The Future of The Future of CoalCoal

Matt JahnkeMatt Jahnke

February 13, 2006February 13, 2006

Thoughts That Come to Thoughts That Come to MindMind

Negative PerceptionsNegative Perceptions Dirty MinesDirty Mines Old TechnologyOld Technology COCO22, SO, SOxx, NO, NOxx, and , and

other Pollutantsother Pollutants Dangerous MinesDangerous Mines Smog and SuitSmog and Suit Poor Working Poor Working

ConditionsConditions Politics (Relaxing Politics (Relaxing

Clean Clean

Air Standards)Air Standards)

Positive PerceptionsPositive Perceptions Abundant Supply in U.S.Abundant Supply in U.S. CheapCheap No Foreign RelianceNo Foreign Reliance New Clean TechnologiesNew Clean Technologies American Jobs in Plants, American Jobs in Plants,

Mines, and Mines, and TransportationTransportation

ElectricityElectricity Politics (R&D for Clean Politics (R&D for Clean

Air Research)Air Research)

Coal is Here to StayCoal is Here to StayU.S. Consumes 1.1 Billion Tons of Coal Annually

Types of CoalTypes of Coal

Anthracite 86-98% Carbon --15,000 BTU/lbAnthracite 86-98% Carbon --15,000 BTU/lb Small segment of Coal Market – Near PennsylvaniaSmall segment of Coal Market – Near Pennsylvania

Bituminous 45-86% Carbon -- 10,500-15,000 Bituminous 45-86% Carbon -- 10,500-15,000 BTU/lbBTU/lb Most U.S. Coal – Electricity – Coke – Industrial SteamMost U.S. Coal – Electricity – Coke – Industrial Steam

Sub-bituminous 35-45% Carbon --8,300-13,000 Sub-bituminous 35-45% Carbon --8,300-13,000 BTU/lbBTU/lb Western States and Alaska (PRB) – Lower in SulfurWestern States and Alaska (PRB) – Lower in Sulfur

Lignite 25-35% Carbon – 4,000-8,300 BTU/lbLignite 25-35% Carbon – 4,000-8,300 BTU/lb Young Coal, “Brown Coal”Young Coal, “Brown Coal”

Powder River BasinPowder River Basin

2Source: Energy Information Administration, May 2004 and December 2004.

8.1¢

31%

6.1¢

64%

5.7¢

94%

5.6¢

10%

5.8¢

69%

4.9¢

96%

6.9¢

78%

6.1¢

9%

6.5¢

75%

7.3¢

88%

8.6¢

51%11.3¢

1%

5.8¢

94%

6.6¢

44%

7.8¢

39%

6.6¢

85%

6.4¢

65%

6.6¢

61%

6.2¢

85%

7.0¢

47%

7.6¢

42%

6.9¢

70%

5.8¢

50%

7.2¢

26%

7.1¢

61%

5.6¢

94%

6.9¢

92%

9.6¢

3%

12.0¢

17%

7.0¢

44%

6.2¢

56%

6.7¢

63%

6.2¢

40%

4.6¢ 92%

6.5¢

50%

8.1¢

55%

5.1¢

98%

7.0¢

58%6.2¢ 60%

5.0¢

1%

11.3¢

8%

15.3¢

15%

NH 11.4¢ 22%VT 11.1¢ 0% MA 10.8¢ 23% RI 10.8¢ 0%CT 10.1¢ 13%NJ 10.4¢ 16%DE 7.3¢ 54%MD 7.1¢ 56%

¢ = average price per kilowatt hour through September 2004

% = percent of total generation from coal for 2003

< 7.0¢

< 7.0¢ - 8.5¢

>8.5¢

Hydro

Cost Per kWh & Percent of Coal GenerationCost Per kWh & Percent of Coal Generation

Low-Cost Electricity From Coal

Current Pollution from Current Pollution from CoalCoal

60% of U.S. Sulfur Dioxide Emissions60% of U.S. Sulfur Dioxide Emissions 33% of U.S. Mercury Emissions33% of U.S. Mercury Emissions 33% of U.S. NO33% of U.S. NOxx Emissions Emissions 33% of U.S. Carbon Dioxide33% of U.S. Carbon Dioxide Currently further reeducation in Currently further reeducation in

admissions is at a stalemate.admissions is at a stalemate. 5 Billion has been spent by the Federal 5 Billion has been spent by the Federal

