This article appears in the March 2011 issue of Louisville Magazine. To subscribe, please visit loumag.com.
Mike McInnis wears a blue cable-knit sweater zipped to his chin. It’s cold outside The Summit office building on Brownsboro Road, and snow has been falling all day. McInnis looks like he’s trying to warm up after skiing to work.
He will warm up. Get him talking about American energy policy, and he sounds frustrated, incredulous, sarcastic, heated. But we don’t get to that large subject until more than an hour into our conversation. With an air of mild frustration, he explains the intricacies of his business, the litigation, the challenge of persistent and well-heeled opposition, the U.S. Environmental Protection Agency rulings, fluctuations in natural gas prices, the unsteady state of the credit markets. All those complexities, intimately bound up in a project he and his partners at The Erora Group have shepherded for 10 years, fail to raise his ire. But the big picture? It gets him steamed.
At the center of the debate is the question: How are we going to get to the middle of this century? How are we going to turn on our lights, make our coffee, watch Real Housewives on big energy-sucking flat-screen TVs, kill Nazi zombies on our computers, run our air conditioners, freeze our food and thaw it later in the microwave, and, eventually, charge our cars? Where will the energy come from?
For McInnis, and many others, the answer is coal. Forget the green future you’ve been waiting for, where windmills turn sedately against a clear blue sky. Oh, windmills have a role to play, as has solar and geothermal and even nuclear and hydroelectric and algae and weeds. And all these things will probably constitute the full mix of our energy needs sometime in the future. But for the next half-century, many believe, wind turbines, solar panels and other “renewables” won’t even make a dent.
Only coal can carry us to a green future.
Coal, the least green of all fuels, famous for despoiling landscapes, blackening lungs, increasing death rates wherever it’s burned, putting mercury in our fish, acid in our rain and nitrogen oxides in our skies. Coal, a leading culprit in global climate change, spewing more carbon dioxide into the atmosphere than any other fuel, where its accumulation triggers ocean acidification, rising sea levels, chaotic weather systems, melting ice caps and a warming planet. Coal: That is the stuff of our salvation.
“We have huge reserves of coal,” McInnis says. “There is more energy content in coal under the state of Illinois than there is oil under Saudi Arabia. And we’re walking away from that? That doesn’t make much sense to me.” He sounds disgusted.
Of course, one might expect McInnis to say as much. Not only is he deeply skeptical of the scientific evidence that ties human activities, including coal burning, to global warming, but he and his partners at The Erora Group intend to profit from coal by building a coal-powered plant, Cash Creek, in Henderson, Ky. Valued according to some reports at $2 billion, the facility will, according to Erora’s plan, produce natural gas and 715 megawatts of electricity, and it will be among the cleanest coal plants in the state and the country. But its use of coal — about 2.8 million tons of Henderson County coal a year — has brought protests from a host of critics, from longtime environmental activists to Catholic nuns.
What’s surprising is who agrees with McInnis — many climate scientists, academics, government policymakers and even some environmentalists.
“People who say nuclear, wind — whatever their pet technology is — will get us there; I just say that’s unrealistic,” says John Thompson, director of the Coal Transition Project for the Clean Air Task Force, a national nonprofit group dedicated to reducing atmospheric pollution. “I’m not willing to bet the planet that fossil fuel will disappear on its own, by magic, by 2050. I think that it’s unwise to set policy along that premise.”
Instead, Thompson says, we must adopt technologies that greatly reduce coal’s destructive side.
“Coal is the worst thing we’re doing. There’s a tremendous push to stop the use of coal,” says Jane C.S. Long, associate director for energy and environment at Lawrence Livermore National Laboratories in Livermore, Calif. But it’s essential. “We have to have energy to survive, and coal is a big part of our portfolio,” Long says. “It’s going to be really hard to get rid of it. So the sooner we start using it in an environmentally defensive way, the longer the use of coal could persist.”
Coal is simply too big to fail.
“The future of coal for electrical generation continues to be strong,” says Len Peters, secretary of the Kentucky Energy and Environment Cabinet. “We have to figure out how we’re going to make it more environmentally benign. And I think we have a lot of activities going on in that direction.”
