By Taylor Kuykendall

While many coal producers dependent on U.S. markets are looking to the courts or Congress for relief from anticipated reductions in demand for thermal coal due to new power plant regulations, others are banking on innovation and technology to secure a future for the coal industry.

The U.S. EPA is vigorously defending its Clean Power Plan, a regulation that is anticipated to significantly erode the demand for coal in pursuit of President Barack Obama's policy goals for mitigating the effects of climate change. At a recent coal conference, members of the industry heard about some of the prospects for advancing carbon capture technologies and the possibility of extracting new value from coal.

"My message of value starts with truth on the ground, which is how sustainability people start their discussions," said David Haberman, president of IF LLC. "The truth on the ground is that coal keeps the lights on in America. If you don't keep the lights on, pretty much everything is not going to work."

Haberman takes an engineering- and technology-focused approach to the future of the coal-value chain, which he said needs to be both smarter and faster about transitioning.

“ Let's take a look at risk from the perspective that change is not sacrilegious, not all technology is from hell, and that lawyers and accountants should not be the final decision-makers in technological adaptation. ”

 Dave Haberman, president, IF LLC

"We do have to move past utility-based decision-making criteria," Haberman told the crowd at the 23rd Annual Platts Coal Properties and Investment Conference. "Utility decision criteria is not what should define the coal sector. The coal sector is far past just utility decision-making criteria."

Haberman said there are many potential uses for coal, including its use as a feedstock for activated carbon and advanced carbon products.

"If you can't get rid of the skeleton in your closet, you better take it out and teach it to dance," Haberman said, quoting George Bernard Shaw.

The problem, he said, is that there has been too much reliance on government to push the sort of innovation the coal industry needs to make that transition to its future.

"Set aside whatever positions people have to take for whatever reasons," Haberman said. "The technology exists today to yield the carbon out of CO2, and that unlocks a large opportunity. It unlocks chemicals; it unlocks carbon materials … a world of value. It's just standing there waiting for us to realize it's there for the taking."

The key, he said, is to find the risk-takers willing to make the expensive mistakes that will win the new coal market. He said there are plenty of "finance guys" who will appreciate these sorts of opportunities, though the industry may have to look toward new sources of capital.

"A lot of times people say that the best vision is through eyes that have been washed by tears," Haberman said. "We have a lot of tears in this industry. … Why don't we use that to wash our eyes a little bit and say, Let's take another look at risk. Let's take a look at risk from the perspective that change is not sacrilegious, not all technology is from hell and that lawyers and accountants should not be the final decision-makers in technological adaptation."

Haberman said the "carbon economy" in the U.S. is growing and profitable. However, to proceed, the industry needs to look at doing business differently, including re-evaluating its take on trade secrets and considering syndicating its intellectual property.

Haberman called one of the most widely promoted uses for captured carbon dioxide — enhanced oil recovery — a waste. He said the U.S. should be capable of doing more than packaging carbon dioxide for use in foreign oil markets.

"We have to stop deferring to government to lead change," Haberman said. "The government is throwing unbelievable amounts of money into shoving something valuable into the ground."

Government-led carbon capture projects have followed a bumpy road so far. While business leaders such as Bill Gates have called on more funding for energy technology including carbon capture, many of the attempts so far have failed or stalled in the application process.

An aerial view of Mississippi Power's Plant Ratcliffe energy facility. Source: Southern Co.

Recently, the government pulled funds for the FutureGen Alliance, a coalition of energy companies including Peabody Energy Corp. backing a carbon capture project. Meanwhile, the government-aided Plant Ratcliffe coal gasification project in Kemper County, Miss., continues to cost Southern Co. billions in construction cost overruns.

David Yaffe, general counsel for Carbon Cubed, says his company is stepping up to help. While "not a silver bullet," Carbon Cubed is hoping to show the world the value of selling carbon in various forms "and creating a different discussion about what a lump of coal is worth. "

"We're not leading toward a carbon-free world. That's an oxymoron," Yaffe said. "There's going to be electric generation after 2030, and in fact the market for carbon, in its pure form, is likely to increase in the future. Who gets to cash in on that value?"

He said there already is interest in various products made from carbon, including carbon fiber materials that can be marketed to the automotive industry. For now, Carbon Cubed is focusing on "niche projects."

"We're not going to have a product that takes all of the carbon dioxide emissions out of the plants tomorrow morning," Yaffe said. "There needs to be demonstrations of how this works, and this is a part of a process. We want to start a conversation and change the conversation."

Shannon Angielski, associate director of Coal Utilization Research Council, said that if the U.S. needs to rely on its electric generation fleet, especially as existing coal plants age, technology is going to play a vital role.

"What is not really discussed, I think, that we don't hear a lot of today, is that this is done with very cheap power," Angielski said. "Coal again, is an essential energy option."

Angielski said meeting international climate goals will require the development of carbon capture technology. While that has proven an expensive proposition, she said utilities could consider alternatives such as high-efficiency plants that are prepared to take on retrofitted carbon controls when the price point is more favorable.

"We can't just completely go to one resource and not consider diversifying our baseload fleet," Angielski said.