Part 1: Edwardsport: Our energy future?, May 23, 2008

HEAD

PU Herald Times (Bloomington, Indiana) DA May 23, 2008 PU Part 1: Edwardsport: Our energy future? Duke sees plant as green response to energy needs; others raise questions Gasification, carbon storage processes templates for the future or giant ratepayer pain?

By Mike Leonard 331-4368 leonard@heraldt.com

It didn't help the Duke Energy public relations campaign when the company recently had to increase its projected cost for a massive new coal gasification plant by 18 percent just six months after the Indiana Utility Regulatory Commission approved its proposal for a $1.99 billion facility.

The planned electrical generating plant at Edwardsport about 50 miles southwest of Bloomington had already struck a sour chord among certain consumers and environmentalists because it relies on coal, historically one of the dirtiest and most polluting energy sources available.

But it's not just coal or the potential for spiraling costs that bothers opponents of the now $2.35 billion, 630 megawatt plant. While the company acknowledges, excitedly, that the integrated gasification combined cycle facility will be unique in its combination of size and use of carbon sequestration technology, the untried and untested overall design leaves some ratepayers and environmentalists worried.

Some environmental groups hail the Edwardsport effort because even if carbon sequestration were to fail, the advanced gasification process alone promises to remove a huge amount of dangerous mercury and sulfur dioxide, deadly air pollutants produced by traditional coal-fired generating plants. Clean Air Task Force representative John W. Thompson describes the Duke carbon sequestration initiative as a pioneering effort that could provide a template for other companies and countries to ameliorate global warming by safely storing carbon dioxide, a major byproduct of the burning of fossil fuels and the greenhouse gas identified as the biggest culprit in the planet's rising temperature.

The critics, including other environmentalists, take a gloomier view. They wonder why Duke is making such a huge investment in coal, which they view as a hopelessly flawed fuel. They wonder why the company isn't instead building upon the science and technology base to create cleaner and more sustainable alternative energy sources. And they point out that while Duke is firm on building the gasification plant, the company promises only to study the feasibility of carbon sequestration. Duke is clear it will only employ sequestration if studies show it is both financially and technologically sound.

Who pays?

A huge question yet to be answered is who takes the financial risk if the plant costs continue to increase Duke Energy or its customers? John Blair, president of the Evansville-based, environmental group, Valley Watch, said Duke is clearly trying to pass all costs on to customers. "The capital markets where they'd traditionally look to for funding are really squeamish on energy right now. They're squeamish about coal," he said. Indiana, Blair contended, has a weak regulatory climate and a major cheerleader for coal in Gov. Mitch Daniels.

Plus, Blair contends Duke Energy and its supporters are exploiting late-1970s legislation that allows a utility to pass on to ratepayers the costs for environmentally friendly projects. The move was aimed to give utilities the incentive to install scrubbers on coal stacks to greatly reduce the dangerous particulate matter emitted from coal combustion plants, he said.

"Now, they're trying to pass this entire power generation plant off as an environmental project," Blair said. "I call it the socialization of risk and the privatization of profit."

Duke Energy executive James L. Turner addressed the question of "Who takes the risk?" in a meeting last week with The Herald-Times editorial board: "That's the conversation we're going to have with the (regulatory) commission in terms of how does the commission view the cost increases we've updated them on.

"We have a lot of challenges ahead of us," Turner said, noting that with or without Edwardsport one thing is certain. "Costs will go up. If we are going to try to produce energy in a cleaner way than in the past, it's going to cost more," he said.

"Customers have enjoyed a relative bargain on electricity for a very long time," Turner continued. "We haven't built new large base load facilities for a very long time."

Planning for future needs

Base load is the average amount of electricity a utility puts out to meet the needs of its commercial and residential customers. Peak demand often is cited in energy generation conversations and refers to the spikes in electrical usage at times such as during a summer heat wave, when energy-demanding air conditioners running constantly can test a utility's energy-generating capacity.

Duke currently has the capacity to meet its Indiana base load entirely through coal plants, and projected peak demand can be met through small, gas turbine "peaking stations" around the state that are switched on when needed. Coal plants account for 95-98 percent of Duke Indiana's energy sales. Duke also has surplus generating capacity in Indiana for now.

