The Reselling of Coal

When the oil giant BP released its annual energy outlook, some felt a pit in their stomach. The study projected energy consumption to spike over two decades and to be fueled mostly with coal, natural gas and oil.

For some, it is a call to arms - to double down on the production of renewable energy. For others, though, it's a different summons - to multiply the amount of investment in new technologies, especially those that can burn coal cleaner and perhaps capture and bury the carbon dioxide emissions. No doubt, those are expensive and risky undertakings. But with coal expected to remain a linchpin of global energy policy, it makes sense and it could help remake coal's image.

Altogether, BP projected a 37 percent increase in energy consumption worldwide, which would lead to a 25 percent jump in carbon dioxide emissions, all by 2035. That's notably more what climate scientists say is safe and to avoid such catastrophic events as rising sea levels, prolonged droughts and aberrant weather conditions. Meantime, the oil giant's February release also said that renewables and unconventional fossil fuels such as shale gas will gain market share.

While developing nations are trying to diversify their electric generation mixes, they will continue to rely on coal, particularly China and India. The good news is that these countries, especially China, are hard at working trying to create modern coal facilities. Even better news is that international governments are actively demonstrating that carbon capture and sequestration is possible, or CCS.

Advocates want to see carbon capture and burial at units that can produce between 5,000-10,000 megawatts in the United States. Already, this country has funneled about $8 billion since 2005 into coal gasification that can remove 90 percent of the coal-related toxins before they leave the smokestack. In the best case scenario, the carbon is captured and is either used to enhance oil recovery or it is permanently buried underground.

According to the Global CCS Institute, the world's largest such project revved up in October 2014 at the Boundary Dam power station in Saskatchewan, Canada. And, two more large-scale CCS projects are expected this year and next: Southern Company's Kemper County Energy Facility in Mississippi and the Petra Nova Carbon Capture Project in Texas, which is a joint venture between NRG Energy and JX Nippon Oil & Gas Exploration.

Globally, 13 large-scale carbon capture and storage projects are in operation, says the Global CCS Institute, adding that nine more are under construction. Those 22 projects would capture about 40 million tons a year of carbon dioxide, it adds. Meantime, 14 more are in development.

Good investments? Both BP and the U.S. Energy Information Administration are predicting that coal will provide at least a third of the global electricity supply in 2035 and 2040, respectively. Making it cleaner is therefore an imperative.

Coal gasification plants can be expected to last a half century. And over that time period, natural gas prices will gyrate while the cost of cleaner coal technologies will decline. Making use of abundant coal reserves and maintaining a diversified energy portfolio would also seem prudent - especially if those plants could become as clean as natural gas facilities.

For their part, utilities say that they are eager participants with the federal government. The demonstration projects in the United States are all public-private partnerships. Utilities also note that over the last 40 years that they have collectively spent $100 billion on such things as scrubbers and coal gasification.

"Increasing demand for electricity cannot be met without coal," adds Fred Palmer, chair of the National Coal Council and senior vice president of government affairs for Peabody Energy. "Energy poverty cannot be eliminated without coal. CCS is the only large scale technology that can mitigate carbon dioxide emission from fossil fuel use for electric generation and key industrial sectors."

The economic and technical issues are one angle. Political realities are another. In this regard, the Obama administration has fought hard to limit the release of carbon dioxide emissions from power plants.

The president's immediate plan is to apply the carbon dioxide limits to all prospective coal facilities. His eventual aim is to impose similar caps on the existing coal-fired fleet. And all this is happening at a time when natural gas is quickly gaining market share because of its abundance and its low cost.

With evolving regulations and markets, coal companies and their utility backers need to change political tactics. Instead of trying to block the administration at every turn, coal's advocates should make concessions to win public funding for progressive technologies that would buttress coal's future and its image.

To this end, the Fortnightly's lead story by Peter Sandman says that the coal industry will never placate its enemies; instead, it must target its message about CCS to those who will keep an open mind. With that, the risk management expert urges the industry to be painfully honest - with itself and with the broader public. Don't say "clean coal," warns Sandman. That's an oxymoron. But "cleaner coal," as he puts it, well, that's actually possible.

"Exaggeration is less tolerated once you have a bad guy reputation," writes Sandman. He admits that his approach may be uncustomary, but he advises companies to be "radically" honest and to admit that their previous PR campaigns have been overhyped.

While that tactic may upset the traditionalists within the coal industry, it is likely to capture the attention of those in the middle - the ones who have an appreciation for coal's past, its present and its possible future. Indeed, if coal usage will remain a staple throughout the world - especially in developing nations - then investments in coal gasification and carbon sequestration are mandatory.

It's tantamount to the e-cigarette movement, he adds, which admits that smoking is a bad idea but which emphasizes that the new cigs are a lot "healthier" than the filtered ones that are now prevalent.

With that, some advanced coal projects may fall flat while others will show promise. It's about taking the long-term view, and cultivating the stakeholders - everyone from public officials to green groups to community activists. Strong-arm strategies are short-term fixes at best and most likely, long-term failures. In fact, if advanced coal generation is to reach fruition, then the coal sector will need a federal partner - one that it cannot afford to continue alienating.

Coal's message resonates mostly in the coal producing states and among those who have inexpensive access to electricity. Beyond those zones, the industry has lost political and economic clout, necessitating that it form broader coalitions to better shape its destiny. That future, no doubt, is tied to CCS - developments that could truly work to resell coal and its message.