1
Introduction

Ensuring a stable energy supply for the nation has been a high-priority issue for the U.S. government since the oil embargo of 1973-1974. In the past 30+ years, the nation has experienced energy price controls and decontrols, deregulation of natural gas and electricity, at least three oil price spikes, and one oil price crash. During this time, national energy policy has been created and modified through numerous acts of Congress and executive orders. These policies included the reorganization and consolidation of energy research and development (R&D) activities with the formation of the Energy Research and Development Administration (ERDA), later incorporated into the U.S. Department of Energy (DOE); the dissolution of the U.S. Department of the Interior’s Bureau of Mines; and the creation of the U.S. Nuclear Regulatory Commission. Throughout this time, as coal production and use have doubled in response to increased demand for electrical power generation, coal prices have been considerably less volatile than those of other fossil fuels (Box 1.1 and Figure 1.1). Mine safety has been consistently improved; environmental control technologies have reduced emissions of NOx, SO2, and particulates from coal-fueled power plants; and the effort to remove abandoned mine land hazards and scars, a vast legacy from earlier coal mining activities, is under way.

Now the nation’s policy makers face critical questions. Will coal use continue to increase over the next 25 years, perhaps with increased synfuels production from coal, or will coal use grow at a slower rate—or even decline—if mandatory carbon dioxide emission controls are imposed? Coal technology research, development, demonstration, and deployment policies need to be designed to accommodate a broad range of possible future scenarios. Addressing this significant



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Coal Research and Development: to Support National Energy Policy 1 Introduction Ensuring a stable energy supply for the nation has been a high-priority issue for the U.S. government since the oil embargo of 1973-1974. In the past 30+ years, the nation has experienced energy price controls and decontrols, deregulation of natural gas and electricity, at least three oil price spikes, and one oil price crash. During this time, national energy policy has been created and modified through numerous acts of Congress and executive orders. These policies included the reorganization and consolidation of energy research and development (R&D) activities with the formation of the Energy Research and Development Administration (ERDA), later incorporated into the U.S. Department of Energy (DOE); the dissolution of the U.S. Department of the Interior’s Bureau of Mines; and the creation of the U.S. Nuclear Regulatory Commission. Throughout this time, as coal production and use have doubled in response to increased demand for electrical power generation, coal prices have been considerably less volatile than those of other fossil fuels (Box 1.1 and Figure 1.1). Mine safety has been consistently improved; environmental control technologies have reduced emissions of NOx, SO2, and particulates from coal-fueled power plants; and the effort to remove abandoned mine land hazards and scars, a vast legacy from earlier coal mining activities, is under way. Now the nation’s policy makers face critical questions. Will coal use continue to increase over the next 25 years, perhaps with increased synfuels production from coal, or will coal use grow at a slower rate—or even decline—if mandatory carbon dioxide emission controls are imposed? Coal technology research, development, demonstration, and deployment policies need to be designed to accommodate a broad range of possible future scenarios. Addressing this significant

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Coal Research and Development: to Support National Energy Policy BOX 1.1 Coal Price Trends In contrast to price trends for natural gas and oil, which are broadly similar for the period 1949-2005, the price of coal has been much less volatile and has followed a different trajectory (Figure 1.1). A period of decreased coal mine productivity in the mid-1970s, in response to a more constrained regulatory environment, was followed by a long period of decreasing prices resulting from a two- to three-fold increase in productivity. This dramatic productivity increase was largely due to an upsurge in production from large surface mines in the West as well as the consolidation of small mines and the adoption of longwall mining in underground mines in the East. On a constant-dollar basis, the price of coal in 2005 was less than half the price of coal in 1975. On a heating-value basis, oil and gas were several times more expensive than coal in 2005, giving coal a significant price advantage over the competing fossil fuels for use in generating electricity. FIGURE 1.1 Fossil fuel production prices for 1949-2005. ‘Chained Dollars’ are calculated to express real prices relative to a particular reference year (2000 in this case), based on the purchasing power of goods and services in successive pairs of years. SOURCE: EIA (2006a).

