Threats to Coal and Paths of Opportunity
Remarks by
Robert S. Kripowicz
Principal Deputy Assistant Secretary for Fossil Energy
Before the
Energy Daily Conference:
"Threats to Coal: Consolidation, Clean Air, Climate Change, and 21st Century Technology"
Thursday, January 21, 1999
Ft. Lauderdale, FL
It is a pleasure to help open this conference. It is fitting in this first month of the last year of the 20th century that we look toward the future - and that we view realistically both the obstacles and opportunities that await the energy and, specifically, the coal industry.
But before I get to my views of that future, I want to take a few moments to comment briefly on the past - and about one individual who, more than anyone else, has chronicled the events that have helped define the last quarter of the 20th century.
I suspect that many of you subscribe to the Energy Daily and that most of you read Llewellyn King's recent retrospective on the 25th anniversary of the 1973 energy crisis. It certainly has been an eventful quarter century, set into motion largely by those turbulent times of the 1970s. And I think a special tribute should be given to Llewellyn...who, over the last 25 years, has helped to put those events into context.
Llewellyn King, more than perhaps anyone else, has helped define the significance of energy in the lives of individuals and in the livelihoods of corporations and businesses . No one has been more eloquent or more perceptive.
The way I see it, as publisher of the Energy Daily, Lewellyn has the opportunity every day to present his commentary. But I only have this forum. So I want to use it to express my opinion that the energy industry - the producers, regulators, law makers, and consumers who are responsible for the lifeblood of energy in this country and globally - owe a great debt of gratitude to Llewellyn King.
So Llewellyn, permit me to use these opening moments of your conference to ask for a round of applause in appreciation for your work over the past 25 years in communicating the essential value of energy to our past and for our future.
Llewellyn, I only wish you would write more about clean coal technology. And that is my segue into my topic this morning.
I have been asked to address the question: "Are there more threats to coal or more opportunities?" I'm tempted to respond to that question by saying that after much thought, I have come to the conclusion that the answer is "yes."
Certainly, there are threats to this industry - approaching from all sides. Ozone regulations, PM2.5 regulations, regional haze regulations, the possibility of air toxic regulations - and perched at the top of the mountain, poised to roll down through the core of the industry, the biggest boulder of them all - climate change.
It would be easy to say that coal will inevitably rise to the occasion. The industry has encountered threats before - and despite the doomsayers, it has met those threats, overcome them, and prospered. The record bears that out.
Today, a decade or more after the intensity of the acid rain debate, for example, coal continues to enjoy record years of production while acid rain emissions continue to decline.
It would be easy to say that coal's future is assured because it seems highly unlikely that this country would ever turn its back on its lowest cost source of power and the fuel that supplies more than half its electricity.
After all, it you look at the electrical grid in this country, there's probably going to be an increase of more than 225 gigawatts in power generation capacity between now and 2020. That's a 31 percent increase. Add new capacity to replace retired units, and the figure grows to more than 370 gigawatts. Factor in difficulties in relicensing nuclear and certain hydro plants, and the figure could grow even higher.
Or to put that in perspective, 370 gigawatts is almost equivalent to adding the current grids of Japan and Germany to the U.S. power supply.
That's an extraordinary amount of electricity needed to sustain moderate economic growth over the next two decades - and even if the numbers are off a little or if they change slightly because of restructuring or a change in economic projections, that is still a very large market. I don't believe any one fuel - natural gas, renewables, or whatever - by itself is going to be able to fill it. The pie is simply too large for coal not to have a significant future role. But is that enough to assure coal's future?
What about climate change? What about some of the ominous projections for coal that you will hear about later today when the Energy Information Administration presents its recent study?
It may be tempting for some - both inside and outside the coal industry - to view climate change not as a threat but only as a flash in the environmental pan, and to believe that climate change mandates will never be enacted, much less enforced.
I believe that the greatest threat to coal may not be acid rain or air toxics or fine particulates or NOx, or ozone...or not even climate change mandates. The greatest threat to coal may be an industry that accepts the inevitability of coal...an industry that assumes:
- there will always be record markets for coal
- that this nation will always opt for the lowest-cost fuel
- that Kyoto - or any future climate treaty - will never come to pass
- that no combination of public concern, competitive pressures, or regulatory changes will ever seriously impact America's demand for coal.
I believe we need to take the "Llewellyn King approach" and tell it like it is...or at least like it could be if this industry becomes too complacent about its future.
I am a strong believer in coal. I believe in coal because I believe in markets and in technology. I believe that coal and other fossil fuels are, in fact, future fuels. And they should be viewed as such.
