http://www.depweb.state.pa.us/dep/cwp/view.asp?a=3&q=474575

The Honorable Kathleen A. McGinty

Secretary

Pennsylvania Department of Environmental Protection

Testimony - Waste Coal Incentives

Before the Senate Environmental Resources and Energy Committee

September 8, 2004 

 

Chairman White and members of the Committee it is my privilege to be
here today to discuss the administration's efforts to reclaim land and
mitigate and eliminate the environmental impacts of waste coal piles
while making use of this potential energy resource. I would especially
like to thank Senator Stout for holding this timely hearing in his
district and calling specific attention to this very important matter
and opportunity.

 

Pennsylvania is a remarkable state with abundant natural riches,
including a tremendous heritage of coal production that fueled the
industrial revolution and provided hardworking residents with
opportunities for a better life. Unfortunately, that legacy also left
significant parts of our state scarred from past mining activities.

 

Travel the back roads of our Commonwealth and it's not uncommon to see
refuse piles of unused coal and rock. These waste coal mixtures,
commonly called gob or boney piles in the western half of Pennsylvania
and culm in the eastern coal fields, are a significant problem in
Pennsylvania, which has some 220,000 acres of abandoned mine lands and
more than 2,200 miles of streams impaired by polluted mine drainage.

 

Western Pennsylvania in particular has a significant and proud
coal-mining heritage, but as we will hear today from members of this
Committee, other speakers and our tour of the Champion waste coal site,
this part of Pennsylvania has been especially impacted by the legacy of
waste coal disposal. As I will discuss further below, we look at this
legacy not as a liability to be mitigated but as an opportunity to be
exploited and I will outline proposals that we are developing to take
advantage of this unique Pennsylvania resource.

 

While Pennsylvania's coal economy has indeed contributed greatly to the
economic expansion of this country and its success in two world wars, it
has left behind numerous scars across the landscape. According to DEP
estimates, as of Dec. 2003, there were an estimated 8,529 acres of
unreclaimed coal refuse piles throughout Pennsylvania. These piles
include at least 258 million tons of waste coal that cause polluted mine
drainage, scar the landscape and, in some cases, result in coal refuse
fires which contribute to air pollution. Coal refuse piles are also used
regularly as dumping piles for trash and other waste. Just one example
of the magnitude of these sites is the coal refuse pile that we are
going to tour, the Champion site, which, at 500 acres, is the biggest
coal refuse pile east of the Mississippi River.

 

As you know, the department has initiated numerous programs to address
the environmental impacts caused by waste coal. One of the most
successful programs is the remining program, where mining companies
re-mine, or remove the culm banks, screen the material, and transport
the suitable refuse material to fuel nearby power generation plants.
This removes much of the pyritic material left behind by past coal
mining activity that contributes to acid mine drainage, one of the
leading causes of stream degradation in the Commonwealth.

 

When the refuse is burned in the plant, alkaline material is commonly
added, and the resulting coal ash -- high in alkalinity -- is then
returned to the refuse sites to help reclaim those areas. This prevents
any leftover pyritic material from causing acid mine drainage. The
removal of the refuse piles can also result in cleaner air due to the
elimination of dust sources and, in some cases, uncontrolled burning of
the piles. Removing the piles also removes unregulated dumping areas,
because people often access these piles through construction access
roads in order to dump garbage and other waste.

 

The Commonwealth has analyzed coal ash and coal ash leachate (water
run-off from ash) from many different sources of ash, and has determined
that coal ash -- when used appropriately -- is safe to use in mine
reclamation projects. This is in part due to the fact that when coal ash
is placed at a mine site in an appropriate fashion, it is placed above
the ground water table to prevent direct contact with water. In
addition, coal ash is usually capped with topsoil -- in many cases up to
a four-foot layer -- and that topsoil is then re-vegetated and graded
with a three-percent slope. This ensures that rainwater will run off of
the site before it comes in direct contact with the placed coal ash.
Even if water permeated the topsoil, the compaction of the ash would
likely prevent the permeation of water through the ash. The capping with
topsoil, sloping of the ash and the compaction of the ash also prevents
the rainwater from contacting the pyritic material left behind from the
mining operation, so acid mine drainage is never formed.

