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Wednesday, April 16, 2008 02:53 pm

Addicted to coal

The battles being waged here will shape the nation’s energy debate

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All across Illinois — at town-hall meetings, in federal courts, in the Capitol — battles are raging over coal power, the outcome of which could very well determine the role  of the black rock in the nation’s energy future.
Illinois is at the heart of the national debate because in no other state have coal interests pushed for more new investment — with critical support from the state’s governmental leaders. According to the U.S. Department of Energy’s National Electric Technology Laboratory, a year ago Illinois had proposals for more new coal-based electric-power plants — 16 — than any other state, and the plants proposed for Illinois would have the capacity to generate twice as much electricity as even the most ambitious proposals for any other state. According to the report, “Coal’s Resurgence in Electric Power Generation,” which was issued on May 1, 2007, more than 10 percent of all new generating capacity from coal-based power plants would be built in Illinois. With 22 coal-burning power plants already providing 49 percent of Illinois’ electricity, the state was unusually reliant on coal for its energy needs. Keep in mind that in the previous seven years, only 10 coal-based power plants had been constructed in all of the United States.
A year after the Department of Energy’s announcement, the Sierra Club has claimed “victory” against all but five of the previously proposed plants, but those remaining five are among the biggest of the proposed projects and they would add substantially to the state’s capacity to generate electricity and air pollution. “We started our coal campaign in Illinois because more [coal-based power] plants were proposed in Illinois than anywhere else,” says Becki Clayborn, regional representative of the Sierra Club. Nowhere has the battle been sharper than in Franklin County, where EnviroPower LLC wants to build a 600-megawatt CFB (circulating fluidized bed) coal-burning power station near Benton. On Oct. 17, 2006, U.S. District Court Judge Phil Gilbert halted construction on the plant when he agreed with the Sierra Club that EnviroPower was attempting to build the plant under an expired air-pollution permit. Celebrity lawyer Alan Dershowitz later joined EnviroPower’s legal team to appeal Gilbert’s ruling. On Jan. 24, 2007, he lashed out at the Sierra Club: “The Sierra Club’s latest salvo to stop all coal-fired power plants in the Midwest threatens America’s energy independence,” he said, adding that the case was critical to America’s future energy policy.
The U.S. Appeals Court of the 7th Circuit heard oral arguments on the case on Oct. 29, 2007. “We are still waiting for an opinion,” says Stephen Soble, legal counsel for EnviroPower. “The project is teed up and ready to go.”
Proponents and opponents of coal both say the stakes are much higher than just the tens of billions of dollars that could be invested in the Illinois economy: A whole way of life is being called into question. Some industry sources say that environmentalists oppose coal-based electric power because they are trying to cause a severe energy crisis to force consumers to dramatically change the way they live in order to drastically reduce their energy use; some environmentalists deride any process that uses coal, no matter how sophisticated, as 19th-century technology with global-warming pollution that will destroy vital ecosystems.

The Sierra Club so far has found only one coal-based energy project in Illinois it can support: CWLP’s 200-megawatt generating unit (under construction, top right).

