April 22, 2007

By Russell Stigall

Frontiersman

Lee Jordan, president of the Matanuska Electric Association board of directors, goes over notes at the March board meeting. When asked recently about MEA’s plan for dealing with potentially toxic mercury emissions from its proposed coal-fired power plant, Jordan replied, “We’re keeping our fingers crossed and our mouths closed.” RUSSELL STIGALL/ Frontiersman

MAT-SU - Is Matanuska Electric Association just blowing smoke on the cost of its coal plant carbon?

It depends on the seriousness with which MEA pursues carbon capture and sequestration technology - as well as what information is contained in the co-op's 76-page Integrated Resource Plan, of which only a 10-page summary has been made public.

The IRP explains in great detail the proposed future power needs of the MEA co-operative and how it plans to meet those needs. Through research conducted by energy consultant CH2M HILL, MEA management, backed by a board of directors vote, has decided to meet future power demands with a 100 megawatt coal-fired power plant and a 100 megawatt gas-fired power plant.

Though natural gas generators produce some carbon, the releases are small in comparison to the emissions of MEA's proposed “circulating fluidized bed” coal-fired generator.

“Different amounts of carbon dioxide are released through different energy strategies, and coal produces more carbon than natural gas,” said Deborah Williams, president of Alaska Conservation Solutions. Coal plants also release more mercury.

Carbon dioxide

Carbon dioxide is a greenhouse gas, widely believed to be accelerating the change in climate on Earth. Human-produced carbon has increased as a percentage of the atmosphere since the industrial revolution, with a sharp increase in both carbon and average Earth temperature in the last few decades. Because of the threat carbon dioxide poses to Earth's terrestrial and sea creatures, a price is expected to be levied on its emission.

Carbon emission is considered a negative externality - whereby industrial byproducts are released into the environment free of the true social and environmental cost associated with the negative effects of the pollutant being released into the environment. Another example of negative externalities is mixing zones, areas in waterways where industrial wastes are dumped and diluted.

With four new coal-fired generators planned to come online in state by 2015, Alaska will increase its carbon and mercury output in the near future.

Future carbon-emitter MEA estimates the cost to offset its emitted carbon dioxide at $9.54 per ton of carbon dioxide emitted when the co-op fires up its 100 megawatt plant in late 2014.

Lee Jordan, MEA board president, said the $9.54 number is an estimate.

“It could be lower and could be higher. There is agreement in the flexibility of that number,” Jordan said.

This estimate could be low according to researcher Mark Foster of Mark A. Foster and Associates Utilities Consulting.

MEA took its estimate from a 2004 PacifiCorp Integrated Resource Plan, done in advance of the current greenhouse gas discussion, Foster said.

“It is an outdated number they used,” Foster said.

Foster said three main changes in public and corporate perception have altered the power production environment since 2004.

One was the Stern Review on the Economics of Climate Change, released in October by British government economist Nicholas Stern. Stern put estimates on per ton cost to emit carbon dioxide at $85.

However, Stern's review is considered pessimistic by Richard Tol, chief author of the Intergovernmental Panel on Climate Change.

Previous versions of the McCain-Lieberman carbon tax bill asked carbon dioxide emissions allowances of more than $100 per ton by 2023.

If McCain-Lieberman or another, more stringent bill were to prevail, MEA would have underestimated the cost of coal-fired electricity by more than $60 a month for the average residential ratepayer between 2020 and 2030.

However, Foster said he doesn't expect such a steep tax.

“It wouldn't surprise me to see the $20 to $30 range,” Foster said.

A 100 megawatt circulating fluidized bed coal-fired generator produces about 1.28 tons of carbon dioxide per megawatt-hour. Running at full capacity, MEA's generator would produce 876,000 megawatt-hours annually. At this level, MEA's estimated carbon dioxide offset tax would cost ratepayers $10.7 million each year.

“This is if you think you are in the cheap seats,” Foster said.

In the Massachusetts Institute of Technology report “The Future of Coal,” researchers estimate an upper end tax of about $32 per ton of carbon dioxide in 2015. This would result in a $25.1 million underestimation of how much the carbon tax would cost MEA ratepayers each year for 30 to 50 years.

Also, MEA escalates the tax at 3 percent a year, while MIT estimates an escalation of 7.8 percent per year.

MEA might be able to avoid these unknown future costs by designing into its coal-fired generator carbon capture and sequestration capability.

Jordan said the co-op has talked about a number of new technologies to address carbon dioxide. The most promising of which, Jordan said, is the carbon-eating algae system.

