A mixed bag of coal-related "policies"

Published by MAC on 2009-05-05

UNITED STATES

ENERGY POLICY: No need to build new U.S. coal or nuclear plants -- FERC chairman

Noelle Straub and Peter Behr, Environment and Energy Publishing LLC

22nd April 2009

No new nuclear or coal plants may ever be needed in the United States, the chairman of the Federal Energy Regulatory Commission said today.

"We may not need any, ever," Jon Wellinghoff told reporters at a U.S. Energy Association forum.

The FERC chairman's comments go beyond those of other Obama administration officials, who have strongly endorsed greater efficiency and renewables deployment but also say nuclear and fossil energies will continue playing a major role.

Wellinghoff's view also goes beyond the consensus outlook in the electric power industry about future sources of electricity. The industry has assumed that more baseload generation would provide part of an increasing demand for power, along with a rapid deployment of renewable generation, smart grid technologies and demand reduction strategies.

Jay Apt, a professor at Carnegie Mellon University's Electricity Industry Center, expressed skepticism about the feasibility of relying so heavily on renewable energy. "I don't think we're where Chairman Wellinghoff would like us to be," Apt said.

"You need firm power to fill in when the wind doesn't blow. There is just no getting around that."

Some combination of more gas- or coal-fired generation, or nuclear power, will be needed, he said. "Demand response can provide a significant buffering of the power fluctuations coming from wind. Interacting widely scattered wind farms cannot provide smooth power."

Wellinghoff said renewables like wind, solar and biomass will provide enough energy to meet baseload capacity and future energy demands. Nuclear and coal plants are too expensive, he added.

"I think baseload capacity is going to become an anachronism," he said. "Baseload capacity really used to only mean in an economic dispatch, which you dispatch first, what would be the cheapest thing to do. Well, ultimately wind's going to be the cheapest thing to do, so you'll dispatch that first."

He added, "People talk about, 'Oh, we need baseload.' It's like people saying we need more computing power, we need mainframes. We don't need mainframes, we have distributed computing."

The technology for renewable energies has come far enough to allow his vision to move forward, he said. For instance, there are systems now available for concentrated solar plants that can provide 15 hours of storage.

"What you have to do, is you have to be able to shape it," he added. "And if you can shape wind and you can effectively get capacity available for you for all your loads.

"So if you can shape your renewables, you don't need fossil fuel or nuclear plants to run all the time. And, in fact, most plants running all the time in your system are an impediment because they're very inflexible. You can't ramp up and ramp down a nuclear plant. And if you have instead the ability to ramp up and ramp down loads in ways that can shape the entire system, then the old concept of baseload becomes an anachronism." 'A lot that is still not understood'

Asked whether his ideas need detailed studies, given the complexity of the grid, Wellinghoff said the technology is already moving that way.

"I think it's being settled by the digital grid moving forward," he said. "We are going to have to go to a smart grid to get to this point I'm talking about. But if we don't go to that digital grid, we're not going to be able to move these renewables, anyway. So it's all going to be an integral part of operating that grid efficiently."

In response to Wellinghoff's comments, James Owens, a spokesman for the Edison Electric Institute, an association of shareholder-owned utilities, issued this statement: "While our industry is making very major strides in expanding energy efficiency and the use of renewables, we'll still have to add new baseload generation capacity to help meet the growth in demand for electricity. As we intensify the transition to a low-carbon future, we will need to have all generation options on the table, including advanced new nuclear, advanced clean coal with carbon capture and storage, as well as natural gas."

The North American Electric Reliability Corp. reported last week on challenges in integrating a twentyfold expansion of renewable power into the nation's electricity networks but did not specifically address whether additional baseload generation would be needed. A spokesperson for NERC did not have an immediate response to Wellinghoff's comments.

Revis James, who directs energy technology assessment for the Electric Power Research Institute, said recently that it is not clear how fast renewable energy can be added without creating reliability issues. "No one knows what the magic number is," he said. "Are we moving too fast? On the policymakers' side, there's a lot that is not still understood about the implications of a large share of renewables." Impact on nuclear power

Wellinghoff's statement -- if it reflects Obama administration policy -- would be a huge blow to the U.S. nuclear power industry, which has been hoping for a nuclear "renaissance" based on the capacity of nuclear reactors to generate power without greenhouse gas emissions.

