Special Subcommittee on Energy


Minutes of the<MeetNo1> 2nd Meeting

of the 2010 Interim


<MeetMDY1> July 16, 2010


Call to Order and Roll Call

The<MeetNo2> 2nd meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> July 16, 2010, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Senator Brandon Smith, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Brandon Smith, Co-Chair; Representative Keith Hall, Co-Chair; Senators Katie Kratz Stine, and Gary Tapp; Representatives Royce W. Adams, Eddie Ballard, Dwight D. Butler, Leslie Combs, Tim Couch, Will Coursey, Jim Gooch Jr., Martha Jane King, Lonnie Napier, Fred Nesler, Tom Riner, Fitz Steele, and Brent Yonts.


Guests:  Judy Tanselle, President, White Energy Coal North America, Inc., Rockville, Maryland, William Zipf, Vice President of Marketing and Development, White Energy Coal North America, Inc., Rockville, Maryland, and Bill Bissett, President, Kentucky Coal Association.


LRC Staff:  Taylor Moore, and Susan Spoonamore, Committee Assistant.


Coal Upgrading Technology

Judy Tanselle, President of White Energy Coal North America, Inc., stated that White Energy is an Australian company that is now a diversified coal company. Coal is a major energy source for the United States, India and other countries. The world is recognizing that coal is necessary, but it needs to be cleaned up in order to reduce coal emissions. White Energy is an exclusive worldwide licensee of a patented technology which upgrades high- moisture, low- value coals through a low cost process of dehydration and compaction which forms a higher-density, higher-energy briquette.


Ms. Tanselle stated that the Jefferson Riverport Project, in Louisville has the potential to be the first United States Binderless Coal Briquette (BCB) plant. White Energy has already tested Kentucky coal fines in Eastern and Western Kentucky and the results were positive.  The company plans to seek board approval to proceed with the project in August once the local air permit is issued and if it qualifies for incentives under the Kentucky Incentives for Energy Independence Act.  White Energy hopes to have the plant operational by the fourth quarter of 2011.


Ms. Tanselle said that several utilities were interested in this project, although most of the interest has come from outside of Kentucky. The utilities in Kentucky are more interested in the development of a biomass briquette. It is the goal for White Energy to create a briquette out of Kentucky coal and Kentucky grown energy crops that will meet the Renewable Portfolio Standards (RPS) with the existing coal-fired power plants.  She explained that White Energy is working with an energy crop company that focuses strictly on crops that work well for energy and enhance the biomass briquettes.


In response to Representative King, Ms. Tanselle stated that the process of compacting briquettes was still greenhouse gas negative because the process did emit carbon dioxide.  The plant power itself will see about a 15 percent to 30 percent reduction. Ms. Tanselle said that their plants do have scrubbers.


In response to Representative King’s question, Ms. Tanselle stated that White Energy is focused on switchgrass, but is also researching the merits of using miscanthus grass for biomass briquettes. 


In response to Representative Gooch, Ms. Tanselle said that the company was using fines from slurry pits, drying it and then making it into a briquette.  She said in some cases, they were mixing that with other coal.


In response to Representative Gooch, Ms. Tanselle stated there would be the possibility of bringing coal in from Wyoming.  For an example, she stated that Duke Energy runs on lower sulfur coals. Duke Energy would require two different briquettes which would be blended.


In response to Representative Gooch, Ms. Tanselle said that the Louisville plant would be better suited to the fines that have already been pulled and dried so they can be shipped.  She also said the company is looking at a slurry site in Eastern Kentucky.


In response to Representative Butler, Ms. Tanselle stated that the briquette could contain anywhere from 10 percent to 30 percent of biomass.  As far as obtaining the materials needed for biomass briquettes, she said it was not feasible at this point.  More research is being conducted on the type of crops that would be suitable.


In response to Representative Steele, Ms. Tanselle said that anywhere in Eastern Kentucky where ash is not too high would be good to site a plant, especially because of the availability of older waste piles.


In response to a question from Representative Hall, Ms. Tanselle stated that in processing briquettes, anything above 30 percent ash would not be good. 


Mr. Bissett stated that Kentucky ranks third in production of coal.  Even if Kentucky and West Virginia were combined, production would not reach Wyoming as the number one coal producer. Kentucky mined 115 million tons of coal in 2009.  He said that 92 percent of Kentucky’s electricity comes from coal, therefore Kentucky benefits from inexpensive electricity rates just behind Utah, Wyoming, and West Virginia.


Mr. Bissett explained that the coal severance tax for fiscal year 2010 experienced a reduction of 7.1 percent due to the decline in production. In addition, the industry is struggling with federal regulations, and the non-issuance of 404 permits which are vital to the mining of coal.  He said it was hard to get answers from the Environmental Protection Agency and the U.S. Army Corps of Engineers as to why the permits were being delayed or not issued. One of the new rules adversely affecting Kentucky is the Conductivity Standards, which only affect six Appalachian Coal Industry states.


Mr. Bissett also explained that there is an anti-coal movement which involves the Bank of America agreeing to no longer finance coal companies that do mountain top removal.  In addition, the Sierra Club, which has a budget of $81 million, has been successful in thwarting the construction of new coal-fired plants.


He said the Kentucky Coal Association embraces renewable energy resources such as wind, solar, biomass and geothermal. By 2025, the demand for electricity will increase by 40 percent.


Mr. Bissett explained the five points favoring coal:  abundance, affordable, reliable, jobs, and clean-coal technology.


In response to Representative Steele, Mr. Bissett said that the decision of Bank of America to not finance coal companies that do mountain top removal was made after the federal government bailed the banks out.


Representative Combs stated it was important for other people in the state to understand that the coal companies are trying to do things the right way and produce a much needed resource, which produces coal severance money with a percentage going into the General Fund.  


In response to Representative Gooch, Mr. Bissett stated that people will not become engaged in the issue until utility rates increase.  Diversifying Kentucky’s energy portfolio is not a bad thing, but doing it at the expense of coal is going to harm Kentucky.


Representative Combs and Representative Steele said that the coal businesses were helping to fund programs in the communities.  Representative Steel commented that every Friday is Coal for Kids day which provides food and clothing for the needy.


Meeting adjourned.