The state energy department's strategic plan titled "Hoosier Homegrown Energy" forecasts a need for an additional 10,600 megawatts of generating capacity in the next 15 years to meet Indiana's power requirements.

Penalties loom

New federal regulations to regulate the polluting greenhouse gases produced by coal and fossil fuels are virtually certain to be promulgated in the near future. Most observers of energy policy believe that the Lieberman-Warner Climate Security Act currently before Congress is a good working model for the type of greenhouse gas regulations to come. The bill imposes financial penalties on emission levels above certain thresholds.

Presidential candidates Barack Obama, Hillary Rodham Clinton and John McCain all are on record as well, supporting similar measures that will penalize with the goal of curtailing the level of carbon dioxide, sulfur dioxide, mercury emissions and other pollutants that come with coal-fired generation plants.

Other informed sources also view carbon penalties and negative financial consequences as inevitable.

"Due to the state's heavy reliance on coal as a fuel source for electricity generation, Indiana is expected to experience larger price increases than those projected on a national level," reads a February report from the State Utility Forecasting Group at Purdue University. "Similar studies by other entities have shown projected national electricity price increases of 15 to 25 percent in 2025, while this study projects a 45 percent increase (averaged across all sectors) for Indiana."

Duke's Turner said the historical increase in energy demand, the aging of the company's power-generation plants and anticipated carbon penalties on coal plants have all combined to motivate the company to get moving on plans for a new power plant. "We've got to plan 10, 15 and 20 years out for a variety of reasons," he said. "Our thought is, what's clean, efficient, reliable. We spend a huge amount of time trying to figure out that balance and the best mix of resources to do those things.

"There are tradeoffs in trying to find that balance," he continued. "You can produce electricity that is cheap but not very clean. You can build electricity that is reliable but not very affordable. And you can build facilities that are very, very clean but they're neither very affordable nor very reliable."

New technology, old fuel

Coal is an energy source that is relatively close-by, abundant and cheap, although prices have almost doubled in just the past year, from $25 to $50 a ton for what Blair describes as "high sulfur, decent BTU"coal. What Duke proposes to do with its Edwardsport plant is to use those coal resources by combining old and new technologies to produce energy that is vastly cleaner than traditional coal-burning plants, which produce high levels of toxins such as mercury and which release unacceptable amounts of still-unregulated greenhouse gases into the atmosphere.

The gasification plant would convert coal into a gas, removing most of the toxins and particulate matter, then burn the cleaned-up gas in a combustion turbine generator to produce electricity. Heat from both the gasification chamber and the combustion turbine also would be used to generate additional power by means of a steam generator. If technological and geological models prove to be viable, the company then hopes to capture and store deep underground about 20 percent of the carbon dioxide produced by burning the gas.

While none of the technologies used in gasification and carbon sequestration are new, the combination and scale proposed at Edwardsport is. Duke has previous experience with coal gasification from its partnership in a 292-megawatt Wabash River Station in West Terre Haute. That project, while deemed successful, experienced significant downtime due to gasifier problems and criticism over pollutants found in its water discharge. Duke sold its interest in the plant to the Wabash Valley Power Association in 2006.

The 630-megawatt IGCC plant being planned is more than four times larger than the traditional 160-megawatt plant that opened at Edwardsport in 1948.

Carbon storage is key

The real wild card at play, however, is the "carbon capture and sequestration" process by which a portion of the carbon dioxide created by the gasification of the coal is captured and not vented into the atmosphere.

Duke has asked the utility regulatory commission for permission to pass on to consumers the ongoing research with a price tag of $16 million to $18 million it will conduct to decide if the plan will achieve the most reliable and efficient capture and sequestration technology. Essentially, it plans to force the concentrated carbon dioxide it diverts from the energy generation process more than a mile below the earth's surface. There, it can be absorbed into the rock and sequestered indefinitely in theory.

The current goal to remove about 18 percent of carbon dioxide emissions through "capture and sequestration" excites people such as Thompson of the Clean Air Task Force. He maintains that the sequestration amount can conceivably go much higher, although he and Duke's Turner acknowledge that currently, it appears that the higher the sequestration level, the less efficient and more expensive Edwardsport electricity will be.

The removal through gasification of large amounts of mercury causes John Goss of the Indiana Wildlife Federation to back the project as well. Currently, he said, fish caught in Hoosier waterways are so tainted by mercury that very few can be safely consumed.

