinkers to design and deploy real solutions that are truly inspiring. With CO2 conversion specifically, the NRG COSIA Carbon XPRIZE aims to support technology game-changers and also to catalyze the markets and investor communities that can advance these ideas by deploying, scaling-up, and reducing the cost of CO2 conversion and other CO2 mitigation technologies. The after-market opportunities are in some sense the true grand prize. Unlike in a traditional “solution search”, teams that compete in the NRG COSIA Carbon XPRIZE stand to benefit from the focused support of investors, media, technology communities, and the public momentum gained during the high-profile, international competition.


The NRG COSIA Carbon XPRIZE is a global competition that benefits from unique connections to industry sponsors in Canada and the U.S. The opportunity to develop and test technologies at North American facilities offers competitors the benefit of proximity to North American investors and capital markets. At the same time, the competition offers benefits to groups developing CO2 technologies for Asian, African, and European markets, since those regions will likely represent the largest market growth and volume in carbon technologies over the medium and long term.


In this context, Canada’s Oil Sands Innovation Alliance (COSIA) has partnered with XPRIZE as a co-sponsor of the competition. COSIA is an alliance of international and Canadian oil sands producers focused on accelerating the pace of improvement in environmental performance in Canada’s oil sands through collaborative action and innovation. As a sponsor, they are also overseeing the development of the Track B facilities that will co-host the finals of the XPRIZE. Siting the Track B (natural gas) facilities in Canada will attract innovators to the country for the XPRIZE and beyond, and support ongoing activities in CO2 conversion, mitigation, and utilization elsewhere in Canada. These include efforts led by the Climate Change and Emissions Management Corporation, an independent body created as a key part of the Canadian province of Alberta’s Climate Change Strategy, and Carbon Management Canada (CMC), a Canadian research network focused on carbon management in the country’s fossil energy sector, and their affiliated research institutes.


NRG Energy has also partnered with XPRIZE as co-sponsor of this competition. NRG Energy is a U.S.-based company focused on wholesale electricity generation (47,000 MW of total generating capacity, including coal, natural gas, oil, wind, and solar facilities) and retail electricity generation and distribution. Track A finalists will demonstrate their tech-
nologies at the under-development Integrated Test Center (ITC, near Gillette, Wyoming. The ITC is a public–private partnership that brings together government and industry—including several electric cooperatives—with the shared goal of developing commercially viable uses for CO2 emissions from power plants. The ITC will be hosted on the site of Dry Fork Station, a 385-MW facility owned by Basin Electric Power Cooperative and the Wyoming Municipal Power Authority. Not only will the ITC serve as a host site for XPRIZE finalists, but also as a center of excellence and innovation in carbon capture, conversion, and utilization, and storage in the coming years.


Both test facilities are expected to have a long-term positive impact for the CO2 conversion community, and for the CO2 mitigation industry more broadly. Opening during Round 3 of the XPRIZE in 2018, this pair of facilities will be among a very small number of such facilities anywhere in the world that are equipped to test, develop, and refine CO2 conversion technologies at pilot and demonstration scales. The initial two to five tons CO2 per day capacity of these facilities places them at the sweet spot for technology commercialization, between grams-per-day early-stage projects and megaton-per-year industry-ready facilities. This testing and evaluation infrastructure could prove to be as valuable and impactful in the long term as the core technology innovation inspired by the XPRIZE competitors.


The NRG COSIA Carbon XPRIZE will accelerate development of breakthrough technologies that turn CO2 emissions into valuable products, proving to the world that innovation can enable solutions to climate change. Ultimately, we intend that this competition will stimulate new markets for CO2 mitigation technologies, attract new investment, and inspire other industries, governments, and educational institutions to take concrete positive actions to combat climate change. At the same time, we hope to help shift public attitudes to be more optimistic about the future of energy and how we tackle climate change.

For more information or to register a team in the NRG COSIA Carbon XPRIZE competition, please visit


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Recognizing the U.S. Cooperative Difference

By Barbara Walz
Sr. Vice President,
Policy & Compliance and Chief Compliance Officer,
Tri-State Generation and Transmission Association, Inc.

