Coal Made the Headlines, but the Real Story of the Energy Summit was the Cost-effectiveness of Renewable Energy

By Wilbur Wood

For The Billings Outpost, Oct. 27, 2005

Coal filled the headlines of Montana newspapers last week during the Governor’s Energy Summit -- officially called “The Montana Symposium: Energy Future of the West” -- but the real news was how much brighter our future will be when we turn our attention away from coal toward energy conservation and renewable energy.

The symposium went on for two days, October 18-19, on the campus of Montana State University in Bozeman -- 740 registered participants (not counting the press), 27 “breakout sessions” punctuated by panels and speeches -- but the coal headlines around the state during those two days did not emerge solely from the Energy Symposium.

One coal story turned out to be a new chapter in the ongoing saga of the beleaguered coal mine in the Bull Mountains south of Roundup. The state Department of Environmental Quality was upset that operators of this mine, while scraping away a ridgetop meadow, ostensibly to level a site for a proposed generating plant -- a plant whose air quality permit, DEQ says, is no longer valid because it expired in June -- encountered an eight-foot-thick vein of sub-bituminous coal and dug through it. They needed, they said, to get to solid ground. DEQ looked at the resultant pile of coal and called this stripmining. The mine is an underground mine and has no permit for stripmining.

The mine was upset that DEQ was upset, and claims it never intended to sell the coal from the site for the power plant whose air quality permit should still be valid.

A second coal story came out of Great Falls, where the City Council voted 4-1 to spend $2 million of that city’s funds on “preparations” for the proposed 250 megawatt Highwood coal-burning power plant east of the city. Five rural electric cooperatives forming the Southern Montana Electric Generation and Transmission Cooperative are partnering with Great Falls on this project because they need the city’s rights to water from the Missouri River. Running a coal-fired generating plant takes a lot of water.

Water is a dominant issue with coal development in our semi-arid region. One reason that a 780 megawatt coal-fired generating complex seems unlikely ever to poke its smokestacks into the sky between Roundup and Billings is a lack of sufficient water, either in the Bull Mountains or in the Musselshell River 15 miles north. Nor do the developers have the right to pipe any water out of the Yellowstone River 35 miles to the south. So they are proposing to drill down 8000 feet into the Madison Aquifer and pump up water that is very hot (about 180 degrees Fahrenheit) and full of salts which would have to be removed.

Water is also a huge issue with the kinds of coal development that were trumpeted at the Energy Symposium. Extracting methane gas from coal seams means pumping out the water that holds it there -- in other words, dewatering the aquifer. Do you then dump this untreated, often very salty water down the nearest stream, potentially ruining pastures and irrigated croplands? Do you dig reservoirs (a bit more expensive) and stash this pumped out water there, waiting for some of this water to seep back into the ground, some to be consumed by livestock and wildlife, and the rest to evaporate and fall -- elsewhere -- as rain?

You could, of course, treat the water, remove the salts, before dumping it down a stream, but this is expensive and does not address the dewatered aquifer and drying up wells and springs. You could re-inject the water back into the coal seam, but this is even more expensive -- although not so expensive that gas producers would not reap enormous profits anyway.

Coal bed methane is a crucial issue for Montana, but other coal technologies -- either gasifying or liquefying coal -- are what Montana Gov. Brian Schweitzer lately has been promoting. Prodigious amounts of water are used (or abused) in both of these, also.

The chief push to create liquid fuel from coal seems to be coming from the Department of Defense -- one of the major consumers of oil on the planet --and indeed, Ted Barna, an assistant under secretary of the DOD was there to endorse that concept.

Another federal agency official was there to push for building new pipelines and new electrical transmission lines. Suedeen Kelly of FERC, the Federal Energy Regulatory Agency, told the audience that energy-producing states like Montana owe it to energy-consuming states to send them their energy, and if states lagged in upgrading its transmission infrastructure, FERC’s job under the new federal energy bill was to step in and make this happen.

This led Brady Wiseman, a Democratic state representative from Bozeman -- during a “what have we learned” session at the end of the symposium -- to complain about “this top down, high voltage approach, mandated by the Pentagon.” He said that electricity deregulation in Montana “was like that. And it did not work.”