If carbon sequestering proves unworkable, the expected penalties on carbon emissions will make the so-called "clean-coal" facility less clean and subject to financial or power generation constraints. Still, Turner maintains, his company's proposed Edwardsport facility "looks like a game changer."

"If we can demonstrate we have the ability to capture and sequester significant amounts of CO2, the plant has the ability to be more of an example to the rest of the nation and the world," he said. "It's a huge foot in the door to try to meaningfully address CO2 and still leave coal in the mix."

========================================================= From: Herald Times (Boonmington, Indiana) May 24, 2008

Part two: Edwardsport: Bold technology or risky venture?

Critics: Sequestered carbon could be deadly in earthquake

By Mike Leonard 331-4368 leonard@heraldt.com

Proponents of Duke Energy's proposed $2.35 billion coal gasification plant at Edwardsport say the plan will help the electric utility meet predicted future energy needs and spark construction of a new generation of clean coal plants that will produce less of the greenhouse gases that contribute to global warming.

Opponents liken the proposal to putting lipstick on a pig. They say the plant's costs are too high, it will produce more pollution than the generating plant it will replace and its design is unproven and potentially dangerous. On top of all of that, opponents argue, the giant energy company is trying to convince regulators to pass the costs of construction and operation onto consumers while guaranteeing itself a profit margin of about 12 percent.

"I will never understand how coal is the answer to global warming," environmental activist John Blair said last week. "Placing two-and-three-billion-dollar bets on technology that doesn'nt exist is arrogant if nothing else when it comes to ratepayers.... Coal, whether it's burning it or mining it, is basically an act of desperation except for those people who stand to make lots of money off of it."

Blair is president of Valley Watch, an Evansville-based environmental advocacy group that has focused on the use of coal to generate electrical power for more than 25 years. A Pulitzer Prize-winning photographer, he is considered by many environmental and conservation groups to be a leading national authority on coal.

A lot of power and pollution

There's a reason why the 61-year-old activist has focused on coal. "Within 100 kilometers of Evansville is more than 15,000 megawatts of electrical generation capacity, which is more than many entire industrial states have. And we are sick because of it," he said. Virtually all of that generating capacity comes from coal, and the proposed Edwardsport plant would increase that location's output from its current maximum output of 160 megawatts to 630 megawatts.

About 20 plants are clustered in the area, a geological region called the Illinois Basin that stretches across a broad swath of southern Indiana and Illinois and northern Kentucky. The plants in the region include three (Gibson, Rockport and Petersburg) of the nation's biggest carbon dioxide polluters. Gibson, also a Duke Energy plant, generates roughly 3,340 megawatts of electricity annually and is the third largest coal-fired plant in the world.

Adding to the list of concerns is that all of these plants are evaluated individually by state and federal regulators and no one takes into consideration the aggregate pollution the power generating facilities vent into the atmosphere.

Blair said a study by the Partnership for Healthcare Information showed that children in Vanderburgh County (Evansville) at ages 9-13 are five times more likely to be diagnosed with asthma than children in cities with similar demographics, such as Fort Wayne. Preliminary studies on the incidence of autism in the Evansville area show that the neurological disorder is "through the ceiling" in the region, Blair said. Research in California and Texas also has linked air pollution and mercury one of coal combustion's most dangerous polluting byproducts but one that Duke says will be greatly reduced at the new plant with autism.

Various studies across the country attribute a broad spectrum of illnesses to coal mining, transportation and combustion. "I was a supporter of clean coal for 20 years and the coal companies weren't Blair said. "When it became apparent that the world had passed them by, they became proponents. But the truth is that clean coal is a myth, both from a technological and economic standpoint."

Duke says new approach needed

Duke Energy and its supporters disagree sharply. Duke Energy executive James L. Turner recently met with The Herald-Times's editorial board flanked by two representatives of environmental groups: John W. Thompson from the Clean Air Task Force and John Goss, who is currently executive director of the Indiana Wildlife Federation. Goss is also a former Bloomington deputy mayor and utilities department head as well as past director of the Indiana Department of Natural Resources.

