Reply to: 231 W

Reply to: 231 W. Main, Suite 1E Carbondale, IL 62901 (618) 457-0137 (618) 457-0513/fax

Main Office: 18 Tremont Street, Suite 530 Boston, MA 02108 (617) 624-0234 (617) 624-4933/fax www.catf.us

August 29, 2006

Mr. Richard Fristik

USDA Rural Development Utilities Programs

1400 Independence Ave, SW

Mail Stop 1571, Room 2237

Washington, DC 22050-1571

Re: Comments of the Draft EIS for the Highwood Generating Station

Dear Mr. Fristik:

The Clean Air Task Force is a national environmental group headquartered in Boston Massachusetts and operating nationwide. We use advocacy, education and research to promote and restore healthy air. We welcome the opportunity to submit comments on the draft Environmental Impact Statement for the Highwood Generating Station. The Draft EIS is deficient because it eliminates from detailed consideration many of the alternatives that are available to replace the proposed CFB plant. These alternatives, which are listed in pages ES-3 and ES-4, should have been included in the detailed EIS analysis. For all practical purposes, the EIS is little more than a comparison of the proposed CFB plant to no action.

In particular, the IGCC alternative to CFB merits detailed evaluation in the EIS. The EIS

incorrectly states that IGCC is not cost effective, needs more research to attain higher

availability, and does not enjoy significant emission advantages over CFB. As more fully

described below, each of these conclusions is incorrect. Therefore, the EIS should not

have eliminated IGCC from detailed review. We respectfully request that the EIS be

revised, adding IGCC to the options evaluated in the detailed analysis.

In July 2006, USEPA released a report entitled, “Environmental Footprints and Costs of Coal-based Integrated Gasification Combined Cycle and Pulverized Coal Technologies.”1 The report presents a “snapshot” of evolving costs and performance of IGCC plants. While the report does not directly compare IGCC to CFB plants, many of the general conclusions of the report still hold. In particular, the report concludes that IGCC plants offer significant air emissions, water use, and solid waste benefits when compared to conventional coal plants. This conclusion is in stark contrast to the draft EIS. The table below compares the USEPA report’s emission rates for a subbituminous IGCC plant to the permit limits for the Highwood Generating Station:

1 Available at http://www.epa.gov/airmarkets/articles/control.html Page 2 As the table above shows, IGCC technology is anywhere from 1.7 to 10 times cleaner than CFB technology.

The USEPA report also concludes that an IGCC plant using subbituminous coal produces about 5.9 lbs of solid waste per MMBtu.2 The EIS estimates that the Highwood plant would produce 223 tons of fly ash and bed ash.3 Depending upon the assumptions about the coal used at Highwood, the amount of solid waste generated would be between 7 and 9 lbs of solid waste per MMBtu.

Water use is also significantly lower with an IGCC. The USEPA report notes that for a 500 MW subbituminous IGCC plant (about twice the size of Highwood), raw water use is about 5,764 gpm.4 Cutting this value in half yields about 2800 gpm, or about 10% less water than the 3200 gpm that the EIS estimates is needed for Highwood.5 2 USEPA, “Environmental Footprints and Costs of Coal-based Integrated Gasification Combined Cycle and Pulverized Coal Technologies” at page 3-36 3 EIS page 4-110.

4 USEPA, “Environmental Footprints and Costs of Coal-based Integrated Gasification Combined Cycle and Pulverized Coal Technologies” at page 3-38. 5 EIS page 4-22.

Pollutant

IGCC

Subbituminou s Coal (1)

Highwood

CFB, 250

Size of IGCC Advantage (in lb/MMBtu)(in lb/MMBtu)

SO2 0.012 0.038

IGCC 3 times better

than CFB

NOx 0.044 0.07

IGCC 1.6 times better

than CFB

Mercury .42x10-6 1.5 x 10-6

IGCC is 3.6 times

better than CFB

PM/PM10 negligible 0.026

VOCs 0.0017 0.003

IGCC is 1.7 times

better than CFB

Sulfuric Acid Mist 0.0005 0.0054

IGCC is 10 times

better than CFB

CO 0.03 0.1

IGCC is 3.3 times

better than CFB

Notes:

1. USEPA Exhibit 3-10, page 3-10

Page 3

The failure to accurately characterize the environmental benefits of IGCC over CFB is a major deficiency of the EIS report.

