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Clean Coal: Investing in Near-Zero Emissions
By Catherine Lacoursiere
March 09, 2006
Just two years ago, a proposal for a clean coal plant in Silicon Valley
would have been unheard of, not to mention one backed by Silicon Valley’s
largest technology companies. The endorsement of coal by the Silicon Valley
Leadership Group (SVLG) is a good indication that coal is cleaning up its
image. The driver, Justin Bradley, the energy director of the SVLG tells
Reuters, is “to control our costs to stay competitive.”
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Coal, abundant and cheap, makes up 56 percent of electric power generation
in the United States, which has 250 years of coal reserves. With the help of
generous tax incentives, the government is pushing for the use of more clean
coal. The market for coal scrubbed clean of pollutant emissions is estimated
to grow to 20 percent of the 87,000 MWs in new coal generating capacity
expected to come online by 2025. During the same period, the Environmental
Protection Agency is requiring significant reductions in NOx, SOx and fine
particulate matter in coal generation, while global pressure to reduce CO2
emissions continues to mount.
Not surprisingly, clean coal is becoming a hot clean tech sector, but it
also is a term that is increasingly used loosely. “I think the first
question to ask is what do you mean by clean coal,” says David Hawkins,
director of the National Resources Defense Council’s climate center and its
clean coal expert. Hawkins defines clean coal as a process that reduces
carbon dioxide by 80 or 90 percent from conventional coal plants. If it does
not control CO2 emissions, investors are not willing to provide financing to
a plant, he adds.
Whether economies choose mandatory or voluntary greenhouse emission
reduction schemes, CO2 reduction through carbon capture and storage
technologies will be a significant future cost for coal plants, which are
responsible for over 85 percent of power plant CO2 emissions. Clean coal
investment activity is starting to pick up with clean coal plants expected
to start coming online around 2015. In addition to the Silicon Valley group,
the chairman of the Anheuser-Busch Company reportedly visited a clean coal
plant this month and states are offering competing subsidies to attract
clean coal plant developers.
The major clean coal technology is gasification, specifically the Integrated
Gasification Combined Cycle (IGCC) plant, which converts coal into a syngas
that produces hydrogen and steam while sequestering the CO2. The prototype
plant, FutureGen, combines turbines and solid oxide fuel cells (SOFC) to
produce electric power. Large power plant developers such as GE and Bechtel
are the primary developers. However, there are a number of technologies that will make up next
generation gasification plants. FuelCell Energy (NASDAQ: FCEL) has just been
selected by the U.S. Department of Energy for an award of an $85 million
project over 10 years, subject to final negotiation of a contract, to
produce 100-MW solid oxide fuel cell (SOFC) system for use in a gasification
plant. The project aims to convert coal into grid electrical power while
capturing 90 percent of carbon dioxide emissions and achieving a 50% overall
efficiency, up from 35% today.
Steve Eschbach, director of investor relations of FuelCell Energy expects
commercial prototypes could be introduced in about seven years, following a
similar commercialization timeline as its Direct FuelCell® power plant,
which was in the market within 10 years of its development program with the
DOE. Today, FuelCell has over 40 DFC power plants at customer sites.
FuelCell owns 41 percent of Versa Power Systems, which is designing the fuel
cell stack for the SOFC power plant.
Another promising technology is oxygen combustion (oxycombustion), a carbon
capture technology that uses pure oxygen instead of air to burn coal. With
the right government-backed incentives in place, oxycombustion could be a
real clean coal contender to gasification technology.
Not everyone agrees that clean coal is defined as coal that is scrubbed 90
percent clean, but most agree that near-zero emission coal plants will not
be completed for a few more years. In the meantime, cleaner coal
technologies are emerging. KFx’s (KFX) K-Fuel™ pre-combustion process
reduces the mercury content of coal by 70 percent on average and SO2 and Nox
emissions up to 30 percent. The technology transforms low Btu coal into a
higher grade coal by increasing the Btus per pound by reducing moisture,
producing a coal that competes with Central Appalachian coal, which has a
lower sulfur and mercury content and is increasingly in short supply.
“To our knowledge, KFx is the only cleaner coal alternative process that is
commercially viable today that does not require tax credits to be economic,”
says KFx president and CEO Mark Sexton. KFx is reducing emissions further by
blending K-Fuel with other ultra-compliant high grade coals and exploring
ways to combine it with biomass to bring emissions levels down, on par with
natural gas.
Disclaimer
Catherine Lacoursiere is an independent columnist for this web site.
Catherine Lacoursiere may hold long or short positions in any of the stocks
mentioned in this article and those positions can change at any moment.
InvestorIdeas.com Disclaimer:
www.InvestorIdeas.com/About/Disclaimer.asp, InvestorIdeas is not
affiliated or compensated by the companies mentioned in this article.
Catherine Lacoursiere is a freelance writer. Nothing in the articles should
be construed as an offer or solicitation or recommendation to buy or sell
any specific products or securities. Past performance does not guarantee
future results.
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