State Incentives for Development of Clean Coal Facilities

1
State Incentives for Development of Clean Coal
Facilities

• Karen R. Obenshain, Sc.D.
• National Association of
• Regulatory Utility Commissioners
• Staff Subcommittee on Accounting and Finance
• April 23, 2007

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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

3
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

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What are Clean Coal Technologies?

• Combustion Pulverized Coal (PC)
• Supercritical
• Ultra-supercritical
• Circulating fluidized bed
• Gasification
• Integrated Gasification Combined Cycle

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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

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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

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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

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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.

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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)

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Non-technology Challenges

• Financing
• Cost recovery
• Environmental groups opposition
• State regulators opposition
• Labor and material shortages
• Permitting and siting

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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, WY
• Considering action KY, MS, NM, VA, WV

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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

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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 CPUCc
  certificate of public convenience and necessity
  full cost recovery from customers recovery of
  additional costs waiver of CPUC rules on
  requiring competitive resource acquisition

14
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.

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Illinois

• Coal Revival Program
• High Impact Business Program Property Tax
  Abatement
• Long-Term Contracting
• Illinois DCEO Coal Grant Programs

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Indiana

• Tax credits for IGCC facilities 10 of the
  first 500 M plus 5 of any investment lt 500 M
• Financial incentives for clean coal and energy
  projects generation, transmission, renewables

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Kansas

• Tax credits for the development of new coal
  gasification facilities

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Kentucky

• Tax credits for clean coal facilities - 2 per
  ton KY coal
• Does not specify technology type

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Minnesota

• Provided an annual grant of 2 million for 5
  years to the Mesaba Energy IGCC plant
• No incentives for other clean coal plants

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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)

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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
  states 5 sales and use tax

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Ohio

• Ohio Coal Development Office (OCDO) awards
  funds to coal RD for use of high-sulfur Ohio
  coal
• Incentives grants, loans, and loan guarantees

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Oklahoma

• Offers coal-fired electric generation facilities
  a tax credit of 5 per ton of Oklahoma-mined coal

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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

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Rhode Island

• Law directs states 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

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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. 

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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

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West Virginia

• The West Virginia PSC has the authority to
  authorize rate-making allowances for electric
  utility investment in clean coal technologies

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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

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Questions?

• Karen R. Obenshain
• [phone]
• obenshain_at_eei.org