pend on the degree of industrialization and urbanization. Urbanization is accompanied by environmental problems so acute that even developing countries strained for capital resources cannot ignore them. In Turkey, for example, which is seeing a massive population shift from rural to urban areas, in major cities there is a shift from indigenous coal to imported natural gas as a home heating fuel, and scrubbers for sulfur dioxide removal are being retrofitted on power plants that use high-sulfur, usually low-rank, local coal. In China coal gasification is being used to ameliorate some critical instances of pollution (Coal and Synfuels Technology, 1993). The motivation to reduce coal-related pollution may be domestically driven or may be a response to environmental requirements imposed by aid donors and international financial institutions. The World Bank now considers environmental impacts as a primary factor in evaluating proposed projects (DOE, 1993b).

Other major factors affecting coal technology markets will be the balance between the costs of mining and transporting coal and the higher capital costs of cleaner, more efficient plants. Where coal is abundant, mining and transportation costs are low, and environmental requirements are minimal, there will be little driving force to use the more expensive technologies. Such circumstances generally hold now in China. As environmental constraints develop or fuel prices increase, there will be incentives to use more efficient and cleaner technologies. Indeed, China, with its abundant coal reserves, rapidly industrializing economy, and large population, is undoubtedly the largest potential market for U.S. clean coal technology over the long-term. For the near-term, however, new power plants in China will most likely use well-demonstrated technology and cheap Chinese coal to produce low-cost power.

Domestic markets for coal utilization technologies are discussed in the remaining sections of this chapter, with emphasis on opportunities and requirements for electricity generation.

COAL USE FOR DOMESTIC ELECTRICITY GENERATION

Electric power generation is by far the largest market for coal in the United States, representing over 80 percent of annual coal consumption. Assessing current and projected electricity demand is thus essential to understanding the future role of coal and the scope of an appropriate RDD&C program. The following section reviews the changing structure of the U.S. electric utility industry, current projections of future electricity demand, and the outlook for competing sources of energy for power generation over the time periods of interest for this study.

Changing Structure of the Electric Utility Industry

The electric utility industry has been subject to extensive price and entry regulation virtually from its beginning almost a century ago. Like other formerly heavily regulated industries, such as transportation, telecommunications, and



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