“We're thoroughly researching all the new technologies,” Jordan said. “We're not sitting back waiting for something to pop up.”

Lorali Carter, MEA spokesperson, said MEA is excited about incorporating the algae biotechnology into its coal plant. The technology is new, Carter said.

“There's still a lot to look into.”

To learn more about MEA's carbon sequestration research, visit www.mea.coop and click on the main menu item “Emerging Technologies.”

Mercury

Mercury is a transition metal, one of five elements that remain liquid at or near room temperature and pressure. Historically, it has been used in dental fillings, switches, batteries and, until banned in 1941, the making of felt hats.

In sufficient doses, mercury causes tremors, dementia in adults and mental retardation and deformities in children.

To help limit the amount of mercury released into the environment, the Environmental Protection Agency introduced the Clean Air Mercury Rule. This would restrict Alaska to emitting into the environment 10 pounds of mercury by 2010, and down to 8 pounds by 2018.

With this restriction in place, mercury is expected, as a negative externality, to come with a price.

Chuck Kleeschulte, aide to Sen. Lisa Murkowski, wrote in an e-mail that “Our office does have deep concerns that there will not be sufficient allowances available for purchase at reasonable prices in the early years, and we still feel Alaska should be given a larger allowance.”

Alaska's mercury allotment is small compared with other states. In comparison, Texas was allotted 4.5 tons.

Alaska's small allotment is due to its current low levels of mercury emission. Alaska has only a handful of small coal-fired plants in operation.

However this may soon change.

Four new coal-fired generators are being planned by Alaska's electric co-ops. Agrium's Blue Sky coal gasification plant in Nikiski, Homer Electric's reopening of the Healy Clean Coal plant, Nuvista's coal plant in Bethel and Matanuska Electric Association's planned coal plant. All are expected to be operational by 2015.

Mercury comes in many forms. The compound methymercury is the form easily suspended in the atmosphere and capable of traveling long distances. It enters low on the food chain and is concentrated as it moves up into fish, whales and humans. Mercury has been associated with autism, learning disabilities and death.

A World Health Organization study on the migration of pollutants found mercury and other pollutants are transported from all over the northern hemisphere to the Arctic by natural wind and water currents.

Coal-fired power plants are the largest sources of emitted mercury in the United States.

MEA's summarized Integrated Resource Plan estimates an annual mercury emission “to meet MEA energy requirements” ranges from 2.9 to 3.7 pounds in 2015 to 3.6 to 5.9 pounds in 2044. However, if MEA sells its surplus generation, total mercury emissions would range from 5.6 to 8.4 pounds in 2015 to 5.6 to 11.2 pounds in 2044.

MEA's summarized Integrated Resource Plan also says consultants CH2M HILL believe MEA's coal plant would slip in under the Clean Air Mercury Rule limit.

The estimates for cost per pound of mercury released run from $35,000 to nearly $50,000. MEA estimates mercury offset costs to run around $46,539.

“[MEA's estimates] are in the right range,” Foster said.

MEA spokesperson Carter said the co-op is looking at buying mercury emission credits from other companies or states that don't use the full allocation. However, she said it is still too early to say what MEA's plans will be.

“We're not at that stage yet, we haven't built anything yet,” Carter said.

At a recent joint meeting between Chugach Electric Association, Golden Valley Electric Association, Homer Electric Association, Anchorage Municipal Power and Light and MEA, MEA board president Lee Jordan was asked how MEA would deal with legislated limitations on mercury emissions.

“We're keeping our fingers crossed and our mouths closed,” Jordan said.

The reason Jordan gave this cryptic response, he said, is because of the sensitivity of the mercury issue.

“Each utility is going to have its own strategy, so it is not something we want to talk about,” Jordan said. “I was there as an observer and not a participant, because the mercury is such a critical thing I don't want to get any figures out.”

Jordan said Alaska power producers are very aware of the federal rules.

“It is something everybody is concerned about,” Jordan said.

Jordan is up for re-election as an MEA board member next year.

There are mitigation techniques that can be used to reduce a coal plant's mercury emission. Injecting activated, brominated or halogenated carbon into the power production can significantly reduce the amount of mercury released, said Jeff Quick of the Utah Geological Survey. However, this must be accounted for during the design and build phase of the project.

The spent coal - ash or slag - cannot be used as a saleable byproduct when activated or brominated carbon is used, Quick said.

MEA plans to ship the slag back to Healy for use as filler in mine reclamation. MEA's plan also records the cost of externalizing the emission of sulfur dioxide and nitrogen oxide.

Contact Russell Stigall at

352-2267 or russell.stigall@ frontiersman.com