Commitment to Coal
By: Bill Reid
“For coal to fulfill its potential to remain a major fuel source for this century – much as it did for the last two centuries – enormous investments will be required,” said National Mining Association President and CEO, Jack N. Gerard in addressing the annual meeting of the Kentucky Coal Association at the Marriott Griffin Gate Resort, Lexington, Kentucky. “These investments are now being undertaken by both the private and the public sectors. They form the basis of a shared commitment, one that has led to an exciting partnership to pioneer new coal technologies.”
Gerard said that this technology partnership is another reason why Washington is a focal point for the coal industry and why Washington offers a fascinating perspective from which to view the future of coal. The environmental policies and research partnerships that are forged in our capital will very likely go a long way in determining coal’s future in the U.S.
“Coal has a great potential to fuel the digital age,” Gerard said. “But this potential is often undercut by misconceptions that derive from coal’s legacy as the fuel of a bygone industrial revolution. In Washington coal is often identified with our country’s past. Our task is to remedy this misimpression to show how coal is the most reliable low-cost fuel for the future,” he said.
Referring to the Comprehensive Energy Bill, Gerard said that NMA has been working on this for three years at least and energy conferees have:
• Agreed to a $2.1 billion for CCPI;
• Earmarked $1.4 billion for coal research and development;
• Proposed a tax incentive of up to $2 billion;
• Included other issues to preserve and expand the coal burn;
• The politics of the energy debate includes another factor, a renewed concern about the energy sources for generating electricity.
Gerard summarized the position with regard to other energy sources:
• Natural gas prices have peaked recently to a 20-year high, a situation serious enough to draw a warning from Alan Greenspan;
• DOE has said that unless there is access to significant new gas supplies, American consumers will pay as much as $1 trillion in higher gas prices in the next 20 years;
• The longer term outlook for natural gas indicates that about 60% of it is under regulated federal land, either off-limits or too expensive;
• Gas imports are problematic with imports from Canada, which supplies 50% of the U.S. demand dwindling;
• No nuclear power plants have been licensed since the 70’s, with high capital costs and problems of nuclear waste disposal;
• Renewable energy sources contribute 6% to U.S. energy consumption, down from 9% in 1950.
To replace the 300 gigawatts of electricity produced by coal, the following would be required form other fuels:
• 300 million solar setups and hope the sun never sets on the American empire;
• 860,000 of the world’s largest windmills covering an area equal to Ohio, Pennsylvania, New York, and Maryland combined;
• 300 1,000-megawatt nuclear plants;
• 1,000 combined cycle gas plants increasing gas supplies by 70%.
By 2005 U.S. electricity demand is expected to increase by more than 52%. That means the construction of many more power plants and far greater utilization of coal, which now fuels about half of all electricity generation.
“Coal remains the most cost effective and plentiful fuel for the next generation of electric power plants. The case for coal’s relevance to our national interest is compelling,” said Gerard.
NMA has urged government policy to pursue a three-tiered approach: first, support R&D projects to reduce coal’s environmental costs; second, reform regulations that increase operating costs and; third, lay the foundation today for increased coal use into the future.
Federal policy includes several initiatives consistent with this approach from FutureGen and tax credits to Clear Skies and NSR.
Energy is an unavoidable cost in manufacturing productivity and job creation. The higher the real cost of energy, the more difficult it is to enhance productivity to increase jobs and to boost real wages, said Gerard. Consequently, a nation that squanders or trivializes it’s energy advantage is a nation that cannot be serious about building a stronger economy. A nation that has lost 2.7 million jobs since the summer of 2000 literally cannot afford such indifference.
One approach favored by the environmental community is to cap CO2 emissions, but according to Gerard capping CO2 per unit of electricity generated will have a negligible effect on overall CO2 levels. But it will not have a negligible effect on the economy exacting a terrible economic price on the U.S. economy. It would mean a corresponding decline in employment and a decline in living standards from what Americans would otherwise enjoy. More American workers mean more commuters, more computers, more demand for electricity and therefore more energy.
Gerard referred to President Bush’s Global Climate Change Initiative, calling for an 18% reduction in U.S. greenhouse gas intensity for 2012. To help achieve this goal, Secretary Abraham has announced a research framework for developing and implementing carbon sequestration technologies with local partnerships involving more than 140 organizations in seven regions of the country.
For industry’s part, NMA has launched the Mining Industry Climate Action Plan. MICAP is a partnership program with DOE, which jointly funds research on carbon sequestration, emissions inventory, coal methane and related issues. MICAP also includes additional research initiatives from the Mining Industry of the Future Program to improve mining safety and reduce energy consumption. Another example of a valuable partnership between public and private sectors, referred to by Gerard, are the tax credits designed to encourage the development of clean coal technologies. These use relatively modest public funding to leverage far greater value through research that will result in enormous savings to consumers by encouraging power plants to utilize low cost fuel and still meet rising environmental standards. NMA urged the congressional conferees to include both production and investment tax credits in the final bill.
The partnership that probably is the most exciting potential benefit for the future of coal, according to Gerard, is FutureGen. Ten companies have formed an alliance to furnish 20% of the funding for this $1 billion ten-year partnership with DOE, which will result in the world’s first coal-based power plant to produce virtually emission free electricity while creating hydrogen to power the hydrogen economy.
“While we have challenges we also have great opportunities,” said Gerard. “Working together we can make coal the fuel of choice now and in the future.” cl
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