Here are the facts: Solar is an intermittent power source, available perhaps 30 percent of the time, and even less in large sections of the country, such as Kentucky. Plus, it’s expensive compared to other options. Although the technology is improving and costs are falling, projections from the International Energy Agency show that by 2050, it will provide only 11 percent of our power — compared to about 1 percent today.
Wind has similar problems. It, too, is intermittent — available about 30 percent of the time. And it, too, is not available everywhere; Kentucky has very few locations that would benefit from wind installations, Peters says. Its per-kilowatt-hour price is low, but while wind power installations have increased sharply in the last decade, the rise is not sharp enough to cover our sizable energy needs anytime soon. The International Energy Agency says wind will supply 12 percent of our energy by mid-century.
The feasibility of both solar and wind would soar if there were a practical way to store the power each generates, but battery technology is woefully short of this goal. To store two megawatts of wind energy — the output of three turbines running 30 percent of the time — with today’s technology would take a battery as tall as a multi-story building, says Rodney Andrews, director of the University of Kentucky Center for Applied Energy Research.
Nuclear energy, even if it could get past public resistance and concerns about nuclear waste, cannot help the nation for 10 to 20 years. That’s how long it takes to permit and build a nuclear plant, Andrews says. Once a nuke plant is online, its power is priced competitively and is reliable, but construction costs are staggering, with published cost estimates varying wildly, from $5 billion to $18 billion.
Biomass, the use of plant matter to provide electricity, may be important for Kentucky’s future, says Peters. But that will also have emissions issues, with biomass emitting new pollutants that coal doesn’t make.
All the technologies face challenges. All of them entail sobering investments. Experts say all of them have some role in the future. But coal will continue to carry the load, many agree, at least until mid-century. What’s important now, they say, is perfecting the technologies designed to reshape coal’s polluting profile.
Key among those technologies is carbon capture and sequestration, a way to get rid of carbon that seems just too good to be true: Catch the carbon as it comes out of the stack, pump it deep into the ground and it stays there forever (see sidebar, page 43). It’s not been done before on a large scale in just this way, although there are important precedents. It’s also very expensive. But it’s probably the killer app for coal.
To look at cost as a barrier to carbon capture and sequestration is to look at the issue from the wrong angle, says Julio Friedman of Lawrence Livermore National Laboratory. Every energy solution is expensive. “There is a cost barrier to all clean energy,” he says. “Solar costs more, nuclear costs more. The thing that costs more is not carbon capture and sequestration. The thing that costs more is ‘clean.’”
So that’s the argument: Coal is inevitable. We have the technology to fix it. We need to put our money into it. To do otherwise is foolish.
After winding through rolling hills, where the land ripples like a carelessly made bed, U.S. 150 opens out onto the flat farmland of western Indiana. Farther west, the town of Edwardsport prepares to disappear. Houses and trailers with collapsed roofs, boarded windows, fallen walls — some of these shelters occupied — make up much of the real estate. A school seems to be the only going concern. The village sits alongside the White River floodplain like a house on a precipice, the victim of continual watery visitations. A casual look for news about the town during the last few decades brings this to the forefront: floods, one after another after another.
There has long been a coal-fired electric plant here. It’s an old one, but then, Indiana has almost nothing but old power plants, and Duke Energy, which owns this 60-year-old relic, hasn’t built a new plant in the state in more than 30 years. Duke’s not alone; the country is full of these dinosaurs — each extracting less-than-maximal energy from the coal it burns while expelling high levels of pollutants. Some have added pollution-control equipment. Most have not. (In 2008, the EPA reported 146 U.S. coal plants had scrubbers to extract another coal-power byproduct, acid-rain-making sulfur dioxide; 351 did not.)
People in the industry blame an environmental regulation called “new source review” for the sorry state of America’s coal-burning plants. The law requires that any substantial investment in a power plant must include upgrades to comply with the most recent environmental restrictions. UK’s Andrews says the “perception” that any investment triggers a need for a larger investment discourages plant owners from “upgrading the plant and bringing on the latest level of efficiency.”
