Plentiful and cheap: Advantages of using coal

Dan Denning - Wed 07 Jun, 2006

...Advantages of using coal...what if coal were cleaner? It would still be plentiful, of course. But it probably wouldn't be as cheap. That's the reason I like coal...

- Coal is plentiful...Coal is cheap...Coal is dirty.
Select the one attribute that doesn't fit the world's
energy preferences today.

- If you selected "coal is dirty," you chose correct! No
prizes just yet. But what if coal were cleaner? It would
still be plentiful, of course. But it probably wouldn't
be as cheap. That's the reason I like coal. A new
generation of "clean-coal" technologies could increase
demand for this filthy fossil fuel, thereby causing its
price to rise...perhaps dramatically.

- No country stands to benefit more from clean-coal
technologies than the United States. Americans have got
a 250-year supply of the stuff. Surely, they will figure
out an effective – and clean – way to use it. The
world's largest economy, and its most wasteful energy
user, simply must.

Advantages of using coal: The energy consumer

- "Throughout the 20th century, the United States has
been a profligate energy consumer," a couple of US Army
researchers assert. "The rapid and expansive growth of
the economy was based on cheap and abundant energy.
Little thought and planning has been given to how to
transition to the realities of the 21st century, when
petroleum and natural gas resources will become
depleted. The US economy uses 50% more energy per unit
of GDP than the other developed nations of the world
(EIA 2004). The fossil fuel-based, automobile-centred,
throwaway economy is not a viable model for the United
States or the rest of the world over the long term. It
is not sustainable."

- I agree. As the price of crude oil trudges inexorably
higher, the world's energy-intensive economy – and most
especially the US - will seek viable alternatives.
Renewable sources like wind, hydro and bio-fuel will
certainly play a role. But one of the most viable
alternatives is not really "alternative" at all...it is
coal.

- New technologies have created new opportunities for
this plentiful but scorned fossil fuel. The governor of
Montana, Brian Schweitzer, has made the creation of
coal-gasification and liquefaction plants a veritable
mission. He is convinced that creating liquid fuels from
coal is the answer to America's energy dependence
problem and that "cleaning it" through gasification (the
removal of harmful ingredients) will help solve coal's
obvious environmental problems.

Advantages of using coal: India and China

- India has also made coal gasification and liquefaction
projects high priorities in its national energy
strategy. When George Bush signed a deal with India to
help it develop the energy its economy needs to grow, it
made front-page news. What didn't make the front page
was that a Coal Working Group was formed between the two
counties. It's co-developing technologies to exploit
coal-bed methane, coal gasification and liquefaction,
and other clean-coal-related technologies.

- And what would an analysis of global energy trends be
without asking what China is up to? China's government
is hard at work with research institutions to develop
proprietary technology for coal liquefaction and
gasification. China would also like — and desperately
needs — to cut coal emissions. It has, in fact, made a
zero-emissions coal-fired power plant one of its goals.

- Whether China, or any country for that matter, can
finally clean up coal is open to debate. What I like
about the whole issue, though, is that it's one of the
few industries I see out there in which technology
actually can lead to cleaner, more efficient, use of
abundant hydrocarbons. I'm not talking wind or solar
here. I'm talking about the more efficient and cleaner
use of an abundant energy resource.

Advantages of using coal: The US

- State-side, Montana has been grabbing all the coal-
related headlines. But Wyoming produces over 35% of the
US nation's coal. Its output is of the bituminous
variety. That is, it is not as dense as the anthracite
coal of eastern Pennsylvania. It has fewer Btu per ton
[British thermal units, a measure of potential heat
energy]. But because it has fewer Btu, it means it also
has less sulphur.

- That makes Wyoming's cheap and abundant coal some of
the cleanest burning coal in the country. And for a
country that's about to embark on a second love affair
with the industrial prowess of coal, cleaner-burning
coal will be very popular.

- General Electric, for one, is acutely quite interested
in Wyoming and the 400 million tons of coal the state
exports each year. Why? GE owns the patent on a coal-
gasification technique that's used in over 60 coal-
gasification plants worldwide. That process removes
usable gas from coal without the harmful emissions. The
gas can then be used to generate power. The whole
process is called the "integrated gasification combined
cycle" - or IGCC for short. It's the Holy Grail of the
coal industry.

- Get cleaner gas from the rock using a special process,
then use that cleaner gas to generate power for man, the
economy, and the state.

- Coal isn't king again just yet. But it might be soon,
especially with crude oil creeping higher from $70 per
barrel...


Regards,

Dan Denning
for The Daily Reckoning