"This is a global environmental project," said Thompson, who said he's spent most of his adult life fighting utilities and coal companies. "The day this plant goes online in 2012, 500 or so conventional coal plants around this country will become obsolete because the emission rate is so low.... We're into this plant not because we love coal.... We're just interested in clean air and clean water."

Goss said the wildlife federation backs the Edwardsport project because it will dramatically reduce mercury emissions that have caused health officials to recommend limited consumption of fish caught in Indiana waters.

Blair challenges the sincerity of the Clean Air Task "Farce" (as he calls the group) and the Wildlife Federation and suggests that the large grants the groups get from the wealthy Joyce Foundation might be clouding their judgment. For better or worse, the Chicago-based foundation has embraced coal gasification and explorations into gasification technology and not only donated to groups advocating "clean coal" but holds investments in energy companies with large coal components.

Thompson from the Clean Energy Task Force argues that even without "capture and sequestration" component of Duke's Edwardsport plan, its fundamental coal gasification design will produce four times more electricity than the current plant and less sulfur dioxide (a greenhouse gas) in one year than the existing plant emits in a month.

Still, it's the lure of capture and sequestration of carbon dioxide that has everyone involved with national and global energy production looking at the Edwardsport plans. The concept involves capturing the carbon dioxide in the generation process, condensing it under pressure and then injecting it into porous rock and depleted oil and gas caverns a mile or more underground.

Thompson said the technology holds the promise of drawing off as much as 90-95 percent of carbon dioxide in energy production and being able to store it for 125 years. Duke's Turner said that because capture and sequestration reduces the efficiency of power generation, his company is targeting 18 percent as a viable number if a final study replicates projections the company already has made.

But even Duke spokeswoman Angeline Protogere acknowledges that "it's the carbon sequestration, or storage, part, that has not been explored at a power plant, although there are various studies under way, including one at a Duke Energy power plant in Ohio."

And as much as environmentalists would love to see a technology capable of reducing the amount of carbon dioxide into the atmosphere, they warn that sequestration might be as fraught problems as potentially catastrophic as the worst scenarios of storing nuclear waste.

Quakes and suffocation

Nancy LaPlaca of Bardwell Consulting in Denver said Hoosiers should think long and hard about going down the sequestration road. "In the 1960s, they injected liquid waste under the Rocky Mountains, and between 1962 and '67 we had 1,500 seismic events and three above magnitude 5 on the Richter scale," she said in a recent phone interview. "The geologists said, hey, all of this coincides with the sequestration program and when they stopped, the seismic events stopped."

Another frightening scenario comes from West Africa, where in 1986, a mysterious event killed 1,700 people and 1,100 head of cattle. Investigators ultimately found that concentrated carbon dioxide trapped in an underground volcanic crater vented naturally, and the heavier-than-air gas settled on a village, displacing oxygen and suffocating every living creature.

The epicenter of Indiana's April earthquake with a magnitude of 5.2 was just 34 miles from Edwardsport and is believed to have involved the Wabash fault system, a northern branch of the New Madrid fault system. New Madrid spawned the infamous New Madrid earthquakes of 1811-12. With some quakes approaching 8.0 on the Richter scale, they constituted some of the most dramatic seismic events ever in the contiguous United States. The worst created liquefaction of soil, changed the course of the Mississippi River and reportedly rang church bells as far away as Boston.

"Sequestration, at best, is only going to divert a very small amount of CO2," LaPlaca said. "So if it leaks, if it explodes, if it causes earthquakes, who's liable? Is it really worth the risk?" she asked.

Rewards or penalties?

Thompson, the Clean Energy Task Force representative, believes it is. "We have to go to the Indiana Legislature to say these guys (Duke Energy) need a liability shield," he said recently. "They can vent and release into the atmosphere and there is no liability. But as soon as they inject these gases underground, their lawyers tell them, "Hey, this is new and different. Don't you think we need to worry about liability?"

"There are pioneer's penalties associated with being the first on technological development, and we need to turn those pioneer's penalties into early adopter's rewards," Thompson said. He described Duke's Edwardsport project as "the Kitty Hawk of carbon storage and sequestration."

Detractors such as LaPlaca argue that while dramatic reduction of greenhouse gases is necessary, coal and carbon sequestration are the wrong way to go. "Everyone's talking about climate change and everyone is changing their light bulbs while they're still building coal plants. We are at the apex of human stupidity," she said.