Clearing the Air: Illinois Looks to the Federal Government Regarding Clean Coal Technology

May 1, 2009

An artist’s depiction of FutureGen, the near-zero emissions coal plant proposed for construction in Mattoon.
Credit WUIS/Illinois Issues
Although concern over climate change has escalated in recent years, America won’t stop burning coal anytime soon. Coal-fired power plants generate half the nation’s electricity, while creating more than a quarter of all the harmful carbon dioxide pollution in the United States.

The coal industry is feeling pressure from all sides to clean up its act by reducing carbon emissions that contribute to global warming. Various methods are being tested. The technology that is gaining the most support from the scientific community and policy- makers is carbon sequestration, which would trap pollutants deep underground for possibly thousands of years. 

Sequestration often is partnered with coal gasification, a process that turns coal into gas and allows certain pollutants to be removed. To date, no large project in the United States has illustrated sequestration’s viability on a mass commercial scale.

The industry’s reluctance to independently fund any major project using so-called clean coal technologies — and the uncertainty that surrounds almost every aspect of the issue — has people in coal-rich states such as Illinois looking to the new federal administration for hints about whether investing in unproven technologies justifies the risk.

U.S. Sen. Dick Durbin says he is not encouraged by the reaction in his chamber to a new bill that aims to make coal plants cut their emissions, as well as fund carbon sequestration research. Durbin says he finds little Republican support, and a dozen Democrats already have voiced concerns or opposition to the bill. 

Supporters of the measure, which would push the coal industry to address some aspects of global warming, have to “start off in a hole trying to come out of it,” he says.

Durbin adds he worries that if so-called clean coal research cannot find backing under President Barack Obama, who vocally supported “clean coal” during his campaign, the issue might be set back by years. Opponents in the coal and power industries are “arguing against the uncertainty” of what is to come.

There is plenty to be unsure about. 

The main risks for the private sector boil down to money. John Mead, director of the Coal Research Center at Southern Illinois University Carbondale, says because the technology is unproven, it’s hard to predict what future costs could be associated with carbon sequestration and coal gasification projects. Science has not proven the amount of electricity that plants could produce or the amount of hazardous carbon emissions that plants could divert from the atmosphere. 

If power plants with advanced technologies fail to produce as much power or reduce as much pollution as promised, investments made by the private sector may not pay off. 

Mead says in a worst-case scenario, companies that borrow money to fund such plants may not make enough profit to repay the loans. 

So far, investors have been unable to count on backing from the federal government. 

The U.S. Department of Energy has pulled support from projects when costs rose. Hitting home in Illinois, for instance, the administration under former President George W. Bush stalled plans for FutureGen, a proposed near-zero emission coal plant in Mattoon that is touted by many as a pivotal research project and public-private partnership. Officials cited estimated cost increases that would have exceeded $1 billion. Since then, the U.S. Government Accountability Office reported that the administration overestimated the cost by $500 million. 

Regardless of original estimates, Energy Secretary Steven Chu now says that the plant could cost more than $2.3 billion dollars to build, partially because of the rising cost of materials. 

With a new administration comes new priorities and possibilities. 

The federal stimulus package includes a potential boon for Illinois. A $1 billion grant is earmarked for fossil energy research, which many in this state hope will go toward resurrecting FutureGen, which was slated to test three technologies at one location. 

Chu’s public statements feed that hope, as he has said that he still is considering moving forward with some version of the FutureGen concept. 

William Brandt, chairman of the Illinois Finance Authority, says he feels optimistic that the Energy Department will support the project. He says he has “every expectation and hope that FutureGen is going to get back on track rather quickly.”

Obama has indicated that the coal industry will have to pursue cutting-edge technologies, such as those proposed for FutureGen, that reduce carbon emissions. If not, power plants risk becoming obsolete in an increasingly climate-conscious political atmosphere. 

In January 2008, then-presidential candidate Obama told the San Francisco Chronicle about his hopes for cutting carbon emissions by making industries pay for the amount they pollute. He caused a stir when he said the so-called cap-and-trade policy would “bankrupt” any new coal plants that were built without technologies to reduce carbon output. 

