North Dakota coal plans to ask the state for financial help — billions of dollars of financial help over time.
Despite a stay on the federal rule, the coal industry potentially faces large carbon dioxide emission reduction requirements from the U.S. Environmental Protection Agency’s Clean Power Plan.
“This is no longer a vague threat out there in the future,” Lignite Energy Council President Jason Bohrer told members at the organization’s annual meeting this week in Bismarck.
Bohrer said North Dakota policy makers will need to answer the question: Will the state set a priority to help the lignite industry remain viable?
The coal industry asked the state for a direct appropriation for the first time during the past legislative session — $5 million from the general fund for the Lignite Research Council. The council, which makes recommendations to the North Dakota Industrial Commission on funding lignite coal-related research projects, was typically funded with extraction taxes collected from the coal industry.
Over the next several legislative sessions, the industry plans to ask for more.
"Because of the challenges facing the industry, it will be at magnitudes larger than what people have thought about historically,” said Mac McLennan, CEO of Minnkota Power Cooperative.
McLennan said the LEC is working on a package that will likely include requests for a multitude of tax incentives, including incentivizing oil companies who use carbon dioxide for enhanced oil recovery, potential financing from the Bank of North Dakota and more research and development funding.
“I can’t do it on my own as a utility because of the risk,” McLennan said of investments. “If it doesn’t work, you’re in trouble.”
This funding request would be the state’s way of sharing in the risk and making it more viable for the industry, according to McLennan.
Bohrer said the industry knows it will be a challenge securing the funding because budgets are tight but LEC aims to make lawmakers understand the rule’s magnitude.
“The Clean Power Plan changes the world we live in today,” McLennan said. “It’s the biggest problem facing the industry today.”
Bohrer said the industry has been able to deal with regulatory issues on its own in the past so state lawmakers assume: “You guys are going to be able to fix this right? … They have a hard time visualizing plants will shut down.”
Carbon restrictions are not likely to go away no matter what the U.S. Supreme Court decides regarding the Clean Power Plans’ constitutionality, said Wade Boeshans, president of BNI Coal. The High Court could decide to leave the rule as it is.
If nothing else about the rule is changed, what the lignite industry hopes to see is a better timeline, Bohrer said. Instead of having to reach an interim benchmark, utilities are aiming to have until the final 2030 deadline to meet the changes.
“If you give us until 2025, we think we could make it happen,” Bohrer said.
A technology the lignite industry is pinning high hopes on to solve its carbon woes is the Allam Cycle.
The Allam Cycle, invented by 8 Rivers, uses pressurized carbon dioxide rather than steam to generate power more efficiently, at a lower cost and cleanly. It is being tested on a $140 million, 50-megawatt natural gas-fired power plant in Texas. After completing engineering and design work, North Dakota’s Energy & Environmental Research Center and industry partners decided the technology had potential for use with gasified lignite coal.
Part of the $5 million general fund appropriation to the Lignite Research Council went to lab test the Allam Cycle carbon capture and utilization system against the properties in lignite coal to determine what materials would be necessary to make the technology work for the industry. Bohrer said the project partners plan to come before the LRC in May for another round of funding.
The research group aims to move to pilot testing through July 2019. The estimated cost of the project up to that phase is expected to total $30 million. The third phase, a potential demonstration power plant similar to that in Texas, would come in August 2019.
Bohrer said, by appearing before the LRC, any projects go through peer review.
“It’s not like we’re saying write a check and trust us,” he said.
But there are a lot of unknowns.
Bohrer said, in addition to the Allam Cycle, the industry will need to research how to retrofit existing plants for carbon capture and still sell power economically, as the Allam Cycle would require the building of a brand new plant.