Don Collins, shared views with JHCGA on the current state of energy in Wyoming and beyond. Don’s comments are aligned with his role as Chief Executive Officer at Western Research Institute, and do not officially represent policy positions of the state.
Tell us about and your background vis a vis Energy in Wyoming.
I’ve worked on Clean Coal technology research and development (R&D) for about sixteen years starting with a position in the Department of Energy developing fuel cell, hydrogen turbines, high-efficiency CO2 compression, rare earth material fabrication, carbon, capture utilization and storage (CCUS), and advanced power electronic conversion technologies with grid interconnection features, including Smart Grid capabilities. Prior to clean coal technology R&D, I worked with teams developing new technologies for, and designing and building nuclear submarines.
Section 1 - Expert Index Questions
The Wyoming Energy Landscape
The Wyoming coal industry will rebound.
The recent restructuring of a number of coal companies will aid Wyoming continuing to be the lowest cost coal producer in the U.S. This will better enable the Wyoming coal industry to ride through the current market conditions and sluggish global economic conditions.
In addition, by increasing the efficiency for converting coal to electricity a number of advances in NextGen Clean Coal technologies are already lowering the cost of electricity and lowering all emissions for each megawatt of electricity produced. State of the art ultra-super critical pulverized coal plants achieve 41% to 43% efficiency and are rapidly being installed in Asian countries. Advanced ultra-super critical pulverized coal technologies underdevelopment aim to increase efficiency to 45% or greater.
The NextGen transformational Clean Coal technology pipeline has several promising advances to further improve upon recent efficiency gains in coal power plants. NextGen Transformational Clean Coal tech R&D efforts strive to increase efficiency to 50%-55% and then up to 60% or greater. Commercially viable CO2 utilization technologies are being advanced through the NRG COSIA Carbon XRPIZE and Department of Energy CCUS R&D Programs.
Wind power should be part of Wyoming’s future.
Wyoming is blessed with an abundance of diverse natural mineral and energy resources that, when developed prudently, will enhance the state’s economy and wellbeing of its communities and citizens. This abundance of resources provides Wyoming with many opportunities to create “the lowest cost” industries for a broad array of diverse companies that add value to Wyoming’s mineral and energy resources.
Wind in Wyoming is rated the highest value land-based wind resource within the U.S. as the wind blows at higher speeds for more hours each year than it does any place else. This enables harvesting wind for electricity production in Wyoming at lower cost than other places in the U.S. Maintaining low cost electricity in Wyoming, whether from wind or fossil energy resources, positions Wyoming to be very attractive to energy intensive value-added industries. It also helps keep costs down for state and local government entities which in turn lessens the tax burden on citizens and industries. I believe that Wyoming will succeed with a holistic strategic approach versus a narrower single resource or single industry focus.
Carbon capture and storage (CCS) technologies should be part of Wyoming’s future.
Converting CO2 into marketable products is a great way to recycle energy and reimagine CO2 as an underutilized natural and anthropogenic resource. I want to emphasize Utilization of CO2 above storage as the technological pathway to recycle carbonaceous energy resources such as wood/biomass, coal, natural gas and oil.
Commercially viable carbon capture Utilization and storage (CCUS) technologies offer the promise to create market demand for CO2 which in turn would create demand for carbon-rich natural resources with coal being the most carbon-rich natural resource.
Blessed with an abundance of the lowest cost coal positions Wyoming to better afford to deploy CCUS technologies earlier in the new technology commercialization cycle compared to other regions of the US since the cost to produce CO2 should be substantially less for Wyoming given our low coal cost. This enables Wyoming to establish a CCUS high-tech economic base component while capturing market share for CCUS industries and the products they’ll produce in Wyoming.
Wyoming should try to diversify beyond energy and tourism in the years to come.
All economies need to adapt and continually position to be successful within near-term and long-term megatrends to avoid stagnating and, more importantly, to avoid going backwards economically.
