Clean Coal Gets a Boost in Britain

A handful of British companies are on board with pricey technologies—coal gasification and carbon capture—that can greatly cut greenhouse gas emissions

by Barbara Frye

SaskPower, a public utility in Canada's Saskatchewan province, recently spent about $17 million on an engineering feasibility study for a new coal power plant. Equipped with cutting-edge antipollution technology, it would have been the first commercial-scale coal plant to trap more than 95% of the carbon dioxide it produced—a vital advance in the race against global warming.

On paper, the plant looked like a winner. SaskPower aimed to sell the carbon dioxide to nearby oil producers, who planned to inject it into their fields to force out more oil. But by the time the utility had to make a final decision last month on the plant, its estimated cost had more than doubled, from $1.5 billion to $3.8 billion, and it was clear that the project couldn't be done quickly enough to meet rising demand for power.

SaskPower decided instead to build new natural gas turbines, at a cost of $525 million. "When we looked at the numbers, we came to the conclusion that today is not the day for coal," says SaskPower Project Manager Max Ball.

That's a recurring story throughout the utilities business, where companies around the world have struggled for years against the tough economics of clean coal. The use of technologies such as coal gasification and carbon capture can slash greenhouse emissions by more than 90%, but the plants cost anywhere up to 82% more to build than traditional facilities.

Carbon Cleanup

Despite the tough numbers, some companies in Britain are forging ahead anyway on clean coal. Mining company Powerfuel is planning to spend $2.4 billion on a power plant in South Yorkshire that could be the first in the world to use both coal gasification and carbon storage. It hopes to connect the facility to the national power grid in 2011. Utility Centrica (CNA.L) has a similar $2 billion project under way in Northern England that it hopes will come on line in 2013.

It's not a moment too soon. Despite environmental concerns, the use of coal could rise by nearly 75% in the next couple of decades, analysts say, fueled largely by the developing economies of Asia. At the same time, figures the U.S. Energy Information Administration, carbon dioxide emissions from coal could rise by the same 75% between now and 2030, assuming current usage patterns and the use of traditional coal-burning technology.

"Around the world we're going to use massive amounts of coal, and coal-fired power plants must be cleaned up," said J. Mike Farley, a technology policy expert with Britain-based Doosan Babcock Energy, at a recent conference on European clean-coal technology in Berlin. "They can't be substituted for. Renewables and efficiency cannot do it all."

Crack the Wall

A mountain of cash has been dumped on clean-energy producers in the past few years—according to one estimate, some $95 billion in 2007 alone for wind, solar, biofuel and other new power technologies. But of that amount, only 0.2% is going to fund research and development into clean coal, according to figures from London-based investment advisers New Energy Finance.

"Basically anyone who can see an opportunity in clean energy has opened their checkbook or is wiring their money," says Chris Greenwood, executive director of New Energy Finance. Clean coal, though, has suffered from a "regulatory and subsidy wall" holding back investment. Once the wall is cracked, Greenwood says, "money will start to find its way toward clean-coal technology."

It seems an obvious target, given how widely coal is used around the world. And after all, there are already known ways to slash coal's carbon emissions.