Does Coal Have a Role in Alaska’s Energy Future

Seventh in a series of eight articles

By Gwen Holdmann
July 7, 2023

On a sunny day on August 28, 2018, a crowd gathered at the University of Alaska Fairbanks to celebrate the completion of its new combined heat and power coal-fired power plant. The $245 million facility was sized to produce enough steam to heat all the buildings and generate 17 megawatts of electricity – more than enough to meet all the needs of campus. The project had taken five years to get to this point, and would require another 18 months before it was fully operational. But on that day, excitement over the imminent completion of the facility rippled through the crowd, coupled with a sense of palpable relief. The old plant had been maintained on life support for years. For anyone briefed on the multiple potential single points of failure that could have resulted in a catastrophic loss of heat and power for the campus, the ribbon cutting for the new power plant represented an impending crisis averted. Rather than a ribbon, there was a switch to flip, energizing a display of light bulbs arranged in a pattern to spell out “U.A.F.” When the lights turned on, the crowd cheered loudly.

Those cheers and applause are very likely the last to ever herald the opening of a new coal power plant in the U.S. 

Coal has been, and still is, one of the world's major energy sources. The coal industry was a major foundation for American industrialization in the nineteenth century, providing a cheap and abundant source of power for steam engines, furnaces, and eventually electric power generation across the country. In many ways, coal shaped the trajectory of our country, driving America’s economy for over a century until it was eclipsed by petroleum in the 1950s. Without coal, the U.S. would almost certainly not have become a global industrial powerhouse, and we may not be enjoying the same standard of living that we do today. 

Coal is also the energy source that is most synonymous with pollution. “Dirty coal”, is a common refrain. Over time, the nature of why we call it dirty has shifted. A century ago, long before we were concerned about carbon dioxide and global warming, the mining and handling of coal was very human intensive, and – quite literally – dirty. Mines were dangerous places to work. Cities were polluted with byproducts of burning coal, such as SOx, NOx, and particulate emissions which resulted in smog and acid rain, and ash laden with toxic byproducts polluted land and water.

Over time, the coal industry adapted to societal expectations for a cleaner environment, and the policy and regulatory restrictions that enforced it. For example, the Clean Air Act signed into law by Richard Nixon in 1970 imposed stringent limitations on sulfur emissions from any newly constructed coal-fired power plants. Industry responded by expanding low-sulfur coal mining, something that Alaska’s Usibelli Coal Mine was well positioned to capitalize on. Because Usibelli’s lignite coal has some of the lowest sulfur content of any feedstock in the world, the company was even able to establish a small export industry. When more effective emission controls were combined with burning lower sulfur coal, significant improvements in air quality were achieved, especially in the vicinity of these facilities. But controlling carbon dioxide emissions is an entirely different matter, one that has proven far more vexing.

Over the past decade, public concern has increasingly shifted to the specter of accelerating climate change. Carbon dioxide has become public enemy number one, and processes that produce it, such as power generation from fossil fuels, have garnered an increasingly negative perception. Coal, more than any other source of energy, has borne the brunt of this paradigm shift. Even though we tend to lump coal, oil and gas in the general category of “fossil fuels,” they are different in both origin and composition. The coal mined at Usibelli Coal Mine in Healy – Alaska’s only currently operating mine – originated 10 million to 50 million years ago, coming from long-dead trees that fell in swamps and were covered by layers of mud and acidic water, preventing decomposition and trapping the carbon they contained. Initially forming peat, the layers were subjected to heat and pressure for millions of years as successive layers of mud and debris were deposited, until ten feet of peat became one foot of carbon-rich coal. In contrast, oil and gas originate from marine organisms, and incorporate far more hydrogen and relatively less carbon in their molecular structure. When they burn, coal generates far more carbon dioxide than more hydrogen-rich gas or oil.

What Has Killed Coal?

Other than the UAF plant, there have been no other new coal power plants constructed in the U.S. since 2015, and there are no current plans to build any. Why? While stricter environmental regulations may have played a supporting role, most economists agree the real culprit for coal’s demise has been the availability of cheap natural gas - and that lower cost isn’t necessary just about the fuel (gas versus coal). It’s about the capital costs and time required to construct a plant. Coal plants are much more complicated and far more expensive to build. That is a fundamental reality based on their greater complexity. If you tour a coal plant, there is a lot of “stuff”. You will see boilers, high pressure steam handling, cooling systems, water circulation and treatment equipment – not to mention the infrastructure required for moving and handling the coal. Usually, all of this occupies a large building the size of a multi-level apartment building. All this equipment is expensive to build and maintain.

