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FOR LOTS OF REASONS, coal has long been the unglamorous bad boy of the energy world. Mining it devastates the land and puts workers at risk. Like other fossil fuels, it will some day run out. And perhaps worst of all, despite years of government regulations, when traditionally burned to produce energy and fuel, coal sends incredibly dangerous fumes into the air, which have significantly contributed to climate change, acid rain, asthma, and other lung diseases.
Coal’s bad reputation has a long history. As far back as the early 1300s, London blacksmiths and artisans began contaminating the city’s air when they started burning coal instead of wood in their shops. King Edward was so turned off by the pungent odor of the new fuel that he banned it and had his soldiers destroy the furnaces of those who ignored his wishes. (It wasn’t until 1956, after a “Black Fog” left more than 4,000 Londoners dead, that the city finally banned coal burning once and for all.)
Why then are Kennedy School researchers singing the sooty rock’s praises?
Despite the lumps that it has deservedly taken over the years, coal helped spark the Industrial Revolution and continues today to have a positive side: it’s cheap, the United States has lots of it, and, believe it or not, the technology to burn coal without harming the environment already exists. With the price of oil and natural gas sky-high and concerns about our addiction to these mostly imported fossil fuels even higher, it’s time, the school’s researchers say, to give coal, in its new cleaned up state, another chance.
What Is It?
The technology to burn cleaner coal is called “coal gasification” and for the past few years, this technology has been the focus of several projects in the school’s Belfer Center for Science and International Affairs. William Rosenberg, a senior fellow at the center who first became interested in energy issues during his days in the Ford and the first Bush administrations, has been looking at how to finance expensive new gasification plants and how to convince key stakeholders that they’re worth the price. Professor John Holdren and Kelly Sims Gallagher, director of the Energy Technology Innovation Project, have been promoting coal gasification to policymakers in Washington, DC, as well as two other energy-guzzling countries: India and China. And Henry Lee MPA 1974, director of the center’s Environment and Natural Resources Program, has been working closely with Rosenberg and along with Holdren, teaches a popular course on energy policy that includes a section on coal.
“These projects began out of the recognition that countries like the United States, China, and India sit on enormous coal resources. In the case of the United States, more than 250 years of coal,” Lee says. “It probably was not realistic to think that the United States would walk away from that resource. We had to think of ways to use it more efficiently.”
Traditional coal plants, known as “coal-fired plants,” burn the coal without cleaning it.
“Up until now, our primary use of coal has been to burn the whole package, with all the pollutants, in a boiler, make steam, and have that steam generate power, or in some cases, in metallurgy, we burn the coal to make coke and then make steel,” says Rosenberg.
Gasification plants clean the dirty package before it’s burned, similar to what we do with dirty crude oil. Currently a handful of small, commercial gasification plants are operating around the world, such as the ones in China that produce ammonia for the fertilization industry, but only two small demo plants for electricity generation are in operation in the United States.
“Gasification is a refinery of coal. We take it and put it into a big vessel that’s under high pressure and high heat, and we gasify everything in the coal,” Rosenberg says. “Then we withdraw from the gas the pollutants: the sulfur, the mercury, and even the slag, or, as my grandmother used to say, the ‘schmutz,’ and we end up with clean hydrocarbons, just like we end up with clean hydrocarbons from an oil refinery.”
These clean hydrocarbons are then put back together into different formats, including a gas called “syngas” that can be used instead of natural gas to generate power.
“Another cocktail might be jet fuel or a chemical that goes into making drugs or fertilizer or plastic,” Rosenberg says.
Although it sounds radical, the process really isn’t, Lee says: we did the same thing when we realized using oil in its raw state wasn’t efficient.
“When we first started producing crude oil, it was mostly for ships, but it was incredibly inefficient and dirty, and it mucked up the engines,” he says. “We burned crude oil directly for many years. Out of that we moved toward refining it.”
When we eventually move toward refining coal through gasification, Rosenberg says, it’s critical that we look at the big picture.
“We have to think holistically. It’s a three-prong issue: energy, security, and environment,” he says. “We’ve had energy policies that encourage natural gas power plant construction without thinking about where the gas is going to come from. We’ve had policies that look at coal or nuclear without thinking about the environmental issues. An energy policy is also an environmental policy is also an economic policy. They are not separate policies. The KSG’s approach is to look at all of the issues.”
Energy and Security
Currently coal provides a huge chunk of the nation’s electricity — more than 50 percent. (In China and India, it’s 75 percent.) It could provide even more.
“If the United States built five of these plants each year for 10 years, we’d get as much gas from coal as we would from the proposed Alaskan gas pipeline, which is going to be a 3,500-mile pipeline to the North Slope,” Rosenberg says. “We have the capacity to produce a lot of gas that can be used for lots of things.”
Meeting the coal demand that these new plants would require wouldn’t be difficult. Right now, the United States has more coal than any other country in the world — 275 billion tons, or about 25 percent. At current use, these 275 billion tons are estimated to last the country another 258 years.
“The United States is the Saudia Arabia of coal,” Rosenberg is fond of saying.
Despite this abundance, over the years, the danger of coal made other fuels more appealing, particularly gas, which is clean and was relatively inexpensive. In fact, by the late 1980s, we stopped building coal plants as more power companies invested in building natural gas plants, with the expectation that the price of gas would stay low.
It didn’t.
“The price of gas is now very high, and we don’t have a lot of ready supplies domestically, so we have to import,” says Sims Gallagher. It is estimated that our domestic supply of natural gas will last us less than 10 more years.