Living in the rural U.S. is different than living in urban areas. Without a doubt, rural life has its advantages: no traffic, close to recreation, knowing your neighbors, etc. But living in rural areas is also challenging: driving for hours to get to the nearest shopping mall or doctor; limited employment options; and, for power providers, consistently delivering affordable and reliable electricity. Rural power providers are specifically challenged by low customer density, the need to install more miles of transmission, and diverse load profiles. These hurdles have largely been overcome by the rural electric cooperatives that supply electricity to rural areas in the U.S., but today the nation’s rural cooperatives are facing a major challenge: how to address new regulations on carbon emissions.

The U.S. rural electric cooperative system was born when President Roosevelt created the Rural Electrification Administration (REA) in 1935 to bring electricity to rural communities. Through REA lending programs, communities were able to join together, create a cooperative, and build the necessary electric transmission and distribution lines and generation resources.


Tri-State relies on coal-fired power plants, such as the Craig Station, to generate its baseload electricity.

The program was, and continues to be, a huge success. Within four years of the end of World War II, the number of rural electric systems in operation doubled, the number of consumers connected to electricity more than tripled, and the miles of energized transmission lines grew more than fivefold. In the 1930s, less than 10% of rural residents had electricity. Today, over 99% of those living in the rural U.S. have electric service.1

Unlike other power suppliers in the U.S., cooperatives are member-owned and governed, and operate on a not-for-profit basis. The benefit of this model is that cooperatives can provide cost-based electricity, and members have a voice in decisions made by their utility. Because all costs are passed directly through to members, cooperative members address new regulations and requirements differently.


Tri-State Generation and Transmission Association, Inc. (Tri-State) is a wholly member-owned generation and transmission (G&T) cooperative serving major parts of Colorado, Nebraska, New Mexico, and Wyoming. The company generates and transmits wholesale electricity to its 44 member-distribution systems (see Figure 1) which, in turn, supply retail electricity in a service area that covers approximately 200,000 square miles with a population of about 1.5 million. The challenges facing Tri-State today largely represent those faced by many rural cooperatives in the larger national network, which collectively provide 13% of power in the U.S.

Walz Figure 1

FIGURE 1. Tri-State member systems map

Through mergers with other cooperatives, consumer growth, and load growth, Tri-State has evolved over the last 60 years from a cooperative that exclusively manages federal hydropower allocations to a cooperative that meets its members’ needs through a diverse portfolio of G&T resources. The company uses market transactions to optimize its position by routinely purchasing power when the market price is lower than its incremental production cost and routinely selling power to the short-term market when it has excess power available above its commitments to both members and non-members. Tri-State also uses spot market purchases during periods of generation outages at its facilities.

An Energy Mix Shaped by the Policy of the Past

Tri-State owns, leases, has undivided percentage interests in, or has long-term contracts with respect to various generating facilities. These generating facilities provide a maximum available power of 2833 MW, including 1866 MW from coal-fired baseload facilities and 967 MW from natural gas-fired facilities. In addition, Tri-State purchases hydroelectric power, under long-term contracts, that provides a maximum available power of 574 MW during the summer and 525 MW during the winter. Tri-State also purchases additional power on a long- and short-term basis, including 172 MW from renewable energy resources such as wind and solar. To deliver this electricity, Tri-State also owns or has interests in approximately 5300 miles of high-voltage transmission lines and 219 substations and switchyards.

Walz Figure 2

FIGURE 2. Capacity by initial year of operation and fuel type (2010)

Like many other U.S. cooperatives, Tri-State’s current generation mix reflects historical energy policies and member needs. Much of the growth in rural Colorado, New Mexico, and Wyoming occurred in the early 1980s. As a result, Tri-State and other rural cooperatives added capacity during this time. In 1978, the U.S. Congress passed the Power Plant and Industrial Fuel Use Act (FUA) to address national security concerns caused by the oil crisis and natural gas curtailments of the early 1970s.2 The FUA restricted construction of power plants using oil or natural gas as a primary fuel and encouraged the use of coal-fired and nuclear power plants. Thus, Tri-State and other rural cooperatives built new baseload generation resources during that period and, therefore, built coal-fired power plants. In 1987, these provisions of the FUA were repealed due to reduced natural gas prices, and, once again, U.S. electricity providers were allowed to use natural gas as a resource for baseload plants. According to the National Rural Electric Cooperative Association (NRECA), in 2012 EIA reported that 37% of the generation capacity serving U.S. cooperatives was coal-based, which produced 70% of the electricity used to serve cooperative members.3 (See Figures 2 and 3 for information, provided by the U.S. Energy Information Agency, on coal-fired power plant capacity built during the time the FUA was in effect.)