The EIS also mischaracterizes the commercial status of IGCC. On page 2-31, the EIS attributes the following claims to the USDOE: 1) IGCC has insufficient operating experience; 2) That major components of IGCC have not been integrated into power applications, and 3) that the technology has been demonstrated at only a handful of facilities worldwide. Attachment 1 is the DOE reference cited by the report. These conclusions attributed to DOE by the EIS are not found in the article and should not form the basis for rejecting IGCC from detailed review.

The EIS claims that IGCC systems cost 20% more than PC systems. 6 Even if this capital cost premium estimate is true, some utilities find IGCC flexibility benefits outweigh these costs. For example, AEP has proposed an IGCC plant before the Ohio Public Service Commission. Attachment 2 is the testimony of AEP’s Michael Mudd on behalf of the company’s IGCC plant. In his testimony, Mr. Mudd assumed that the capital cost of an IGCC plant is 20% higher than a PC. Next, he modeled the impact of future carbon dioxide regulations by preparing a simple option value analysis of IGCC and SCPC under varying carbon scenarios. The model weighted three scenarios each at 30% probability— no carbon dioxide requirements, low carbon dioxide prices, and high carbon dioxide prices. The remaining scenario, weighted at 10%, required CO2 controls by 2020. Even assuming a 20% capital cost premium for IGCC over conventional coal plants, IGCC had about the same NPV as the PC project.

By failing to look at total costs, and by focusing exclusively on today’s costs and not future costs, the EIS reaches the wrong conclusion that IGCC is not cost effective. The EIS also incorrectly concludes that IGCC plants do not achieve acceptable levels of reliability. This conclusion is not supported by the facts. Three of the newer IGCC plants are found at Italian refineries. Attachment 3 is a recent Gas Turbine World article that reports that the capacity factors of these three plants are between 90% and 94%. Only one of these plants operates with a spare gasifier. All three IGCC plants utilize liquid refinery wastes not coal. But to use coal in most gasifiers, the coal must be slurried to a liquid, so the gasifier, and all the key downstream equipment, is exactly the SAME as the ones found in the Italian refineries. As noted in the Turbine World article, US power companies overly focus on Wabash and Polk plants. These older plants have availabilities that don’t exceed 85%.

In conclusion, the EIS cited several key reasons for eliminating IGCC from the EIS detailed evaluation. A more careful consideration of these issues—environmental benefits, costs, and availability—show that IGCC has important benefits over CFB technology. We respectfully request that the EIS be revised to include IGCC in the detailed evaluation of alternatives to the proposed CFB plant. 6 EIS page 2-31.

Page 4

Sincerely,

John W. Thompson

Director of the Coal Transition Project

Page 5

Attachment 1

08/29/2006 04:06 PM DOE - Fossil Energy: Pioneering Coal Gasification Plants

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You are here: Clean Coal & Natural Gas Power Systems > Coal Gasification R&D > Pioneering Gasification

Plants

Pioneering Gasification Plants

In the 1800s, lamplighters once made their rounds down the streets of many of America’s largest cities lighting street lights fueled by “town gas,” the product of early and relatively crude forms of coal gasification. (Town gas is still used extensively in some parts of the world, such as China and other Asian countries). Once vast fields of natural gas were discovered and pipelines built to transport the gas to consumers in the 1940s and 50s, the use of town gas phased out.

In the 1970s, interest in coal gasification

revived, due largely to concerns that the U.S.

supply of natural gas was waning. The

massive Great Plains Coal Gasification Plant in

Beulah, North Dakota, was built with federal

government support to use coal gasification

to produce methane, the chief constituent of

natural gas. When government price controls

on natural gas were lifted, however, large

quantities of natural gas became available,

and no other coal-to-methane gasification

plants have been built to date in the United

States.

Coal gasification, however, found its most

important market application in the 1980s and

90s. Driven primarily by environmental

concerns over the traditional burning of coal, gasification emerged as an extremely clean way to generate electric power. By turning coal into a combustible gas that could be cleansed of virtually all of its pollutantforming impurities and burned in a gas turbine, coal could rival natural gas in terms of environmental performance.

The first major use of coal gasification to generate electric power in the United States took place in the mid-1980s at Southern California Edison’s experimental Cool Water demonstration plant near Barstow, California. The 110-megawatt Cool Water plant established the early technical foundation for future integrated gasification combined cycle (IGCC) power plants.

Coal gasification-based power concepts got their biggest boost in the 1990s when the U.S. Department of Energy’s Clean Coal Technology Program provided federal cost-sharing for the first true commercial-scale IGCC plants in the United States.

Tampa Electric’s Polk Station

The Polk Power Station near

Mulberry, Florida, is the Nation’s

first “greenfield” (built as a brand

new plant) commercial gasification