In contrast, a simple gas turbine works off a different principle – it is driven by compressing air, mixing it with fuel, and then combusting it at extremely high temperatures with the resultant gas spinning the blades of the turbine. We have all seen one of these hanging off the wing of a jet airplane. That cylindrical object is essentially a very compact power plant, generating thrust in the case of an airplane, or turning a shaft connected to a generator in the case of a powerplant. For example, the LM6000 turbine that is used by Golden Valley Electric Association (GVEA) in their North Pole power plant is very literally derived from a GE aircraft engine, and it produces 50 megawatts of electricity. That is roughly three times the output of UAF’s new coal plant, which is six stories tall and takes up several acres of space when considering all of the coal storage and handling facilities. And for a coal power plant, that added complexity and “stuff” doesn’t just result in higher capital costs and longer construction times, it also means a larger workforce is required to operate it. And that results in a higher operating cost. 

Even a modern and more efficient combined cycle gas plant consists of a simple cycle gas turbine (like on the jet airplane), followed by a heat recovery steam turbine and generator, sort of like you would find in a coal plant. This improves the efficiency of the power plant by making use of the hot exhaust gasses that are coming out of the back end of the gas turbine to boil water, make steam, and use that steam to drive a turbine as a secondary source of power. But even in this case, there is no boiler, and no complex fuel handling or management of byproducts like ash.

Across the U.S., most of the coal plants are also quite old – the majority of them are at or approaching the end of their design life. When faced with the decision of whether to continue to operate these aging facilities, many utilities are opting to phase out coal generation rather than keep them operating, even in places where public sentiment is still in favor of coal. What do these national trends mean for future power production in Alaska?

Rethinking Coal in Alaska

Like much of the U.S., Alaska has a long history with coal. Before Anchorage was powered and heated by natural gas, coal - shipped from the Matanuska Valley - was a major component of its power supply. When locally available gas became available as a byproduct of oil exploration and production in Cook Inlet, electric utilities were quick to take advantage of it. As a result, southcentral Alaska became one of the first markets in the country to rely predominantly on natural gas for power generation. Initially, the gas was supplied for just $0.15 cents per thousand cubic feet. That price creeped upward as producers established export markets, including ammonia for fertilizer, and the first ever shipment of LNG to Japan. As these basins have matured and gas became less abundant and more expensive to produce, the cost has continued to rise. And, more concerning, there is uncertainty about long-term supply from the inlet, prompting local utilities to seriously consider the need to import gas in the future. All this combined with the fact that existing renewable technologies do not yet have the capability to meet the electric and space-heating needs of the state warrants taking another look at coal given its vast local availability.

When the UAF coal plant was under development, there was very little pushback. Universities are thought of as bastions of liberal thought; yet, there were really no significant protests about the idea of building a new coal plant, at least that I was aware of. Why? Because after a lengthy analysis of other options, ranging from solar and wind to natural gas, biomass and geothermal, it was understood coal was, and still is, the only viable, local option that can provide heat to the campus. The power plant that we celebrated on that warm summer day in 2018 was not really a power plant at all – it was first and foremost a heat plant– a heat plant with electricity as a by-product. And because of that, it is also the most efficient power plant on the Railbelt.

Coal generation is typically less efficient than gas-fired turbines, especially combined cycle turbines such as the ones operated by Chugach Electric Association at their Southcentral Power Project. Those units approach 50% energy conversion efficiency (energy in/power out), and are frequently cited as the most efficient generation on the Railbelt. This would be true if you are only taking into account electric power generation. But if a facility can be used to both generate power and provide steam and hot water for heating – called cogeneration – much better efficiencies can be achieved. Incidentally, this is also why small nuclear reactors are a very appealing option to so many. They represent an alternative technology capable of providing both heat and power in a way that is highly efficient, reliable, and hopefully price competitive. 

Both the UAF coal plant and the Aurora plant in downtown Fairbanks are cogeneration facilities, operating at about 70% thermal efficiency. That means about 70% of the energy available in the coal when it arrives at the plant is turned into either electricity or heat. As a result, they are the most efficient power plants operating on the Railbelt. And this efficient use of coal has a big impact on emissions as well. While gas turbines emit approximately 50% less carbon dioxide than coal plants per megawatt-hour of power generated, when you take into account the better overall thermal efficiency of these coal plants, at least some of this innate advantage disappears. The bottom line is that thermal efficiency really matters and needs to be taken into consideration when it comes to any calculation we are making about carbon. Space heating accounts for the lion’s share of our state’s energy consumption. Placing so much emphasis on electricity generation loses the forest for the trees. By my calculation, an efficient coal combined heat and power plant produces about the same CO2 emissions as a highly efficient combined cycle natural gas power plant, coupled with separate natural gas-fired heating via a conventional gas distribution network. 