I see no reason why we shouldn't consider coal for what it is - a massive wealth of raw carbon and hydrogen, and assorted other molecules, that given the right technology, can be extracted, manipulated, and used by society just as cleanly as any other source of raw energy. I am one who considers this country lucky to be sitting on top of such a treasure house.
But I am not a believer in the inevitability of coal. Coal's future will have to be earned. It will not be granted.
I would have been tempted to begin - and end - my remarks this morning by saying "yes, there are more threats to coal than opportunities" if it wasn't for two technological paths that I believe can remove the most serious threats to coal.
One is the ultra-efficient use of coal. The other - and perhaps in the long-run, the one that ultimately defines the future of coal - is the sequestration of carbon.
It is down these two technological paths, in my opinion, that coal will discover whether, or not, there remain opportunities in the future.
First, ultra-high efficiency: Many of you who have been in the business of coal technology for the last quarter century or more may remember a study done in the late 1970s called ECAS - Energy Conversion Alternatives Study. It was a landmark effort, carried out by some of the best minds in the business.
ECAS concluded there were practical limits to the efficiency of certain fossil fuel technologies, and those limits were very modest...particularly in hindsight.
Advances in coal combustion technology would never push power plant efficiencies much above 38% or 39%. Gasification technology would top out at about 40% to 42% efficiency. And the only way to get anywhere in the neighborhood of 50% efficiency with coal was to develop a technology called "magnetohydrodynamics."
Well today, we have a pulverized coal system - our Low Emission Boiler System - that we project will be capable of 42 percent efficiencies.
We have demonstrated pressurized fluidized bed technologies that can take us into the 45% to 48% range. We have demonstrated integrated gasification combined cycle technologies that can move us to 50%.
ECAS was a good study...but it clearly underestimated what R&D can accomplish. Now, as we look into the coming century, I believe we must set our sights on the new plateau of power efficiencies - pushing the envelope into the 60 percent range. At the same time, we need to examine ways to combine power generation with process heat applications and possibly, with the production of fuels and chemicals - pushing thermal efficiencies into the 80 to 85 percent range. That would effectively reduce CO2 emissions at the source by more than 60 percent.
That concept is what we call our "Vision 21" power plant. It is our goal for a power and fuels production complex that will establish the baseline for coal plants beginning around 2015 and extending throughout the next century.
When President Clinton outlined actions this country should take to implement a climate change accord, one of the examples he used was the fact that many energy processes discard two-thirds of a fuel's energy value. We need to do much better, he said. And many people used that as a mandate for emphasizing new research into the efficiency of end-use appliances and processes. But I believe we also need to recognize that there are remarkable opportunities for efficiency gains at the point where power is produced.
In fact, if we could boost power generating efficiency into the 60 percent range for coal and 70 percent range for natural gas, in the next 20 years, the energy savings in this country would be almost 2 and 1/2 times greater than the savings achieved by applying the most efficient residential end-use technology into every American home.
Moreover, we're not talking about higher efficiency at a price....we're talking about reducing the cost of power 10 to 20 percent. In fact, the technologies in our portfolio, if they can be successfully developed and deployed, could save consumers $5 to $15 billion per year through at least 2030...probably well beyond. These truly are "win-win" technologies -- for the industry, the environment, and the economy.
The second path of opportunity is carbon sequestration. Perhaps more than anything else, this may be the one technology path that truly dictates coal's longevity - not just into the 21st century but well beyond.
Let me tell you why this is NOT an issue centered on whether we have, or don't have, implementation of a Kyoto accord.
By 2020, the world's appetite for energy is likely to be twice what it was in 1990. Assuming current practices, global carbon emissions could increase by more than 80 percent from 1990 levels. That's what a lot of people are focusing on.
But I believe it is important to recognize that the next 20 years is just a snapshot - a brief flash of time in the context of the globe's carbon cycle. A few months ago, another publication - unfortunately not one of Llewellyn's [it was the journal Foreign Affairs] - made the case that haggling over near-term targets, whether Kyoto is or is not the solution - misses the point.
If we confine our discussions, the authors wrote, to whether emissions, trading systems, or joint implementation mechanisms are, or aren't workable solutions, we run the risk of losing sight of the real issue.
I believe it WAS in Llewellyn's publication that an article referred to the climate change solution as "not a sprint, but a marathon." I agree. It is a challenge that must be measured not in years, but in generations.
Think about this for a moment: By 2050, according to the Population Institute, there could be 21 cities with populations over 10 million people...and only four of them will be in today's industrialized world [New York, Los Angeles. Tokyo and Osaka]. The other 19 megacities will be in places least able to support them, such as India and Nigeria. Eighty-two (82) countries are expected to double their population in the next 30 years. By 2020, Nigeria and Pakistan will likely have more people than Brazil and Russia. And with a growing global population comes global growth in energy consumption.