The biggest challenge I see for Wyoming is to overcome the higher cost to transport products to market centers. The lengthy distance to population market centers in the U.S. and to export terminals is a competitive weakness that needs to be countered with Wyoming’s great strengths, such as low-cost minerals and energy resources. By producing “High-Value Density” products from our low-cost natural resources, Wyoming can lessen the impact of long distance transportation cost for value-added manufacturing businesses.
We are fortunate that a number of advances in material science and technologies are becoming commercial and require carbon as a major ingredient. A critical mass of sorts is emerging for which Wyoming should be a major industry and economic player given it’s abundance in low-cost carbon natural resources and low-cost business conditions.
The Nation’s Energy Landscape
Within 5 years in the U.S., CCS technologies will start coming on-line through demonstration projects, bringing the costs of these technologies down, and proving the technology.
Thanks to Wyoming’s leadership and collaboration with the NRG COSIA Carbon XPRIZE a number of different CO2 utilization technologies will be tested at the Wyoming Integrated Test Center in 2018. The next stage is larger scale demonstration projects beginning in 2019/2020 to further develop and prove at large-scale that CO2 utilization technologies are ready for commercial investment and operation.
To be clear about expectations, it is important to understand that commercial operation occurs after the demonstration stage for new technology development. The first commercial installations are the highest cost as all engineering costs and design debugging costs are assigned to the first unit. Costs generally decline after the first unit. So, I think that we should expect, baring a large infusion of funds to accelerate commercialization, that significant commercial-scale use of CO2 utilization technologies will occur circa 2025 to 2030.
Within 5 years, California will be using Wyoming generated wind-power.
A lot of effort has led to approval of new transmission projects that will deliver Wyoming wind to California that is very price competitive with local California renewable electricity prices.
Another bright spot for Wyoming wind developers is the prospect of Wyoming diversifying its economy to include manufacturing of high-value carbon-based products that will use Wyoming wind electricity without the cost for long-distance transmission lines. So, over the next ten to twenty years, I think that other states like California will need to compete to obtain electricity from Wyoming wind farms. That is a good position for Wyoming to be in!
The national regulations set forth by the Clean Power Plan will be repealed, or abate in some manner.
Since the election of Donald Trump the process to unwind the Clean Power Plan has already started. Also, a number of scientists and environmental leaders are communicating that in fact climate science is not settled as some leaders have promoted for political reasons.
For example, Patrick Moore, the co-founder of Greenpeace, released a paper in June 2016 entitled, “The Positive Impact of Human CO2 Emissions on the Survival of Life on Earth.” A key point by Mr. Moore is that the earth’s atmospheric CO2 levels were trending below 180 parts per million (ppm) such that the earth’s atmosphere would lack sufficient CO2 to sustain plant life.
Mr. Moore provided three critical findings: (1) “Human emissions of CO2 have restored a balance to the global carbon cycle, thereby ensuring the long-term continuation of life on Earth.”, (2) “The extremely positive aspect of human CO2 emissions must be weighed against the unproven hypothesis that human CO2 emissions will cause a catastrophic warming of the climate in coming years.”, and (3) “The one-sided political treatment of CO2 as a pollutant that should be radically reduced must be corrected in light of the indisputable scientific evidence that it is essential to life on Earth.”
Dr. Moore’s findings are profound in that they are counter to the prevailing political wisdom concerning the effects of anthropogenic CO2 emissions as presenting great negative consequences for life on Earth. The ramifications identified by Mr. Moore are that our world would begin to face food shortages and would become increasingly challenged to feed the world’s growing population; especially while also striving to transition large population groups from extreme poverty to middle class quality of life and consumerism. Mr. Moore identifies anthropogenic CO2 as a providing a positive impact in forestalling/preventing a food crisis on earth and allowing people to be lifted out of poverty.
In addition, reports issued by the United Nations Intergovernmental Panel on Climate Change (IPCC) found, “The current rate of global mean sea level change, starting in the late 19th – early 20th century, is, with medium confidence, unusually high in the context of centennial-scale variations of the last two millennia.” The IPCC’s definition of “medium confidence” rates findings at a 50% chance of being correct, which also means that a finding is rated at a 50% chance of being wrong. Surely a 50-50 chance of being right or wrong is not settled science.