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Coal Research and Development: to Support National Energy Policy challenge was a primary objective of this study—the common thread throughout the committee’s deliberations. COAL IN THE U.S. ENERGY ECONOMY Different coals have different heating values (energy per unit mass). Therefore, the amount of coal in the overall U.S. energy economy should be considered in terms of both its mass (commonly expressed in tons) and its energy content (commonly expressed in British thermal units, abbreviated as Btu1). Annual U.S. coal production has roughly doubled over the past 50 years, and now exceeds 1 billion tons per year (Figure 1.2) (EIA, 2006a). Since the mid-1980s, the proportion of coal in the total U.S. energy mix has remained broadly constant and supplied approximately 23 percent of the 101 quadrillion (1015) Btu of total energy consumed in 2005 (Figures 1.3 and 1.4). On a tonnage basis, production from large surface mines that are located mostly in the western states (Figures 1.5 and 1.6) has grown rapidly since 1970, while production from underground coal mines, located largely in the interior eastern part of the country, has remained approximately constant (Figure 1.6). Just four states—Wyoming, West Virginia, Kentucky, and Pennsylvania—produce 65 percent of the coal mined in the United States on a tonnage basis. Wyoming supplies almost two and a half times as much coal on a tonnage basis (or about 1.6 times as much on an energy basis) as West Virginia, the next largest coal producer. Historically, most coal produced in the United States has been consumed in the United States (EIA, 2006c). In 2005, 1.128 billion tons of coal were consumed and 1.133 billons tons were produced. That year, the United States imported 30.5 million tons of coal, mostly from Colombia, and exported 49.9 million tons, with about a third going to Europe and a third going to Canada (EIA, 2006c). Metallurgical coal made up more than half of coal exports (28.7 million tons), primarily to Europe but with lesser amounts going to Canada, Brazil, and Asia (Freme, 2006). Coal use for electric power generation has risen dramatically in the last half century (Figure 1.7) with most U.S. coal that is produced at present consumed by the electric power sector. That sector alone consumed 1 billion tons of coal in 2005, or 92 percent of all coal produced in the United States that year (EIA, 2006a). Today, coal supplies the energy to produce more than half of the electricity generated in this country, making it a vital part of the U.S. energy economy. 1 Although the standard measure of energy content used by the coal industry in the United States is the Btu, other countries use the International System of Units (metric) measurement system. Unit conversion factors and energy ratings are listed in Appendix G.

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Coal Research and Development: to Support National Energy Policy FIGURE 1.2 Total domestic coal production, showing the consistent upward trend since the early 1960s. SOURCE: EIA (2006a). FIGURE 1.3 Total domestic energy consumption by major source, 1949-2005. SOURCE: EIA (2006a).

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Coal Research and Development: to Support National Energy Policy FIGURE 1.4 Coal use as a percentage of total domestic energy consumption, showing that the proportion of coal in the total U.S. energy mix has remained broadly constant since the mid-1980s. SOURCE: Based on data in EIA (2005d). FIGURE 1.5 Major coal-producing regions in the United States. SOURCE: Modified after EIA (2006b).

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Coal Research and Development: to Support National Energy Policy FIGURE 1.6 Domestic coal production since 1950 from surface and underground coal mines, illustrating the dramatic expansion of surface mining (concentrated primarily in the western states). SOURCE: EIA (2006a). FIGURE 1.7 Historical trends in U.S. coal use by sector, showing the continued and steep rise in coal use for electric power generation as other uses have declined. SOURCE: EIA (2006a).

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Coal Research and Development: to Support National Energy Policy COMMITTEE CHARGE AND SCOPE OF THIS STUDY For this report, a broad interpretation of coal R&D has been adopted to include activities that are variously described by different agencies as pure research, applied science, pilot-scale testing, technical support, demonstration projects, and applied engineering projects. Collectively, these research-related activities support the coal component of the federal government’s energy portfolio. The range of agencies and the diversity of federally funded programs raise a number of questions: What is the total federal R&D funding across the coal life cycle? Have R&D products been successfully integrated into the coal industry? Does coal R&D require particular coordination? In the 2005 Consolidated Appropriations Act (P.L. 108-447), Congress directed the Office of Surface Mining Reclamation and Enforcement (OSM) to contract with the National Research Council to conduct a study on coal research, technology, and resource assessments. The committee’s task (Box 1.2) was to broadly examine coal R&D, recognizing that it is an essential component of an appropriate, integrated roadmap for our nation’s future energy needs. The analysis would allow policy makers to gauge the success of past research activities, gain a clearer understanding of the research being undertaken throughout the entire coal cycle, and provide updated and expanded information to better prioritize investment and policy needs within the coal sector. By also examining critical gaps in research and technology, and the potential impacts of key policy developments, this study was intended to offer a more complete picture of the role of coal in the U.S. energy mix, and provide the basis for more informed development of a national energy strategy. To respond to the charge from Congress, the National Research Council established a committee comprising 13 experts with wide-ranging academic, industry, and state government expertise. Committee biographical information is presented in Appendix A. This report is designed for a wide range of audiences. It provides analysis and advice for the U.S. Congress and relevant federal agencies. It is also designed to provide accessible information to other federal agencies, state policy makers, the coal industry, and the general public. COMMITTEE PROCESS The committee held seven meetings between January 2006 and February 2007, convening three times in Washington, D.C., and once each in Pittsburgh, Pennsylvania; Spearfish, South Dakota; Boulder, Colorado; and Irvine, California. The committee visited an underground coal mine near Pittsburgh, Pennsylvania, and a surface coal mine in the Powder River Basin near Gillette, Wyoming.