But that’s about to change. Environmental regulations that come into force in April clamp down hard on the coal plant contaminants of mercury, sulfur dioxide and nitrogen oxide. A September analysis of the regulations, issued by Credit Suisse, predicts that one in five U.S. coal-fired plants will shut down as a result. In most cases, natural gas-fired plants will replace them, the analysis says. At some point, that will drive up the price of natural gas — which is very low right now — and push down the cost of coal.
Just the other side of shabby Edwardsport, a skyscraper of sorts rises. It’s 17 floors high, reaching 314 feet above the plain, across the road from a herd of cows and a red-roofed barn. I count nine tall red construction cranes surrounding the skyscraper before I get confused and give up. A few months ago, says Jack Stultz, manager of this growing complex, there were more than 20 cranes, all employed in building the biggest investment that Knox County has probably ever seen, just over the trees from Edwardsport.
It will be a new, nearly $3 billion power plant, scheduled to go online in 2012, and it’s going to use coal. It won’t burn coal. Instead, coal will be reacted under high pressure with pure oxygen to produce a gas that will then power electricity generation. Two gasifiers occupy that skyscraper. When the plant goes online next year, Stultz says, it will be the largest one of its kind, and one of the cleanest coal plants around.
If all goes according to plan, the 618-megawatt plant, which can power a half-million homes, will produce 90 percent less sulfur dioxide emissions than federal standards allow for new plants. Its nitrogen oxide emissions — a major component of smog — will be 80 percent lower than guideline requirements. Mercury emissions will be 90 percent lower. Even though the new plant will run almost round-the-clock, its total output of these pollutants will be 70 percent lower than the current plant, which runs only 30 percent of the time. The Clean Air Task Force says the Edwardsport emissions of these pollutants will be the lowest in the world for a coal plant.
It also will produce electricity more efficiently. Although the plant will use 60 railcars of Indiana coal every day — some 6,000 tons — that adds up to 40 percent less coal per megawatt than the current plant. And because the plant does not burn coal, but gasifies it using 90 percent pure oxygen, it might easily capture its carbon dioxide byproduct and pump it underground. Emissions from a gasifier — unlike emissions from a coal-burning plant — are almost all carbon dioxide, expelled under pressure and ready to be pumped underground.
But the Edwardsport plant faces some obstacles.
It may not ever be fitted with carbon dioxide-removal equipment. “It’s premature to speculate on plans for carbon capture and sequestration at the site,” company spokeswoman Angeline Protogere says. “We’re in the study stage right now, and what we do will depend on a number of factors, including the outcome of the study.”
Duke CEO Jim Rogers is on record saying he intends to use carbon capture and sequestration technology, but he hasn’t said where or when. Huge cost overruns at the Edwardsport plant may also complicate hopes of adding carbon capture technology at that facility. The Indiana Utility Regulatory Commission initially agreed to allow the company to phase in an average 16 percent rate increase to pay for construction, based on a $1.9 billion construction-cost estimate. Then last April, Duke announced it needed another rate hike to cover costs now estimated at $2.88 billion. The plant also has $400 million in tax incentives.
The Indiana utility commission is considering further rate increases to meet this new price tag, but it operates under a cloud. A scandal involving an employee of the regulatory agency who applied for a job with Duke while considering the rate-hike case led to firings at both the energy company and the utility commission. E-mails later revealed close personal ties between the regulatory chief and a utility administrator.
The Edwardsport plant, with its cranes and towers and stacks and girders, and a long silvery coal chute resembling a roller coaster for the timid, looks like nothing so much as an amusement park awkwardly looming above the cow pastures.
“Well it’s not,” Stultz says. “There’s been nothing funny about this.”
They call the campaign “Beyond Coal.” The Sierra Club is one of many environmental organizations hoping the nation can turn away from this fossil fuel immediately, and it puts muscle into these hopes, fighting proposed coal plants through every step of the permitting process. It’s working to stop Cash Creek in western Kentucky, and it has put a significant investment in legal resources to accomplish this, never missing an opportunity for a challenge — objecting to the temperature of discharge water, the quality of the discharge, wetlands loss, waste disposal, run-off issues and air quality. The Sierra Club’s website details the systematic objections it has raised and lawsuits it has filed to keep the Cash Creek plant from breaking ground. The group fought just as hard against Duke’s Edwardsport plant and has taken on a gasification plant in Rockport, Ind., 10 miles from Owensboro, Ky.