Walz Figure 3

FIGURE 3. Capacity of coal-fired generators, by initial year of operation (2010)

Meeting Member Needs in the Current Energy Policy Environment

Markets, regulation, and innovation all play a role in how electricity is produced, delivered, and consumed. Meeting the historical requirements placed on power producers has led Tri-State to have some of the most progressive distributed generation policies in the U.S. The company continues to generate or purchase power produced from a mix of hydropower, solar, wind, coal, natural gas, and oil resources and is also a leader in renewable energy use. Its baseload power plants are equipped with the latest emissions control technologies. Today, Tri-State is reducing CO2 emissions by maintaining highly efficient power plants and investing in renewable energy projects.

It is projected that 25% of the energy delivered by Tri-State to its members in 2016 will be generated by renewables. Since 2010, the company has added nearly 250 MW of renewable energy and plans to add an additional 281 MW by 2017. This investment was recognized by U.S. Department of Energy (DOE) when it awarded Tri-State the 2014 Wind Cooperative of the Year in the G&T cooperative category. Tri-State also supports (financially and operationally) progressive energy efficiency programs offered by our members and has provided technical assistance and financial incentives to its members to develop their own local renewable and distributed generation projects. At year-end 2014, 16 members were participating in this program and 47 projects had been authorized by the Tri-State board, adding up to a combined 68 MW of generation that is either online or in development.

Despite significant investments in renewable energy and energy efficiency programs, Tri-State remains reliant on fossil fuel-based generation to meet demand, maintain reliability, and control costs to our members. This fact drives our concerns with regulations and legislation that could potentially limit these resources.

Preparation for a Carbon-Constrained World

As part of its ongoing comprehensive carbon emission analysis, in 2009, Tri-State initiated an enterprise-wide effort to assess its ability to manage the risks associated with potential new carbon-focused energy policy. The result of this effort was the Greenhouse Gas Management Roadmap that serves as an internal planning tool. The goals laid out in the Roadmap are wide-ranging, including research into clean coal, carbon capture and storage, renewable technologies, generation and transmission efficiency, demand-side management, and research, development, and demonstration initiatives.

The Roadmap is based on Tri-State’s two-decades-long engagement with the Electric Power Research Institute (EPRI), an organization which brings together scientists and engineers as well as experts from academia and industry to address challenges in the electricity industry. As a full funder in EPRI’s R&D portfolio, Tri-State takes advantage of the synergies between EPRI’s broad array of collaborative RD&D programs and has access to all of EPRI’s research results and products.

In recognition of how the Roadmap reflects successful collaboration with EPRI, Tri-State received an EPRI Technology Transfer Award for its leadership in education and information exchange of technology and research results.


Tri-State has long supported research and development in the areas of capturing power plant CO2 and identifying viable uses for it. Tri-State is looking for technological breakthroughs that would allow power plant operators to convert CO2 waste into useful fuels, chemicals, and other valuable products. Such CO2 utilization opportunities have the potential to generate revenue that could help offset the cost of capture and conversion.

In October 2015, Tri-State pledged significant funding for Wyoming’s Integrated Test Center (ITC), which will be hosted at Basin Electric Power Cooperative’s coal-fired Dry Fork Station in Gillette, WY. The ITC will provide a testing facility for researchers working to develop commercially viable uses for CO2 emissions from coal-fired power plants. The goals and potential benefits of the research to be conducted at the ITC include:

  • Developing economically competitive carbon capture and utilization technologies and retrofits for existing and potentially for new coal-fired power plants
  • Identifying technologies with the potential to provide less costly solutions to meeting CO2 regulations (e.g., Clean Power Plan)
  • Transforming the perception that carbon is a waste product and liability to an asset and possible revenue stream

The ITC will be completed in time to host the final phase of the Carbon XPRIZE, which is scheduled to begin in late 2017. The XPRIZE Foundation—whose mission is to bring about “radical breakthroughs for the benefit of humanity” through incentivized competition4—has agreed to be one of the first tenants in the ITC. This international philanthropic group recently announced a $20-million global competition to encourage development of new uses for CO2 (see full article on the NRG COSIA XPRIZE in this issue for more details).

