by Dan Watkiss, Bracewell & Giuliani
Barry McGuire’s 1965 song “Eve of Destruction” hounded me as U.S. senators left Washington, D.C., for August break. They failed to pass energy legislation after it had been cut to the bone and would have increased efficiency standards, generation from renewable sources, and the financial responsibility of exploration and production companies.
The Senate’s complete capitulation on pricing carbon darkened my outlook further during the hottest year globally since record-keeping began in 1880. An asphyxiating conflagration rages across much of parched Russia, monsoons submerge much of southern Asia, and an ice island four times the size of Manhattan broke from Greenland’s Petermann Glacier.
“And you don’t believe we’re on the eve of destruction?” McGuire growled.
Two reports intoned to me “nil desperandum” and restored some hopefulness for the nation’s energy future.
The first came from FutureGen. On Aug. 5–as the Petermann Glacier shed its giant ice island–the Department of Energy announced it had awarded up to $1 billion in Recovery Act appropriations to fund a reconfigured version of a coal-fired, carbon-capture-and-sequestration (CCS) process known as FutureGen 2.0, backed by an international alliance of power companies and heavy industries.
Unlike FutureGen 1.0, a greenfield coal-gasification CCS concept supported by the Bush administration in 2003 but abandoned in 2007, FutureGen 2.0 would repower an existing Ameren 200 MW coal-fired Unit 4 in Meredosia, Ill., with an advanced oxy-coal carbon-capture technology developed by Babcock & Wilcox Co. and Air Liquide Process and Construction Inc. In addition to capturing for transport to permanent geological storage 90 percent of the repowered unit’s carbon dioxide emissions, FutureGen 2.0 technology combusts coal in a mixture of oxygen and CO2 to produce a concentrated form of the latter for storage, while eliminating emissions of almost all other noxious coal by-products, including mercury, sulfur dioxide, nitrogen oxides and particulates. If as effective as anticipated, the FutureGen 2.0 oxy-coal technology could become a template for converting coal-fired units to meet new Environmental Protection Agency air rules scheduled in the next two years and stabilize and reduce U.S. contribution to ambient greenhouse gases.
The second report underscored the urgent need for FutureGen 2.0 and comparable innovations to begin operating and testing the effectiveness of its CCS technology with coal types and qualities. The government of the world’s largest greenhouse gas emitter since 2006 and the world’s largest energy consumer since 2009, China continues to decommission more than 30 gigawatts of smaller, inefficient coal-fired electric generating plants. Coal supplies more than 70 percent of China’s electricity (as opposed to 50 percent for the U.S.). In addition, Chinese Premier Wen Jiabao recently vowed to employ an “iron hand” to improve the energy efficiency of its economy, and the Ministry of Industry published an Aug. 5 list of 2,087 steel and paper mills, coking plants and cement works, among other energy-intensive factories that will be required to close by Sept. 30. Although provincial resistance largely thwarted earlier efforts by the central Chinese government to shutter inefficient power plants and industries, the new measures appear more likely to succeed because they are backed by measures to deny the target operations access to bank loans, export credits, business licenses and land.
Just as U.S. coal-fired generation will have to retire or repower to meet air-emission controls, the decommissioned Chinese power plants and much of the shutdown industrial capacity will have to be replaced by highly efficient, low-emissions powerhouses such as FutureGen 2.0 if China is to achieve its pledge in Copenhagen to increase by 20 percent the energy efficiency (reducing the energy intensity) of its expanding economy in 2010. As a developing country, China made that pledge in lieu of committing to a hard cap on its greenhouse gas emissions. Development of the CCS technology and turnkey installation service, in turn, promises to generate high-paying engineering and infrastructure jobs missing from the current U.S. economy.
Notwithstanding publicity campaigns to the contrary, coal is not and cannot be made to be clean. From extraction to combustion to by-product disposal, it is a dirty business. But coal cannot be replaced as the engine of power and industry in the near term in the U.S. and particularly in developing countries such as China (India, Indonesia, Mexico and South Africa are comparably dependent on coal). That is why developing technology such as CCS to use coal as cleanly as possible with the least emissions of greenhouse gases and creating markets that will drive innovation in using coal as cleanly as possible is a worthy national energy policy. For these reasons, the international FutureGen alliance and the Obama administration must be unflagging in their efforts to fund and bring online FutureGen while they continue to press the Senate to pull back from uncontrolled climate change and join the House of Representatives in passing comprehensive energy legislation that promptly puts a price on carbon and other greenhouse gases.
Dan Watkiss is a partner with Bracewell & Giuliani in Washington, D.C., representing power companies, exploration and production and midmarket companies, natural gas pipelines, power and liquefied natural gas project developers and lenders, as well as government agencies and regulators. Reach him at email@example.com.