COAL-FED IGCC COMMERCIALIZATION FACES RISING CHALLENGES

Despite rising expectations since the 1990s, coal-fueled integrated gasification combined-cycle (IGCC) power generation is now facing several major challenges to broad-based commercialization. Concerns include cost, competition from technology alternatives, and the timing of any future carbon capture and storage (CC&S). IGCC technology and project developers may still recover their momentum with additional progress on a mix of costs, public sector support, and CC&S policy development. The emergence of potentially cost-effective carbon capture technologies for pulverized coal (PC) plants, however, means that IGCC might eventually compete as one of several options for limiting carbon emissions from coal-fed power generation.

*Preliminary estimates are that IGCC capital costs are 15 to 20 percent greater than for PC, but engineering, procurement, and construction contractor risk premiums could increase this cost gap substantially as IGCC power proposals are finalized. This is driving regulatory and market resistance, and vendors and developers are working aggressively to lower IGCC costs and improve competitiveness.

*Public sector cost sharing and other regulatory incentives are essential for IGCC project success, and individual proposals have targeted jurisdictions, locations, and programs to maximize their chances. Still, government support so far has been insufficient to ensure any project's success.

*Broad-based geological carbon sequestration is a primary driver for IGCC, but key logistical and legal/regulatory implementation issues remain unresolved.

*Significant investment in IGCC projects will likely occur over the next eight years only when companies are determined to secure first-mover advantage and policymakers provide sufficient incentives to overcome current cost disadvantages.

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