Describing recently implemented or approved regulations – including the Greenhouse Gas New Source Performance Standard, the Utility MACT standards, and the Cross-State Air Pollution Rule – and their deep impacts on the coal industry, a report from the Heritage Foundation calls on Congress “to create a framework that restricts overregulation, empowers the states, balances economic growth and environmental well-being, and creates a timely permitting process for all aspects of coal production.” The report finds no issue with the free market changing coal’s share of our energy mix, but argues against artificially reducing that share through disincentives and regulation.
The report states that many of these new regulations have reached “a point of diminishing returns at which further tightening will impose exceedingly high costs on American energy consumers for unnoticeable environmental benefits.” The report argues that the regulations are largely based on shaky scientific rationale, and provide little or no benefit at great cost.
Among the report’s recommendations to Congress: Shift power on these issues away from federal agencies towards State governments; Freeze new federal environmental regulations; Repeal New Source Review; Prohibit the EPA from regulating greenhouse gas emissions; Require congressional approval of major new regulations promulgated by agencies; Restructure and withdraw proposed Mine Safety and Health Administration worker safety rules; Eliminate subsidies for clean coal technologies.
Do the economic and energy security benefits of coal outweigh its environmental costs? What is your take on Heritage’s argument and recommendations? Would these recommendations, if implemented, save coal?
There is, in practical terms, no “deep impact” on the coal industry from the regulations that the Heritage Foundation is challenging. Existing power plants are exempt, and nobody was going to be building new coal-fired plants anyway.
The capital cost for new NGCC plants is about a third of that for a new pulverized coal plant. Between the higher thermal efficiency of NGCC and the ridiculously low current prices for natural gas, even fuel costs for NGCC are lower than for coal.
Any new coal-fired plants that are built in the next ten years will be heavily subsidized demonstration plants for CCS. That’s as it shoud be. Technology for CCS needs to be proven and an experience base established. The early CCS experiments will almost certainly end up selling their captured CO2 to oil field operators for use in EOR. Based on what they were paying for CO2 when oil prices were lower, the value of captured CO2 shoud be around $30 per tonne. That will largely cover the cost of CCS, if construction overruns don’t get too badly out of hand.
Needless to say, I don’t agree at all with the Heritage report’s statement that regulations on greenhouse gas emissions are based on “shaky scientific rationale, and provide little or no benefit at great cost.” As far as I’m concerned, that’s simply ideological claptrap from the anti-AGW campaign.
While I’ll never categorically deny the potential for new technology, CCS is a tough nut to crack. In particular, since its feedstock will be gathered from exhaust streams at near-gauge pressure, the economics will always be burdened by the energy and carbon cost of bringing it up to the 500-750 psi (minimum) required to move it by pipeline to market, regardless of sequestering costs. Except there won’t be a general market.
CO2 enhanced oil recovery is quite well supplied by enormous deposits of nearly pure CO2 at McElmo Dome in the West and Jackson Dome near the Gulf Coast. Were that supply to be depleted, CCS activities would still suffer from the lack of the gathering/shipping infrastructure required to provide the very large demands of a field-scale CO2 flood. Having extensively worked the economics of a pipeline from Jackson Dome to target fields, I can say with confidence that providing such infrastructure for CCS will raise the delivered CO2 price high enough to render the target EOR uneconomic. Of all the pie-in-the-sky carbon reducing concepts, CCS is the least likely and will have AT BEST no better EROEI than Canadian tar sands.
The issue no one seems to be closing with is that burning coal is a bad idea, has always been a bad idea and likely will continue to be a bad idea unless and until CCS makes a breakthrough. Long before there was any notion that accumulating CO2 might be damaging to the biosphere, Londoners wheezed, hacked and even died in some cases from air egregiously polluted by the general burning of coal. And there is all that mercury no one is mentioning.
Rather than burn it or leave the asset in the ground until a dubious technology can be devised, we should be looking at the economics of coal-to-liquids. While I’ve never worked those numbers myself, my guess is that they are at least as good as those of CCS without the long R&D time required for it. And maybe we can get rid of the mercury while we’re at it.
