Another challenge: capturing gases to be buried

Against a pancake-flat horizon dotted by nodding oil pumps, Hoxie Smith sweeps his hand across 600 acres where he expects the nation's first "clean coal" power plant to rise from a vista of mesquite and prickly-pear cactus.

He's leading the Odessa, Texas, bid for a joint public-private project to build a revolutionary energy source that would emit virtually no greenhouse gases.

"I think we're on the verge of an energy renaissance in this country," says Mr. Smith. "Texas is going to lead the way."

Several Lone Star initiatives are under way. A second Texas city is vying for the project. In the private sector, at least a dozen proposals using similar technology have surfaced in the state in the past year. If the race to build climate-neutral coal-fired plants is heating up here in the home of Big Oil, it's a sign that America's energy industry is eyeing seriously new ways of producing power without warming the planet.

The idea is simple: Capture greenhouse gases before they go up the smokestack. Some promising technologies have already been developed. But several obstacles remain, key among them: storage and cost.

Scientists are hard at work here on the first challenge, trying to figure out if greenhouse gases can be stored safely and permanently underground. Texas' underground salt basins and old oil and gas fields are among the prime areas being considered to hold the nation's waste carbon-dioxide (CO2) and other greenhouse gases.

The second challenge is to find cost-effective ways to trap those gases in power plants before they go up the smokestack.

At the moment, the leading technology to do this is coal gasification, otherwise known as Integrated Gasification Combined Cycle or IGCC. Instead of burning coal, an IGCC system heats it up with steam until it breaks apart into a concentrated stream of gases, including CO2. The CO2 is captured while other gases, including hydrogen, are burned to produce electricity.

Plants are costlier to build and run

Currently, building a new IGCC plant costs about 20 percent more than a conventional coal-fired power plant, industry experts estimate. It's also more expensive to run. Even without CO2-capture, electricity produced by IGCC costs 5 to 11 percent more to make, according to a study by the Massachusetts Institute of Technology. When capturing CO2 for sequestration below ground, the cost jumps to 30 percent or more above a standard power plant.

But big utilities here in the United States and elsewhere are interested in IGCC for three related reasons. First, the alternatives are not particularly attractive. The spike in natural-gas prices has made gas-fired turbine plants less attractive. Nuclear plants are controversial, costly, and take years to site and get approved, at least in developed countries. That leaves conventional coal-fired power plants, which face an uncertain future because their greenhouse-gas emissions could make them much more costly to operate if governments enact climate legislation that puts a price on carbon.

If the typical household had to pay, say, $30 for every ton of CO2 emissions it produced, it would pay an extra $13.50 a month for electricity, the MIT study estimates.

Coal-fired power plants around the world produce about a third of global greenhouse-gas emissions, according to the US Energy Department.

That's why some 50 IGCC power plant projects are now in various phases of development around the world – 27 of them in the US alone across 16 states, reported Emerging Energy Research, a Boston-based market research firm, earlier this year.

The most visible US effort is the $1.5 billion "FutureGen" project, partially funded by the Energy Department, which Odessa is trying to land. It faces tough competition from two sites in Illinois, as well as another in Texas. Final proposals are due Wednesday.

But FutureGen is now in a race with the private sector to build the first IGCC plant capable of sequestering at least some of its CO2. In Edwardsport, Ind., Duke Power filed a request earlier this month with the state public service commission to build a 630-megawatt IGCC plant.•In Mountaineer, W.V., American Electric Power also this month filed to build a 630-megawatt IGCC plant for completion by 2012.•So did Tampa Electric Company in Polk County, Fla. Two other plants proposed by independent power producer ERORA Group LLC of Louisville, Ky., are also in advanced stages of development in Taylorville, Ill., and Cash Creek, Ky.

Back in the Lone Star state, it had looked like the state would get the typical solution to Hoxie Smith power demand – 11 big new pulverized-coal power plants emitting tens of millions of tons of CO2 emissions and other pollutants. But TXU has dumped plans for eight of those plants and intends instead to erect two IGCC facilities. Meanwhile, Hunton Energy, a division of Houston-based Hunton Group, is moving ahead with plans for a 1,200-megawatt IGCC power plant. The municipal power company for Austin, Texas, has also announced plans to build an IGCC plant.

US could lead global push

IGCC development in the US could have important ramifications abroad. For example, China is a partner in FutureGen and some experts believe the project could convince China to begin building IGCC plants instead of the hundreds of conventional coal-burning plants it has been erecting at a rate of two per week.

"What happens in Texas has clear potential to affect plans for power-plant construction worldwide, including China," says John Thompson, director of the coal-transition project at Clean Air Task Force, a Boston-based environmental group.

A final decision on siting FutureGen is slated for November. While he's a little nervous, Smith isn't too worried because he says Odessa would still be a shoo-in for another IGCC plant.