Betting on 'clean coal': Why some see it as a crucial part of our energy future — and some don't

Duke Energy's new $3.5 billion coal-gasification plant opened in 2013 in Edwardsport.

The ambitious coal-to-diesel plant proposed for Spencer County is being pitched as a way to revolutionize how we use coal.

But forgive coal-heavy communities and environmental advocates if they are more than a bit skeptical. They've heard this pitch before.

Since the 1980s, energy companies and even the U.S. government have pointed to coal gasification technology as the panacea that would save the coal industry, produce jobs, revive communities and assuage environmental concerns.

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Proposals have popped up around the nation, including right here in Indiana.

So how did it turn out? Not so well.

Coal gasification is different from the process for the plant currently being proposed for Dale, Ind., but it comes from the same overarching idea: use coal as fuel without emitting the nasty pollutants coal contains. The Dale plant would produce diesel fuel and would be the first of its kind in the United States.

Coal gasification, on the other hand, takes coal and turns it into something similar to natural gas. It’s considered cleaner than coal because part of the process – called Integrated Gasification Combined Cycle, or IGCC – removes some of the pollutants that make coal a public health hazard.

The plants are marketed as a cleaner, less carbon intensive way to continue to burn coal, one of the U.S.’s most abundant energy resources. But the technology is complex – and expensive.

A 2017 report from the Institute for Energy Economics and Financial Analysis suggests that of the 25 coal gasification plants that have been proposed in the U.S. since 2000, only two have ever come on line, one in Mississippi and Duke Energy's Edwardsport plant in Knox County, Ind.

The two plants were marketed as opportunities to provide inexpensive electricity to ratepayers, but both projects were plagued by cost overruns and constructions delays and have been deemed multibillion-dollar failures by IEEFA's director of resource planning analysis David Schlissel.

His report demonstrated that the plants were more expensive than proponents had publicly acknowledged, they were unreliable, and they did not present a feasible path toward carbon capture and sequestration — a potentially lucrative idea that would allow for the greenhouse gas to be reused instead of emitted, and a main selling point of the plants.

But of particular concern was that neither plant could compete with cheaper sources of electricity such as natural gas and renewables.

"We are in the midst of a fundamental change in our energy economy. It’s not that it’s coming. It’s here," Schlissel told IndyStar.

Once the plants were finally online, the electricity they produced was not competitive, so much so that after only a year of producing electricity via the IGCC process, the Kemper plant was forced to switch to natural gas. And Indiana's Edwardsport plant is still more expensive to operate than a natural gas plant, according to a company spokesperson.

So why would companies continue to pursue a process that is so complicated and expensive at a time when renewables and natural gas present extremely cost effective ways to produce electricity? Coal is cheap, widely available, and not going anywhere.

"We’re developing technologies to give the commercial sector the cleanest fossil fuel energy conversion. That’s a winning story for the public," said David Lyons, gasification technology manager for the National Energy Technology Laboratory, a research division of the Department of Energy.

Countries such as China and India are not expected to stop burning coal anytime soon, so developing clean coal technologies would help curb pollution while supporting these nations' energy demand. And because the process of coal gasification is relatively optimized for carbon sequestration capture, building plants now could make them ready to adopt that technology should it become more feasible in the future.

That could be huge if the world can find a market for carbon, according to National Coal Council CEO Janet Gellici.

“We need to start monetizing CO2,” said Gellici. “I’ve heard people talk about electricity being a byproduct (of CO2) because it has so much potential applications.”

One of those applications is enhanced oil recovery. Carbon dioxide can be injected into existing oil wells to help extract oil that is otherwise inaccessible. The greenhouse gas is then trapped in the oil reservoir, keeping it out of the atmosphere where it could contribute to global warming.

According to Gellici, other countries are currently trying to develop coal gasification and carbon sequestration technologies. The U.S. is investing in the process as well, with considerable tax breaks for carbon sequestration and millions of taxpayer dollars funding research. If the technology is successful, it could mean that the United State would be leading the globe with these efforts.

It's not a process you'd call carbon neutral, but for folks like Gellici, finding a market for carbon could create the conditions needed to curb the release of carbon into the atmosphere while also supporting the global energy needs.

Plants like Kemper and Edwardsport are often built with carbon capture and sequestration in mind. But it's not widely implemented. In fact, construction of Kemper's carbon capture technology was suspended around the same time it stopped gasifying coal to turn to natural gas, and a representative from Duke Energy said that they are not currently pursuing carbon sequestration.

For cases such as Edwardsport and Kemper the question of who should pay for such risky experiments is a serious one. It’s one that weighed on the mind of Mike Mullett, who formerly served as general counsel for the Citizen’s Action Coalition. Mullett testified against the Edwardsport plant and against Duke’s subsequent related rate increases.

“It’s literally beyond belief how expensive this electricity is," Mullet said. "They badly underestimated not only capital expenses but operating expenses.” 

According to a representative of Duke Energy, conditions at the plant have improved significantly. After years of low net capacity — a performance metric for how much energy a plant puts out compared to what is possible — the Edwardsport station had its highest ever monthly net capacity factor in November, according to IURC filings.

But even with the progress, operating costs remain high, and Duke Energy continues to file for rider adjustments to recover costs from the project.

The latest gasification research is focusing less on large-scale commercial implementations to see the promise in smaller projects, according to researchers who spoke with the Star. Similar to the benefits of distributed energy via solar panels, smaller gasification operations could have a positive effect on delivering energy to rural areas. And some say investing in research of coal gasification could contribute to our energy independence in a future without cheap, reliable natural gas.

Jack Groppo, principal research engineer at the Center for Applied Energy Research at the University of Kentucky, implores people to remember a time when cars lined up at the gas station not knowing if there would be gas to buy. This is that, but for electricity.

"Thank heavens for fracking," Groppo said. "If we couldn’t do that for some reason we’d be in a pickle because demand is high and resources are limited."

Still, there are those who remain skeptical. While renewable energy resources aren't entirely reliable — the wind doesn't always blow, and the sun doesn't always shine — we're not at a point where renewable saturation is affecting reliability, according to Michael Taylor of the International Renewable Energy Agency.

"You have renewable options available, and with wind and (solar) costs coming down you have them virtually everywhere right now," Taylor said. "With those available, is there a business case for clean coal technologies in the future? Our analysis is that there isn’t really."

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Taylor said that technology for battery storage — a key factor in making renewable energy more reliable — may soon see the same types of cost reductions that solar and wind have recently experienced. That is, with more adoption and industrialization, the technology will become less expensive.

"There’s significant project risk with some of these large (coal plant) projects, and there are efficiency limits that are not going to allow for cost reductions," Taylor said. "If I were to bet on it, I'd be cautious. Renewables can deploy before you've got the permits to get started."

Emily Hopkins covers the environment for IndyStar. Contact them at (317) 444-6409 or emily.hopkins@indystar.com. Follow them on Twitter: @_thetextfiles.

IndyStar's environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.