Coal-to-Diesel: Economic Development or Not?

In a welcome move for the future of our community, the Indiana Department of Environmental Management is about the hold a public hearing on December 5, 2018 at Heritage Hill High school in order to receive input from the public on a controversial economic development project proposed by Riverview Energy. The proposal is on the construction and operation of a massive coal-to-diesel conversion plant in Dale, Indiana.

A state analysis has concluded that the proposed coal-to-diesel plant in southern Indiana will not significantly affect air quality or residents’ health. State environmental officials have said that the facility wouldn’t significantly contribute to pollution and poses very little cancer risk. The department found that the plant would emit a total of 30 tons per year of various hazardous air pollutants. According to the company’s air permit application, the plant would have annual emissions rates of about 2.2 million tons of carbon dioxide, 225 tons of carbon monoxide and 120 tons of sulfur dioxide. ( “This means if an individual was exposed to these hazardous air pollutants continuously for 70 years, the risk of getting cancer from this exposure would be 4.6 in 10 million,” the state’s analysis stated.

According to the Greg Merle, CEO of Riverview energy: “The point of this project is not to build one plant,” he said, “it’s to create a new industry in our country.” Creating new industries that resulted in extremely negative environmental consequences is not unprecedented in American industrial history.

Thomas Midgley, Jr. (May 18, 1889 –November 2, 1944) was an American mechanical engineer and chemist. Midgley was a key figure in a team of chemists, led by Charles F. Kettering, who developed the tetraethyl lead (TEL) additive to gasolines as well as some of the first chlorofluorocarbons (CFCs), two of the most talked about chemical pollutants in human history. Many environmentalists consider him to be “the human who has done the most damage to the environment”. After all, this was a man known as much for his showmanship as for his achievements in chemistry. Midgley demonstrated the nontoxic and nonflammable properties of Freon by inhaling the gas and softly exhaling it to extinguish a burning candle. He also demonstrated the apparent safety of TEL by pouring TEL over his hands, then placing a bottle of the chemical under his nose and inhaling its vapor for sixty seconds, declaring that he could do this every day without succumbing to any problems whatsoever. This was done after a new plant was plagued by severe cases of lead poisoning, hallucinations, insanity, and then five deaths in quick succession. As a good salesman, Midgely himself was careful to avoid mentioning to the press that he required nearly a year to recover from the lead poisoning brought on by his demonstration.

TEL levels in automotive fuel were reduced in the 1970s under the U.S. Clean Air Act in two overlapping programs: to protect catalytic converters, which mandated unleaded gasoline for those vehicles; and to protect public health, which mandated lead reductions in annual phases (the “lead phasedown”).  It is important to note that protecting public health was only second in importance to avoiding catalyst poisoning and serving certain short-term financial interests.

In decision making that requires the consideration of potentially negative environmental impacts, Midgley’s story may serve as a cautionary tale. Especially in the light of the growing significance of applying the Precautionary Principle to making far-reaching public policy decisions. The precautionary principle, proposed as a new guideline in environmental decision making, has four central components (The Precautionary Principle in Environmental Science”:

1) taking preventive action in the face of uncertainty;

2) shifting the burden of proof to the proponents of an activity;

3) exploring a wide range of alternatives to possibly harmful actions;

4) and increasing public participation in decision making.

As a group of concerned citizens has been voicing their opposition to a $2.5 billion direct coal-hydrogenation plant proposed for Dale, it is informative to analyze how the precautionary principle is applied in Indiana to the issuance of permits.

Taking preventive action in the face of uncertainty

The State of Indiana does not monitor air quality in the Dale area and does not correlate it with local health statistics. Consequently, additional levels of pollutants may not be adequately entered into computer models assessing related risks, particularly risks of unknown health consequences. Computer models require a fixed set of already known parameters, part of which are parameters of convenience satisfying mathematical needs. Real ecosystems, in contrast, are open, self-modifying systems, which constantly produce novelty and new parameters and which cannot be severed from their environment. Although calibration may adapt models to data sets of the past, it does not assure predictive capacity or validity.Consequently, the State’s conclusion that “ the risk of getting cancer from this exposure would be 4.6 in 10 million” may not be even remotely accurate.