Some very specific doubts about whether coal liquefaction will work were set forth by Northern Plains Resource Council in the week leading up to the Energy Symposium. In a meticulously researched position paper, Northern Plains disagreed with Schweitzer’s assertion that coal liquefaction would be “clean,” pointing out that oxides of sulfur, nitrogen, carbon and hydrogen, along with other pollutants, are emitted by this World War Two era German technology, called the Fischer-Tropsch Process.

Northern Plains also questioned whether enough water exists in all of eastern Montana to run coal to fuel facilities on the scale that the Governor has been proposing.

The Governor’s office replied that NPRC’s data was based on out-of-date technologies and suggested that newer cleaner technologies are in the works. (Schweitzer, a soil science graduate of Montana State University, makes no secret of his desire that MSU be a leading researcher in these “clean coal” technologies.) Northern Plains, however, had drawn its data from Sasol, the South African company that operates the only existing commercial scale coal-to-liquid fuel plants on the planet.

This thrust by Northern Plains may briefly have muted Schweitzer’s enthusiasm for coal liquefaction, for in his opening speech. Schweitzer spoke first of conserving energy, the only solution in the short term to the sudden crisis of rising energy prices. Then he celebrated the Judith Gap Wind Farm which --when its 135 megawatts of windpower come on line-- “will take Montana from 50th place to 15th place (among states) in windpower” and will produce “8% of Montana’s electrical portfolio.”

Judith Gap windpower will be sold to NorthWestern Energy for $32 per megawatt, and NWE has “firmed that power” (with sources that, unlike wind, are not intermittent) so that “the collective cost is $38 per megawatt,” Schweitzer said, “the cheapest new energy produced in America. And it is green!”

The Governor mentioned his administration’s support for producing biodiesel and ethanol from crops. Although he refrained from specifically mentioning coal-to-liquid fuels or coalbed methane, he did speak of breaking America’s dependence on oil and gas imported from countries governed by “dictators and rats” and specifically mentioned coal as “a bridge to the new hydrogen economy.”

Of course, there were plenty of others, on panels and in plenary sessions, to talk up coal. Andre Steynberg, technical manager of research and development at Sasol, the South African coal-to-liquid-fuel producer, breezed through a power point presentation of flow charts and photos of giant “reactors” on the large screen behind the podium on the MSU fieldhouse floor.

But Steynberg eventually went “off message” when he revealed that Sasol had been converting many of its liquid fuel operations from coal to natural gas. (Sasol recently spent $1.2 billion constructing a pipeline to import natural gas from Mozambique.) Coal is just too environmentally costly, and for Sasol to invest in converting it to liquid fuel, Steynberg said, would require “incentives.”

Translation of “incentives”: government subsidies. Other coal-to-liquid-fuel promoters at the symposium cited their frustration with the lack of private sector funding, and their hope for an infusion of government cash to get a pilot plant up and running and show the private sector it works.

At a panel of five Western governors, Dave Freudenthal of Wyoming unexpectedly dampened their hopes. Even though Wyoming now “exports more BTUs than any other state” and is rolling in cash from its coal -- and coal bed methane -- boom, Freudenthal had this to say about coal liquefaction: “If the private sector says ‘we won’t put money in it,’ the states ought to be cautious.”

Schweitzer’s remarks were not characterized by caution. He charged that the federal energy bill (recently signed into law) offers “no vision” and that consequently “the future starts with the states, working with private industry” and coming up with “big ideas.” He means the Rocky Mountain states in particular, as well as the Western provinces of Canada: all rich in coal, oil shale, tar sands and -- oh yes -- renewable resources such as wind.

So it was an odd juxtaposition, after Schweitzer’s state-centric speech, to have FERC’s Suedeen Kelly follow him with her unmistakable message that if the states did not act to solve transmission bottlenecks, the federal government would ensure that “transmission corridors” opened up.

This was an eerie echo of a message Montanans heard in 1971, when the federal government and the fossil fuel industry -- in a document called “The North Central Power Study” -- decided that this region’s coal should fuel as many as 42 power plants, sending electricity to population centers east and west.

Montana’s transmission system, now as in 1971, has bottlenecks both east and west. I missed breakout sessions about how to “solve” these bottlenecks, partly because I am among those who really don’t want to see them solved. Montana already produces twice as much energy as it consumes, and building more long-distance transmission lines to fill with power generated here, either by expensive polluting coal plants or cheaper clean wind farms, does not thrill me. Long distance transmission lines leak enormous amounts of energy, are vulnerable to natural disaster or sabotage, and may become obsolete as more and more utilities turn to conservation and generation closer to the centers of demand.

