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State Incentives for Development of Clean Coal
Facilities
Karen R. Obenshain, Sc.D.National Association of
Regulatory Utility Commissioners:Staff Subcommittee on Accounting and
FinanceApril 23, 2007
Fuel Diversity and Innovative Technologies are Critical
Meet future energy demand Provide affordable, reliable energy Establish energy security Generate energy efficiently with minimal
environmental impact
Why Coal?
Accounted for 50 percent of all electricity generated in the United States
Sufficient domestic reserves for at least 150 years
Innovative technology development has made ‘clean coal’ power a reality
Future issues: CO2 emissions
What are Clean Coal Technologies?
Combustion – Pulverized Coal (PC)– Supercritical– Ultra-supercritical– Circulating fluidized bed
Gasification– Integrated Gasification Combined Cycle
DOE-NETL Database
159 new coal-fired power plants* ~45% propose to use advanced technologies:
– 22 circulating fluidized bed units– 14 supercritical units– 4 ultra-supercritical units– 32 IGCC
*DOE-NETL 1/24/2007
Supercritical
New ‘crop’ using steam at temperatures of 600 to 605 C (1110 – 1120 F) and sliding pressure operation
In some cases, the reheater steam temperatures are as high as 1135 F
Current bids to suppliers requesting steam temperature capabilities between 1100 – 1115 F
Ultra-supercritical
DOE USC defined: 1400 F and 5500 psig EU USC (Thermie) defined: 1292 F and 4500
psig Need to move to nickel-based materials due to
high temperatures and pressures
Circulating Fluidized Bed
Coal is burned on upward-blowing jets of air during combustion at such a velocity that the gases and solids produce a “bubbling” mixture.
The fluidizing action promotes complete coal combustion at relatively low temperatures, and provides a means to transfer combustion heat efficiently from the bed to the steam tubes.
This technology eliminates the need for external pollution controls, such as scrubbers (a scrubber is a device that uses a liquid spray to remove aerosol and gaseous pollutants from the air stream).
Largest existing CFB is around 500 MW.
IGCC Gasification is the best way to use a gas turbine with a
coal feedstock Gas turbine combined with a steam turbine = high
efficiency and reduced emissions Reduces all criteria pollutants as well as mercury Lends itself better to CO2 capture and sequestration
technology development than pulverized coal Currently works best with high quality coals (anthracite
and bituminous)
Non-technology Challenges
– Financing– Cost recovery– Environmental groups opposition– State regulators opposition– Labor and material shortages– Permitting and siting
State Incentives for Clean Coal
States with incentives for Clean Coal Technologies: AK, CO, ID, IL, IN, KY, MN, NY, ND, OH, OK, PA, RI, TX, VA, WV, WY
States with specific incentives for IGCC:CO, IL, IN, KS, MN, OH, PA, TX, WYConsidering action: KY, MS, NM, VA, WV
Alaska
Alaska Industrial Development and Export Authority (AIDEA)
Provides bond financing to a “plant or facility demonstrating technological advances of new methods and procedures and prototype, commercial applications for the exploration, development, production, transportation, conversion and use of energy resources.”
Projects must be able to demonstrate that they will be able to produce adequate revenues to repay the bonds
Colorado Incentives for construction of IGCC Must use CO or other western coal Must demonstrate carbon capture and sequestration for
a portion of the CO2 emissions May not exceed 350 MW without a finding from CPUC Incentives include: waivers of CPUC’c certificate of
public convenience and necessity; full cost recovery from customers; recovery of additional costs; waiver of CPUC rules on requiring competitive resource acquisition
Idaho
Idaho has adopted a moratorium on the construction of new coal fired power plants effective until April 2008. However, this moratorium does NOT apply to IGCC facilities.
Illinois
Coal Revival Program
High Impact Business Program Property Tax Abatement
Long-Term Contracting
Illinois DCEO Coal Grant Programs
Indiana
Tax credits for IGCC facilities – 10% of the first $500 M plus 5% of any investment < $500 M
Financial incentives for clean coal and energy projects – generation, transmission, renewables
Kentucky
Tax credits for clean coal facilities - $2 per ton KY coal
Does not specify technology type
Minnesota
Provided an annual grant of $2 million for 5 years to the Mesaba Energy IGCC plant
No incentives for other clean coal plants
New York
Advanced Clean Coal Power Plant Initiative (ACCPPI) – goal is to build one or more clean coal power plants within NY– New York Power Authority (NYPA) will agree to purchase
power– NYPA may become a minority share partner– NYPA will establish a Clean Coal Initiative ($50 M) to
implement carbon sequestration technology when it becomes available
– Tax exempt bonding up to $200 M per year (cap: $1 B)
North Dakota
20% of funds in coal development impact trust fund may be appropriated to clean coal demonstration projects
New plants are eligible for a tax deduction = 1% of total wages and salaries paid in the state for the first three years; ½% for the fourth and fifth years
Investments in new power plant exempted from state’s 5% sales and use tax
Ohio
Ohio Coal Development Office (OCDO) – awards funds to coal R&D for use of high-sulfur Ohio coal
Incentives – grants, loans, and loan guarantees
Oklahoma
Offers coal-fired electric generation facilities a tax credit of $5 per ton of Oklahoma-mined coal
Pennsylvania
Energy Deployment for a Growing Economy (EDGE) – offers incentives for IGCC technology
A one-time option of allowing older facilities to continue using coal without updated air pollution controls if the utility agrees to replace the plant with an IGCC facility by 2013
Rhode Island
Law directs state’s energy facilities siting board to give priority to projects based on eight criteria, once of which is the use of coal processed by “clean coal technology”
“Clean coal technology” is defined as a technology developed in the DOE clean coal technology program and shown to produce emissions levels substantiailly equal to those of natural gas fired power plants
Texas
$22 million in grant funds for clean coal and gasification projects Funded the site screening process for possible FutureGen plants
and allows expedited permitting for projects that are related to the construction of a FutureGen component
Under the Water Code, the state assumes liability of CO2 captured and stored from a clean coal project. Clean coal project is defined as “…the construction of electric generating, steam production, or industrial production facilities, the modification of existing facilities, or other projects that install technology, including gasification, designed to utilize coal while reducing emissions of air contaminants.”
Virginia
Permit application priority for “clean coal project”
“Clean coal project” is any project that uses any technology, including technologies applied at the precombustion, combustion or postcombustion stage, at a new or existing facility that will achieve significant reductions in air emissions of CO2 or NOx associated with the utilization of coal in the generation of electricity, process steam or industrial products, which is not in widespread use
West Virginia
The West Virginia PSC has the authority to authorize rate-making allowances for electric utility investment in clean coal technologies
Wyoming
Legislation creating a sales and use tax exemption for new goal gasification or coal liquefaction facilities and the equipment used to construct a new facility or make it operational