THE GOVERNOR AND THE INDUSTRY Environmentalists don’t get a sympathetic hearing at the top levels of Illinois state government, where the current governor is one of the fuel’s top advocates.
Marcelyn Love, a spokeswoman for Gov. Rod Blagojevich’s Department of Commerce and Economic Opportunity, says the governor is very supportive of coal-based energy projects around the state — for economic reasons. “Coal is very important to Illinois’ economy,” Love says, and will be even more so in the future as oil and natural gas prices continue to rise. The governor has suggested that, as other fossil fuels become scarcer, Illinois’ “coal wealth” could rival Saudi Arabia’s oil wealth. Coal is so important to Illinois that in 2002 the state initiated a Coal Revival Program, which provides grants to assist with the development of new, coal-fired electric-power plants in Illinois. In July 2003, Blagojevich signed legislation that expanded the program by offering $300 million in state-backed bonds to help finance the construction of “advanced technology” coal-fueled projects. In June 2005, he signed legislation that expanded the program to include coal-gasification plants or integrated gasification-combined cycle plants. A second piece of legislation that the governor signed that year lets any natural-gas utility enter into a 20-year supply contract with a company that produces synthetic gas from coal if the company has begun construction of a coal-gasification plant by July 1, 2008. On Oct. 12, 2006, he announced $3 million in state grants to help Power Holdings of Illinois LLC develop a plant to produce synthetic gas from coal. To Clayborn, Illinois’ commitment to coal looked more like an addiction than wise energy policy. “We think the trend is very frightening,” she says. Coal-burning power plants, she says, already are the Illinois’ largest source of air pollution, “causing asthma attacks, emphysema, and even deaths.”
According to Environment Illinois, a statewide environmental advocacy organization, the existing 503 coal-fired power plants in the United States are responsible for 25 percent of the smog-forming nitrous oxides put into the air each year, annually triggering 33,000 asthma attacks in Illinois alone; 66 percent of soot-forming sulfur dioxides; 35 percent of the mercury; and 40 percent of climate-changing carbon dioxide.  
Proposed coal-based power plants would spew less sulfur and nitrous oxides into the air than older plants, but would not do much about carbon dioxide, and that, Clayborn says, is a problem. “We are at a crossroads,” she says. “Either we continue adding to global warming problems or we look for alternatives.” That is a big part of why the Sierra Club has two of the remaining coal-based power projects — the Prairie State Energy Campus, in Lively Grove, and the Taylorville Energy Center, in Taylorville — squarely in its sights.
PRAIRIE STATE ENERGY CAMPUS While the Blagojevich administration has backed the Prairie State Energy Campus as “among the cleanest coal plants in America and a model for new generation,” the Sierra Club has derided it as “dirty coal.”
The $2.9 billion campus combines a mine, owned by Peabody Energy, with a 1,600-megawatt supercritical coal-fueled power plant owned by a partnership consisting of American Municipal Power-Ohio, the Illinois Municipal Electric Agency, the Indiana Municipal Power Agency, the Kentucky Municipal Power Agency, the Missouri Joint Municipal Electric Utility Commission, the Northern Illinois Municipal Power Agency,  Prairie Power Inc., the Southern Illinois Power Cooperative, and Lively Grove Energy, a subsidiary of Peabody Energy. The construction project is so huge, and has soaked up so much construction equipment, that construction in St. Louis, 60 miles away, has been slowed by the lack of equipment, according to Darren Jaycox, president of Budrovich Excavating, a major excavation and crane-service company. A supercritical coal-fueled power plant burns coal more efficiently — by using hotter temperatures and higher pressures — and hence at lower cost and with less pollution than a conventional coal-fueled power plant. A spokesman for Prairie State, a St. Louis-based public-relations specialist who insisted that he not be quoted by name, says the new plant, which is expected to start operating in 2011 or 2012, “will be among the cleanest U.S. plants with emission rates that are approximately 80 percent lower than the average U.S. coal plant operating in 2006.” Even the carbon dioxide emission rate, he says, “will be approximately 15 percent lower than that of the typical U.S. coal plant.”
Clayborn counters that even an 80 percent reduction in pollution “doesn’t mean it is the cleanest plant around.” According to Clayborn, the Prairie State Energy Campus will add “25 thousand tons of toxic air pollution” into the atmosphere of Washington County and nearby East St. Louis, thereby endangering the health of “the more than 50,000 asthmatic adults and children” living in the area. In addition, she says, the plant will threaten wildlife and fish in the Kaskaskia River ecosystem and dump 270 additional pounds of mercury into Illinois lakes, streams, and rivers each year. According to the Sierra Club, the Prairie State Energy Campus will put seven times as much sulfur into the air per megawatt of capacity as will a comparison plant that first turns coal into gas and then burns the gas. It would put twice as much mercury into the air as that comparison plant and four-and-a-half times as much carbon monoxide. Comparing Prairie State with an existing natural gas-fired power plant, the Sierra Club says that Prairie State would put almost 400 times more sulfur into the air and 21 times as much carbon monoxide, and adds that a natural gas-fired power plant does not cause mercury pollution. “Prairie State has and will meet all standards under the U.S. Clean Air Act and state regulations,” the Prairie State spokesman says. “Prairie State has prevailed throughout the process in the courts wherever it was challenged,” he adds. On Feb. 27, 2008, Prairie State issued a press release celebrating the expiration of the time limit for the Sierra Club to appeal an appellate court ruling upholding Prairie State’s permits. “Prairie State’s environmental profile has continued to prevail in the courts of law and public opinion,” says Rick A. Bowen, Peabody senior vice president of Btu conversion and strategic planning. “Each environmental review has brought stronger affirmation of Prairie State’s advanced environmental controls.”
