Subsidies for Clean Coal Miss Mark, Critics Say 

Douglas Jehl / New York Times 4aug01

	Oscar Sosa for The New York Times The Northside plant in Jacksonville, Fla., will use coal-cleaning technology that critics say utilities are installing even without federal aid. Lifts installed a coal conveyor inside a storage dome with transparent slits.

ACKSONVILLE, Fla., Aug. 1 — Compared with many alternatives, a coal-fired power plant being built here will be anything but clean. It will emit several times as much smog-causing pollution and heat- trapping gas as the same utility's new plant, fired by natural gas, a few miles away.

But it is the coal-fired plant, not the gas-burning plant, that is being subsidized by the federal government, under a 15-year-old program that has spent $1.8 billion to promote so-called clean-coal technology in 38 projects. That aid would triple under the energy bill passed by the House of Representatives, to $5.3 billion over the next 10 years, including new tax credits.

The coal industry and the utilities say the subsidies are necessary to help make coal, the country's dirtiest fuel, but also its cheapest and most abundant one, as clean as possible. But critics say the program has fallen badly off the mark, by paying utilities like the Jacksonville Electric Authority here to install technologies they would probably be adopting on their own and by encouraging the burning of coal over environmentally friendlier alternatives.

"Basically, there is no such thing as clean coal," said Kate Abend, an energy expert with the United States Public Interest Research Group, which is aligned with environmentalists.

Michael N. Lawson, major projects manager at the Jacksonville plant, said it was going to switch to the new coal-burning technology "whether we had Energy Department money or not." The utility is converting a second 300 megawatt generator at the plant without federal help.

The federal aid — some $73 million from the Energy Department — is covering a fourth of the $300 million cost of what will soon become the largest coal-fired power plant in the world to use what is known as circulating fluidized bed technology. The conversion to coal, at the utility's Northside generating station, on a waterway near the Atlantic Ocean, will increase the output of a power plant built in 1972 by 240 percent, while reducing its emissions of the pollutants that cause smog by 10 percent.

The technology, which burns coal at lower temperatures and uses limestone to capture many emissions, is about 50 percent cleaner than the technology used at a typical new coal-burning power plant. The converted Northside plant, with no visible emissions, will be cleaner than a nearby 1980's coal-burning plant, which has visible plumes.

But the converted coal plant will still allow 10 times the emissions of smog-causing nitrogen oxide as generators fueled by natural gas, like the Brandy Branch plant, which the utility opened in Jacksonville this year. The Northside plant will also emit more than twice as much carbon dioxide, which traps heat and contributes to global warming, and considerable sulfur dioxide, an ingredient in smog and acid rain that is not generated by natural gas.

Nor is the technology being installed here state of the art. A process known as coal gasification, being tested at plants in Tampa, Fla., and Terre Haute, Ind., has shown much more promise in reducing emissions of pollutants, including carbon dioxide. The ostensible purpose of the federal financing is to demonstrate clean coal's commercial possibilities, but years of delays have meant that even before the Jacksonville plant begins operating next year, others will have begun installing the technology without federal help.

The federally backed plant will become the latest of 400 fluidized-bed units operating around the world, most built without subsidies.

Walt Bussells, the chief executive of the Jacksonville Electric Authority, the eighth largest utility in the country, said the federal aid was "a deciding factor" in the project. But he said that in proceeding with a coal-fired plant and a gas-fired plant at roughly the same time, the authority was mainly concerned with avoiding the mistakes of the late 1970's, when reliance on one fuel — oil — left it vulnerable to soaring prices.

The Northside plant, built to burn oil and gas, is among a handful built or converted to burn coal in the last five years, a period in which utilities embraced the cheaper, cleaner-burning natural gas plants.

But more than half of the country's electricity is still generated by burning coal, and the recent volatility in natural gas prices has prompted some utilities to give coal a second look. In the last six months, plans have been announced for at least 24 new coal-fired plants nationwide, and most analysts expect that trend to accelerate if the Senate approves the new clean-coal subsidies. The details of the Senate version of the bill are still being worked out.

Whether building more coal-fired plants is good is a subject of debate.

The National Mining Association said large subsidies were crucial to an economically and environmentally sound coal industry. The Bush administration, which proposed $2 billion in new money for clean coal, has supported the even larger subsidies approved by the House, on grounds that they are needed to promote diversity in the country's energy supply.

"For the environmental benefits in particular, there's a natural reason to move this thing forward," said Robert S. Kripowicz, acting assistant secretary of energy for fossil fuels and the main overseer of the clean- coal program. "And because of our need for energy, it's important to promote a balance of technologies."

Mr. Kripowicz conceded that the federal clean-coal program had had many setbacks, including project delays and bankruptcies. The General Accounting Office has criticized the program, prompting Congress to take back more than $400 million of the roughly $2.4 billion it appropriated in the late 1980's. The money for the Jacksonville project was approved in the early 1980's, when the project was to be in Tallahassee, Fla.

If the department were making the decision today, Mr. Kripowicz said, it might not have financed what is now a widely used technology. But he pointed out that two-thirds of the cost of federally backed demonstration projects had been borne by industry and the states, and he said the investment had helped coal-burning power plants to cut their emissions since 1970 even as the use of coal to generate electricity had tripled.

Coal is not the only energy industry that would benefit from the House bill. Oil and gas producers would be exempted from certain royalty payments to the government and eligible for a variety of tax credits; so would investors in nuclear energy.

But most analysts see the coal industry as the biggest winner. It would benefit not only from the $2 billion to promote clean-coal technology over the next 10 years, but also from $3.3 billion in investment and tax credits to encourage the use of coal to generate electricity, subject to certain performance standards. That has caused resentment among advocates of natural gas, who believe the government should more actively embrace their cleaner technology.

Under the House measure, most of the $2 billion in development financing would be reserved for technologies that convert coal to a gas before burning it for electricity. These processes have already shown more success than other approaches in reducing emissions of pollutants that cause smog.

Coal gasification is also seen as the most promising technology for capturing carbon dioxide, which scientists regard as a major contributor to global warming, but which is not being reduced under existing pollution controls.

People who have studied the bill, however, say the standards of eligibility for the tax credits could include coal-burning generators no cleaner than many existing ones. Environmentalists who believe the industry should be driven toward cleaner technologies by regulation rather than subsidies particularly object to tax credits, saying they will give coal an advantage over wind and water power and other clean, renewable ways to generate electricity.

"The net result is that this would put coal back in a position where it would outcompete the better environmental performers in the marketplace," said David G. Hawkins, a former senior official at the Environmental Protection Agency who now works for the Natural Resources Defense Council. "It would make the situation worse by expanding the taxpayer subsidies for the world's dirtiest fuel."

But David Parham, chief executive of Foster Wheeler, a principal manufacturer of coal-burning systems and a beneficiary of the subsidies, argued that major federal aid made sense.

"Of course, gas is a cleaner fuel to burn than coal," Mr. Parham said. "But we need a balanced approach to generating electricity, and coal is still our biggest energy resource."