Congress created significant financial incentives to encourage the construction of perhaps a half-dozen nuclear plants with innovative designs, and Energy Secretary Steven Chu has promised Congress to accelerate awards of federal loan guarantees for some of these proposals.

But a major expansion in U.S. nuclear energy would require a high effective tax on carbon emissions from coal plants, or an extended loan guarantee and tax incentive policy, according to the Congressional Research Service and outside consultants.

The leading energy bills before Congress do not provide more loan guarantees.

"If expansion of nuclear plants is the nation's policy, then Congress has to recognize that the U.S. energy companies cannot afford to do this alone," said Paul Genoa, policy director for the Nuclear Energy Institute, in a recent interview.

"The president needs to show his cards on nuclear energy," said energy consultant Joseph Stanislaw, a Duke University professor. "He cannot keep this industry, which must make investments with a 50-year or longer horizon, in limbo for much longer."
"I think [new nuclear expansion] is kind of a theoretical question, because I don't see anybody building these things, I don't see anybody having one under construction," Wellinghoff said.

Building nuclear plants is cost-prohibitive, he said, adding that the last price he saw was more than $7,000 a kilowatt -- more expensive than solar energy. "Until costs get to some reasonable cost, I don't think anybody's going to [talk] that seriously," he said. "Coal plants are sort of in the same boat, they're not quite as expensive."

Can renewables meet demand?

There's enough renewable energy to meet energy demand, Wellinghoff said. "There's 500 to 700 gigawatts of developable wind throughout the Midwest, all the way to Texas. There's probably another 200 to 300 gigawatts in Montana and Wyoming that can go West."

He also cited tremendous solar power in the Southwest and hydrokinetic and biomass energy, and said the United States can reduce energy usage by 50 percent.

"You combine all those things together ... I think we have great resources in this country, and we just need to start using them," he said.

Problems with unsteady power generation from wind will be overcome, he said.
"That's exactly what all the load response will do, the load response will provide that leveling ability, number one," he said. "Number two, if you have wide interconnections across the entire interconnect, you're going to have a lot of diversity with that wind. Not all the wind is going to stop at once. You'll have some of it stop, some of it start, and all of that diversity is going to help you, as well." Push for grid modifications

But planning for modifying the grid to integrate renewables must take place in the next three to five years, he said.

"If we don't do that, then we miss the boat,"Wellinghoff said. "That planning has to take place so you don't strand a lot of assets, a lot of supply assets."

Unlike coal and nuclear, natural gas will continue to play a role in generating electricity, he said.

"Natural gas is going to be there for a while, because it's going to be there to get us through this transition that's going to take 30 or more years."

Chu reiterated before the House Energy and Commerce Committee today that he supports loan guarantees for new nuclear power plants and is working with the White House on the issue.

"I believe nuclear power has to be part of the energy mix in this century," Chu said.
Chu also noted today that nuclear technology, along with renewables, is an area where the United States has lost its lead. "We are trying to start the American nuclear industry again," he said.

Coal currently provides half of U.S. power, while nuclear energy accounts for about 20 percent.

Senior reporter Ben Geman contributed.

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Coal and the new political landscape

Infomine

29th April 2009

[Luke Popovich, vice-president of external communications at the National Mining Association, gave the keynote address at the Coal Prep 2009 conference on Tuesday. InfoMine presents an abridged version of his talk.]

Tomorrow marks the first 100 days of the Obama administration-the traditional milepost for taking stock of a new government's direction, so it's particularly fitting that we assess the policy outlook for the coal industry and measure our reaction to it.

From the days on the campaign trail to these first 100 days in office, the president and many in Congress have focused on the low-carbon future as a panacea, creating millions of new so-called green jobs, solving global warming and strengthening energy independence. The coal industry has much at stake in this bold attempt to transform the energy sector. In fact, this overriding ambition to transform a carbon-based economy into a renewable-based economy could be the biggest challenge the coal industry faces in our lifetime. What makes this challenge especially intriguing is the sense, broadly shared I think, that we're entering uncharted waters. I say this for a number of reasons.

First, we see a dramatic change in political leadership in both Congress and the administration. This is a leadership supported by labor and environmental constituencies and far more sympathetic to their priorities than we saw in the Bush years. A second change is a different political party alignment. The Republican party is in near complete disarray, barely competitive in the Northeast, on the West Coast and losing support in the Rocky Mountains as it struggles to redefine its appeal beyond low taxes and less government. By contrast, the Democratic Party is ascendant, strengthening government's grip on the economy, adding to its strength in the Senate and led by a charismatic president who continues to win rave reviews for his coolness and leadership.