It is of particular concern that not all prior experience seems to be taken into consideration by the State’s risk assessment. An article in Environmental Health Perspectives back in 1976 already pointed out:

At the present time, no commercial scale liquefaction or gasification plants exist in the United States. However, a number of major installations are far advanced into the planning stage. Estimates of total populations who might be associated with these plants, including workers, dependents, and service personnel, vary from 5000 to 16,000. The potential health implications of coal processing plants to these people, and to those who might be affected by water and/or air transport over greater distances, need to be considered at the very outset of planning. Some large-scale liquefaction and gasification facilities exist elsewhere in the world. However, environmental measurements around such plants, if they exist at all, are not readily available. It is also likely that any coal conversion plants constructed in the U.S. will be considerably different than those already in existence. Consequently, analysis of the pollution potential of coal processing currently depends on the evaluation of data collected from pilot plant processes and bench scale reactors. Although this type of consideration is the only one presently available, it is well to point out that many pollution problems will become evident only after a facility has operated continuously for a period of weeks or months.”(“Coal hydrogenation and environmental health.”)

This article also emphasized that “One study of workers in a hydrogenation process has revealed an incidence of skin cancer 16-37 times that expected in the chemical industry. In addition, a number of high boiling point liquid products were identified as being carcinogenic, and air concentrations of benzo[a]pyrene up to 18,000 g/1000 m3were reported. Health statistics on occupational groups in other coal conversion industries have shown significantly higher lung cancer rates, relative to groups without such occupational exposures. .” These findings do not seem to be in support of the conclusions the State of Indiana’s analysis for the proposed Dale plant stated.

The lack of other plants of this kind in the US is another warning sign.  Other targeted sites probably have taken preventive actions in the face of uncertainty, and decided on not moving forward with such “developments”.

Shifting the burden of proof to the proponents of an activity

Proponents of the proposed Dale plant place the burden of proof of negative consequences on the oppositions, who – in their views — represent anti-community interests. All the decision-makers, company officials, economic development and environmental management officials, as well as worker union representatives and members are, by default, interested in the approval of the project, based on creative marketing tactics that depicts any opposition as biased and anti-business.  In other words, they are claiming immediate economic measures such as investment, job creation, and construction as counterparts of future environmental damages and harmful health effects. Any formal model that converts the precautionary principle into economic terms would help clarify the concept of precaution and decision-making. It would frame a decision problem concerning the prevention and management of risks. It would make an economic analysis of the impact of risks on individual and collective welfare, as well as resolve the conflicts of interest with the purely economic and technical issues-driven proponents of the proposed plant listed below:

Economic Development personnel

Tom Utter, the executive director of the Lincolnland Economic Development Corporation, said the Indiana Economic Development Corporation first contacted him and said Riverview Energy was looking for a site. He’s been recruiting the project ever since. “I want to bring something new to the community,” Utter said. “I got the opportunity to recruit it. I’ve recruited it heavily and I’m still recruiting it heavily. I’m recruiting Riverview Energy very strongly, very aggressively.” He said it’s his role with LEDC to “bring companies, industries, into the community. … We search and search in a competitive world to find new ways to bring revenues into the community.”

In terms of economic development, he looks for “large projects to bring significant, innovative technologies that will revive some of the jobs that have been lost, and create new jobs.”

“The fact is that what we look at is improvements in technology,” Utter said. “Technologies now produce fewer environmental negatives than older technologies. We do want to keep bringing new investment, jobs, but we are looking at processes like this one that would indeed produce fewer environmental negatives than the older technologies. And we’ll continue to do that to raise the bar in the community.”

Questionable aspects of the above approach:

+ New technology does not automatically mean better technology;

+ Fewer environmental negatives do not offer a solution to an existing problem, but become part of them;

State environmental officials

The “innovative” technology proposed for the plant is mimicking the process that took Mother Nature millions of years and special conditions to accomplish. That process took place in a closed environment, underground, and did not release known toxic substances into the atmosphere at an accelerated rate. The proposed hydrogenation process would produce such compounds at an alarmingly high rate every day. On the other hand, the health of the workers and residents living nearby will not show a sudden decline, and any correlation between certain health problems and environmental factors may take decades to recognize, just as in the cases of asbestos, cigarette smoking, TEL, and CFCs. Computer models with limited understanding of potential issues involved may suggest that “exposure to these hazardous air pollutants continuously for 70 years, the risk of getting cancer from this exposure would be 4.6 in 10 million.” Even if the numbers were true for cancer risk, they only declare that the loss of few human lives due to additional air pollution is acceptable.