Clayborn, however, says the Sierra Club still has some weapons to use it can use in this fight. She points to a U.S. Supreme Court decision last year that ordered the U.S. Environmental Protection Agency to regulate carbon dioxide emissions from smokestacks as a pollutant, and to a federal appeals court ruling in February that said that power-generating plants have to use the “best available technology” to remove mercury from their smokestack emissions.
TAYLORVILLE ENERGY CENTER Ten months ago, Blagojevich hailed the decision to grant Christian County Generation LLC an air construction permit to build the $2.5 billion Taylorville Energy Center. “The Taylorville Energy Center, using cutting-edge clean-coal gasification technology, is a great example of how we can grow our economy and create good-paying jobs while protecting our environment,” he said. Love says the project is central to the governor’s energy goals. The Taylorville Energy Center is planned as a 630-megawatt integrated gas combined cycle (IGCC) power plant. The owner, Christian County Generation, is a joint venture of Nebraska-based Tenaska Corp. and Kentucky-based MDL Holdings.
Bart Ford, the Taylorville Energy Center project manager, says it is a mistake to think of the plant as a coal-burning power plant. “It uses coal, but it does not burn coal,” he says. As Ford describes it, the Taylorville Energy Center should be seen as two plants next door to each other: a chemical plant that manufacturers synthetic gas from coal with negligible emissions and a typical gas-burning combined-cycle power-generating plant, which in this case, happens to burn synthetic gas instead of natural gas. “Burning gas is a whole lot cleaner than burning coal in terms of sulfur, nitrous oxides, and particulate matter, producing only 10 to 20 percent of what a coal plant would emit,” Ford says. The process of making the gas includes both a clean-up process to remove toxins such as mercury, and a process for removing excess carbon to reduce carbon dioxide emissions, he says. “Our emissions will be dramatically better than Prairie State’s,” says Ford, and in terms of removing carbon dioxide, “our technology is commercially available and already in use on chemical plants,” whereas the technology for coal-burning plants “is still in the development stage and is not yet commercially available.”
The Taylorville Energy Center proposal has the backing of the Citizens’ Utility Board, the American Lung Association, and the Illinois Clean Air Task Force, but it hasn’t won over the Sierra Club and some other environmental groups.
IT’S THE CO2 , STUPID “The Taylorville plant does not address CO2 emissions at all,” Clayborn says, belittling Ford’s claims of removing carbon from synthetic gas. “One of our main concerns about adding coal plants without shutting down old ones is that you are just adding to CO2 emissions. If a [proposed] plant does not have a mechanism to deal with the CO2 problem, it should not go forward,” she adds. According to the Sierra Club, perhaps 37 percent of native plants and animals could be extinct within 43 years unless there is significant immediate action is taken to reduce global warming. That’s a concern shared by the National Resources Defense Council. According to Shannon Fisk, staff attorney with the NRDC’s Midwest Office, in Chicago, “The construction of new coal-fired power plants is not good for the environment. We should be facing the future by going to alternatives and improving our energy efficiency. If we are building new coal plants, we must have binding commitments to capturing and sequestering CO2 emissions, the best control of other pollutants, and a serious look at the mining practices of coal.”
The NRDC claims that a recent federal-appeals court ruling in February requiring each new coal-fired power plant in the U.S. to adopt stricter measures to control toxic air pollution to meet the most rigorous standards under the Clean Air Act, coupled with an April 2007 U.S. Supreme Court decision that the U.S. Environmental Protection Agency must regulate carbon dioxide as a pollutant under the Clean Air Act, shakes up the outlook for the EnviroPower, Prairie State, and Taylorville Energy projects by requiring “a new and additional evaluation of pollution limits and control technologies.”
“Climate change is not a joke, and the regulation of emissions from power plants should not be a joke,” says Josh Mogerman, a Midwest spokesman for the NRDC. The Prairie State spokesman dismisses those claims like an athlete dismissing his opponent’s trash talk. “Prairie State has prevailed throughout the process in the courts wherever challenged,” he says. “We will comply with the Clean Air Act, whatever changes are made in it, and with whatever state regulations are in effect.”
On April 2, 2008, the Illinois Attorney General Lisa Madigan and the attorneys general of 16 other states filed a lawsuit to force the EPA to comply with the Supreme Court ruling on regulating carbon dioxide as a pollutant. The Taylorville Energy Center, meanwhile, faces a problem much more daunting than a possible change in EPA regulations.
IT’S THE MONEY “Taylorville can’t be built without financial incentives from the state,” Clayborn says. Comparing the Taylorville plant with the experimental FutureGen plant that the U.S. Department of Energy pulled the plug on earlier this year, Clayborn says, “If FutureGen could not be built with the government paying most of the cost, it is hard to see how a private developer can build one.”
