Clean-coal technology was pricey, unproven

TONAWANDA, NEW YORK - At first glance, the advanced coal power plant proposed for the Huntley Station in the Town of Tonawanda seemed like a good solution to some of America's energy problems.

Use America's abundant - and relatively affordable - supply of coal to generate electricity in a groundbreaking new way that would keep the carbon dioxide that causes global warming from spewing into the atmosphere.

But the reality was far different for the Huntley Station project - and at least 11 other similar plants that had been on drawing boards across the country.

High costs, combined with still-developing technology, raised serious questions about whether the Huntley project and other proposed advanced coal power plants would be able to deliver on their high-sounding environmental promises.

And even if they did, it was becoming increasingly apparent that the cost of doing it would be prohibitively high.

"The Huntley project was, in many ways, ahead of its time," said David Crane, the chief executive of NRG Energy, as the company and state officials pulled the plug on its proposal for a 680-megawatt power plant.

It wasn't just the $2.3 billion Huntley project, either. Virginia utility regulators in April scrapped a proposed plant that would have been similar in size to Huntley because it would be too expensive. The U. S. Department of Energy in January pulled out of the so-called $1.8 billion Future Gen project in Illinois that would have developed advanced methods to convert coal to gas and capture the plant's harmful emissions because the project's costs had nearly doubled.

Since the start of last year, utilities have pulled the plug or put on hold other advanced coal projects in states ranging from Connecticut and Florida to Wyoming and Oklahoma. Duke Energy, which is currently building an advanced coal project in Indiana, said in May that the plant's price tag had swelled by almost 20 percent to $2.35 billion.

Because the Huntley project was designed to be a cutting-edge advanced coal plant built on a scale never done before, it was always a risky project, both for NRG and state officials, who were being asked to provide extensive subsidies and power purchase commitments.

In the end, those risks proved to be too daunting.

"The financial and environmental risk associated with this large-scale commercial power plant is simply too great," the New York Power Authority concluded in a report issued last week.

The Huntley project, even with significant government subsidies, would have produced electricity that cost far more than the current market price. To bring those costs in line would have required additional government aid and subsidies totaling $1.5 billion to $3 billion in today's dollars over a 20-year period - a hurdle that ultimately proved to be a key part of the project's undoing.

The Huntley project and other advanced coal power plant proposals have gathered a lot of attention over the last few years as officials search for ways to expand electricity production without adding to the threat of global warming. The Bush administration has backed efforts to develop advanced coal technology. Presidential candidates John McCain and Barack Obama also have endorsed advanced coal efforts.

The Huntley project also had widespread political support, lured by the promise of 100 permanent jobs and 1,000 construction jobs. But in the end, it wasn't enough.

Coal, which is both abundant in the United States and relatively cheap, is a natural choice as a potential fuel. But coal, which already is used to produce half of the U. S. electricity supply, also has huge environmental problems, because burning it produces high levels of harmful emissions, ranging from nitrogen oxide and sulfur dioxide to carbon dioxide.

That led to a focus on ways to reduce those harmful emissions by using new equipment and processes. The Huntley plant, for instance, would have used a relatively new process that turns the coal into natural gas before burning it, vastly reducing sulfur dioxide and mercury emissions.

Another major part of those efforts would involve capturing the carbon dioxide, turning it into a liquid and then injecting it more than a mile beneath the earth's surface. If all went as planned, the carbon dioxide would remain safely underground forever.

But that process likely would be expensive, and scientists aren't sure that the carbon dioxide wouldn't seep out eventually, potentially defeating the purpose of easing the global warming problem.

There also are complex legal and regulatory issues that still need to be resolved, such as who would be liable if the carbon dioxide sequestration efforts led to ground water being contaminated.

In addition, no plant has ever fully integrated the three pillars of the Huntley emissions control program - the Integrated Gasification Combined Cycle process that would burn the gasified coal, capture the carbon dioxide and then store it, NYPA officials said.

"The worst case scenario being that the plant is built, carbon capture and sequestration doesn't work, or the economics for using it fail and it is discontinued, and the plant operates anyway -- emitting large volumes of greenhouse gases into the atmosphere," said Walter Simpson, a spokesman for the Western New York Climate Action Coalition.

Power authority officials had the same concerns. "It is not without doubt that the combined technologies may face significant challenges to deliver the promised environmental benefits at the anticipated costs," the Power Authority report concluded.

"This could likely result in the use of significant public financial resources for a facility that does not achieve its stated purposes and fails to meet the overall environmental goal," the report said.

The Paterson administration agreed that the risks were too great - a view that it signaled last month when it threw its support - and $7 million in aid - behind a 50-megawatt advanced coal power plant being proposed in Jamestown.

Paterson administration officials are drawn to the Jamestown project because it is less than one-tenth of the size of the proposed Huntley plant, reducing the financial commitment required, while also shrinking the amount of pollutants that the facility would generate for its carbon capture and sequestration demonstration project.

"It has a much smaller price tag and it has much less risk if it doesn't work," said a Paterson administration official, who spoke on the condition he not be identified.

If it does work, other advanced coal projects could build on the Jamestown experience, on an even larger scale. "The beautiful thing about Jamestown is that it's fully scalable," the official said.

Paterson is enthusiastic about the Jamestown project because of its potential environmental benefits, as well as the economic development benefits it could produce, particularly in job-starved upstate, said Paul DeCotis, Paterson's deputy energy secretary.

"This has implications well beyond New York," DeCotis said. "If its proven, with New York industry and New York intellectual know-how, we could be exporting this technology. The potential upside is enormous. The potential downside is virtually zero."

Simpson isn't so sure. "Given U. S. heavy reliance on coal for electricity generation, there is a need to test and develop carbon capture and sequestration technologies. But it is not clear what applications and test sites are best for conducting carbon capture and sequestration tests," he said.

Funding also is a big hurdle for the $285 million Jamestown project, where its backers are seeking $100 million in federal aid.