This political re-alignment will certainly lead to higher environmental and operating costs for coal producers. Just yesterday, Secretary of the Interior Ken Salazar called on courts to revoke the SBZ rule six years in the making. It's a safe assumption that it will be replaced by a costlier one for coal companies mining in Appalachia.

The climate change bill debated this week is opposed by many House Democrats and some labor unions. It mandates steep reductions in CO2 emissions with little regard for costs to coal states, little regard for coal industry jobs and scant regard for the higher utility bills that could spell the end to affordable electricity in much of the U.S. In its present form at least, the bill is unlikely ever to win the coal community's support and unlikely to win the majorities it will need to pass this year or even next.

Finally, economic anxiety is influencing another major issue that is key to our industry, the debate over "clean coal." Our opponents have mounted an expensive advertising campaign denouncing the prospect of clean coal. Nevertheless important coal state senators and congressmen, eager to keep coal in the picture, support the concept.

The Obama Administration's stimulus budget contains $3.4 billion for CCS technology development. Dozens of coal-state Democrats support the Future Gen project, the near zero emission, coal-based power plant with CCS technology. This was to be the show-case example of the U.S. technology commitment to climate change before the Bush Administration withdrew its support for it a year ago.

More significantly, President Obama himself waves the clean coal banner, insisting that if we can put a man on the moon we can remove carbon from coal combustion. While Al Gore and the Sierra Club deride the clean coal concept as an industry PR gimmick, Secretary of Energy Steven Chu, a Nobel Prize-winning physicist, insists CCS is not only viable but vital for reducing CO2 from the biggest emitting countries such as China and India.

The green argument that coal is the problem fails on two major points. First, there are no reliable substitutes for coal for generating base load power at affordable prices. Renewable fuels presently take less than 3 percent of the electricity generation market; coal generates 50%.

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CANADA

Canada Aims To End Traditional Coal Power: Report

PlanetArk

30th April 2009

OTTAWA - The Canadian government plans new regulations that will effectively phase out traditional coal-fired power stations, Environment Minister Jim Prentice said in an interview published on Wednesday.

He told the Globe and Mail newspaper that new coal plants would have to include technology to capture greenhouse gas emissions and inject them underground for permanent storage.

Ottawa also plans to impose absolute emission caps on utilities' existing coal-fired power plants and establish a market-based system to allow them to buy credits to meet those targets, he said.

"The approach that we've been working toward involves a cap-and-trade system relating to thermal coal, and the requirement of phasing out those facilities as they reach the end of their useful, fully amortized life," Prentice said.

"The concept is that, as these facilities are fully amortized and their useful life fully expended, they would not be replaced with coal," he added, saying the regulations would be unveiled later this year.

The Globe said coal-fired electricity represents roughly 18 per cent of Canada's current emissions, and eight of the 10 largest greenhouse gas emitters in the country are coal-fired power plants.

The minority Conservative government has long promised to release regulations aimed at major industrial emitters of greenhouse gases, including Alberta's oil sands producers.

(Editing by Peter Galloway)

© Thomson Reuters 2009 All rights reserved

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AUSTRALIA

Australian Firms Win Green Energy Exemptions: Report

PlanetArk

29th April 2009

CANBERRA - Energy-intensive industries could be offered exemptions by Australia's government on its 20 percent renewable energy target as financial tumult saps support for its climate change policies, a report said on Wednesday.

Prime Minister Kevin Rudd would ask state leaders to sign off on further concessions for big electricity users including pulp and paper, steel, cement and silicon industries at a meeting on Thursday in Hobart, the Australian newspaper said in an unsourced report.

The centre-left government has already foreshadowed an exemption for aluminium, which consumes about 15 percent of electricity nationally.

Major industries had complained about the "double whammy" from a planned carbon emissions trading system, set to begin next year, and the new renewable energy target, which requires electricity retailers and large users to source 20 percent of their energy needs from renewable sources by 2020.

Broader renewable exemptions could soften industry resistance to the emissions trading law when it faces an obstructive upper house senate dominated by government opponents and swing-vote independents next month, the paper said.