Furthermore, the IPCC report provides “very high confidence” findings that actual historical precedent for glacial cycles prior to anthropogenic CO2 emissions have resulted in at least 5 meter sea level rise higher than at present and that sea level is to be expected following the Little Ice Age. Therefore, it would be intellectually incorrect to assign recent rise in sea level rise solely to anthropogenic CO2 emissions since the Little Ice Age ended circa 1750. These facts from the IPCC report are important because they identify factors predominately responsible for rising sea level that are not being addressed in solution discussions given the incorrect focus on anthropogenic CO2 emissions as the root cause.
Clarifying the correct root cause(s) is extremely important to ensure that efforts to prevent the estimated damage due to rising sea levels are properly focused on solutions that actual address the true root cause(s). Failure to do so will allow the estimated damage to occur. So, it is vitally important that U.S. and international policies concerning responses to rising sea level and beneficial contributions of higher than 180ppm atmospheric CO2 levels properly understand the controlling factors and refocus solution efforts more appropriately. I believe that the pendulum is swinging away from incorrect political agendas to correct scientific understanding.
Other coal producing regions of the U.S. will rebound and successfully diversify their economies beyond coal dependence.
The old and wise adage, “Change is Constant,” is an eternal truth and one that everyone knows deep down even when faced with the unpleasantness of being forced to change. American innovativeness and entrepreneurial spirit are tremendous at solving complex problems. I’m confident it will continue to be a great strength of our country and will develop good ideas to help the economically depressed coal communities throughout our nation, though it will take considerable time to accomplish.
The Global Energy Landscape
Within 5 years, CCS technologies will start coming on-line globally through demonstration projects, bringing the costs of these technologies down and proving the technology.
Several countries, such as Japan, South Korea, and Taiwan, look very well suited to be early adopters of CCUS technologies given their relative lack of natural resources and need to import resources generally at cost premiums over domestic resource supplies. The ability to make substances and products from their CO2 emissions can reduce the need to import resources and products, thereby improving their economic security and sustainability.
As discussed above, we need to be clear about expectations, it is important to understand that commercial operation occurs after the demonstration stage for new technology development. The first commercial installations are the highest cost as all engineering costs and design debugging costs are assigned to the first unit. Costs generally decline after the first unit. So, I think that we should expect, baring a large infusion of funds to accelerate commercialization, that significant commercial-scale use of CO2 utilization technologies will occur circa 2025 to 2030.
Within 5 years, renewable energy will reach price parity with fossil fuel energy, creating a global renewable energy explosion.
The general narrative concerning grid parity typically does not consider efficiency gains in fossil energy plants and the financial income benefits that commercial viable CCUS technologies can provide. Also, general mainstream grid parity analyses for renewable grid parity are incomplete as they do not consider cost for demand response, the communication infrastructure to monitor and control several orders of magnitude more and smaller devices (which increases grid cyber threat risks), new control systems to manage renewable variable electricity supply, and the cost of cyber security to protect against cyber threat risks.
India is the next frontier for CCS technologies.
India has much economic growth promise that will be realized once substantial cultural changes are progressed to clear up widespread corruption such that companies believe it is safe to invest in India projects.
Japan is a leader in CCUS technologies to watch.
The world’s largest economies, the USA and China, should be cooperating with each other in developing and scaling clean energy projects.
Business parties generally successfully partner where significant mutual benefits exists to overcome free market competitive factors. China does not operate under free markets as its largest companies are sovereign, or largely sovereign, owned with strategic plans and pursuits being highly guided by national priorities rather than individual corporate missions and strategies. Cooperation need not be forced as it will naturally occur where it makes sense for both parties.
Japan is a leader, and is collaborating with Wyoming, in developing NextGen transformational Clean Coal technologies. The Japanese have identified both integrated gasification combined cycle (IGCC) and integrated gasification fuel cell (IGFC) as game changing technologies combined with co-feeding biomass to achieve 55% to 60% efficiency for coal to electricity with near zero emissions.
