By Taylor Kuykendall

Wyoming, the top-producing coal state in the U.S., is aggressively working to develop new technologies that would give coal a place in a policy environment that encourages reduced carbon dioxide emissions.

Gov. Matt Mead announced on July 14 that two utilities, Basin Electric Power Cooperative and Black Hills Corp. unit Black Hills Power Inc., were interested in hosting an Integrated Test Center facility that would allow researchers to find new commercial uses of carbon dioxide. In addition to possibly spinning off new industries, the initiative could offer utilities an alternative to moving away from using coal, a carbon-heavy resource.

"Having coal as part of the energy mix keeps the United States competitive with the rest of the globe," said Renny McKay, Mead's communications director. "Coal is predicted to be the fastest growing fuel source globally over the next 20 years. So, coal provides important jobs in Wyoming and is a huge contributor to the state's economy and it is also valuable beyond our borders."

Aside from the direct and indirect employment benefits, McKay said the industry is a significant revenue contributor to cities, towns and counties in Wyoming. Also, unique to the coal industry, revenue generated from coal leases funds new school buildings throughout the state.

McKay also pointed out that Wyoming, predominately powered by coal plants, enjoys some of the lowest electricity rates in the country.

“To ensure this industry continually makes improvements to be more environmentally neutral, Wyoming is filling the gap, investing in research for various new technologies.”

 Renny McKay, spokesman for Wyoming Gov. Matt Mead

However, proposed U.S. EPA rules for new power plants essentially rule out coal plants that do not incorporate carbon capture and storage, an early-phase technology that has proven challenging to commercialize. While Wyoming's Powder River Basin is expected to fare better than some other coal-producing regions, rules for existing power plants are also projected to impact broader coal demand.

Mead has proposed to address the issue on multiple fronts, from initiatives to boost exports to encouraging a variety of other coal-fired energy technologies. The state recently invested $50 million at the University of Wyoming for research into new coal technologies in addition to its efforts on the Integrated Test Center facility that aims to find processes that add value to carbon dioxide.

While representatives of some environmentalist groups such as the Sierra Club have told SNL Energy that the only path forward is to "phase out coal," with limited or no room for developing carbon capture technologies, the proposal does have some support in the environmental community. Shannon Anderson, a spokeswoman for the Powder River Basin Resource Council, said the project is aimed at relatively new coal plants that likely are not going to be retired anytime soon anyway.

"Our organization is generally in favor of carbon capture and sequestration," Anderson said. "If there's a way to capture that carbon and make it work, I think it would be a benefit to the state and probably the nation."

Anderson said her concern would only be ensuring that there are not drastic economic consequences of implementing any new, experimental technology that may be passed to ratepayers.

McKay said Wyoming is seeking to be a leader in developing coal technologies on several fronts, including being one of the first states to pass a law related to carbon sequestration. He said that research on new coal technologies is not happening in a vacuum: The state is also collaborating with Australia and China in the quest to find new ways to use coal.

"We are moving forward ourselves and with others because we see a lack of initiative at the federal level to invest in new coal technologies," McKay said. "To ensure this industry continually makes improvements to be more environmentally neutral, Wyoming is filling the gap, investing in research for various new technologies. Having a strong coal industry is good for Wyoming and good for the country."

The two utilities that have expressed interest in hosting the new Integrated Test Center facility both have generation portfolios that include more than one type of energy source. Both utilities told SNL Energy that there were advantages of keeping coal in an energy supply mix.

"Renewables have their place in an energy portfolio, which is why we will have nearly 1,000 MW in our mix in the next couple years," said Curt Pearson, a spokesman for Basin Electric. "However, baseload coal facilities provide reliability and consistency and contribute to low-cost power. We believe coal needs to be a part of our energy mix, but how we use it in the future may change."

Sharon Fain, a spokeswoman for Black Hills, said Mead has "laid out a strong vision" to lead carbon capture development, and Black Hills viewed that as an opportunity in the state.

"Obviously, it's cost-effective," Fain said of coal, particularly coal from the Powder River Basin. "It comes down to innovative technology and our ability in Wyoming to be on the leading edge and be a partner with developing that new technology. It's really a game-changer for the utility and our customers as well as the coal industry."

Both utilities said they are exploring broad options for participation at this early stage in the project. Basin Electric is considering hosting the site at its Dry Fork station, which is supplied coal by Western Fuels Association Inc.'s Dry Fork mine.

“Our members are going to face huge stranded costs if we're forced to change fuel types and prematurely abandon our coal generation. ”

 Curt Pearson, spokesman, Basin Electric Power Cooperative

Pearson clarified that the utility "made no commitments other than continuing the dialogue" about the project at this point.

"Coal accounts for just over half of our resource portfolio and it benefits our members to keep affordable coal baseload facilities as part of the generation mix," Pearson said. "A commercially viable method of capturing CO2 that puts the captured gas to beneficial use would extend the useful life of existing coal plants and could enable the construction of new coal facilities to take advantage of our nation's remarkable coal resources."

Pearson said Basin Electric already conducted a front-end engineering and design study focused on capturing a portion of the carbon dioxide from a unit at its Antelope Valley station in North Dakota. Based on the $6.2 million study, Basin Electric was able to analyze the technical, operational, regulatory and financial risks for installing carbon capture technology at a conventional coal power plant.

"The FEED study, coupled with an assessment of the additions necessary at the plant, financing and sequestration costs indicated a demonstration-scale project could cost as much as $500 million," Pearson said. "We learned a great deal and remain committed to exploring CCS technologies."

Pearson said history has shown the electricity industry "can and will" develop solutions to regulatory challenges but added that it could take time. He said Basin is committed to working with state governments, other utilities, environmental groups, the EPA and Congress to work together to make sure coal continues to be used in the future.

"EPA's proposed rule for existing power facilities and all of the regulation coming down from the agency comes at a high price with little benefit," Pearson said. "Our members are going to face huge stranded costs if we're forced to change fuel types and prematurely abandon our coal generation. For not-for-profit associations like electric cooperatives, our members ultimately pay the cost of all regulatory compliance in their electric bill."