NEW YORK (CNN/Money) -
Big money is pouring into "clean coal" -- hyped as an environmentally friendly resource that can keep the lights on and break our dependence on foreign oil -- but some critics question whether the investment is worth it.
The Bush administration currently spends about $400 million a year on coal research, not much compared with the $1.3 billion spent annually on renewable resources, such as solar and wind power, according to the federal Energy Information Administration (EIA).
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But the administration has proposed another $2 billion for its clean coal program, on top of $2 billion in subsidies for the coal sector. Meanwhile, Sen. John Kerry has pledged to spend $10 billion on clean coal technology, including $2 billion to demonstrate the commercial viability of clean coal.
In an election year when votes in coal-producing swing states like Pennsylvania and West Virginia are crucial, these promises come as little surprise. And few disagree that the nation needs alternate, more efficient sources of energy.
But critics say that newer "clean coal" technology, for all its promised benefits, is expensive. And some say that the technology, despite its positive-sounding name, will create expensive environmental headaches.
The need for power
"With nuclear and hydro resources pretty much tapped out, it comes down to a debate between coal and gas," said Mark Morey, director of the Cambridge Energy Resource Association's North America power group.
According to the EIA, coal is plentiful and cheap, with domestic supplies projected to last two centuries or more. About half the nation's electricity is already generated by coal-fired plants, so there's an infrastructure for coal in place.
And with electricity demand expected to grow sharply in coming decades, proponents say clean coal is the way to go. "Clean coal technology is the future," said Ohio Coal Association President Mike Carey.
Some big companies are betting heavily on the technology. General Electric (Research) and Bechtel are jointly developing a model for coal gasification plants, which convert coal into a gas. The plants are considered the most vaunted of the clean coal technologies by the EIA and coal industry leaders.
An expensive proposal
Clean coal plants aren't cheap to build, and costs to dispose of their waste are steep.
Bechtel said the initial cost to build a coal gasification plant is 25 percent more than a medium-sized conventional coal-fired power plant. A conventional plant costs about $780 million to build, according to Bechtel, so a comparable coal-gas plant would cost about $975 million.
"There are a lot of parallels between coal and nuclear energy," said Cambridge Energy's Morey. "The plants are really expensive to build and there's an issue about disposing of large amounts of [carbon dioxide] waste that could get really costly."
While there has never been a law regulating carbon dioxide emissions in the U.S., many scientists, utility analysts, environmentalists and business executives admit that CO2 emissions are the chief cause of global warming.
"In ways we've looked at pollution in the past, coal has cleaned up. But the bigger problem we face now is carbon dioxide, which clean coal plants still emit," said Dave Hamilton, the Sierra Club's director of Global Warming and Energy Programs.
"Businesses know carbon dioxide will be regulated in the future and would rather make it part of the cost to build a new plant now rather than wait and have to add technology," said Morey. "These plants are 40- to 50-year investments."
"Many ways of taking care of carbon dioxide are being studied, particularly carbon sequestration," said Carey. Trapping and holding CO2 is the most popular method of dealing with emissions from coal-gas plants; and it's part of President Bush's FutureGen initiative to create the world's first zero-emissions fossil fuel plant.
But trapping carbon is expensive. For an average traditional coal-fired plant, which produces some 750 million tons of carbon a year, the annual cost of trapping CO2 is about $31 million a year, said Stephan Singer, head of European Climate and Energy policy with WWF International, which works closely with the EU on climate change and energy.
Analysts and environmentalists also say there's little evidence to show this process will ever work.
"If it all leaks, then you're right back where you started, plus you've wasted all that money," said Hamilton.
If not coal...
Environmentalists aren't the only ones questioning whether clean coal is worth it.
Dave Schanzer, a utilities analyst with Janney Montgomery Scott, said billions should not be spent on making the country more dependent on coal.
"The answer is nuclear power," Schanzer said. "Spent nuclear fuel has to be stored safely, but we have that technology now." In contrast, he added, "You have to store CO2, and we don't even know if it can be done. Using the technology we've got can prevent polluting the environment and the massive clean-up."
While Schanzer may take a minority view in the U.S. on nuclear power, the Sierra Club's Hamilton agreed money should be invested in improving existing technology before spending billions on new technologies.
And with coal now providing 50 percent of the nation's power, Schanzer added, "Every systems operator will tell you a balanced fuel mix is the best way to provide electricity. We should be using more of what we have and making it more efficient."
"Attacking energy waste is the cheapest and cleanest thing we can do to address the energy crisis," added Hamilton. "We have no ethical problem with making dirty things cleaner, but by simply investing in energy efficiently we could create 1.4 million jobs by 2025 and reduce the overall electricity load by 10 percent."