 

In addition, leachate tests have shown that even when coal ash comes in
contact with water, the metals and other constituents found in coal ash
tend not to leach out. This is due to the fact that the chemical make-up
of the alkaline coal ash binds up the metals and other constituents in
the ash. In addition, the alkalinity of the coal ash prevents the
development of acid, which would promote leaching (the coal ash is
alkaline due to the addition of alkaline material during the combustion
process).

 

The re-use of this material is a prime example of one of the main
environmental themes of the Rendell Administration, namely viewing
environmentally harmful material as a potential resource that can be
re-used rather than remain as a liability. In 2003 alone, DEP issued
mining permits which resulted in the removal of nearly a half-million
tons of coal refuse in southwestern Pennsylvania.

 

Of course, government can't pursue the goal of industrial re-use alone.
These efforts are a result of the advent of new boiler technology used
by power generation plants called "Circulating Fluidized Beds." These
plants burn coal refuse and other fuels that have far less "heating
value" (BTU's, or British Thermal Units) than the types of boilers used
by the large utilities to burn regular coal.

 

CFB's are also inherently cleaner than pulverized coal-fired boilers.
For more than 30 years, the Department has collected company specific
information necessary to obtain estimates for all toxic pollutants. This
data demonstrates that dioxin levels were approximately four times lower
and most metals, with the exception of mercury, were ten times lower per
gigawatt hour than pulverized coal-fired generation. Further, CFBs could
achieve very high-levels of mercury control, up to 95%, for very low
relative costs should mercury standards be set at the federal level. By
comparison, mercury controls on pulverized units would achieve
lower-levels of control at higher costs.

 

Similarly, emissions of NOx and SO2 were also lower than pulverized
coal-fired boilers. It should be noted that newly built pulverized
coal-fired units would be able to achieve similar emissions levels for
S02 due to the installation of scrubbers under Best Available Control
Technology determinations. Therefore, newly constructed electric
generating combusters of either waste coal or coal would emit at
comparable levels because both would be employing very similar BACT for
all pollutants. We have attached a comparative analysis of waste coal
emissions developed by our Bureau of Air Quality, which provides more
details on this matter. MS Word    PDF

 

There are 15 plants burning coal mining refuse in CFB's located in
Pennsylvania. The first of these plants came on line in Pennsylvania in
1988. According to ARIPPA, a trade organization representing 13 of the
CFB plants in the Commonwealth, from 1988 through the end of 2003, coal
refuse plants in Pennsylvania consumed 88.5 million tons of coal refuse,
mostly from abandoned refuse piles. Approximately 19 million tons of
that were burned in coal refuse plants in the southwest region of the
Commonwealth. ARIPPA's records show that the plants in the Commonwealth
burn an average of about 7.5 million tons of coal refuse per year,
mostly from abandoned coal refuse piles.

 

The coal refuse that fuels these plants is removed -- or remined -- from
the refuse piles under the regulation of DEP. Thanks to DEP's remining
program, there have been numerous success stories in southwestern
Pennsylvania in the effort to reclaim coal refuse piles. One of these
examples is the scheduled removal of 60 million tons of coal refuse from
over 40 different coal refuse piles in seven counties, including
Allegheny, Westmoreland, Indiana, Cambria, Armstrong, Huntingdon and
Somerset. These piles are scheduled to be removed and burned in the
newly-constructed Reliant Energy plant, a 500-megawatt fluidized bed
coal refuse-burning power plant at Seward in East Wheatfield Township,
Indiana County. Reliant received $400 million in tax-exempt financing
(bonds) from the Pennsylvania Department of Community and Economic
Development for this project. It is estimated there is an additional
10-20 million tons to be found in piles that are still on a list to be
explored and evaluated for possible use by Reliant.

