The Enduring Appeal of Canadian Coal

Alberta Oil May 2011

On the 23rd of June last year, Jim Prentice, then minister of the environment, put the Canadian coal industry on notice: the fossil fuel’s days of being used to generate electricity were numbered. On that date, the Calgary resident, whose home province possesses huge coal reserves, announced federal plans to reduce greenhouse gas emissions in the electricity sector by imposing new regulations on coal-fired electricity generation plants that would eventually force them to match natural gas-fired plant emissions – or shut down.

It was a bold move by the Conservative government, which has been repeatedly criticized for failing to do its part to reduce the country’s greenhouse gas emissions. By announcing these new regulations, the government had put coal squarely in its crosshairs. But while shuttering old coal-fired plants belching copious amounts of greenhouse gases sounds like sound environmental practice, the dirtiest fossil fuel still generates a substantial amount of Canada’s and Alberta’s electricity – nearly 17 per cent and 59 per cent, respectively. And as energy demand continues to grow in Canada (the National Energy Board predicts a modest 0.7 per cent annual growth between now and 2020), replacing the volume of electricity coal produces with other fuel sources won’t be easy.

Beyond the practical realities of weaning the nation off electricity generated by coal, there is recognition that – warts and all – it still holds a number of advantages as a fuel source. For one, it is a reliable, mature technology that’s well understood by traditional producers of electricity. Also, coal prices have historically been lower and less volatile than oil or natural gas, providing power producers and their customers pricing certainty.

But the main advantage coal has is that there is a lot of it. Alberta's Energy Resources Conservation Board estimates the province has 33.6 billion tonnes of established reserves. In 2009, Alberta produced 31 million tonnes of marketable coal. At current rates of production, Alberta has enough coal to last another thousand years. And at a time when alternative electricity options like wind, solar and geothermal represent only four per cent of Canada’s power market, nuclear power is fast becoming a pariah because of safety concerns and endowments of oil and gas continue to dwindle, coal could be a stable and secure fuel source for hundreds of years. “There are such large amounts of coal available, I don’t think we can walk away from it,” says David Butler, executive director of the Canadian Clean Power Coalition, a Calgary-based organization dedicated to advancing technologies that will lead to cleaner, more efficient coal-fired power plants.

But walk away from it we must if emissions cannot be substantially cut. In an increasingly carbon-constrained Canada, coal’s future hinges on the success of clean coal technologies which so far are unproven, and time on proving their worth is running out. Effective mid-2015, all new coal-fired electricity generation units, and units that have reached the end of their economic life must comply with the new federal emission regulations. Ottawa has yet to announce specific targets, but players will be given a reasonable head start. Environment Canada says the performance standard would be set at the emissions-intensity level of natural gas combined cycle (NGCC) technology and would be in the range of 360 to 420 t/GWh. NGCC units are efficient as they use natural gas-fired turbines and apply the waste heat to a steam turbine.

However, there are no existing technologies yet proven that can make coal-fired generation that efficient on a commercial scale – although several pilot projects have been successful. Another challenge is that every existing clean-coal technology requires capture of carbon dioxide (CO2) and either selling it for enhanced oil recovery or sequestering it underground. But sequestration is also in the proving stage, although the world-class Petroleum Technology Research Centre’s Weyburn-Midale CO2 Project in Saskatchewan – where more than 19 million tonnes of CO2 has been deposited since 2000 – is demonstrating its technological viability.

Finally, assuming sequestration is technologically viable, there remains another hurdle to jump over in order to keep coal in the energy mix – the cost of building the infrastructure to move the CO2 to the oil and sequestration reservoirs. This is getting serious attention, though. The Alberta government has tasked an international panel co-chaired by noted Nobel Prize-winning scientist Stefan Bachu with examining the environmental, safety and assurance processes for the earliest CCS projects. The hopes for cleaning up coal rest on three techniques: post-combustion, pre-combustion and oxyfuel combustion. All of them come with their own set of costs and challenges.

Post-combustion processes capture CO2 from the flue gas after combustion. Amine (a compound derived from ammonia) scrubbing is the most common process, but “the challenges to amine scrubbing are the significant energy penalties because of the need to drive off the CO2 from the amine,” explains Nader Mahinpey, associate professor in the department of chemical and petroleum engineering at the University of Calgary’s Schulich School of Engineering. “Typically that takes seven to nine per cent of the plant’s electrical energy output.” Also hiking the cost of this technology is degradation of the expensive amines in the process. Moreover, “there have been no large-scale demonstrations of the technology,” adds Mahinpey.

Main pre-combustion technologies don’t burn coal directly, they gasify it – typically exposing it to steam and using air or oxygen under high temperatures and pressures to break it down. The results are synthetic gas for firing turbines and several other gases including CO2, which is readily captured. Integrated Gasification Combined Cycle (IGCC) can make this more efficient. Or, gasification can be in situ, where oxygen and sometimes water is injected into deep underground coal seams and ignited to produce synthetic gas with CO2 and other gases. At the surface, the CO2 and gases are separated and the synthetic gas is used in power-generation turbines.

The third clean coal technique, oxyfuel combustion, involves injecting high-purity oxygen into the plant combustion process, which creates a flue gas with high-purity CO2, which is more easily separated, dried, compressed and put into a pipeline. Mahinpey thinks coal gasification is ultimately the cleanest technology regarding overall emissions. “But we should keep in mind that with respect to coal gasification, there are challenges that need to be addressed, especially regarding the quality of the feedstock,” he says. Coal in Alberta is generally low in sulfur, however, and it burns relatively clean compared to many coals mined around the world.