Rosenberg says that from 1990 to 2000, the price of natural gas was about $2.50 per MMBTU. During the last three years, the average price has more than doubled and went as high as $15 dollars during Katrina. That, combined with the 53 percent of oil that we import, has made us a nation addicted to foreign fuels — something Washington is taking notice of.
“President Bush spoke in the State of the Union about getting off our dependence on oil. If you look at oil and gas imports as a national security challenge, then the ability to convert our coal into products that otherwise would use oil and gas is an obvious strategic benefit,” Rosenberg says. “If we start to use coal in a more sophisticated way by refining it, by gasifying it, then we open up the possibility of reducing our reliance on imported fuel.”
Environment and Economics
We’ll also dramatically clean up the air. The National Commission on Energy Policy, which John Holdren co-chairs and of which Sims Gallagher is a member, estimates that coal combustion accounts for more than a third of U.S. carbon dioxide (CO2) emissions. Climate change mostly comes from burning fossil fuels — oil, natural gas, and coal — which release CO2 into the air. Of the three, coal creates the most greenhouse gases — annually, the same amount created by all of the cars and trucks in the United States. These gases then blanket the earth, trap in heat, and cause global warming. According to the commission, this human-made phenomenon has caused, among other things, average temperatures and sea levels to rise. Floods and heat waves are also increasing.
In the commission’s final report, they strongly recommended that the country needs a mandatory policy to reduce greenhouse gas emissions and must expand the domestic production of natural resources like coal.
“We did zillions of briefings all over Washington on this report. A series of hearings were also held. One was on the future of coal,” Sims Gallagher says. “John testified and asserted that climate change and how the country responded to the issue was at the heart of the question of what the future of coal would be.”
She says the next key step is to figure out what to do with the carbon dioxide once it’s taken out. The Energy Technology Innovation Project that she oversees is currently pushing for a government policy that would address this issue.
“If you do a lot of expansion of coal without addressing the CO2 issue, without capturing and storing it, we’re going to dramatically increase our CO2. When you gasify coal, you have the option of separating the carbon dioxide during the process,” Sims Gallagher says. “You can then put it into a pipeline and store it below the ground. Most likely, depleted gas and oil reserves, which are stable and held gas and oil for many years, would be used.”
However, there are still issues that need to be worked out.
“Does it work? How well does it work?” she says. “We’ve argued for large-scale, government-funded demonstration projects that should help us learn more.”
She and Holdren are also reaching out to other countries.
“We’re trying to address these issues in China and India,” she says. “We all share this one characteristic of being massive coal producers and consumers. Longer term, the need for these technologies is going to be just as great in India and China as it is in the United States.”
“If you are concerned about climate change, emissions of CO2 anywhere in the world affect everybody,” Lee says. “Look at China’s rapid deployment of new electricity generation. In the past few years, they’ve been producing 50 GW of new power generation each year. That’s an enormous amount of power, most all of which is pulverized coal — old-fashioned coal. If they continue to do this, they not only are going to continue to contribute substantially to their problem of conventional air pollution, but they’re going to make it even more difficult for us to reduce greenhouse gas concentrations.”
Sims Gallagher and Holdren are working with the Chinese government to develop and deploy a cleaner coal strategy. Later this year, they will hold informational workshops in India.
Another key step in making coal gasification a reality, Rosenberg says, is dealing with the funding issues. The technology (minus the carbon capture and storage) has existed for a long time, at least as far back as the turn of the last century, when lamps in the United States were fueled by gas. The British and Germans used it during WWII to make diesel when their access to the Middle East was limited. What’s kept it from moving forward has been the cost.
“It’s much more economical to start with gasification up front then to retrofit those plants later,” Sims Gallagher says. “The question is, If you’re a power company owner, what are you going to do next? We have a system in this country where we grandfathered old coal-fired plants into the Clean Air Act and said they didn’t have to comply with regulations on the assumption that they would be retiring soon. Because they turned out to be so cheap to operate and because they didn’t have to comply, the vast majority of them never shut down.”
Building new gasification plants from scratch will be expensive, something Rosenberg knew would make the technology a tough sell.
“That problem that we approached was: How could an economic investment be made for an $800 million to a billion dollar plant? What could attract that
level of capital, and how could the risk be shared by the different participants:
the ratepayer, the builder/owner, the lender, and the government?”
When the price of imported fuels recently rose dramatically, he knew the timing for gasification was right.
“The high price of oil and gas has created an economic opportunity to cover the cost of converting the coal to liquid or gaseous fuels,” he says. “We’re at a unique opportunity to move forward in a way that provides a source of cleaner fuel and a domestic source of energy — you don’t need the Army, Navy, Air Force, and Marines to move coal from one side of Indiana to the other.”
His financing plan combines a federal loan guarantee with tax credits and state and public utility financial support. Rosenberg presented the plan to the Senate Energy and Natural Resources Commission in 2004, which adopted it by unanimous vote. Congress and the president followed, and the plan became part of the 2005 Energy Policy Act.
Lee says he’s proud of the school’s work on coal gasification.
“We had good research, and we stimulated a dialogue based on that research. I’m not saying everyone agreed with the conclusions, but at least it catalyzed a dialogue and influenced the debate in Washington,” he says. “This is the kind of research effort that the school should be proud of. If you asked people what we ought to be doing, this is exactly what we ought to be doing.”
Rosenberg agrees.
“Making coal gasification a reality,” he says, “may be one of the most important economic, environmental, and national security initiatives of this century.”
To read about the center’s work on this issue, go to www.bcsia.ksg.harvard.edu and type in “coal gasification” in the search box.
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