SEPA
Assessment of the Worldwide
Market Potential for Oxidizing
0
Coal Mine Ventilation Air
Methane
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v°/EPA
United States
Environmental Protection
Agency
Air and Radiation
(6202-J)
EPA 430-R-03-002
July 2003
COALBED METHANE OUTREACH PROGRAM
The Coalbed Methane Outreach Program (CMOP) is a part of the US
Environmental Protection Agency's (USEPA) Climate Protection Partnerships
Division. CMOP is a voluntary program that works with coal companies and
related industries to identify technologies, markets, and means of financing
the profitable recovery and use of coal mine methane (a greenhouse gas) that
would otherwise be vented to the atmosphere.
CMOP assists the coal industry by profiling coal mine methane project
opportunities, conducting mine-specific technical and economic assessments, and
identifying private, state, local, and federal institutions and programs that could
catalyze project development.
DISCLAIMER
This analysis uses publicly available information. USEPA does not:
(a) Make any warranty or representation, expressed or implied, with respect to
the accuracy, completeness, or usefulness of the information contained in
this report, or that the use of any apparatus, method, or process disclosed in
this report may not infringe upon privately owned rights; or
(b) Assume any liability with respect to the use of, or damages resulting from
the use of, any information, apparatus, method, or process disclosed in this
report.
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United States Environmental Protection Agency
SEPA
Assessment of the Worldwide Market
Potential for Oxidizing Coal Mine
Ventilation Air Methane
July 2003
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
ACKNOWLEDGMENTS
This report was prepared under USEPA Contract 68-W-00-093 by International
Resources Group. The principal authors were H. Lee Schultz, Peter Carothers,
Robert Watts, and Robyn McGuckin. The authors and USEPA gratefully
acknowledge the vision and direction provided by Karl H. Schultz, Team Leader,
Coalbed Methane Program, in planning and overseeing the scope and focus of this
assessment. In addition, industry experts from coal-producing countries around the
world also provided comments and suggestions that significantly advanced this
analysis. Specifically, we wish to recognize the assistance of the following
individuals who (a) contributed data for the technology characterization and the
country analyses and/or (b) served as peer reviewers of the draft report:
• Zhu Chao (a), Project Manager, China Coalbed Methane Clearinghouse,
Beijing, China
• Alexander Filippov (a, b), Programs Coordinator, Partnership for Energy and
Environmental Reform, Kiev, Ukraine
• Dr. Jiri Gavor (a, b), Partner, ENA Ltd., Prague, Czech Republic
• Brian King (a, b), Senior Consultant, Neill and Gunter (Nova Scotia) Ltd.,
Dartmouth, Nova Scotia, Canada
• Jan Kwarcinski (a), Polish Geological Institute, Upper Silesian Branch,
Sosnowiec, Poland
• Philip J.D. Lloyd (a), Energy Research Institute, University of Cape Town,
South Africa
• Professor Emeritus Jan Mutmansky (a, b), Pennsylvania State University,
State College, Pennsylvania, United States
• Vijay Nundlall (a), Inspector of Mines, Occupational Hygiene, Pretoria,
South Africa
• Peter Radgen (a, b), Project Manager, Fraunhofer ISI, Karlsruhe, Germany
• Joanne Reilly (b), Senior Geologist, RAG American Holding, Inc.,
Waynesburg, Pennsylvania, United States
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
• Patrick Reinks (b), Ingersoll-Rand Company - Energy Systems, Davidson,
North Carolina, United States
• Dr. Geoff Rigby (b), Reninna Consulting, New South Wales, Australia
• Abouna Saghafi (b), Principal Research Scientist, CSIRO Exploration and
Mining, Sydney, Australia
• Mario Alberto Santillan-Gonzalez (a, b), Mining Engineer, Minerales
Monclova S.A. de C.V., Coahuila, Mexico
• Igor A. Shvetz (a), Director, Ispat Karmet JSC, Karaganda, Kazakhstan
• Umesh Prasad Singh (a, b), Deputy Chief Engineer, Coal India, Ltd.,
Calcutta, India
• Shi Su (b), CSIRO Exploration and Mining, Kenmore, Queensland, Australia
• Dr. Oleg Tailakov (a, b), Director, Russia Coalbed Methane Center,
Kemerovo, Russia
• Jerry Triplett (b), Partnership for Energy and Environmental Reform (PEER),
Kiev, Ukraine
• Liu Wenge (a, b), Project Manager, China Coalbed Methane Clearinghouse,
Beijing, China
• Richard Winschel (b), CONSOL Energy, South Park, Pennsylvania, United
States
