"Daniels’ energy plan relies on it

Second in a series of articles on Gov. Daniels and energy producers.

One of the most abundant natural resources in Indiana is coal. It fuels more than 90 percent of electricity, with natural gas supplying less than 10 percent. However, slightly more than half of all coal used in Indiana comes from out of state. That’s because Indiana, like the rest of the United States, has a major coal problem: It’s cheap, it’s abundant, but it’s dirty.

Peabody Energy, the largest coal company in the world and owner of Black Beauty Coal, the largest coal company in Indiana, currently has billions of tons of unusable Indiana coal sitting in reserve. Because of its high sulfur content, Indiana coal can’t be burned in traditional utility plants without undergoing costly pollution controls. Quite simply, it’s a product no one wants, and Peabody Energy owns billions of tons of it. But thanks to Indiana Gov. Mitch Daniels’ new “Hoosier Homegrown” energy initiative, the winds of fortune are about to blow Peabody’s way.

According to the governor’s new plan, “Indiana will best use its coal reserves and rely less on imported coal through coal gasification, or Integrated Gasification Combined Cycle (IGCC). This process takes highly sulfuric coal and converts it to gas as a clean source of fuel to fire the generation of electricity.” The gasification process, more widely-known as Clean-Coal Technology (CCT), is the saving grace of the coal industry, particularly Peabody Energy. But its roots are hardly Hoosier or homegrown.

Over the past twenty years, the federal government has spent more than $5 billion for research and development of clean-coal technology in order to revive a quickly dying coal industry. This jumped tremendously under President Bush and his “FutureGen” program — a partnership between the federal government and the world’s largest coal and electric companies, including Peabody Energy. In his 2005 budget, Bush proposed nearly $300 million in federal funding for FutureGen research and development projects.

And now, FutureGen, Peabody Energy and the state of Indiana are joining forces. The federal Department of Energy has chosen Indiana as one of only three states in the U.S. to facilitate the construction of an IGCC power plant under the DOE Clean Coal Demonstration Project. Because all of the recipients of the DOE Clean Coal Demonstration Project grants are members of FutureGen, and Peabody Energy is the largest coal company in the alliance and in the state, it is not unthinkable that Peabody will build the plant. There are only two others in the country, and they own one of them.

Carbon dioxide waste

Clean-coal technology has enabled companies like Peabody to eliminate most of the emissions of sulfur and other pollutants that cause smog and acid rain. The IGCC plants are virtually air pollution free. That’s the good news.

The bad news is that these plants, even the most technologically advanced, still produce as much as five times the carbon dioxide waste as natural gas facilities.

Currently, IGCC plants can “sequester” 90 percent of the CO2 emissions in a liquid form and prevent it from entering the atmosphere, an amount that exceeds Clinton Era and Kyoto treaty levels of carbon emissions, but is acceptable under the Bush administration. Carbon dioxide emissions are the number one cause of global warming, and the coal industry is the number one culprit. Peabody Energy Chairman Irl Engelhardt, however, doesn’t believe in global warming. “It’s an environmentalist PR tool. There’s no science to prove it,” he said during a Congressional hearing in 2001 while lobbying for looser emissions regulations for coal plants.

Those who buy natural gas to fuel their electric utility companies rightly predict that when the Bush administration leaves office, the cost to reduce the CO2 emissions under new air quality regulations will increase. Few manufacturers want to invest in new technology and new facilities that could be obsolete or extremely costly to retrofit within a decade. That’s why in addition to receiving federal funds to develop the technology to produce clean coal and federal funds to build the plants to produce clean coal, companies are asking for and receiving tax incentives to help off-set the high cost of building and operating future clean-coal technology facilities themselves.

Here in Indiana, Gov. Daniels has promised more than $75 million in state tax credits, abatements in local taxes, and grant monies for workforce development to companies that build new clean-coal plants in Indiana. One of the conditions for the credits, however, is that the plants must use Indiana coal. This creates the very real possibility that Peabody Energy will build an IGCC plant in Indiana using 80 percent government funding to create a profitable product from dirty coal they already own, and receive millions in state tax credits to do so.

Just as troubling as the corporate welfare aspect of the proposed clean-coal plant in Indiana is the unproven science that the technology is based on. Like most of the discussions of clean-coal gasification facilities, Daniels’ “Hoosier Homegrown” makes no mention of the most dangerous aspect of the technology — what happens to all the carbon dioxide that has been “sequestered?”

Potential environmental disaster

There are currently two methods for disposing of the more the 20 billion tons of CO2 waste generated annually by a clean-coal facility. The first is to inject the waste deep into the earth, usually inside abandoned gas or coal reserves. The second is to inject the waste deep beneath the ocean floor. Both methods remain in the testing stage, and both currently show signs of potential environmental disaster.

Scientists testing the deep geologic disposal of carbon dioxide are finding that it’s disintegrating the minerals in the very rock compounds meant to keep it buried and thus leaking into the soil at a much, much faster rate than predicted. In a study released two months ago, researchers at the FutureGen project northeast of Houston reported “no catastrophic failures” but acknowledged “an aspect of risk we hadn’t considered,” particularly “a new potential risk should CO2 leak into shallow aquifers.”

Studies on the undersea burial of CO2 have not fared much better. The most recent data indicates that the naturally forming algae created when CO2 is released underwater is appearing at an alarming rate and “filling up” the underground spaces so quickly that small amounts of CO2 are already beginning to leak into surrounding waters.

While both methods are currently in pilot programs, the lack of proof that burying billions of tons of carbon dioxide is, in fact, a safe thing to do has not stopped the coal companies from pushing forward with clean-coal technology, nor has it stopped the federal government from funding clean-coal research and manufacturing.

Next week: How Peabody Energy’s relentless lobbying and millions of dollars in campaign contributions to Mitch Daniels and the Indiana Republican Party helped shape the “Hoosier Homegrown” energy plan.

A full text of “Hoosier Homegrown” is available: www.energy.in.gov