Coal Industry Representatives

+ Coal-related jobs are quickly disappearing in the Midwest as coal-fired power plants are shut down at record speeds, said Bruce Stevens, the president of the Indiana Coal Council. “We’ve lost 4 million tons per year of Indiana coal from retired power plants,” Stevens said. “This [coal-to-diesel] plant will replace about half of that. We’re very hopeful this plant becomes a reality because it will be very helpful to communities in which miners have lost work.”

+ It’s not just miners who are losing work as the coal industry declines. Local construction workers who’ve made a career of building and maintaining coal facilities are also suffering.”We need this for our families, for our futures and for our retirement packages,” said Timothy Brunfield, a dispatcher for Boilermakers Local 374, a union that represents skilled construction workers. “This is not just a new plant, it’s a new industry.”

Exploring a wide range of alternatives to possibly harmful actions

It is interesting to see that extending the life of a dying industry is defined as the birth of a new one, considering no other alternatives.  According to an article in Financial Times (“Coal is dead; long live the sun”), The transition to renewables is possible if policymakers plan ahead

For more than 100 years, coal has driven economic growth, powering the Industrial Revolution and helping much of the world develop. But its best days have passed. Pretty much anywhere you look in the world, coal is no longer the best option for energy or for jobs. In fact, it’s become a risky bet.

From an economic development point of view, however, there might be a promising answer to the question: the only thing we have is coal, and lots of it. What can we do? Certainly not what we’ve been doing – burning it, or turning it into other combustive products.

Challenging times call for challenging our old way of thinking.

Coal is a fantastic natural resource that offer a variety of useful, environmentally positive and economically pursuable developmental opportunities. One of them is the industrial-scale production of activated carbon.

“The activated carbon market was valued at USD 3,124.73 million in 2017 and is expected to expand significantly with an estimated CAGR of 6.24%, mainly due to the growing water treatment industry during the forecast period, 2018-2023. Activated carbon removes the impurities from water primarily through surface adsorption. It is primarily used for purification of gases and liquids in food & beverage processing, industrial pollution control, and environmental recovery.”

“The United States holds the largest market and accounted for 80.18% in activated carbon market in North America. Growing end user industries, like pharmaceutical, oil & gas is expected to drive the market during the forecasted period. The gradual increase in the number of drilling rigs in the United States is expected to gradually increase the consumption of activated carbon during the extraction process. In addition, the advances in the technology are opening up scope for increasing exploration in the deep-water fields of the Gulf of Mexico.This is expected to open up new opportunities for the usage of activated carbon in oil & gas field.”

Increasing public participation in decision making

In addition to the significant efforts made by the Spencer County Citizens for Quality of Life and the NOC2D Coalition in opposition to the proposed coal-to-diesel plant on Dale, the December 5 Idem hearing will provide an excellent opportunity for concerned citizens for letting their voice heard in the decision-making process.

In conclusion, real economic development efforts in finding contemporary use for Indiana’s coal resources may benefit from concentrating on truly innovative projects that could also mitigate the negative environmental effects of the past 100 years of industrial pollution and careless use of natural resources. The health and well-being of future generations would also greatly benefit from a proactive yet restorative economic development policy that balances immediate interests with future ones.

Paul Kovacs, a native of Hungary earned his Ph.D. degree in Physical Chemistry from Eotvos University, Budapest. Having spent a year doing post-doctoral research at the Tokyo Institute of Technology and Tokyo University, Dr. Kovacs moved to the US and joined the R&D department of Smith and Nephew Orthopedics in Memphis, TN. Recently, he taught “Environmental Topics in Chemistry” and “Science and Society Today” courses at Bellarmine University in Louisville, KY. Currently he lives in Santa Claus, IN and provides technical consulting.