I agree that CCS is a “tough nut to crack”. The baseline technology is post-combustion amine-based flue gas scrubbing. By IPCC estimates from several years back, it would boost the capital cost of a new pulverized coal plant by ~30% (IIRC) and create a parasitic power drain amounting to 24% of the plant’s output. But what’s the conclusion?
One conclusion might be that, unless substantially more cost-effective approaches for CCS can be found, then the economic viability of coal-fired power generation hinges on the public’s continued willingness to assume the burden of coal’s external costs. Coal-fired plants must be allowed to freely dump their CO2 emissions into the atmosphere. If coal is to remain economically viable for power generation, then it cannot be held to account for the cost of mitigating its emissions.
As it happens, I believe that there are, indeed, substantially more cost-effective approaches for CCS. I’m researching one approach that would use the entire surface of the ocean as a collector. It would offset emissions from diffuse sources and would not require installation of CC equipment at power plants.
It would, however, require a modest tax on all carbon sources (not just coal plants) to pay for the cost of removing and sequestering CO2 from the atmosphere.
Agreed, Joel: “The issue no one seems to be closing with is that burning coal is a bad idea, has always been a bad idea and likely will continue to be a bad idea unless and until CCS makes a breakthrough. Long before there was any notion that accumulating CO2 might be damaging to the biosphere, Londoners wheezed, hacked and even died in some cases from air egregiously polluted by the general burning of coal. And there is all that mercury no one is mentioning. “
The recommendations to congress seem a bit questionable to me, some of them anyway…
“Shift power on these issues away from federal agencies towards State governments” – that’s more or less standard ideology, ok.
“Freeze new federal environmental regulations…Prohibit the EPA from regulating greenhouse gas emissions;
“Require congressional approval of major new regulations promulgated by agencies” I hope not. Congress caused us a near-default on our national debt – why should we trust the federal government when it comes to dealing with regulations here, if the EPA or other Federal agencies are so disliked? Congress isn’t showing any more competence.
“Eliminate subsidies for clean coal technologies.” ?
I don’t really know what to make of these, other than see it as a more or less ideologically driven set of recommendations. It sounds like something “The Heritage Fund” would write, and is seems a bit born of an intellectual silo, so it appears more or less useless in the real world. But it will give politicians something to reference that supports their views, I suppose.
The report misses a major element that others here have mentioned – economics as a reason for coal unit retirements. While the EPA regs discussed in the report are a contributing factor, right now we are seeing the closing of older, inefficient coal plants with low capacity utilization factors that would not be economical to retrofit. Combined with low natural gas prices, closing a coal unit and replacing with a natural gas unit is the economically prudent decision. In addition, regulated utilities cannot recover costs for compliance with regulations that have not been promulgated. Some of the EPA rules cited are still in the proposal stage. This presents uncertainty which is certainly a factor in the decision to retire some coal units.
The conclusion about eliminating CCS subsidies is a bit perplexing. While I agree with Joel that it CCS is a tough nut to crack, carbon reduction technologies (CCS, oxycombustion, etc) will be essential for coal to be part of the energy future.
Unfortunately I doubt that this piece will persuade anyone but those ideologues already railing against EPA.
Dawn makes a good point: The boom in natural gas and resulting fall in price has been the major factor undermining the domestic coal industry. Related to that though has been the shift toward exporting coal to Asia, where there is still large and growing demand. And coal exports are unaffected (so far at least) by EPA regulations.
My sense is that CCS will not work unless and until it can yield a commercial byproduct. SO2 scrubbing is cost-effective (at least relatively more so) because its byproduct, sulfuric acic, has a substantial commercial market. The closest thing so far to CCS providing a commercial benefit is using the captured CO2 to enhance recovery from oil/gas wells. Which makes the ‘carbon footprint’ benefits diluted if not dubious.
Alternatively, a way to make the energy resource in coal deposits useful while less environmentally harmful would be an efficient means of conversion of coal to gas (methane). Some analysts have suggested that developing a prolific strain of bacteria to feed on coal and produce methane in situ could be the solution.
Bacteria that that are able to consume coal and produce methane do exist; I believe they’re the primary source of coal bed methane. Talk about biological coal-to-methane centers on developing strains that are more productive, whose activity rates can be accelerated by injecting oxygen and nutrients.