Bluescope Steel, Australia's top steelmaker, on Tuesday attacked the emissions trading plan, branding it as a A$2.5 ($1.76) billion economic "de-stimulus" package as Australia teeters on the edge of recession and thousands of job losses.

"It is very disappointing that the government still appears stubbornly committed to its 2010 carbon pollution reduction scheme deadline, despite its obvious and serious flaws," Bluescope chairman and Reserve Bank of Australia board member Graham Kraehe told a meeting of company directors in Brisbane.

Climate Change Minister Penny Wong, attending U.S. President Barack Obama's climate meeting in Washington, said clear domestic laws were needed to ensure the success of the U.N.-backed talks in Copenhagen in December on a post-Kyoto climate pact in 2012.

© Thomson Reuters 2009 All rights reserved

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CHINA

China Low-Carbon Path Hard But Doable:

Chris Buckley, PlanetArk

30th April 2009

BEIJING - China must swiftly decouple its rapid economic growth from rising carbon dioxide emissions for global greenhouse gas levels to stay manageable, the authors of a new study said, urging sweeping support to help that transition.

The study from Britain's Tyndall Center for Climate Change Research by Tao Wang and Jim Watson finds China can transform into a "low-carbon economy" with the right mix of clean energy, carbon storage technology and development policies.

But at the release of the report to officials and experts in Beijing on Wednesday, Wang said the task of turning the world's biggest greenhouse gas emitter into a green economy will be difficult, even in the easier scenarios.

And it would require big commitments of technology and funding from wealthy countries.

"It's very crucial to slow the growth as early as possible and to reach a peak as early as possible," Wang, a researcher at the University of Sussex, told the meeting.

"It's vital for China to have the technical and financial assistance to make the fast transition which is necessary," he told Reuters in a separate interview.

Wang and Watson said their study suggested China's CO2 output should peak between 2020 and 2030, because keeping accumulated emissions within
tolerable levels would be increasingly difficult if output keeps growing beyond then.

"What we're not saying is that China should take on a target now," Watson, a researcher at the Tyndall Center, told Reuters. But, he added, "slowing the trajectory from the steep rise it's been on is needed, whatever future you conceive of."

Their study can be found on the Centre's website (www.tyndall.ac.uk).

LESS AMBITIOUS

Chinese climate change policy officials and experts are developing the government's position for negotiations aiming to agree the outlines of a new pact on fighting global warming by the end of the year.

China is mankind's biggest source of CO2, the main greenhouse gas. On a per-capita basis, China's 1.3 billion people produce about 4 tons of greenhouse gases, compared with the U.S. average of about 20 tons per person.

The Tyndall study will add to debate here and abroad about how China can balance hopes for prosperity with efforts to contain greenhouse gases
from industry, vehicles, farming and land clearance.

China produces about 80 percent of its electricity from coal-fired power stations and is also the world's largest producer of power from coal.

The Chinese government is exploring pathways to a low-carbon economy, but the emissions growth reductions envisaged by Chinese studies are less ambitious than those Wang and Watson examine.

"How low is low?," Lu Xuedu, a Chinese environment policy official said at the release of the report, speaking of a low-carbon economy. "To do this well, and not treat it as a mere slogan, will not be easy."

Wang and Watson take the total "budget" of CO2 emissions throughout this century that a U.N. scientific panel concluded was likely to keep average global temperature rises 1.9 to 4.4 degrees Celsius above pre-industrial levels.

They then tested how China might be able to grow while staying within the "carbon budget" it could receive in an international apportionment of emissions.

Of global CO2 emissions throughout this century equal to 490 gigatonnes of pure carbon, China may potentially get to emit 70 to 111 gigatonnes, they wrote. Emissions are also often estimated in tons of CO2, which weighs 3.67 times as much as pure carbon.

China can stay within carbon bounds and keep growing if it adopts sweeping measures to divert energy generation away from dirty coal to clean sources, and puts increasingly wealthy consumers on a path to less carbon-intensive homes and transport, said Wang and Watson.

Under various energy and development settings, China's economy could expand to between 8 and 13 times its current size by 2050 while sticking within the emissions budget, they found.

But while China's massive market might help speed the spread of wind and solar power, other bigger technological challenges such as mastering carbon capture and storage would be expensive, and wealthy nations should pitch to help, said Watson.