As a result, plans to construct new coal plants are being canceled and delayed nationwide, indicating the industry’s concern that Obama’s statement may become a reality.

If the coal industry were to move toward sequestration, the possibility of cleaner-burning coal could have a huge impact on the future of Illinois. 

This state holds more than 40 billion tons of recoverable coal reserves, according the Illinois State Geological Survey. However, Illinois coal has a high sulfur content and when burned, emits pollutants that lead to acid rain. 

Mining and use of Illinois coal declined after federal law enforced tougher pollution standards in 1990. The U.S. Clean Air Act was designed to address acid rain by limiting the amount of sulfur, along with other pollutants, emitted by coal plants. 

Since the law took effect, the amount of coal mined in Illinois, the number of mines throughout the state and the jobs associated with coal have been cut almost by half, according to Phil Gonet, president of the Illinois Coal Association.

The cap-and-trade program restricts the amount of pollution plants are allowed to emit and then fines them if they exceed the allowable limit. The policy drove some power companies to use lower-sulfur coal because it was cheaper than installing scrubbers to remove sulfur after the coal was burned. 

Gonet says that Illinois plants began to import western coal, even though the transportation costs could reach five times the price of the coal itself, because they determined it was the cheapest option. 

While a cap-and-trade program aimed at sulfur in the 1990s hurt the coal industry in Illinois, the current focus is on reducing global warming. A new cap-and-trade program would target carbon emissions, potentially creating a resurgence in demand for Illinois coal. 

Gonet says that if the industry applied carbon capture technology on a commercial level, the sulfur content of the state’s coal would be less of a factor because pollutants could be kept out of the air through the sequestration process. 

“If clean coal technology can be developed and deployed, it would be huge for Illinois coal,” he says. 

However, if coal-fired power plants don’t find a way to cut carbon emissions, and if state or federal laws are enacted to financially penalize them for their emissions, then the companies might seek out such cleaner fuels as natural gas. 

In short, it could be a death sentence for the coal industry.

Many environmentalists say coal’s days should be numbered. Opponents of burning fossil fuels think that continuing to view coal as an acceptable power source and investing public money in research are big mistakes. 

The Illinois Sierra Club, for instance, protests any new proposed coal mines or power plants in the state. Becki Clayborn, a Sierra Club regional representative based in Chicago, says that there can never be “clean coal” because the mining process itself releases pollutants and damages local environments. 

Instead, Clayborn says, the government should invest time and money into researching such renewable energy sources as solar and wind rather than trying to bring “old dirty” power sources up to new standards. 

“We need to upgrade,” she says, adding that she realizes that coal power plants are not going away anytime soon. In the meantime, however, the pollution they create must be curbed, she says.

She adds that while the country transitions from fossil fuels to renewable energy sources, it is the government’s responsibility to protect people and the environment by making the industry address environmental concerns. 

“It’s the health of everyone that’s at stake here,” she says. 

Many conservation advocates question the industry’s commitment to cleaning up its act. They view the public support of clean coal by the industry, including an advertising and public relations campaign, as lip service until some major industry-funded research projects move forward. 

This is Reality, a national organization funded by the Alliance for Climate Protection, the Sierra Club, the National Wildlife Federation, the Natural Resources Defense Council and the League of Conservation Voters, has created its own advertising campaign that draws attention to the lack of large-scale clean coal power plants in the nation.

However, not all environmentalists agree that opposition to cleaner coal technology is realistic. John Thompson, director of the coal transition project for the Clean Air Task Force based in Boston, works for an organization that combats air pollution. He says because the nation relies so heavily on coal for its electricity, those concerned with global warming should support research that aims to cut carbon emissions at coal-fired power plants. 

“At the end of the day, we have two choices. [Carbon dioxide] is either going to be vented, and we know what the consequences of venting it are, or we can store it.” 

According to Thompson, solar and wind power technologies will not be reliable enough to meet America’s demands in the near future. He says research should be dedicated to renewable energy and to cleaning up existing energy sources, creating a diverse energy portfolio while emitting the least amount of greenhouse gas possible. 