That’s a really bad idea, in my opinion. It’s energetically impossible to produce only methane from coal; carbon atom for atom, methane carries a much higher chemical potential energy than coal. So what happens is that more than half of the coal is “burned” all the way to CO2. That provides the energy for bacteria to extract hydrogen from water and produce methane as a waste product. The net result is that there is more CO2 than methane in the gas produced. Then only a portion of gas produced makes it into the collection well. The rest diffuses into the overburden and eventually into the atmosphere. It’s worse even than digging up the coal and burning it for power without CCS.
Lewis, good point about a useful byproduct from CCS. Some flue gas desulfurization systems (forced oxidation) produce synthetic gypsum, used to manufacture 30% of the wallboard in the U.S. There are numerous examples of wallboard plants co-located with coal-fired power plants. Also, let’s not forget the use of coal ash in concrete, asphalt, and other construction products. If we can find a way to utilize the CO2 from power plants rather than sequester, I think the technology would become more easily commercialized.
The small merchant market for CO2 (dry ice, food storage, and a few other applications) would be totally overwhelmed by the flood of CO2 from any CCS program large enough to be helpfulful. The largest potential market is for EOR, and even that market could absorb at most 10% of the CO2 produced by our current fleet of coal-fired power plants.
The only market large enough to handle the volumes of CO2 produced would be the carbon credit market created by setting a price on carbon emissions.
Roger, re microorganisms, you raise a fair question. However, in situ extraction of coal by biotechnology at least potentially could significantly reduce its environmental, energy and other costs. Coal mines with fewer or no miners would save lives. Without mechanical mining, tailing piles would be reduced or eliminated. The tops of mountains might not need to be cut off to get to coal seams. I would guess, too, that it is far more efficient to transport gas by pipeline than coal in freight cars.
Depending on the nature of the microorganisms, sulfur could be left behind, along with mercury and other toxic metals. (At least one DOE project I saw demonstrated that this could be feasible.)
Your assumption that more CO2 than methane would be produced is hardly obvious. At least one source I found claims that its process yields 60-80% methane: http://bit.ly/NXTnYF. There is no reason to assume that more advanced biotechnology could not do as well or better.
Meanwhile, Dawn has pointed out that at least one durable, solid commercial product can be made from CO2 extraction, gypsum. Further innovation may come up with other kinds of commercially useful products.
Coal is going to be used one way or another. And carbon pricing has continually failed. Reducing the environmental, health, and other costs of coal may not seem ideal to some, but still would be an improvement.
Actually Lewis, synthetic gypsum is not made from CO2 extraction, it is made from the calcium sulfate produced by passing SO2-laden gas through limestone and subjecting it to forced oxidation. I only meant to point out that uses for the byproducts from flue gas cleaning technologies are possible.
With regard to CO2 uses, I think we have to think beyond EOR to develop new uses for CO2. There was a story earlier this year about a startup receiving investment to turn captured CO2 into baking soda. Now that seems on the extreme low end of the useful byproduct development, but perhaps other uses can be found as well.
Lewis, thanks for the link to Humaxx. It looks like my automatic orientation toward non-biological chemistry and my limited knowledge of biochem tripped me up. I failed to recon with what could be called the “benign inefficiency” of biochemical processes.
The reason that Humaxx might actually be able to get 60 – 80% methane from their process is that the bugs producing the methane aren’t particularly efficient in how they go about it. The most efficient way to get the energy needed to make methane from coal and water would be to oxidize a portion of the coal all the way to CO2. But the bugs don’t do that. The processes that they employ are less efficient, and produce a range of organic waste products in which the coal has only been partially oxidized.
That’s bad, in the sense that only a small fraction of the coal ends up getting turned into methane. But it’s good, in the sense that the partially oxidized waste products are humus, which is non-gaseous and doesn’t contaminate the methane output. In fact, I believe the CO2 that is produced is from a parallel metabolic pathway, and not directly involved in producing the methane. It’s possible that genetic tinkering with the bacteria could reduce the production of CO2 even more.