 

While the project will result in the elimination of harmful coal refuse
piles, it is also contributing to the creation of over 300 much-needed
jobs throughout southwestern Pennsylvania. This underlies another major
tenet of the Rendell Administration: spurring job creation and economic
growth. The ability to create jobs while simultaneously cleaning up
environmental scars from the past is a double-win for the Commonwealth.
It's also important to note that without industry involvement, this type
of success in all probability would not be happening: it's unlikely
government would have the resources available to reclaim many of these
coal refuse piles. 

 

DEP also issues reclamation contracts to mine operators to reclaim
refuse piles, such as the nearly 19-acre Crucible Pile in Greene County
that is currently being reclaimed, and has granted funds through the
Growing Greener program to various organizations to reclaim waste coal
piles. For example, DEP awarded two Growing Greener grants for a total
of approximately $4.6 million to the Greene County Industrial
Development Authority to reclaim the Mather coal refuse pile in Greene
County. That project is still under way and includes the removal of
material and the capping of the area with on-site material such as top
soil. That project should be completed within a year.

 

In addition to the environmental and economic benefits derived from the
re-use of waste coal, the Commonwealth's 15 waste coal power plants
generate enough electricity to power approximately 1 million homes
annually. They do this with relatively low air emissions, adding to the
environmental success of cleaning up waste coal piles that cause water
and air pollution. 

 

According to ARIPPA, since 1988 Pennsylvania's waste coal industry has
reclaimed approximately 3,429 acres of abandoned mine lands. The
Department estimates the cost of government-sponsored reclamation to be
between $20,000 to $40,000 per acre. Consequently, these efforts have
saved the taxpayers of this Commonwealth between $68 million and $137
million since1988, an amount equal to approximately three to six years
of federal abandoned mine land appropriations to our state.

 

Even the residual ash from electric generation at these facilities
provides a benefit for Pennsylvania as it is used to fill strip mine
pits with dangerous highwalls. Similarly, because the ash is mixed with
limestone, the alkaline mixture makes it effective for use to remediate
the acidic drainage that pollutes streams and threatens drinking water
supplies.

 

Using waste coal to produce energy is an innovative process that will
attract new investment and help to create the jobs we critically need
while ensuring the highest standards of environmental protection and
public health. Pennsylvania exports more than $20 billion a year to
import energy fuels--that's nearly as much as our entire state budget.
Yet, indigenous energy development has a multiplier effect in the
economy that may generate as much as 1.6 times more revenue than from
imports. Keeping energy dollars in state clearly is an important step in
retaining and generating more jobs in Pennsylvania.

 

The Rendell administration has recently initiated two actions to help
support and promote Pennsylvania's waste coal industry. During his
January budget address Governor Rendell announced that the Commonwealth
would purchase ten percent of its electricity from clean, advanced
energy sources, including waste coal. I am pleased to note that we
recently completed this purchase, which includes 10,000 megawatt hours
of waste coal -- out of a total of 100,000 megawatt hours of clean,
advanced electricity. 

 

In April Governor Rendell reestablished the dormant Pennsylvania Energy
Development Authority, PEDA. As many of the members of this Committee
know, PEDA was first established to encourage the development of
Pennsylvania's energy resources. PEDA possesses $300 million in
tax-exempt bonding authority and in the past this capability has been
used to finance waste-coal power plants, notably the Ebensburg, Cambria
facility. PEDA will work in concert with the Pennsylvania Economic
Development Financing Authority, thereby expanding the financing
capabilities of the Commonwealth. As you know, PEDFA financing was
instrumental in enabling the re-powering of the Seward, Reliant power
plant to utilize waste coal.

 

We are currently in discussions with developers seeking to deploy
state-of-the-art advanced coal gasification technology, which in some
cases will be able to utilize waste coal as a fuel.

 

Projects utilizing waste coal are also a focus of the Pennsylvania
Energy Harvest Grant Program. This $5 million annual grant program
provides funding to projects that improve the environment through
advanced energy solutions. Last year, Energy Harvest funded two waste
coal projects. The first is a joint project with the U.S. Department of
Energy and CO Inc. to demonstrate the utilization of coal fines. The
process, termed "Granu Flow," adds asphalt emulsion, or a similar,
binder to agglomerate the coal fines. Once these fines are bound
together they will be able to be utilized as fuel in waste coal power
plants. Energy Harvest also provided funds to the River Hill Power
Company Project in Clearfield County for preliminary environmental and
fuel quality analysis for their proposed waste coal power plant.
Together, Energy Harvest provided nearly $400,000 for these two
projects.