“If we don’t do that, everything the environmental movement has achieved over the last 100 years goes out the window. All the species and habitats we have protected will be at risk from the temperature increase,” he says. 

The government could spur the technology’s advancement, he adds, by funding research and putting a cap-and-trade program in place to penalize plants that generate unacceptable levels of carbon dioxide emissions.

Industry insiders, investment experts and researchers all agree that Illinois could play an integral part in the development of carbon capture and storage. 

Illinois has a vested economic interest in developing the technology, but it also has the right environmental conditions. 

According to the State Geological Survey, the Illinois Basin, a large depression under the state, could prove to be one of the best places in the nation for storing carbon. The state agency is partnering with the federal Department of Energy to test the carbon storage capabilities of the basin. The project, which is in Decatur, held a groundbreaking ceremony in April to celebrate the completion of an 8,000-foot-deep well where carbon pollutants generated by an ethanol plant associated with Archer Daniels Midland will be stored. While no coal is involved, the technology is being tested to apply to coal plants in the future.

Illinois legislators are starting to show support for other “clean coal” projects in the state. 

The General Assembly approved a bill during its last session that allows the first step toward building a plant using carbon sequestration near Taylorville. The legislation initiates a study to determine whether the Taylorville Energy Center, proposed by a Nebraska-based power company, Tenaska Inc., would be feasible. If the project were to break ground, it would be backed by state funds.

Another measure that advanced through the Senate this year would approve up to $3 billion in bonding authority for the Illinois Finance Authority to invest in carbon sequestration and renewable energy. 

According to the authority’s Brandt, up to $50 million of that funding could go toward resurrecting FutureGen. He says Illinois could become an energy pioneer state, similar to California. 
“Illinois is going to come uniquely to the forefront of energy production,” he says. 

But he adds that private-sector companies should share the financial risk with the public sector because private investors have the most to gain financially if the technology proves to control pollution. 

Joe Lucas, a spokesman for the coal industry’s lobbying organization, America’s Power, says that the private sector is willing to take some of the risk, but the government also has to reassure investors that they won’t go it alone. 

According to Lucas, the No. 1 challenge to carbon sequestration is the initial cost of testing. He says emission standards are necessary, but they should be set at realistic levels that plants can meet and then step up as the technology improves. 

Patience will be needed to see the changes through, he adds. “Some people think we can just throw the car in reverse, and that’s not a very doable process.”

The federal proposal, sponsored by Democratic U.S. Reps. Henry Waxman of California and Edward Markey of Massachusetts, may be one of the first steps toward creating parameters for regulation and securing initial funding for research. The measure includes funding for carbon sequestration and a cap-and-trade program in an attempt to control overall emissions. The legislation does not yet specifically address the controversial subject of carbon credit distribution, a critical point for the industry because the more credits a plant would receive, the more pollution it could release without having to pay fines. 

Gonet of the Illinois Coal Association says that the 1990 cap-and-trade system for sulfur was successful because the allowances were doled out based on need, but Obama has proposed auctioning off the carbon credits as a way to raise revenue. 

Many in the coal industry oppose the idea, saying it would artificially inflate the cost of electricity that comes from fossil fuels. 

Lucas of America’s Power describes the bill as “pragmatic” and says that it is a great starting point for dialogue.

“We’re just happy to have the conversation going,” he says.

But because the federal legislation currently lacks the necessary support, a conversation may be all that results this year. 

Durbin says it’s important to work out incentives and penalties to push the coal industry into reducing carbon emissions. The government, he adds, must help private interests with the initial investment needed to create a plant that would prove the technology. 

“There is no single company that could take on a project of this magnitude,” he says. 

If he were in the private sector looking to the government for a signal, Durbin says he “would be wary knowing that change is coming, and it has to come.” 

But the two questions of when and how still remain.

 

Many conservation advocates question the industry’s commitment to cleaning up its act. They view the public support of clean coal by the industry . . . as lip service until some major industry-funded research projects move forward.

Illinois Issues, May 2009