Ford says Clayborn is wrong on both counts. The Taylorville Energy Center is not like FutureGen, he says. The former is a mid-sized commercial baseload power-generating plant; the latter is a small experimental plant designed to test techniques for capturing carbon dioxide and sequestering it — injecting it deep into the ground so it does not pollute the atmosphere. Nor, he says, does Taylorville Energy need any subsidy from the state. What it does need is a change in the way Illinois regulates utilities.
Love, by the way, says the governor believes that the next president of the United States will move forward with the FutureGen project. Industry sources say that the electric-utility deregulation that swept through several states in the 1990s, including Illinois, discourages the development of baseload power-generating plants. Baseload plants operate continuously — 24 hours a day — as distinct from peak  power plants that can be turned on and off to supply power only when demand for it is high. Deregulation divorced utilities from power-generating plants, forcing utilities to pay market rates for electricity from competing power plants and imposing regulations that barred utilities from entering into long-term contracts (more than 36 months) with a power generators (electric cooperatives, however, can still have long-term contracts with the suppliers of their electricity). As long as there was more supply than demand, this worked fine. But what happens when demand is more than supply? That’s what states are beginning to find out. Some states are expecting brownouts and blackouts. In Illinois, where the U.S. EPA predicts that the demand for electricity will climb by 50 percent over the next 20 years, analysts are expecting that consumers will pay sharply higher rates for electricity unless more baseload-generating capacity is built. Ford says that baseload plants are more expensive to build than peak power plants, although they are cheaper to operate. Unless someone is committed to buy the power that is produced 24 hours a day in a baseload plant, then it is too risky financially to build one. The few efforts that have been made to build baseload plants without long-term sales contracts, he says, have gone bust. What Taylorville Energy wants, he says, is a change in Illinois law to let utilities enter into long-term contracts with power generators — akin to the law that lets a natural-gas utility enter into a 20-year contract with a company that makes synthetic gas from coal — so that Taylorville can get the private financing to build the project. Just such a change, called the “Clean Coal Program Law,” passed the Illinois Senate unanimously with the support of Blagojevich, but it has been bottled up in the House. Taylorville Energy’s chief worry, according to industry sources, has to be that anti-coal environmentalists will team up with Enron-style energy speculators to defeat a law that will let utilities stabilize the supply and price of electricity. Ironically, a defeat of the Clean Coal Program Law might inadvertently boost a different kind of coal-gasification technology. Many utilities and energy producers have turned to natural gas to fuel their power plants because of the strenuous opposition to coal-based plants of any sort, and because it is much easier to meet the demands of the Clean Air Act with natural gas, and that increased demand has pushed up the price of gas and raised concerns about future shortages. Even if a company is effectively blocked from making gas from coal and then burning the gas itself to make electricity, it could still make gas from coal and then sell it to gas companies. Two companies plan to do just that. Secure Energy is moving forward with plans to spend $100 million to build a plant to make substitute gas from coal, which it will pipe directly into the natural gas pipeline system. That plant will be built on a site behind the Caterpillar facility in Decatur. Robert Gilpin, chief executive officer of Power Holdings LLC, says his company is within a year of starting construction on a $1 billion plant near Mount Vernon to make pipeline-quality substitute gas from coal.
THE CLUB’S ALTERNATIVE So far, the Sierra Club has found only one coal-based energy project in Illinois that it can support, and that is the 200-megawatt generating unit that City Water, Light & Power is building in Springfield. Clayborn says the Sierra Club supports that project because “CWLP agreed to other things to reduce its CO2 footprint. They agreed to close two older plants when they start up the new one; they agreed to purchase wind power, to educate customers about reducing energy use, and they agreed to clean up three other boilers to reduce their emissions to the lowest rates of other existing boilers.”
With the threat of global warming growing every day, the Sierra Club believes the first plank in Illinois’ energy policy should be conservation. “We believe energy efficiency can reduce the need for electricity by more than 40 percent,” Clayborn says. “In general, we waste a lot of energy. An Illinois residential survey found that the No. 1 cause of wasted electricity is the second refrigerator in the garage.”
Lawrence Chapman, a partner in Clayco Inc., a national commercial real-estate development and construction company with offices in Chicago and St. Louis, says that buildings use 65 percent of all electricity produced in the United States, and that in doing so they account for 30 percent of the country’s greenhouse-gas emissions. He predicts that regulations to cut buildings’ energy use will be part of the standard building code used in cities across the country within 10 years. Douglas Farr, president of Farr Associates, a Chicago-based architecture and urban-planning firm, says a 40 percent reduction in building energy use is feasible. “Over the last 10 years, Farr Associates has designed 12 buildings we call high-performance that reduce their energy consumption by 40 percent or more compared to what the code requires,” he says. “We do this with off-the-shelf technologies,” he adds. “All new buildings and major renovations in Illinois could be designed to achieve this same level of performance and avoid the need for additional coal plants.”

Peter Downs is a St. Louis editor and  a freelance writer .

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