 

In addition to the tools provided by the Commonwealth's electricity
purchase PEDA, and Energy Harvest the Governor has also advocated for an
Advanced Energy Portfolio Standard that would include waste coal as an
eligible resource. I know this Committee has already held several
hearings on this subject so I will refrain from covering the basics of
portfolio standards and the Governor's proposal in general and, instead,
will focus my remarks specifically on the role waste coal can play as an
eligible resource.

 

As you know, many portfolio standards limit eligibility to renewable
resources. We do not feel that this is the best approach for
Pennsylvania. As I discussed earlier in my testimony, Pennsylvania's
unique history and geology mean that we should take a broader view to
include other resources, such as fugitive coal-mine methane and waste
coal, that while not considered "traditional" renewables, still provide
a net environmental benefit to the Commonwealth.

 

Therefore, the Governor has proposed a two-tiered portfolio standard, an
Advanced Energy Portfolio Standard, which includes waste coal as an
eligible resource in the second tier. The first tier would be made-up of
traditional renewables, energy efficiency, energy conservation,
efficiency upgrades at existing power plants, recycled energy and
electricity generated from fugitive coal-mine methane. The second tier
would include emissions offsets and electricity generated from fuel
cells powered by non-renewable fuel, and waste coal.

 

Because participation in an Advanced Energy Portfolio Standard will
provide economic benefits to qualifying facilities, by making power
purchase contracts with those facilities more attractive to electric
distribution companies and electric generation suppliers and through the
sale of advanced energy credits, we believe that the qualifying
facilities should be attaining the highest possible environmental
standards. As such, we are proposing that qualifying facilities should
meet the highest attainable emissions standards for nitrogen oxide,
sulfur dioxide, particulates, and volatile organic compounds. By
including an emissions standard we will ensure that our unique
Pennsylvania energy resources are utilized in a way that protects the
health and environmental quality of all the Commonwealth's citizens.

 

To clarify, this standard would not replace any facilities existing air
quality permits. Facilities would still be in compliance so long as they
are meeting the standards set in their current operating permits. These
standards would be the requirement, essentially a higher bar, which
facilities would need to meet in order to qualify for eligibility as
part of the Advanced Energy Portfolio Standard.

 

In order for waste coal to be a meaningful part of the Advanced Energy
Portfolio Standard we believe the portfolio standard targets set for the
second tier should be sufficient to include both the existing power
plants and to provide incentives for some new plants to be built. As was
demonstrated in my testimony earlier, Pennsylvania's existing waste coal
industry has and continues to provide tremendous environmental and
economic benefits to the Commonwealth's citizens. However, because many
of the smaller merchant facilities have power purchase agreements that
will expire, in many cases, by 2013 we believe there is a need to
continue to incentivize their existence and the reclamation work they
are doing.

 

Still, as we will see later today when we visit the Champion refuse
pile, there are still many areas of the state that would greatly benefit
from reclamation resulting from waste coal utilization that currently
have no outlet for existing abandoned waste coal piles. As such, we
believe that a portfolio standard that includes waste coal should
consider a target that will also incentivize new projects. We can
discuss what such a target should be as we move forward in developing
legislative drafts, however, for starters we believe that a second tier
target of ten percent in ten years makes sense. Pennsylvania's existing
and projected waste coal power plants will likely generate enough
electricity to meet as much as 8% of the Commonwealth's projected
electricity demand ten years from now. Thus, a ten percent overall goal
would be keeping in line with the Governor's original proposal for a
three percent second tier to incentivize new projects. 

 

We believe in the view that the waste coal many individuals may see as
liabilities can truly be an asset if we use our imagination for
innovative solutions. The incentives that we are proposing above will
provide both the policy framework and the financial tools to turn these
opportunities and solutions into a reality. Again, I thank the Committee
for the opportunity to present to you today. I would be happy to answer
any questions that you have at this time.