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Coal Research and Development: to Support National Energy Policy BOX 1.2 Statement of Task The study will broadly examine coal resource assessments, technologies, and research and development (R&D) activities in the United States in order to formulate an appropriate, integrated roadmap of future needs. The results of the review should help define and construct a national strategy for coal R&D and resource assessments. The study shall consider the following issues: Summarize recent projections of the coal use as part of the U.S. and global energy portfolios over the next 25 years, including projections that take into account the potential roles of coal in future integrated energy and environmental policies, in order to set the context for development of a more comprehensive, strategic roadmap for coal R&D and resource assessments. Describe the full range of local, regional, national, and global issues and challenges, including environmental issues, that must be taken into account when considering future production and utilization of coal. Review the coal reserve assessments based on recent trends in the coal sector and examine the current and future role of coal imports and exports. Assess the categories of coal R&D currently being carried out in the United States and internationally, and investigate whether and how technology developments in other fields can be applied to the coal sector. Review how technologies are being transferred to coal mine operators and other users, recognizing differences among companies. Determine the priority coal R&D needs, including in the areas of exploration, discovery, reserve assessment (including in terms of commercial feasibility for known reserves), extraction, coal preparation, delivery to market, waste disposal, reclamation, health and safety, community impact, environmental practices, education and training, and productivity. Evaluate the need for a broad-based, coordinated, multi-agency coal research and development program. Review current coal-related research, examine what agencies are conducting it, and determine how much funding is currently being spent throughout the coal life cycle. Examine options for supporting and implementing a broad-based coal R&D program, including approximate costs, and the relative roles and commitments of the public and private sectors now and into the future. Six of the meetings included information-gathering sessions open to the public. These open sessions included presentations by, and discussions with, representatives from the offices of U.S. Senators Arlen Specter and Robert C. Byrd, and relevant federal government agencies—the U.S. Air Force for the Department of Defense, Office of Advanced Systems and Concepts; the Energy Information Administration (EIA) and National Energy Technology Laboratory (NETL) in the Department of Energy (DOE); the Office of Surface Mining Reclamation

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Coal Research and Development: to Support National Energy Policy and Enforcement (OSM), U.S. Geological Survey (USGS), and Bureau of Land Management (BLM) in the Department of the Interior; the National Institute for Occupational Safety and Health (NIOSH) in the Department of Health and Human Services; the Mine Safety and Health Administration (MSHA) in the Department of Labor; and the U.S. Environmental Protection Agency (EPA). The committee also received briefings by representatives from the International Energy Agency (IEA), industry associations, state organizations, environmental organizations, academic researchers, and labor and industry—these individuals, with their affiliations and presentation titles, are listed in Appendix B. To respond to the statement of task, the committee relied on relevant technical documents, written materials provided to the committee, presentations made to the committee, pertinent National Academies’ reports, the committee’s observations during mine visits, and the collective expertise of committee members. Early in the process, the committee queried the all-encompassing nature of the statement of task, which might be interpreted as an invitation to undertake a highly detailed study resulting in a lengthy and comprehensive report covering all aspects of coal production and use. In response, representatives from the offices of Senators Byrd and Specter emphasized to the committee that the advice sought by the congressional mandate was to be broad in scope and insightful, but with limited detail and abundant references to existing more comprehensive studies that address specific topics. Moreover, they indicated that R&D aspects of coal utilization technologies have already been assessed by a range of National Research Council reviews and requested that this study focus primarily on R&D related to all other (“upstream”) aspects of the coal fuel cycle. For this reason, the current report presents only a brief overview of coal utilization technologies and related R&D programs. While the committee identifies and highlights a number of critical issues related to coal utilization—in particular, the impact on coal use of government policies regarding climate change and greenhouse gas emissions—it does not evaluate or consider in detail the related R&D programs such as research on carbon capture and sequestration technologies. Rather, in accord with the congressional guidance, coal utilization R&D activities are summarized briefly with references provided to other ongoing programs and assessments. REPORT ORGANIZATION—THE COAL FUEL CYCLE The committee used the coal “fuel cycle” as an organizing framework to address the broad scope of the work statement. The fuel cycle is illustrated schematically in Figure 1.8, which depicts the approximate mass flows of coal from reserve assessment, through mining and processing, to end use. Although the energy content per unit of mass varies depending on coal type, the flow of energy embodied in the coal is approximately proportional to the mass flow. Each stage of the fuel cycle also has associated environmental impacts, in the form of land use requirements and additional flows of wastes or residuals

