Thomas White Global Investing
Green Reports

February 17, 2010

The Green Report

Is Clean Coal Technology a Viable Energy Alternative?
Is Clean Coal Technology a Viable Energy Alternative?

As the primary source of carbon emissions, the fossil fuel family has endured the brunt of criticism from environmentalists. But it is coal that has drawn the most ire. This hardworking fuel, which runs the world’s economies, has been derided as the dirtiest and most polluting of fossil fuels. It is no wonder then that the phrase “clean coal” is being dismissed as an oxymoron by skeptics.

Surprisingly, it is not so. Although still in its infancy, Clean Coal Technology (CCT) is a broad term used to include various processes and technologies that aim to make coal greener by flushing out impurities, an effort to elevate the energy source to the elite list of environment friendly fuels.

Coal is the primary supply of fuel for homes and factories from China to the U.S. to Germany. It provides 50% of the power in the U.S. and 80% in China, the two biggest consumers of coal in the world. Unlike oil, coal is abundant, reliable and cheap, and coal mining assures employment to millions of people.

But coal is also dirty and is the biggest emitter of carbon dioxide, making it an arch enemy of the environment. James Hansen, a NASA climate scientist, is one of the fuel’s most vociferous protestors, labeling coal-powered facilities as “death factories,” and tagging coal the “single greatest threat to civilization and all life on our planet.”

With Clean Coal Technology, however, the little black rock’s powerful energy can be harnessed without sending carbon into the fragile atmosphere. Carbon Capture and Storage (CCS) is one of the technologies gaining prominence. It involves capturing carbon emissions and releasing them underground ensuring that coal can still be used without creating catastrophic consequences. In the standoff between climate and coal, this method has snagged global attention, especially in the U.S. and China.

The U.S. already disposes of 30 million tons of carbon dioxide into ancient oil and gas wells, although that is just 1% of the six billion tons that are produced in the country. In the last two years, the U.S. Department of Energy (DoE) has assigned $6.7 billion in funding for clean coal research projects all over the country. And recently, U.S. President Barack Obama created a task force to develop around ten CCS demonstration projects by 2016. The 2009 stimulus bill earmarks $3.4 billion for Clean Coal Technology.

China, on the other hand, may be the world’s biggest polluter, but it is also emerging as one of the leaders in building energy efficient coal power plants. On a vast, slushy field in Tianjin, a new coal power facility, whose carbon dioxide emission rate is only one tenth of a normal coal plant, will soon debut. Scheduled for 2012 completion, the $419.59 million project will generate 1,470 gigawatt hours of electricity. Last year, China and the U.S., two countries that are responsible for 40% of the world’s carbon emissions, signed a MoU to cooperate in developing CCS technologies.

Clean Coal Technology appears to be a tantalizing solution, a panacea where everyone can continue to use coal with no negative consequences. But there is one hitch. Rendering coal impurity-free is an expensive affair. As the clean coal plants churn extra hard to clean up emissions, they also require more coal over typical coal facilities. China, for instance, expects to be burdened with a bill of $15 billion to handle the extra work of cleaning coal, if it cranks up coal production by even 20%. The Chinese will have to pay a jaw-dropping $400 billion over 30 years to install CCS systems according to Richard Morse, a Stanford University researcher.

With prohibitive costs, opinion about the future of Clean Coal Technology is divided. While some agree that it is a viable solution others beg to differ. The Sierra Club, one of the oldest environmental organizations in the U.S., advocates moving away from coal altogether and using renewable energy. But abundant coal has become an integral part of the world’s machinery. And CCT provides a ray of hope.

The promise of Clean Coal Technology is evident in the world’s first commercial clean coal plant in Germany, functioning since September 2009. Various ventures across the U.S. are slowly taking shape with the DoE providing 50% of funding for clean coal projects as part of the Clean Coal Power Initiative (CCPI). Prominent among them is the FutureGen project situated in Mattoon, Illinois, which is fast gaining steam. The project, backed by big coal companies like BHP Billiton, Anglo American and China Huaneng Group, expects to generate power for 150,000 homes. But this comes at the cost of more than an estimated $2 billion, which is three times that of a regular coal plant.

That is why the search is on to arrive at cost-effective Clean Coal Technology. In 2005, an Intergovernmental Panel on Climate Change report estimated expenses to come down by 20% to 30% over a decade when clean coal plants will likely begin to be built on a larger scale. Others suggest introducing government subsidies. But so far, only speculation exists.

Without a doubt, CCS remains an expensive option; yet it is a viable solution if we hope to continue using our abundant coal resources. As President Obama pointed out, “I know that there’s some skepticism about whether there is such a thing as clean coal technology (but) it makes sense for us to make that investment now, not only because it will be good for America but it will also ultimately be good internationally.”




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