By the time we approach the end of the coming century - when our grandchildren are raising their children - world energy consumption could be triple what it is today. And 80 percent of the carbon emissions released into the atmosphere come from energy production.
Many scientists believe that to prevent catastrophic climate change in the long-term, we must do more than just reduce these emissions. We must stabilize greenhouse gas concentrations. That's a much different - and much more difficult - challenge.
But 160 nations - including the United States - have already ratified the Rio Framework Convention that calls for just that....stabilizing CO2 concentrations at an acceptable level.
Now what is an "acceptable level?" If that's defined as the current level, world emissions would have to capped at 10 percent of their 1990 levels....10 percent!
Absent an overnight transition to a low- or no-carbon fuel, that means the world would be forced to cut back its consumption of energy by 90 percent! Not very realistic.
So let's say you assume that the term "acceptable" means double current levels, you are still talking about cutting global emissions by almost 70 percent, compared to 1990 levels. Again, a staggering target. And developed countries will likely be expected to do more than the global average, to allow developing countries energy for economic growth.
Reducing concentrations of carbon dioxide - not just annual emissions - is the true challenge facing the energy industry. And remember, 160 nations have already said that this is their long-term goal.
Higher efficiency power plants, by themselves, can't get you to that goal. In fact, I don't see any foreseeable combination of low-carbon technologies, higher energy efficiencies, or anything else on the horizon achieving that level of reduction...with one exception: carbon sequestration.
I believe the potential for capturing and sequestering carbon is just as significant as the potential problems if we don't pursue this technology path.
It may be possible, if low-cost sequestration options can be developed, to sequester all 7 billion tons of man-made carbon emitted each year at today's rate and the 10 to 14 billion tons projected to be emitted annually 50 years from now.
The world's oceans hold some 40,000 gigatons of dissolved carbon dioxide. Annual manmade emissions are literally a "drop in the bucket."
Depleted oil and gas reservoirs theoretically could store 100% of the carbon captured from the power generation sector for most of the next century. Unmineable coal seams could provide an attractive option. Agriculture is another area of potential for sequestration. Researchers are exploring new farming techniques and bio-engineering that could lead to crops that absorb more carbon and yield more products.
If multiple options could be developed for large-capacity disposal, sequestration could be a fraction of the costs of other emissions reduction alternatives. In our Fossil Energy program, we have set an aggressive R&D target of $10 per ton of carbon or lower for viable sequestration options in the 2015 time frame. If this can be achieved, sequestration could save the United States hundreds of billions of dollars.
Most importantly, sequestration is the only option for addressing climate change that is completely compatible with our current energy infrastructure.
Sequestration R&D at DOE is in its earliest stages. This is the first year of significant federal funding, a total of $6 million for applied research and $13 million for more basic, exploratory research in the Office of Science. Efforts in the Fossil Energy office include 12 projects to explore a variety of sequestration concepts - from using CO2-absorbing algae growing on artificial reefs or encased in bioscrubbers, to disposing of greenhouse gases in deep reservoirs or on the ocean floor.
So why is this research - with payoffs 10, 20 or 30 years into the future - important to the coal community today? Well, one reason is because it is better to develop this technology today and later discover we do not need it, than not to develop it and discover too late that it could made the difference.
But there is also another reason - by supporting it, the industry moves to the side of being part of the solution, rather than being perceived as part of the problem.
Perhaps, in reality, an even greater threat to the coal industry is not complacency within its ranks but the perception from outside that it will always be an industry that will say "no" forever.
I have worked with members of the coal industry for more than 20 years. I know people in this industry care about the health and well being of our society, and about the environmental legacy we are leaving for future generations. This is an industry that has made remarkable progress in cleaning particulates and acid pollutants from smokestacks of the power plants and factories that form the energy and economic backbone of this country.
Now the challenge is to look to the future and to stand up and say "Yes, there are options we should be pursuing. There are alternatives we should have in place if the world's environmental consciousness demands action. There are reasonable, responsible paths we can commit to today so that we will be prepared for the future."
The coal industry has begun to take steps down those paths. Its initiation of the "Mining Industries of the Future Program" is a major step in the right direction. I would hope that the roadmap also includes a strong and vocal commitment to the twin paths of efficiency improvements at the front end and carbon capture and sequestration at the back end of the energy production process.
These, I believe, are the true paths of progress for the coal industry....the paths that make the industry part of the solution, rather than part of the problem, the paths that lead away from serious threats and toward remarkable opportunities in the coming century.
Thank you for your attention, and again Llewellyn, thank you for the opportunity to be here today.
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