Tri-State is also reviewing the latest energy storage technologies and, when feasible, testing them throughout its system. Through our membership in EPRI and the National Rural Electric Cooperative Association (NRECA) Cooperative Research Network (CRN) Tri-State is supporting extensive energy storage research, including:

  • Developing and field testing of operation safety standards for interconnecting to the system
  • Funding a demonstration project with one of its members to learn about “fast real-world” control of electric water heaters in response to the variability of a nearby wind farm
  • Working with the developer of a prototype 5-kW zinc-air battery with plans to field test it at a member-system site
  • Owning the rights to 40 MW of pumped-storage capacity at the 200-MW U.S. Bureau of Reclamation Mt. Elbert Hydroelectric Power Plant, which is used to meet power demand with increased penetration of intermittent renewable energy in the grid


Tri-State now faces a potential new challenge: how to meet the U.S. Environmental Protection Agency (EPA) Clean Power Plan (CPP), while continuing to deliver affordable and reliable energy to our member systems. One reason Tri-State opposes the Clean Power Plan is because it does not recognize or even acknowledge the cooperative difference. The EPA ignored that when cooperatives were growing in the 1980s, federal law essentially limited fuel options for new generation to coal. It ignored that cooperatives own a small amount of coal-fired generation compared to our utility brethren, but are relatively much more reliant on, and have more invested in, those units. In addition, the EPA did not take into account that, through the years, cooperatives have invested billions of dollars in increasing the efficiency of those coal-fired units, in addition to investing in renewable energy and energy efficiency programs. The bottom line is that the CPP does not take into account that member-owned cooperatives are regulated differently. The CPP is one-size-fits-all, but does not fit Tri-State or other cooperatives across the nation.

Our response to the CPP has been twofold: (1) Tri-State will work with regulators in the five states in which we operate to develop compliance plans, while (2) challenging the EPA’s legal authority to promulgate the CPP. An initial positive result of the challenges to the CPP came in early February 2016 when the U.S. Supreme Court granted a stay of the controversial rule. This means that the CPP cannot be implemented until the legal challenges have been heard in court. Ultimately, the case being made against the legality of the CPP will likely be heard and decided upon by the Supreme Court—a process that could take more than two years to reach a final outcome.

There has been, and will continue to be, an effort to ensure that the the difference between cooperatives and investor-owned utilities is recognized at the state level. This is necessary because the EPA did not modify the CPP based on comments submitted by Tri-State and other cooperatives that explained this important distinction. While we continue to have great concern with the rule, Tri-State is committed to working with officials in the five states in which we operate to minimize the impact on rural consumers and employees at our power plants. As we work with states, Tri-State will be guided by the following principles:

  • Ensure reliable and affordable electricity supply
  • Recognize the remaining useful life of and impacts of stranded costs for each generation facility
  • Maintain a balanced resource plan
  • Consider all compliance options, not just those proposed by the EPA
  • Recognize capacity and infrastructure limitations of renewable and natural gas generation

As Tri-State participates in the process to evaluate how to achieve CPP-related state goals, we will look for options to ensure that our higher efficiency, low-emissions coal-fired plants remain in our electricity generation portfolio.

In addition to working with states to develop plans, Tri-State will continue to work with numerous trade groups to challenge the EPA’s legal authority to propose the CPP. We believe the EPA is attempting to accomplish emission reductions through changes in the way energy is produced, distributed, and used—and not through the application of emissions control technology on affected power plants. Thus, we believe the CPP essentially makes EPA the primary energy regulator in the U.S.—usurping the authority of the state and federal agencies assigned that task and disregarding the scope of its authority under the Clean Air Act (CAA).

The CAA established EPA as the primary regulator of air emissions within the U.S., and EPA has filled that role for more than 40 years, dramatically cutting emissions of pollutants such as sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter from power plants. However, no technology currently exists to reduce CO2 emissions from an existing gas or coal-fired power plant that is adequately demonstrated or commercially available.

In the end, although Tri-State and other cooperatives are different, we do have one thing in common with utilities—a desire to protect the environment while continuing to provide affordable and reliable energy to our members. We simply believe a different approach is needed to mitigate CO2 emissions.


  1. National Rural Electric Cooperative Association (NRECA). (2015). History of electric co-ops,
  2. U.S. Energy Information Agency. (2015). Repeal of the Power Plant and Industrial Fuel Use Act (1987),
  3. National Rural Electric Cooperative Association. (2016). U.S. Co-ops by the numbers,
  4. XPRIZE. (2015). Who we are,


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