January 21, 2008
Series Editor: Ian Parry
Managing Editor: Felicia Day
Assistant Editors: John Anderson and Adrienne Foerster
Welcome to the RFF Weekly Policy Commentary, which is meant to provide an easy way to learn about important policy issues related to environmental, natural resource, energy, urban, and public health problems.
This week, RFF's in-house journalist John Anderson discusses the FutureGen demonstration project, a joint venture by the Department of Energy and a private consortium to develop a coal gasification plant that will capture and permanently store carbon dioxide emissions underground, rather than release them into the atmosphere. If successful, FutureGen represents the type of transformational technology that will be needed if carbon dioxide emissions are to be substantially reduced in the future at acceptable cost. But is one demonstration project enough to encourage widespread adoption of the technology, once we have an emissions-control program in place?
Next week, David Zilberman and Steve Sexton will discuss regulations on pesticide use in agricultural production.
FutureGen: How to Burn Coal—Maybe—Without Contributing to Climate Change
John W. Anderson
FutureGen, the Bush Administration's premier experiment in technology development, is being designed to provide a solution to one of the most urgent questions in climate policy. Its goal is to demonstrate, on an industrial scale, that it is possible to generate electricity by burning coal without emitting carbon dioxide into the atmosphere.
Coal is cheap and massive deposits are easily accessible in many countries—especially in the two biggest emitters of greenhouse gases, the United States and China. As demand for power rises, it is unrealistic to think that coal will not be used increasingly. But burning coal produces carbon dioxide, the increasing presence of which in the atmosphere is currently responsible for warming the Earth's climate.
FutureGen's builders propose to capture the carbon dioxide and sequester it underground. Not all of the issues facing the project are technical. Carbon capture and sequestration (CCS) has been widely greeted as a crucial development, but it is costly. It cannot compete with conventional coal-fired generators as long as they are allowed to vent carbon dioxide freely into the air.
A recent study at MIT estimated that CCS will be competitive only if carbon dioxide emissions carry a cost of about $30 a ton. Legislation is pending in Congress to impose a price on carbon emissions, but it implies a price (at least in the near term), that would be substantially lower—in the range of $5 to $20 a ton. In any case, President Bush has given no indication that he will support this legislation. The economics of FutureGen will apparently be left to the next administration.
The FutureGen plant is to be built by a partnership between the federal government and the FutureGen Alliance, a consortium of 13 American and foreign utilities and coal companies. The Alliance recently chose a site at Mattoon, Ill., for the project, a decision that drew a protest from the federal Department of Energy (DOE) that it was moving too fast. There have been indications of concern from the government about construction costs. They were estimated at $1 billion in February 2003 when the President announced FutureGen, but the figure is now up to $1.5 billion.
The plant is being designed to produce 275 megawatts, based on the integrated gasification combined-cycle technology, turning coal into a synthetic gas that can be burned to spin a turbine. The process also produces hydrogen, which can likewise be burned to produce electricity or, further in the future, to feed fuel cells. The carbon dioxide generated can be separated and pumped far underground.
Geologists have had a good deal of experience with underground injection of carbon dioxide; oil companies have used it for years to enhance recovery. But most oil fields have used the technique on a much smaller scale. Only the Sleipner West Gas Field in the North Sea has come close to injecting the amounts of carbon dioxide that FutureGen would produce.
Capturing the gas, compressing it to high pressure, transporting it, and injecting it all take a lot of energy, which accounts for much of the cost of underground storage. There are also questions about the permanence of the storage, and legal liability if the gas should begin to leak, although a report by the Intergovernmental Panel on Climate Change projects only tiny losses of carbon dioxide.
Despite these challenges, a wide consensus holds CCS to be a highly important technology that should be pursued as rapidly as possible.
The MIT study, "The Future of Coal: Options for a Carbon Constrained World," released early in 2007, termed CCS "the critical enabling technology" to allow the world to use its coal resources while mitigating climate change. But the study also said that building only one plant was too narrow an effort. It urged a greatly expanded research and development program for CCS, with a number of projects testing the technology under varying geological circumstances. In line with that recommendation, DOE recently announced that it will be teaming up with three partners in the Midwest on a separate large-scale project to investigate the potential for carbon sequestration in the Illinois Basin.
"The flagship [Department of Energy] project, FutureGen, is consistent without priority recommendations to initiate integrated demonstration projects at scale," the MIT study said. "However, we have some concerns about this particular project, specifically that need to clarify better the project objectives (research vs. demonstration), the inclusion of international partners that may further muddle the objectives, and whether political realities will allow the FutureGen consortium the freedom to operate this project in a manner that will inform private sector investment decisions."
To keep climate change within tolerable limits will require transformative technologies developed in ways that will persuade governments and companies worldwide to adopt them rapidly. Ernest Moniz, co-chair of the MIT study, pointed out, for example, that types and qualities of coal vary widely from one deposit to another. The focus so far has been on bituminous coal, but other coals have differing properties and may well require differing technologies.
It is a fair summary to say that among scientists and engineers, support for CCS and FutureGen is widespread. The barriers to progress at present appear to be economic, financial, and organizational.
Update: The Bush administration announced on January, 30, 2008, that it is cutting off federal support to FutureGen, effectively killing the project. FutureGen was to have demonstrated new technology to generate electricity on an industrial scale by burning coal without contributing to climate change. The Department of Energy said it was ending support because of the rapidly rising cost of the project. When President Bush announced the project in 2003, the price tag was $1 billion but the current estimate is now $1.8 billion, with the rise caused mainly by inflation.
The administration said that it wants to redirect its effort. FutureGen was originally to have built a plant that gasified coal and stored carbon dioxide underground. Instead, the administration said, it now wants to put money only into the development of storage technology. Since the administration is now in the last year of its term, it seems unlikely to have enough time to carry this concept into action.
Views expressed are those of the author. RFF does not take institutional positions on legislative or policy questions.
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Anderson, J.K. 2005. "Coal: Dirty Cheap Energy." Resources. Winter. # 156.
Biello, David. 2007. "New Power Plant Aims to Help Coal Clean Up." Scientific American Digital. December 19.
Bologna, Michael. 2008. "Energy Department, Midwest Partners Launch Carbon Sequestration Project in Illinois Basin." Environment Reporter. January 11. 39(2), p. 67.
FutureGen Alliance, the consortium of industrial companies that is the Energy Department's partner in the project. Intergovernmental Panel on Climate Change Special Report on Carbon Dioxide Capture and Storage. 2005.
Massachusetts Institute of Technology. 2007. The Future of Coal: Options for a Carbon-Constrained World.
U.S. Department of Energy website for FutureGen.
Wald, Matthew L. 2007. "New Type of Coal Plant Moves Ahead, Haltingly," New York Times, Dec. 18. Page C3.