For Fairbanks, the alternative to coal, at least in the near future, is trucked-in LNG. Recently, the Interior Gas Utility (IGU) entered into a long-term contract with Hilcorp to truck-in LNG from the North Slope. If you consider the energy required to liquefy, truck, and regasify natural gas, it’s tough to see how gas-fired power generation can beat coal-fired combined heat and power with the feedstock delivered by rail in terms of lower greenhouse gas emissions. That includes not only the UAF plant, but also the Aurora Plant in downtown Fairbanks, as well as the ones currently operating at Fort Wainwright and Eielson Air Force Base. In other words, you cannot just measure CO2 production during combustion – all aspects related to the power generation need to be taken into account, including processing and transportation. 

Last July, the Army published an Environmental Impact Assessment (EIS) related to heat and electrical system upgrades at Fort Wainwright. In the 600+ pages of analysis, they assessed three alternatives, weighted to consider reliability, economics, environmental factors, and operational impacts. The preferred alternative was decommissioning and demolishing their existing coal centralized heat and power plant, which is aging and badly in need of replacement. In its place, the plan would be to purchase electricity from GVEA and install diesel generators as emergency backup for mission-critical buildings. Off-site electric generation would be coupled with a shift to distributed natural gas-fired boilers strategically placed around the base, with a greatly reduced utilization of the base’s district heating system. In summarizing the environmental impacts of each option, the authors of the study noted that the preferred alternative has “the greatest reduction in greenhouse gas emissions of all action alternatives.” But, in reviewing their data, it does not appear that they took into account emissions generated by purchased electricity from GVEA. Wherever this power might come from, it almost certainly won’t result in the 75% reduction emissions over the status quo that the EIS claims.

Can Coal be Carbon-Neutral?

If coal was truly carbon neutral through efficient point-source carbon capture of CO2 and long-term, verifiable and effective sequestration of that carbon, would we have the same objections to its use?

Saskatchewan has been successfully using carbon capture and underground storage at its Boundary Dam electricity coal-powered plant for almost a decade now—the first in the world to do so. There are legitimate questions about how much carbon is captured and how energy intensive that process is, but it seems to be working effectively. The next question is how replicable is this demonstration project?

Wyoming is probably the most pro-coal state in the country, and it has been fighting hard to keep its coal industry going – an industry which has long been the mainstay of the states’ economy, and a key part of its identity. In response to market demand for lower-carbon solutions, Wyoming passed a bill in 2020 directing utilities to install carbon capture equipment on 20% of their coal fired power plants by 2030. At the same time, the state has poured money into refining solutions to this challenge. But the clock is ticking and the utilities are now pushing back, claiming the technology is not economically feasible at this time. The state has abundant coal reserves and the right geology to store captured carbon dioxide. Even with this perfect confluence of factors, there are other ways to decarbonize the energy sector that are easier and cheaper – at least for now. Over the past couple of decades, Wyoming has seen a huge boom in wind farms, and is now looking to a new generation of nuclear energy to replace coal and maintain the workforce. A 300 megawatt Terrapower reactor is slated to be completed in Kemmerer, Wyoming in 2030, at the site of a retiring coal plant.

In the future, there could be a breakthrough resolving the many technological and economic challenges hampering broad adoption of carbon capture and sequestration. There are certainly many countries working on this challenge, and the arc of innovation does tend to bend toward long-term progress. Many other technologies, such as solar photovoltaics or hydraulic fracking that were once dismissed as far-fetched have become important parts of our modern energy portfolio. It’s possible this could also happen for carbon capture and sequestration, and if it does, this would be a huge boon for Alaska. We have some of the most abundant coal resources anywhere on earth, and plenty of ways we can sequester carbon. In that case, taking another look at coal as an energy source for Alaska might be worthwhile.

This is not to say that we shouldn’t be pushing for better options and exploring innovative ways to improve efficiency and reduce our overall fossil fuel use. We have many of those options available to us now - things like weatherization improvements, use of more efficient appliances, and increased adoption of renewable energy. These are immediate steps we can take while the longer process of technology development and hardening churns on. Like any complex problem, however, there is no singular solution that will swoop in to save us, but rather a suite of integrated options that incrementally, overtime will lead us to a carbon-free energy future. It behooves Alaskans to think holistically about our energy options, what are trade-offs we can live with (and what are trade-offs we can’t), and how we do the absolute best with ALL of the energy sources and technologies we have access to.