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Coal Research and Development: to Support National Energy Policy FIGURE 1.8 Schematic showing the coal fuel cycle in United States, illustrating the flow paths and relative quantities of coal as it moves from reserves through the various operations—mining to processing (if applicable) to transport to utilization. The thickness of flow arrows reflects tonnages moved in 2005; similarly, the heights of the reserve and operations boxes reflect tonnage estimates for 2005 (Gt—gigatons; Mt—megatons); note the differing scales for reserves, operations, and flows. The ultimate stage, the distribution of products from the utilization stage, is not depicted. The processing losses box is dashed to reflect the great variability among preparation plants and the difficulty of quantifying losses. SOURCES: concepts and data from Fiscor (2005), NCC (2006), EIA (2006d); Gene Berry (Lawrence Livermore National Laboratory, personal communication, 2006). emitted to air, land, and water. While the quantities of coal in Figure 1.8 represent the situation in 2005, the future picture could be quite different. For example, some scenarios described in Chapter 2 indicate a potential for substantial growth in the production of coal-derived liquid and gaseous fuel, requiring a transport infrastructure for distributing such products via pipelines. Chapter 2 first considers the outlook for U.S. and world coal production and use to set the context for this report. The R&D activities associated with each stage in the coal fuel cycle are then discussed more fully in subsequent chapters: The first stage of the coal fuel cycle is geological exploration to establish the resource base of coal reserves. Although current estimates of minable coal

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Coal Research and Development: to Support National Energy Policy reserves amount to several hundred years of supply at today’s rate of extraction, questions remain regarding the characterization and quantification of coal reserves as well as future rates of coal utilization. Chapter 3 describes coal resource and reserve assessments and addresses issues and concerns associated with these assessments. The second stage of the coal fuel cycle is the mining and subsequent processing of coal from underground and surface mines, described in Chapter 4. Coal processing can include a variety of steps—crushing, screening, and wet or dry separations—to reduce the mineral matter (ash) content of coal prior to transport and use. Much western coal is surface mined from very thick (greater than 50 feet) seams of relatively clean coal and shipped after simple crushing and screening, whereas eastern coal—generally mined from thinner seams (less than 10 feet thick)—is characteristically cleaned prior to shipment. The third stage of the fuel cycle is the transport of raw or processed coal, described in Chapter 5. Approximately two-thirds of coal production is moved by rail, with trucks, inland waterways, and multimodal transport accounting for the remaining third. One reason for the large market share for rail was the rapid growth in the 1990s of coal production from the Powder River Basin. More than 90 percent of this coal is transported by rail outside the state of origin, with more than 50 percent going to power plants east of the Mississippi River and to Texas. The chapter also includes a brief description of the distribution of coal-derived products to end users, dominated by the electric power transmission system, and discusses the potential future transport of CO2 captured in coal-fired power plants. The fourth stage of the fuel cycle is the conversion of coal to other energy forms, described in Chapter 6. This stage is dominated by the combustion of coal for electric power generation, which accounted for 92 percent of U.S. coal use in 2005. Other major uses of coal are by the industrial sector for the production of coke (used in steel and other metals production processes) and as a boiler fuel to supply process heat and power. As well as a brief analysis of R&D issues associated with coal utilization, Chapter 6 also discusses environmental concerns associated with coal-fired power plants. Chapter 7 summarizes future projections for coal production and use, notes two important societal issues—community impacts and workforce demographics—that cut across the coal fuel cycle, and presents an outline of current federal support for coal-related R&D. Chapter 7 also summarizes the findings and repeats the recommendations from earlier chapters for additional funding support of upstream R&D activities, and concludes with suggestions for improved coordination of R&D activities among federal agencies, coal-producing states, and the coal industry. As part of its analysis of existing and past coal-related R&D programs and their outputs, the committee used its collective knowledge to provide broad, but necessarily approximate, estimates of the funding levels that will be required to achieve the outcomes described in each recommendation.