Government for Clean-Coal Government for Clean-Coal TechnologiesTechnologies

Alternatives to CoalAlternatives to CoalAvailabiliAvailabilityty

EnvironmeEnvironmentalntal

CostCost

CoalCoal AbundantAbundant HighHigh LowLow

HydroHydro ModerateModerate MinorMinor LowLow

Wind & Wind & SolarSolar

UnreliablUnreliablee

MinorMinor ModeratModeratee

OilOil ScarceScarce ModerateModerate HigherHigher

Natural Natural GasGas

ModerateModerate ModerateModerate ModeratModerate and e and RisingRising

NuclearNuclear AbundantAbundant Minor or Minor or CatastrophCatastrophicic

Same as Same as CoalCoal

Coal vs. NuclearCoal vs. NuclearCost Element Cost Element NucleaNuclea

r r $/MW-$/MW-hrhr

Coal Coal $/MW-$/MW-hrhr

FuelFuel 55 1111

O&M and LaborO&M and Labor 66 55

Pensions, Insurance, Pensions, Insurance, TaxesTaxes

11 11

Regulatory FeesRegulatory Fees 11 0.10.1

Property TaxesProperty Taxes 22 22

CapitalCapital 99 99

Decommissioning & Decommissioning & WasteWaste

55 00

AdministrativeAdministrative 11 11

TotalTotal 30.030.0 29.129.1

Coal vs. Natural GasCoal vs. Natural Gas CoalCoal

Best Long Term Economic Best Long Term Economic OptionOption

In reality only 4% of the In reality only 4% of the new large power plants in new large power plants in the last 12 years were coal.the last 12 years were coal.

In order to regain public In order to regain public support, new technologies support, new technologies need to be perused.need to be perused.

Advanced Pulverized Coal Advanced Pulverized Coal (PC) (PC)

Integrated Gasification Integrated Gasification Combined Cycle (IGCC) Combined Cycle (IGCC)

FutureGen FutureGen Fluidized Bed Combustion Fluidized Bed Combustion

(FBC)(FBC)

Natural GasNatural Gas Has been the best Has been the best

compromise for Energy compromise for Energy Companies and Companies and Environmentalists in the Environmentalists in the 1990’s.1990’s.

If continued the next few If continued the next few decades will see, for the decades will see, for the first time, the US depend first time, the US depend on foreign nations for its on foreign nations for its fuel used for production fuel used for production of electricity.of electricity.

Capital Investment is Capital Investment is about half $500/ kW about half $500/ kW compared to coal’s $1,000 compared to coal’s $1,000 conventional Coal plant.conventional Coal plant.

Less COLess CO22 due to fewer C-C due to fewer C-C bondsbonds

FutureGenFutureGen

"Today I am pleased to announce that "Today I am pleased to announce that the United States will sponsor a $1 the United States will sponsor a $1 billion, 10-year demonstration project billion, 10-year demonstration project to create the world's first coal-based, to create the world's first coal-based, zero-emissions electricity and zero-emissions electricity and hydrogen power plant..."hydrogen power plant..."                                                                President George President George W. BushW. Bush                                February 27, 2003                                February 27, 2003

What is FutureGen?What is FutureGen?

Integrated Gasification Combined Cycle (IGCC)Integrated Gasification Combined Cycle (IGCC) Acts as a Chemical Plant rather than a Coal Acts as a Chemical Plant rather than a Coal

plant.plant. Removes impurities mainly sulfur prior to Removes impurities mainly sulfur prior to

combustion – making exhaust much cleaner.combustion – making exhaust much cleaner. Currently 2 IGCC plants exist in the U.S.Currently 2 IGCC plants exist in the U.S.

COCO22 is only slightly reduced do to the higher is only slightly reduced do to the higher efficiency in IGCC plants 33% to 38%efficiency in IGCC plants 33% to 38%

FutureGen’s Goal is to reach 50% efficiency by FutureGen’s Goal is to reach 50% efficiency by attempting to capture all H2 and use it in Fuel attempting to capture all H2 and use it in Fuel CellsCells

Hopes for Sequestering COHopes for Sequestering CO22 in the ground in the ground

Current IGCCCurrent IGCC

IGCC – How Low Can We IGCC – How Low Can We GoGo

Will it Ever HappenWill it Ever Happen

Requires 15% higher capital Requires 15% higher capital investment.investment.

R&D and Tax incentives.R&D and Tax incentives. No mandatory requirement.No mandatory requirement. FutureGen is still 8 years away FutureGen is still 8 years away

assuming that it stays fully funded.assuming that it stays fully funded. No Private Energy Companies have No Private Energy Companies have

constructed an IGCC plant.constructed an IGCC plant.

The RealityThe Reality U.S. can not agree on its source of energy.U.S. can not agree on its source of energy. Clean Air policies are in limbo.Clean Air policies are in limbo. Future Coal emissions are uncertain.Future Coal emissions are uncertain. Even the oldest coal plants are cheaper to run Even the oldest coal plants are cheaper to run

with a low efficiency than building a newer more with a low efficiency than building a newer more efficient one.efficient one.

Natural gas is currently the compromise taken.Natural gas is currently the compromise taken. By 2025 the U.S. will need 50% more electricity.By 2025 the U.S. will need 50% more electricity. Will the U.S. suffer an electrical energy crisis?Will the U.S. suffer an electrical energy crisis?

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