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Michael Zey
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ANALYSIS-Cleaner coal arrives, but will it become mainstream?

By Timothy Gardner

 
NEW YORK, Dec 7 (Reuters) - Environmentalists have long lobbied to dethrone coal as the top power source in the U.S., but with soaring natural gas prices, and new cleaner-burning technologies, coal's reign may extend well into the future, industry experts said.

"Coal's going to be around for many many years," said Bob Porter, a spokesman for the U.S. Department of Energy (DOE).

Coal is still king in the rapidly expanding U.S. power world. Plants that burn the notoriously dirty fuel produce 56 percent of all U.S. electricity -- still well ahead of nuclear power at 20 percent, and natural gas at 15 percent, according to the D0E.

The nation's electricity appetite has more than doubled over the last 20 years, and swelled four percent so far this year, according to the Edison Electric Institute.  

"Power demand grows so fast in this country that even with the great increase in natural gas, 10 to 15 years from now you will still see about half the power being generated in this country by coal," said the DOE's Porter.

But gas, a cleaner fuel, has become the natural choice with over 90 percent of new gas-fired plants currently planned in the United States.

Natural gas power plants produce half the emissions of the greenhouse gas carbon dioxide (CO2), on an energy-produced basis, than conventional coal-fired power plants, according to environmental Web site Powerscorecard.org.

But as wholesale natural gas prices have nearly hit all-time highs on a daily basis ahead of winter and California braves so-called brownouts, or power emergencies, in mild December weather, coal's future looks bright.

Wall Street is closely watching coal as leading U.S. producers Arch Coal and Consol Energy are up sharply from their 52-week lows.

And in September, Wisconsin Energy Corp. (WEC) announced plans to build two new 600 megawatt coal burning plants in its state, the first coal plants proposed in the United States in five years.

Although state and federal regulatory and environmental approval is required, the company is confident.

"In a year to year-and-a-half, we hope to be turning soil for building those plants," WEC spokesman Mike John told Reuters.

SHOULD A 19TH CENTURY FUEL POWER THE 21ST CENTURY?

Industry and the DOE have built two cleaner burning plants that change coal to gas, one in Tampa, Fla., the other in Terre Haute, Ind. Since the late 1990s, the plants have boosted efficiency from a conventional coal plant's 33 percent to 45 percent.

That efficiency could eventually be boosted to 60 percent or better, especially if fuel cells are added, coal backers argue.

But some environmentalists insist any reliance on coal is bad.

"Clean coal is an oxymoron," said Ann Mesnikoff, an official with the global warming and energy unit of lobbyist group the Sierra Club.

"Here we are in the 21st century and they are groping at ways to make a 19th century technology slightly better," she said.

Environmentalists claim the country could meet electricity demand with efficient appliances such as the compact florescent light bulb which, they claim, saves 400 pounds of coal over its lifetime.

Besides, the impact of coal is far reaching.

Burning coal also releases sulphur dioxide, an acid rain factor, while coal mining permanently changes the landscape in states like West Virginia and Kentucky where coal is usually mined by lopping off mountain tops and then smoothing them over, environmentalists say.

CHEAPER POWER WORLDWIDE  

Still, because projections that coal will be used for many years, the DOE's Porter says the sooner gasified coal plants come into the mainstream, the sooner they will cut CO2 emissions here and abroad.

China, India and Indonesia, who have huge amounts of coal and enormous power demand potential, can benefit from technologies being developed in the United States.

"As China and India moves into major expansions of their power grid, we ask them to consider options like gasification combined cycle (of coal), not only because it is cleaner, but because you can ultimately get more power from a given sized plant, which makes it more affordable," said Porter.

Perhaps in a few years.  

Building a conventional coal plant costs about $1,000 per kilowatt, while gasification plant costs $1,200 to $1,400 per kilowatt, a cost, Porter says, that will go down as more plants are built.  

"The problem is, when do we build the next generation of plants?" Porter said.

Even Wisconsin Energy's John said time will tell whether the company's two proposed coal plants will be conventional or coal-to-gas.

((Timothy Gardner, New York Energy Desk, +1 212 859-1632; fax +1 212 859-1629; email: timothy.gardner@reuters.com))

17:32 12-07-00

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