• Ken Zak (a, b), MEGTEC Systems, DePere, Wisconsin, United States
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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CONTENTS
Acknowledgments v
Glossary xi
Acronyms xiii
1. Introduction 1
2. Emissions 3
2.1 Methane 3
2.2 Coal Mine Methane 3
2.3 Components and Qualities of CMM 3
2.4 Baseline Emissions Estimation Methodology 4
2.5 Country-Specific Baseline VAM Emission Estimates 6
2.6 Uncertainty in the Baseline Emission Estimates 7
2.7 Emissions Projection Methodology 8
2.8 VAM Emissions Projections 9
2.9 VAM Emissions Projection Uncertainty 9
3. Emission Reductions 11
3.1 Technology Overview 11
3.1.1 Thermal Flow-Reversal Reactor 11
3.1.2 Catalytic Flow-Reversal Reactor 12
3.1.3 Energy Conversion from a Flow-Reversal Reactor 13
3.1.4 Other Technologies 13
3.2 Cost Analysis 17
3.2.1 Methodology 19
3.2.2 Analysis of the MAC Curves 26
3.2.3 Opportunity Cost of VAM Recovery and Use 29
3.2.4 VAM Carbon Mitigation Cost in the Absence of Power
Generation 30
3.2.5 Uncertainties 30
3.2.6 Estimating the Effects of Uncertainties on the MAC Curves... 37
3.2.7 Worldwide Market Potential 38
4. Summary and Conclusions 39
5. References 41
Appendix A. Country-Specific Analyses (2000-2020) 43
VAM Oxidation Market Potential: China 49
VAM Oxidation Market Potential: United States 53
VAM Oxidation Market Potential: Ukraine 57
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VAM Oxidation Market Potential: Australia 61
VAM Oxidation Market Potential: Russia 65
VAM Oxidation Market Potential: South Africa 71
VAM Oxidation Market Potential: Poland 73
VAM Oxidation Market Potential: Kazakhstan 77
VAM Oxidation Market Potential: India 81
VAM Oxidation Market Potential: United Kingdom 83
VAM Oxidation Market Potential: Mexico 87
VAM Oxidation Market Potential: Germany 91
VAM Oxidation Market Potential: Czech Republic 95
Appendix B. Sample Calculations 99
Appendix C. Basis for Power Price Used in the Analyses 105
Appendix D. Technology Developer/Vendor Contact Information 109
Appendix E. CMOP Contact Information 113
Tables
Table 1. Countries Analyzed and 2000 VAM Emissions 7
Table 2. Projected Annual VAM Liberation by Country,
2000-2020 10
Table 3. Potential Worldwide Market for VAM Projects 38
Table A. Summary of VAM Liberation Projections, 2000-2020 47
Figures
Figure 1.
Figure 2.
Figure 3.
Figure 4.
Figure 5.
Figure 6.
Figure 7.
Figure 8.
Figure 9.
Figure 10.
Figure 11.
Contribution of Anthropogenic Emissions of All
Greenhouse Gases to the Enhanced Greenhouse
EffectSince Industrial Times 3
US Anthropogenic Methane Emissions 3
US Underground CMM Liberation by Source, 2000 4
Illustrative Ventilation Airflow and VAM
Concentration Variations 5
Thermal Flow-Reversal Reactor 12
Environmental C & C's Fluidized Bed Concentrator 14
EDL Carbureted Gas Turbine Installation 15
MAC Analysis for the United States—Carbon Mitigation 27
MAC Analysis for the United States—Power Production 27
Global MAC Analysis—Carbon Mitigation 28
Global MAC Analysis—Power Production 28
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Figure 12. Global Opportunity Cost Curve 29
Figure 13. US Carbon Mitigation Cost in the Absence of Power
Generation 30
Figure A-1. MAC Analysis for China—Power Production 50
Figure A-2. MAC Analysis for China—Carbon Mitigation 51
Figure A-3. Opportunity Costs for China 51
Figure A-4. MAC Analysis for the United States—Power Production 54
Figure A-5. MAC Analysis for the United States—Carbon Mitigation 54
Figure A-6. Opportunity Costs for the United States 55
Figure A-7. MAC Analysis for Ukraine—Power Production 58
Figure A-8. MAC Analysis for Ukraine—Carbon Mitigation 59
Figure A-9. Opportunity Costs for Ukraine 59
Figure A-10. MAC Analysis for Australia—Power Production 62
Figure A-11. MAC Analysis for Australia—Carbon Mitigation 62
Figure A-12. Opportunity Costs for Australia 63
Figure A-13. MAC Analysis for Russia—Power Production 66
Figure A-14. MAC Analysis for Russia—Carbon Mitigation 67
Figure A-15. Opportunity Costs for Russia 68
Figure A-16. MAC Analysis for Poland—Power Production 74
Figure A-17. MAC Analysis for Poland—Carbon Mitigation 74
Figure A-18. Opportunity Costs for Poland 75
Figure A-19. MAC Analysis for Kazakhstan—Power Production 78
Figure A-20. MAC Analysis for Kazakhstan—Carbon Mitigation 78
Figure A-21. Opportunity Costs for Kazakhstan 79
Figure A-22. MAC Analysis for the United Kingdom—Power Production 84
Figure A-23. MAC Analysis for the United Kingdom—Carbon Mitigation 84