Section 2 - Short Answer Questions
What steps do you think Wyoming should implement to combat layoffs in the coal industry?
Devise approaches to expedite permit approval of industry projects that can hire laid off coal miners. Swiftness is essential to respond in time to have a reasonable chance to make a positive impact.
Should Wyoming work to reemploy such workers in the coal industry or work to create employment for former coal industry workers in other fields, including renewable industries? If so, how could this be done?
In general, the state government does not manage industries, but rather establishes frameworks for industries to do well given market and industry competitive conditions. If the state were to take an active leadership role, then resources to monitor and swiftly adjust to market changes will need to be put in place for the full time span of the endeavor. This requires a long-term commitment versus a “hit and fade away” approach. It is up to industry to devise a success strategy and implement it successfully.
That said, the state can work at national and international policy and regulatory levels to fight for fair and just policies and regulations for Wyoming industries to compete within. Not all countries actually practice free trade as major companies are sovereign owned and are highly subsidized in various ways to be competitive. President Trump’s pursuit of a border adjustment tax is a national policy to level the competitive field for all U.S. companies that Wyoming can engage and support.
Another challenge for Wyoming is that the workers may quickly leave the state to find employment and are therefore not available to reemploy with the state.
I think that the focus needs to be on leveraging existing strengths to build upon for the near-term and devise and implement longer-term strategies that align with megatrends and not just the latest hot trend. This can enable Wyoming to develop a robust and growing innovation component to the economy that can lead to high-tech careers (not just jobs) and establish companies that will hire Wyoming’s youth and then also provide a better return on the state’s investment in education.
In your opinion, can state or federal legislative solutions play a role in solving Wyoming’s current economic situation? If so, what are some of those legislative solutions?
Wyoming has a great opportunity to improve the return on investment in education by facilitating companies to create quality careers in state so that our youth, out of necessity, will not need to leave Wyoming to find quality employment and the ability to have a quality life for their families.
Is there a state that has successfully implemented state legislative policies that Wyoming could replicate?
Several states and Canadian provinces have used legislation to incentivize/mandate new energy technology usage to help drive down costs by supporting the higher costs during early market penetration.
Also, Canada uses carbon taxes to fund new technology R&D projects which can be a model to adopt in Wyoming to provide a long-term stable funding stream to take CCUS technology from pilot testing at the Wyoming Integrated Test Center to large scale demonstration and first commercial plant operation. I think that Wyoming will need to devise a legislative approach that overcomes state constitution restrictions.
What are currently Wyoming’s most important clean energy R&D priorities? Coal conversion? Carbon capture, utilization, and storage? Hydrogen production and utilization? Energy storage? How should this research be financed?
I believe that development of CO2 utilization technologies are the best to increase the value of Wyoming’s fossil energy resources by getting at least a second use from the natural carbon resource. This is essential to support coal mining production at healthy levels. So, CO2 utilization technologies offer opportunities to provide a new additional source of revenue and increased net income for coal power plant owners.
The Wyoming legislature has already appropriated $15 million to build and operate the Wyoming Integrated Test Center where CCUS technologies can be tested at pilot and demonstration scale to advance and be proven, including five finalists from the NGR COSIA Carbon XPRIZE in 2018. The private sector is funding development of several CCUS technologies thanks to the Carbon XPRIZE.
The Department of Energy (DOE) is funding both NextGen Clean Coal plant technologies that lessen CO2 emissions by increasing plant efficiency and new CCUS technologies to lower the cost of CO2 removal from $80-$140/tonne today down to $10/tonne by 2035.
Wyoming could stimulate a CCUS high-tech industry by offering to provide cost share in support of projects funded by the DOE. This would be a highly leveraged play for Wyoming and that can provide return on investment. By requiring the pilot/demonstration projects to be conducted in Wyoming, economic activity will be stimulated possibly more than the value of Wyoming’s cost share investment. For example, a typically DOE pilot project is funded 80% by DOE and 20% by the project parties. If Wyoming offered to provide 10% ($1 million of $10 million), then Wyoming has the opportunity to recruit 40%-60% of the total project value ($4-$6 million) into the state’s economy.
