Clean Coal Technology
by Gavin Donohue, President & CEO, The Independent Power Producers of New York, Inc.

Much attention has been given lately to President Bush’s comments in his State of the Union address regarding renewable energy. In addition to renewables, here in New York Governor Pataki and independent power producers have consistently pushed for advances that will make New York more energy-independent and environmentally-friendly. “Clean coal” power generation is an exciting new initiative that the Governor referenced in his State of the State address and, considering its wide range of environmental, reliability and economic development benefits, environmental groups and local governments should embrace this energy source.

The Governor’s Office of Regulatory Reform (GORR), the New York Power Authority (NYPA), the New York Energy Research and Development Authority (NYSERDA) and the Department of Environmental Conservation (DEC) have been tasked to work together to identify “shovel ready” sites for the potential development of one or more advanced “clean coal” generating facilities by private sector power developers. Under this initiative, not only will GORR help identify sites and conduct feasibility and initial environmental reviews, but NYPA is slated to also establish a Clean Coal Initiative Fund of $10 million per year over five years. As further incentive to developers, NYPA will also enter into power purchase agreements with the selected participants.

Such support from New York’s public sector can serve as a driving force for the energy industry to develop advanced coal facilities that are economically and environmentally efficient. Additional research and development can lead further enhancements to existing state-of-the-art technologies. Also, a shift towards state-of-the-art technologies will require new construction, and that means more jobs and an expanded tax base for the upstate economy.

Congress recently recognized the benefits of clean coal technology when it enacted, as part of the Energy Policy Act of 2005, provisions that provide more than $3 billion in grants, loans and tax credits to developers of clean coal technologies. Governor Pataki has proposed $50 million in incentives to companies willing to research and develop new technologies that will reduce carbon dioxide emissions.

Coal must remain a critical part of New York’s diverse energy supply. Coal has been and likely will continue to be one of the least costly fuels used to generate electricity. Unlike known world reserves of gas and oil that are measured in decades, known world coal reserves are measured in centuries, which makes coal the most price-stable fuel for power generation. More importantly, greater reliance on domestic coal will decrease dependence on foreign sources of fuel. The United States has 25 percent of the world’s 1,083 billion short tons of proven recoverable coal reserves. This quantity of coal is enough to last the United States for over 200 years at current consumption levels.

Electricity customers also benefit when diverse state-of-the-art technologies are introduced into the energy market. As witnessed with the recent increase in natural gas and oil prices, an over-dependence on a small number of fuel sources can lead to volatility in electricity prices. Optimizing existing fuel sources creates more price stability and electricity reliability across New York. Further, per recent NYISO reports about system reliability, the time is right to bring new clean coal facilities online into the energy marketplace to avoid capacity shortfalls in the future.

“Clean coal” generation is one of many ways that the energy industry is pushing forward with ideas that benefit the environment, consumers, and the country. Energy conservation programs, improvements to infrastructure, and continued fuel diversification are all essential elements of a sound long-term energy policy. Clean Coal technologies are one critical part of that diversified long term energy picture.

by Gavin Donohue, President & CEO, The Independent Power Producers of New York, Inc.

3/23/06