Figure A-24. Opportunity Costs for the United Kingdom 85
Figure A-25. MAC Analysis for Mexico—Power Production 88
Figure A-26. MAC Analysis for Mexico—Carbon Mitigation 88
Figure A-27. Opportunity Costs for Mexico 89
Figure A-28. MAC Analysis for Germany—Power Production 92
Figure A-29. MAC Analysis for Germany—Carbon Mitigation 92
Figure A-30. Opportunity Costs for Germany 93
Figure A-31. MAC Analysis for the Czech Republic—Power Production 96
Figure A-32. MAC Analysis for the Czech Republic—Carbon Mitigation 96
Figure A-33. Opportunity Costs for the Czech Republic 97
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GLOSSARY
Anthropogenic
Bleeder shaft
CO,
Gob
Gob gas
Greenhouse gas
Tonne
VAM
Of, relating to, or resulting from human influences on natural
systems.
Smaller in diameter than main mine ventilation shafts, used at
some mines to increase ventilation at individual or groups of
longwall panels.
Methane, a greenhouse gas with a 100-year atmospheric
forcing factor approximately 21 times that of CO2.
Carbon dioxide, the reference greenhouse gas with a global
warming potential of 1.
Superjacent rock (and coal) strata that fracture and cave into
the mining void following coal extraction as the longwall face
and hydraulic roof supports advance (termed goaf outside of
the United States).
Methane that is released into the gob during and subsequent
to gob formation.
Any of a number of gases that trap heat in the Earth's
atmosphere, including water vapor, CO2, CH4, nitrous oxide,
ozone, hydrofluorocarbons (MFCs), perfluorocarbons (PFCs),
and sulfur hexafluoride (SF6).
Metric ton (1000 kilograms).
Ventilation air methane; the methane contained in ventilation
airflows exiting gassy underground coal mines.
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
ACRONYMS
Bm3 Billion cubic meters
Btu British thermal unit
CBM Coalbed methane
CFRR Catalytic flow-reversal reactor
CGT Carbureted gas turbine
CMM Coal mine methane
CMOP Coalbed Methane Outreach Program
CO2e Carbon dioxide equivalent
GHG Greenhouse gas
IPCC Intergovernmental Panel on Climate Change
kWh KiloWatt-hour
MAC Marginal abatement cost
MBtu Million British thermal units
Mm3
UG
Million cubic meters
MMT Million metric tons (million tonnes)
MW MegaWatt (million Watts)
MSHA Mine Safety and Health Administration
NPV Net present value
TFRR Thermal flow-reversal reactor
Underground (coal production)
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
USEPA United States Environmental Protection Agency
VAM Ventilation air methane
VOC Volatile organic compound
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
1. INTRODUCTION
Methane vented from coal mine exhaust shafts constitutes an unused source of
energy and a potent atmospheric greenhouse gas (GHG). Technologies that can
reduce ventilation air methane (VAM) emissions while harnessing methane's
energy offer significant benefits to the world community. Thermal and catalytic
oxidation technologies are both candidates for utilizing the low methane
concentrations contained in VAM streams. This report estimates global VAM
emissions and the potential for their mitigation.
This assessment focuses on the major coal-producing countries worldwide. Based
on 2000 data quantifying country-specific methane emissions from underground
coal mining, the countries analyzed comprise an estimated 85 percent of global
emissions.
Information provided by volatile organic compound (VOC) oxidation equipment
suppliers reveals that technology can oxidize VAM concentrations down to a
practical limit of 0.15 percent methane in air and can reliably oxidize and produce
energy from VAM concentrations down to 0.2 percent. Because such equipment is
employed at industrial installations around the world for VOC emission control, a
sound database of oxidizer equipment capital and operating costs is available.
Similar data for other system components, such as heat recovery and energy
production units, are based on less definitive information.
Using data obtained from both public and private sources, this US Environmental
Protection Agency (USEPA) assessment estimates current and projected
underground coal production, ventilation airflows, and unitized VAM emission
values (i.e., specific emissions). Using those estimates in combination with
equipment cost data enabled the development of marginal abatement cost (MAC)
curves that illustrate, for each study country and the world overall, the costs
associated with mitigating various levels of VAM emission.