Likewise for a larger scale demonstration project of $200 million, DOE typically funds 50% of the project with the project parties funding the other 50%. For this example Wyoming could offer to provide 10% ($20 million) to produce the opportunity to recruit 40%-60% of the total project value ($80-$120 million) into the state’s economy while assisting in development of CCUS high-tech businesses that can provide a longer term return on the state’s 10% cost share investment. Wyoming could devise the legally acceptable means to obtain an equity position in the companies for the possibility of future returns. In addition, commercially successful CCUS technologies can sustain and possibly increase the demand for Wyoming coal which supports revenues to the state as another return on the state’s 10% cost share investment.
Alternatively, the coal industry could agree to a small levy to provide the cost share described above and retain the equity ownership in some form of a joint venture with the mission to become self-sustaining over time to fund future Clean Coal and CCUS technology development and demonstration projects.
Creation of a CCUS high-tech business sector and economic base provides opportunities for Wyoming’s youth to obtain quality employment in our state rather than go to another state. By increasing the percentage of students that stay in Wyoming to work, the state will improve its return on investment in education. So, the state has a broader bigger picture perspective compared to individual companies such that the state can directly and indirectly realize greater return for investments in both CCUS tech and education.
Grid modernization is a term that we hear again and again but it is unclear what that looks like. Wyoming could be at the center of grid modernization because of our role as an energy producer. What sort of grid infrastructure can Wyoming invest in to be at the forefront of grid modernization?
While there may be opportunities for Wyoming to participate in the “grid modernization” movement, and some have already, the cost-benefits are limited for Wyoming compared to the large metropolitan population centers and regions with higher electricity costs. Examples of the modern grid already deployed in Wyoming are the advanced digital meter infrastructure at the distribution level and synchronous phasor measurement units at the transmission level.
The Department of Energy Grid Modernization R&D program does envision that large central power generation plants will eventually be integrated into a modern national grid. Wyoming’s fossil and wind power generation facilities are such central power assets that would be integrated in the future, but that integration is a considerable time off from today. So, I think that the in-state market for modern grid technologies and business is substantially smaller than for the more population dense states and is likely to remain so for many years.
Perhaps the best way is for Wyomingites to pursue opportunities to develop and then sell new technologies for the modern grid in the larger markets existing in other states.
What is the international market for coal, oil, or natural gas produced in the U.S.? Should Wyoming be in the business of developing these markets?
The international market for coal, oil and natural gas have all declined in recent years primarily due to sluggish global economic conditions in the wake of the Great Recession.Technology advances in directional drilling and fracking have substantially increased the supply of oil and natural gas while contributing to multi-year low prices for both as well.
Shale plays exist around the world and have yet to be tapped to the extent that they have been produced within the U.S.If other nations beginning developing their shale resources, then we should anticipate lower oil and natural gas prices to continue for more than a decade.Also, within the next year or two a natural gas pipeline from Russia to China will go on-line providing China with significant additional natural gas to help meet its energy and industrial chemical production needs.These emerging energy supply developments are not generally considered in energy supply and demand forecasts into the next decade and longer time horizons.So, the development will add to oil and natural gas supply estimates and put pressure on prices for both which will put pressure on coal to drop in price or experience reduced demand.
I believe that the state of Wyoming has roles to play in developing energy markets.Most important is engagement at national and international policy and regulatory levels to ensure that facts guide decisions as much as possible.Relations with many nations benefit from high level state government participation while also providing venues and opportunities to discuss and coordinate policies.
How much of a global market do you think there is for coal-based industrial chemicals and other end-products of coal conversion?
Coal-based industrial chemicals production faces strong competition from oil and natural gas derived industrial chemicals. Coal will find it difficult to increase market share due to the increase in production of both oil and natural gas and the attendant lower prices for both feedstocks.
Coal has advantages in production of certain end-products such as higher strength carbon fibers and regenerable activated carbon for water purification. Both of these are potential large markets with compound annual growth rates (CAGR) over 10%. These are very attractive markets for Wyoming coal given is low cost advantage.