Considering how large its reserves are and how much of the province’s electricity is generated using coal, it’s not surprising that the public and private sectors in Alberta are hustling to develop clean coal technologies. Sherritt Technologies, working with Alberta Innovates – Energy and Environment Solutions and other third-party technology development partners, opened the Clean Coal Technology Centre at Fort Saskatchewan in 2009 for research. In partnership with the Ontario Teachers’ Pension Plan, Sherritt is focusing on its Dodds-Roundhill project to develop a commercial-scale surface coal gasification facility.

TransAlta Corporation is also joint venturing with Capital Power Corporation on Project Pioneer at their new $1.6-billion, 450-megawatt (MW) Keephills 3 coal-fired plant west of Edmonton, where it will retrofit chilled ammonia flue scrubbers and, starting in 2015, transport one megatonne of CO2 annually by pipeline for enhanced oil recovery and permanent sequestration. And then there is the Swan Hills Synfuels project, which is using pre-combustion in-situ coal gasification technology. Proponents say the project will capture and sequester more than 1.3 million tonnes of CO2 each year beginning in 2015. The process was perfected through a successful demonstration plant completed last year. Synthetic gas fires the generation plant and the CO2 is piped off to enhance recovery in nearby oilfields.

The new commercial endeavor, called the Swan Hills In-Situ Coal Gasification/Sagitawah Power Project, will produce 300 MW of electricity. It’s a scaling-up of the demo plant and Swan Hills Synfuels president Doug Shaigec says it has advantages over surface gasification plants. “Our in situ is certainly less costly and it needs less infrastructure,” Shaigec says. “No coal is mined or handled. We don’t have gasifiers on the surface – all we have is cleaning and removing CO2. Mother Nature is doing it all in the coal seam, which for all intents and purposes is already stranded.” He says it also makes capture costs more efficient. “We’ve got that gas under high pressure and high concentration. Those are the ideal conditions for capture.” In post-combustion capture, physical conditions are the opposite: hot gas and very low pressure. “And they bring with them a high penalty in energy costs,” Shaigec adds.

However, for all their promise, it’s unclear right now if these technological developments will be cheap enough and emissions-free enough to meet the federal government’s new standards and maintain coal-fired generation’s cost advantage over other sources – notably natural gas.

Several major natural gas producers, facing low North American prices for the cleanest-burning fossil fuel, are banking on gas as the way of the electricity-producing future. They figure it will be more competitive than clean coal. John Hess, chairman and CEO of gas-rich New York-based Hess Corporation, said at the recent IHS CERA conference in Houston that natural gas power plants have much lower costs and are more efficient than modern-day coal-fired plants. “To build a gas plant generating 1,000 megawatts of power, it is estimated to take two years at an investment cost of $1 billion [US],” he said. “For coal, it would take an estimated three years and $3 billion.”

But coal advocates look farther onto the horizon. Allen Wright, president and CEO of the Calgary-based Coal Association of Canada, makes a pricing point. “The big issue with natural gas is, can you tell me that 20 years down the road, the price of natural gas isn’t going to be $7 or $15?” he says. “That’s the risk you run. When you build a plant, you are building it for the next 40 or 50 years, not just next year.” He expects power-plant coal to remain in the $15-per-tonne range for decades because of its abundance and ready availability. “You don’t have the volatility you do with gas,” he says. Still, CCS remains the wild card in coal’s future. “What will happen as far as carbon capture is concerned? Good question,” Wright says. “Will it be the technology of the day? It will certainly be one of the solutions. Where they’ll end up 30 or 40 years from now I really don’t know.”

Unfortunately for coal, uncertainty about the effectiveness of CCS doesn’t bode well for its future in Canada if the federal government follows through on its emissions standards pledge. “The CO2 management from coal to generate electricity is critical,” says the University of Calgary’s Mahinpey. “There are no sensible ways of using coal that don’t involve emitting carbon, so capture and sequestration are essential if coal is to be used in a near-zero-emissions manner.” Alberta’s current goal is to sequester five megatonnes per year by 2015. But the province currently emits about 139 megatonnes of CO2 annually – most of it coming from coal-fired power plants.

And while there are some potentially game-changing breakthroughs being researched, the vast percentage of produced CO2 will have to be sequestered. Advanced technologies, like New Jersey-based Carbon Sciences’ research into transforming CO2 into a synthesis gas for processing into petroleum products like gasoline, are still in the laboratory stages.

“We still haven’t found a technology that as an organization we would say helps us reduce our emissions in a way that allows our plants to remain economical,” says the Canadian Clean Power Coalition’s David Butler. “We’ve studied oxyfuel technology, we’ve studied post combustion technologies and we have studied gasification technologies. All of them have expensive costs to recover and capture CO2, so at this point we do not have a favorite technology. There are several in the lab, but nothing commercial so far that look promising. In fact, there are no commercial-scale plants anywhere in the world with CCS on a coal plant.”

But research must continue if Canadian – and global – demand for energy increases, as expected. “I don’t think we can substitute it with anything else,” Butler says. “Unless we are prepared to substantially reduce the amount of energy we consume, and I don’t see that happening.” It’s a real wakeup call for ramping up research. “These technologies are not ready for full-scale adoption,” Butler emphasizes. “They are still expensive and risky. We believe that we need to continue to develop both new and existing technologies to bring the cost down. And we will continue to need industry and government support to research options, including CCS.”

Without all of that falling into place, Jim Prentice’s announcement last summer may prove to be coal’s curtain call.

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