I also missed other sessions that normally I would have attended, on subjects such as renewable resources, energy efficiency, hydrogen and fuel cell technology -- and on the intriguing topic of how to “sequester” carbon to keep it out of the atmosphere.

I dutifully attended one session dealing with what is (and is not) in the new federal energy bill and sat through two sessions on coal -- turning it to gas and turning it to liquid fuel.

Logically, biofuels should have been treated the same way -- one session on biodiesel and another on ethanol. But both were crammed into one session, to which nonetheless I went with relief, and which turned out to be, for me, the high point of the symposium.

Joe Jobe of the National Biodiesel Board began with a jibe at liquefied coal. “How many gallons of Fischer-Tropsch fuel is being sold in the U.S. today?” he asked. Zero gallons. But 25 to 30 million gallons of biodiesel, he said, were sold in the U.S. last year. Truckers, enraged at seeing diesel prices climb higher than regular gasoline and then stay high, are avid for information on biodiesel and are driving demand for it.

Biodiesel is interesting because it can be produced in your garage from used French fry oil, but also in large plants that crush and refine oilseed crops. Ethanol, too, can be produced on a variety of scales. One of the larger facilities in the Northern Plains region is a 34 million gallon per year ethanol plant that Husky Oil is integrating with its heavy oil upgrader in Lloydminster, Saskatchewan, according to Bert Faber, senior environmental advisor for the company.

Montana will produce very little ethanol from corn -- that’s for places like Iowa and Minnesota -- but this state has a variety of crops that can be converted to fuel and also produce a high quality by-product to feed livestock. Phil Madsen, whose company Katzen International has designed ethanol plants around the world, looks to Montana wheat and barley. So does microbiologist Cliff Bradley, who adds sugar beets (which at current prices are worth more as a fuel crop than a sugar crop) and cellulose (such as from perennial grasses -- $2.50 per gallon gasoline makes ethanol from cellulose viable, he said).

Bradley is co-founder of the Missoula-based company Montana Microbial Products, which has produced enzymes that break down a variety of cellulosic materials, thus reducing the energy requirements of the distillation process.

Bradley had sat through the coal liquefaction presentations and began with this policy recommendation: “We don’t turn over one shovelful of coal to turn into liquid fuel until the U.S. implements energy conservation, mass transit, and eliminates gas hogs from the road. Then I’ll listen to schemes to ‘liquify’ eastern Montana.”

But he had a better idea than that. In 2004, Bradley said, retail sales of gasoline and diesel fuel for transport in Montana totaled 870 million gallons. The price of those fuels was rising by about $1 a gallon during that time, which means that an extra $870 million simply left the state for corporate bank accounts in Houston or Los Angeles. None of it stayed here.

These high prices, however, have made ethanol and biodiesel competitive with the fossil fuels. So why not stop sending our money out of state and invest it here, to grow our own fuels?

He calculated that Montana could produce 500 million gallons of E85. ethanol from a variety of crops, including perennial grasses and straw (with half left on the ground)..

“The technology is here. It’s not how you do it, but who owns it. If you sell your crops to Archer Daniels Midland (to make ethanol) this gains us nothing. But biofuels can be an opportunity for farmers and communities to keep value added dollars in the local economy.”

Bradley said that one coal to liquid fuels plant was projected to cost $3.3 billion to build and would produce 10,000 gallons of fuel per day. Assuming we could use this fuel in-state and not ship it off to the military, this still would cover less than 10% of Montana’s transport fuel needs. For much less than that amount, perhaps as little as $1.1 billion, Bradley figures we could build enough biofuels capacity eventually to furnish 100% of Montana’s liquid fuel needs.

Where to get a billion dollars? Bradley suggests we start by keeping 10 cents of every dollar of that gasoline price increase in state. That would raise $80 million per year in capital.

“The Governor says, ‘Think big.’ So let’s think big with diverse and small scale systems, community owned, integrated with agriculture and local economic development strategies,” he said.

“ Montana does not have to become a national sacrifice area for a faulty federal energy policy.”