Indiana Gasification, a subsidiary of Leucadia National Corp., is developing a plant in Rockport that would turn Illinois-basin coal into pipeline-quality natural gas. The 40 billion cubic feet of gas it produces would be sold to Indiana consumers and the carbon dioxide it captures sold it for other uses.
Cash Creek is still fighting with environmental groups. Although it finally won its water permit after a long battle, and has its air permit, appeals of the air permit continue.
“I think the air permit may well stop it,” says Craig Segull, the lawyer who contested the water permit battle for the Sierra Club. “It’s a lousy permit, as far as I know.”
John Blair hopes so. The Evansville, Ind., man is the founder of a group called Valley Watch, and has fought power plants since the 1970s. The region has too many already, he says, and no one needs the power from the new ones. Within 62 miles of Evansville, there are some 16 plants already built, by his count, and another eight proposed. “It’s a mess,” Blair says. “We’re the sacrifice zone for the nation’s energy, so that people can flip a switch.
“These technologies are cleaner than old technology,” he acknowledges. “But it’s a huge, unfortunate situation. It’s only adding (to air pollution). It’s not reducing it. And, of course, it’s not even needed.”
When I bring this up with McInnis, he snaps, “Think how stupid that is.” The electric grid dispatches plants with the lowest variable costs first, he says. Those are the newest and most efficient. They’re also cleaner. “Bringing new, cleaner plants online forces dirty, less efficient plants to run less because of the way electricity is dispatched,” McInnis says.
“When the Sierra Club says we don’t need any more (power plants), well, what they’re really saying is, ‘Let’s keep operating these really dirty, filthy plants.’ That’s ridiculous. It defies any kind of reason or logic.”
The Kentucky Cash Creek gasification plant in Henderson, McInnis’ firm’s project, would capture a significant portion of its carbon dioxide output and sell the CO2 for oilfield use. Denbury Resources Inc. is designing a 700-mile-plus, 24-inch pipeline to carry some 800 million cubic feet of carbon dioxide daily from the Midwest to its Gulf Coast oil fields. Cash Creek has an agreement to supply carbon dioxide to Denbury, McInnis says, as have several other projects in the region (including the Rockport gasification facility mentioned above).
In addition to selling the carbon dioxide, Cash Creek will make both natural gas and electricity from the 2.8 million tons of coal it takes from a nearby mine. Some of the 36 billion cubic feet of natural gas will be sold, and some will be used to make 500 megawatts of electricity.
Cash Creek isn’t the only Kentucky project that may capture its greenhouse gas emissions. A mine-mouth gasification plant proposed by ConocoPhillips near Central City in Muhlenberg County would make 60 billion to 70 billion cubic feet of natural gas from coal gasification. Company news releases say the plant will be “carbon storage ready,” and that the company is supporting research to evaluate carbon storage options.
The race for cleaner coal is on, and Kentucky has a couple of horses at the starting gate. Demonstrating that plants that capture carbon dioxide are economically workable would, according to Andrews, “open the door to capital investment (in the state), with less risk aversion to the use of the technologies.”
The world outside Kentucky knows the state for only a few things. Coal is one. Despite what looks like a future role for this resource, there is little in this picture to bolster optimism about Kentucky coal — at least when it comes to the Appalachian coalfields.
Eastern Kentucky coal was in trouble long before President Obama said the nation needed to cut carbon dioxide emissions by 85 percent before 2050 to tame global warming. And the trouble didn’t come from government. It came from the coal itself, says Rory McIlmoil, project manager for energy programs at the environmental consulting firm Downstream Strategies in Morgantown, W.Va.
Kentucky coal production was on a high in 1997-’98 as a result of expanded surface mining and increased mechanization. Miner productivity was up and coal prices low, McIlmoil says. But by 2000, the state’s prominence was rapidly eroding. Thinning coal seams and depleted reserves led to a sharp increase in the price of Kentucky coal.
The second phase of the Clean Air Act, which limited sulfur emissions from coal-burning plants, induced many utilities to add sulfur scrubbers, increasing the market for relatively inexpensive high-sulfur