Title

Coal Gasification: An Economic Evaluation

Comments

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Abbreviated Journal Title

Technol. Forecast. Soc. Chang.

Keywords

Environmental Sciences

Abstract

Political interest in developing the capability to produce gaseous fuel from coal in the United States has been cyclical in nature, depending primarily upon the security of the international market for oil and public attitudes toward nuclear power. Interest in coal gasification technology by private investors, however, depends primarily on the economic and technological considerations analyzed in this paper. A cost forecasting model is developed with the capability to take into account future economic and technological uncertainties associated with producing high BTU gas (a substitute for natural gas) from coal. The cost forecasting model incorporates probabilistic information on key economic and technological parameters subject to future uncertainty and simulates, by Monte Carlo methods, the costs which private investors would incur over the life of a commercial size coal gasification plant. The results suggest it is highly unlikely that the coal gasification process could produce high BTU gas more cheaply than the price at which natural gas is likely to be available.

The cost forecasting model is also modified to compare the cost per kilowatt–hour of generated electricity when fueling a 1,000 Mw power plant with oil versus high BTU gas from coal. Again, based upon the costs to private investors, the simulation results indicate a very low probability that high BTU gas from coal would prove the least costly fuel for generating electricity.

The implied economic infeasibility for private investment in coal gasification does not necessarily provide a basis for public policy to abandon the technology. Public policy recommendations must consider social costs as well as private costs. Possibly the greatest social cost associated with abandoning coal gasification is the risk of a significant energy supply interruption. A diversified national energy policy including coal gasification may in fact be less costly if relevant social costs are included in the calculations. Results from the cost forecasting model indicate the size and type of public subsidies that may be necessary to support a diversified energy industry which would include coal gasification.

Journal Title

Technological Forecasting and Social Change

Volume

25

Issue/Number

327

Publication Date

1-1-1984

Document Type

Article

Language

English

First Page

309

Last Page

28

WOS Identifier

WOS:A1984TB26200002

ISSN

0040-1625

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