It’s an interesting tradeoff to go for a higher purity of methane at the expense of a lower total output per ton of coal. It’s probably not a favorable tradeoff for coal that has been mined. Most of the coal is converted to humus rather than methane, and I suspect that the coal humus would be too contaminated by heavy metals and toxic organic molecules to be used in agriculture. But for in-situ treatment, it might be very favorable. Since you’re not goint to the trouble of digging it up, it’s not important to use the coal efficiently.
Leaving most of the coal in place, as humus, is probably the next best thing to leaving it untouched altogether.
Thanks for correcting me, Dawn. However, I’ve read some other things about using captured CO2 to create solid/liquid products. Here’s one I just stumbled across:
http://www.oakbio.com/?tag=co2-capture
This approach makes more sense to me than pumping gas into a hole and hoping it won’t leak out. Especially if the product is durable.
I’m not assuming this approach is or will be feasible. Recycling SO2 seems a lot easier. But again, I think it is a more promising line for innovation than just trying to hide gas. Biotechnology may offer a useful solution: e.g., artificial photosynthesis that could more efficiently convert CO2 into solid or liquid organic material.
Regarding the CCS topic and the creation of solid/liquid products, a colleague in another discussion group just pointed out this UK report:
http://www.policyinnovations.org/ideas/policy_library/data/01612/_res/id=sa_File1/CCU.pdf
Lewis, thanks for the links. Very interesting. I agree that the focus should be on utilization, rather than sequestering and waiting for potential problems to happen. It would seem that policies that focus on CO2 usage may have far more impact than just sequestration, so why isn’t it being funded more? Is this just lack of knowledge/awareness on the part of policymakers?
Thank you for all your comments.
Let me first start by saying that I have no problem with switching from coal to natural gas as a result of cost. This paper was not meant to say that coal has to be a part of our energy future, rather that regulations shouldn’t unnecessarily drive up the costs of coal to make it artificially uneconomical.
Nor am I Anti-AGW. It’s quite clear warming is happening and man is playing a part. Where the science is shaky is how much warming is due to man and how fast is it occurring. As Richard Muller put it in the NYT last week: “It’s a scientist’s duty to be properly skeptical. I still find that much, if not most, of what is attributed to climate change is speculative, exaggerated or just plain wrong. I’ve analyzed some of the most alarmist claims, and my skepticism about them hasn’t changed.”
Having said that, it doesn’t matter. If our earth is cooking, whether it’s caused by man or not, we need to do something about it. The fact of the matter is that reducing our CO2 emissions dramatically will do nothing to reduce global emissions and have no impact on temperature. Paul Knappenberger’s analysis of Waxman-Markey showed that reducing CO2 emissions 83 percent below 2005 levels by 2100 would moderate the Earth’s temperature by a few tenths of a degree C. If we’re serious about climate change, we need to find solutions that work rather than driving up the cost of energy to make us poorer and less equipped to deal with the problem.
Also to be clear, Heritage wants to remove subsidies for all energy sources, not just coal. I’ve made clear why we don’t think CCS is necessary and those commenting know more about the technological and economic challenges than I do, but there’s also the probabilty of much more seismic activity as a result of CCS. National Research Council stresses that continuously injecting carbon dioxide at high pressures (tankers full per day) could induce earthquakes of higher magnitudes than what we’ve seen from wastewater wells and geothermal activities.
Nick, thanks for the clarifications. One thing I think gets overlooked with regard to EPA regs is that timelines greatly affect compliance costs and technical feasibility. As several regulations are still in the proposal stage, it is only speculation on what compliance timelines will be relative to other promulgated regulations. It can also be a challenge for transmission operators to coordinate retrofit outages.
Here’s the catch-22 that I see with regard to subsidies: while I agree in principle that all energy sources should be on a level playing field, until we start to count in life-cycle costs into overall production costs, they are not on a level field to begin with. Further, getting emerging technologies (whether it be renewable energy, emissions clean up, energy storage, etc) from R&D to commercial scale presents financial risk without subsidies. I think it is difficult to attract investors for that scale-up, which is frequently the barrier for some great scientific advancements to achieve penetration.
With CCS, I’d like to forget the “S” on the end and rename it “CCU” carbon capture and utilization, as I think technologies that can achieve that are worth funding.