Futurgen Alliance to Pioneer New Coal Energy and Sequestration Frontier with $1 Billion DOE Partnership

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas)--In scientific and technology terms, the jury is still out on the ways and means and the pros and cons of various methods of sequestering CO2 emissions produced by energy generating processes. A number of pathfinder ventures are underway, and currently there are scientific debates taking place on the long term positive/negative environmental feedback potential of various technologies and types of sequestration sites whether they are onshore geological or deep oceanic based.

'Sequestration' as applied to CO2 emissions is seen to include the optimum choice of processes which generate the gases as well as the function of 'banishment or the permanent containment or retirement' of the offending emissions which is the appropriate meaning of the word to be gleaned from dictionaries.

It is therefore very significant that at this point in the development process of sequestration techniques, the U.S. government and DOE (Department of Energy) together with major companies in the coal and energy production industries have taken the Futuregen initiative to construct the world's first pollution free, coal-fired power plant that will produce both electricity and hydrogen.

The plant, said the US secretary of Energy Spencer Abrahams, when announcing the public-private venture earlier this year, will use cutting edge technologies. It will be designed to turn coal into hydrogen rich gas rather than burning it directly. The hydrogen will then be extracted form use in powering a turbine or fuel cell to generate electricity. Carbon air pollutants such as sulfur dioxide and nitrogen oxides will be cleaned from the coal gases and converted to useable byproducts such as fertilizers and soil enhancers, he said.

In backing the initiative, President George Bush is supporting application of technologies to sequester CO2 emissions and reduce heat-trapping greenhouse gases in the atmosphere. CO produced by the plant/s will be captured and sequestered in deep underground geologic formations.

The working group companies in the Futuregen alliance so far are: American Electric Power (NYSE:AE) (Columbus, Ohio), which is the largest electricity generator in the US with 42,000 MW of generating capacity; CONSOL Energy (NYSE:CNX) (Pittsburgh, Pennsylvania) the largest producer of high-Btu bituminous coal in the US and the largest exporter of U.S. coal and one of the largest coalbed methane producers which is uses methane as fuel at a joint venture power generation plant; Kennecot Energy, a Rio Tinto company (NYSE:RTP) (London, United Kingdom) is one of the largest U.S. producers of low sulfur coal which is sold to electricity generators in the mid-western and south-eastern states; The North American Coal Corporation , a subsidiary of NACCO Industries (NYSE:NC) (Mayfield Heights, Ohio) is engaged in the acquisition, mining and marketing of coal used by electrical power generating utilities; PacifiCorp (NYSE:SPI) (Glasgow, United Kingdom) provides electrical service to over 1.5 million customers in California, western and northwestern states. The company generates about 8,000 MW of energy from coal, hydro, gas-fired combustion turbines, geothermal and windpower sources and is looking to add 1,400 MW of renewable resources to its generation portfolio in the next ten years; Peabody Energy (NYSE:BTU) (St Louis, Missouri) is one of the world's largest private sector coal companies with 2002 sales of 198 million tons. It claims to fuel 9% of all US electricity generation and 2% of worldwide generation; RAG American Coal Holding is one of the five largest US coal producers for electric utilities and is the US mining unit for RAG Coal International AG (Essen, Germany); Southern Comp (NYSE:SO) (Atlanta, Georgia) with nearly 37,000 MW of generating capacity is the premier super-regional energy company in the US southeast with 4 million customers; TXU (NYSE:TXU) (Dallas, Texas) serves five million customers in North America and Australia. With 19,000 MW of generation in Texas it is the state's leading energy retailer.

Battelle (Columbus, Ohio) a non-profit R&D institution assisted in the formation and coordination of the alliance. The group focuses on technology development and commercialization and product development and has annual revenues of around $1 billion.

In a letter to President Bush the alliance said that Futuregen is squarely targeting three of the most critical long term energy challenges facing the nation: 1) ensuring the continued availability of low cost electricity. 2) reducing the US dependence on imported oil and limited US natural gas reserves by advancing the production of hydrogen through the use of coal and 3) managing the potential environmental and financial risks of climate change.

In the letter the alliance stressed that openness and transparency must be guiding principles of the FutureGen partnership and they will welcome any electricity generator or coal producer that is willing to cost-share the effort and commit to the goals of the program. They will also provide an opportunity for independent technology vendors to participate in the program, where appropriate.

The DOE says that the goals of $1 billion partnership are to design, construct and operate a nominal 275 MW (net equivalent output) prototype plant that produces electricity and hydrogen with near-zero emissions. The size of the plant is driven by the need for producing commercially relevant data, including the requirement for producing one million metric tons per year of CO2 to adequately validate the integrated operation of the gasification plant and the receiving geologic formation.

At least 90% of the CO2 emissions from the plant should be sequestered with the future potential to capture and sequester nearly 100%.

The project should prove the effectiveness, safety and permanence of CO2 sequestration and establish standardized technologies and protocols for CO2 measuring, monitoring and verification.

The project should also validate the engineering, economic, and environmental viability of advanced coal-based, near zero emission technologies that by 2020 will: 1) produce electricity with less than 10% increase in cost compared to non-sequestered systems; 2) produce hydrogen at $4 per million Btus (wholesale), equivalent to $0.48/gallon of gasoline, or $0.22/gallon less than today's wholesale price of gasoline.

The alliance is due for a meeting with president Bush later this month after which, depending on the results of a feasibility study the design, construction and operation of the facility will go ahead in partnership with the DOE. Assuming a start date in the third quarter of 2003 the project will have available advanced gasification technologies that should come on line in 2008/10.

In stating that it is critical that the project should require no more than 20% non-Federal cost share with no repayment obligations the alliance is looking for a financial structure 'that overcomes the difficult constraints that the investment community has placed on the energy industry'.

With many bodies, companies and interested parties, such as the World Business Council form Sustainable Development looking on the project positively the goals of the alliance should assist in setting standards for clean energy throughout the industry, combustible and renewable. It is also a 'can do' project and vision which brings the industry back to its traditional positive ethos of engineering innovation, production and service after a confused era of virtual trading, regulation and de-regulation at arms length from the engineering coal face.