Such trade-offs will be at the heart of the global climate negotiations culminating in Copenhagen in December.

"They would not be signing up to just a number," Watson said of China. "They'd be signing up to a huge set of infrastructural changes, behavioral changes, institutional changes."

(Editing by David Fogarty)

© Thomson Reuters 2009 All rights reserved

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China: Nation to clean its coal habit

China Daily

22nd April 2009

China is trying to clean up its coal habit in an effort to reduce some of its environmental problems.

Coal accounts for over 70 percent of China's primary energy production and consumption. The country's use of it will likely reach 2.9 billion tons by 2020.

Coal-firing-related emissions constitute 80 percent of China's annual sulfur dioxide (SO2) emissions and 70 percent of its carbon dioxide (CO2) emissions.

The 11th Five Year Plan (2006-2010) for Coal Industry Development in China requires the coal industry to strengthen reforms in its industrial structure, take a sustainable path with a high utilization rates and reduce its environmental impacts.

Clean coal technologies have become a key way to achieve such goals. "Clean coal technology should be adopted throughout the entire coal chain," said Huang Shengchu, president of China Coal Information Institute (CCII).

The Chinese government is promoting coal washing, to improve combustion efficiency and minimize ash production and pollution. But the extra cost involved in the related technology means many coal-fired power plants are reluctant to adopt it. Currently only 15 percent to 20 percent of them use it.

Huang, however, said coal washing is a relatively cheap way to cut back pollution and that the government might need to implement relevant policies to encourage it.

Integrated Gasification Combined Cycle (IGCC) is another clean coal option.
In an IGCC system coal is not combusted directly but reacts with oxygen and steam to form a sort of syngas (synthesis gas). After being cleaned, it is burned in a gas turbine to generate electricity and to produce steam to power a steam turbine.

Carbon capture and storage (CCS) is a type of clean coal technology that involves capturing the carbon dioxide, preventing the greenhouse gas from entering the atmosphere, and storing it deep underground.

But the cost of capturing and storing one ton of CO2 is about $70 to $80, said Huang.

Although IGCC and CCS technologies are not widely commercialized so far, they have the potential to turn black coal into another green energy source and, as such, deserve attention and investment, said Huang.

Wan Gang, minister of Science and Technology, said in February that China would further cooperate with the US in IGCC and CCS technologies.

Huang added that China needs to construct more mine-mouth power plants, which are located quite close to coal mines, since such plants reduce energy expended during transportation.
Last December, the US-based Clean Coal Technologies Inc (CCTI) and Sino-Mongolia International Railroad Systems Co Ltd (SMIRSC) signed an agreement under which CCTI will provide technologies to China to produce clean coal.

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China's Shanxi Province to close 1,600 coal mines in 3 years

China Knowledge

20th April 2009

China's Shanxi Province will launch an unprecedented reform for the coal industry for the next three years, with the number of its coal mines cut to 1,000 from the current 2,600, according to a decision announced by the local provincial government on Wednesday.

By 2011, Shanxi, whose coal output accounts for one third of the country's total, will restrict its annual coal output to 850 million tons.

The local government also aims to develop three large coal enterprises each with an annual capacity of 100 million tons and another four large coal companies each with an annual capacity of 50 million tons, with their total output accounting for 75% of the province's total.

Some industry insiders have said that the consolidation will significantly reduce the accident rate in coal mines since the government has vowed to close over 60% of the mines in the province, and that the reform will be environmentally beneficial.

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Shanxi carries out coal industry reform

MetalBiz

20th April 2009

The government of Shanxi province, which makes a quarter of China's coal, drew up an adjustment and stimulus plan to reform its coal industry in the years to come on April 15, according to Shanghai Securities News on Friday.

By the year 2011, the Shanxi province will cut coal mines by more than 60% to 1,000 from the current 2,600, the report said. All coal companies should also boast annual production capacity of no less than 3mln tons with single well production capacity of no less than 900,000 tons through M&A and reshuffling moves, which have commenced and should be completed by the end of 2010.

Mechanization and professional training for coal mine staff are also required.

"It's a thrilling blueprint for Shanxi's coal industry," said director with the Shanxi Coal Industrial Bureau.

Shanxi also guaranteed to hold its production capacity to 850mln tons and build three coal manufacturers with annual production capacity of 100mln tons and four with 50mln tons by 2011, the report noted.