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
2. EMISSIONS
2.1 Methane
The Intergovernmental Panel on Climate Change
(IPCC) estimates that methane (CH4) is 21 times more
potent than carbon dioxide (CO2) over a 100-year
timeframe in trapping heat in the atmosphere.1 It is
second only to CO2 as a contributor to global warm-
ing, as shown in Figure 1.2
2.2 Coal Mine Methane
HCFCs,
PFCs, SF6
Trap Ozone
13%
Figure 1. Contribution of Anthropogenic
Emissions of All Greenhouse Gases to
the Enhanced Greenhouse Effect since
Industrial Times (measured in Watts/m2)
Coalbed methane (CBM) is formed during the coalification process and is
contained in coal seams and adjacent rock strata. Unless it is intentionally drained
from the coal and rock, the process of coal extraction will liberate CBM into the
mine workings where it is referred to as coal mine methane (CMM). CMM poses a
serious hazard to workers, and mine operators employ large-scale ventilation
systems to remove CMM from mine workings. Figure 2
reveals that in the US methane released to the atmosphere
from coal mines represents almost 10 percent of the
country's anthropogenic methane emissions.3 Ventilation
systems at underground mines account for the bulk of those
emissions.
2.3 Components and Qualities of CMM
Methane emissions to the atmosphere can result from
surface mining as overburden is removed and coal is
extracted, underground mining as coal is removed and gob
Natural
Gas
Systems
18.9%
Enteric
Fermentation
20.2%
Coal
Mining I
Landfills
33.1%
Other
Sources
1.1%
Manure
Management
6.1%
Wastewater
Treatment
4.7%
Petroleum
Systems
3.6%
Stationary
Sources
Rice 1.2%
Cultivation
1.2%
Figure 2. US Anthropogenic
Methane Emissions
1 This report uses the global warming potentials from the IPCC's Second Assessment Report because
these values are used in emissions reporting under the United Nations Framework Convention on
Climate Change. The IPCC updated these values in the Third Assessment Report and the relative
impact of methane as compared to carbon dioxide increased to 23.
2 IPCC(2001).
3 USEPA (2002a).
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Emissions
Avoided/
Methane
Used
27%
Drained
CMM
Available
7%
is formed, and post-mining activities such as coal storage and transportation.
USEPA (2002a) reports that in the US in 2000, approximately 65 percent of
methane emitted from coal mining came from underground mines, 14 percent from
surface mines, and 21 percent from post-mining activities.
Methane liberated by underground coal mining can vary in quality depending on
where and how it is liberated. Because there are fewer opportunities for air to
dilute it, CBM drained from coal seams in advance of mining is of very high
concentration, often meeting natural gas pipeline quality specifications. CMM
released from coal and rock strata as gob forms during longwall mining operations
(gob gas) unavoidably mixes with mine air thus reducing its concentration. Gob gas
generally is considered to be of medium quality (approximately 30-90 percent
methane and containing contaminants such as nitrogen, oxygen, carbon dioxide,
and water vapor). CMM released to the atmosphere by the mine ventilation system
is the lowest concentration, typically below 1 percent.
Figure 3 illustrates the relative magnitude of methane emissions to the atmosphere
in the US from mine ventilation and methane drainage systems.4 As the figure
reveals, 27 percent of methane from underground coal
mines is drained and used, 7 percent is drained but
released to the atmosphere, and 66 percent escapes to the
atmosphere through ventilation systems.
Ventilation
Emissions
66%
2.4 Baseline Emissions Estimation
Methodology
This section describes the general analytical methodology
applied to estimate and project VAM emissions. Appen-
dix A explains the application of this methodology to
Figure 3. US Underground CMM each country in the analysis.
Liberation by Source, 2000
Variations in ventilation air methane flow and
concentration affect the size (ventilation air-processing capacity) and cost of an
oxidation system emplacement. For example, Figure 4 provides a graph of such
variation over time at an underground coal mine bleeder shaft in the eastern United
States.5 As the figure illustrates, over a 2.25-year period ventilation airflow at this
4 USEPA (2002b).
5 Data obtained from the US Mine Safety and Health Administration.
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
150
5"
g c
o o 100
t u
•-= w
< 1- <
Eg. 50
*k
0
r
c
c
k
>***
F- . _<
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CM* Concentration (%)
• Vent Airflow
ChU
Figure 4. Illustrative Ventilation Airflow and VAM Concentration Variations
shaft ranged from just over 50 to almost 120 m3 per second and VAM
concentration ranged from less than 0.5 to over 0.7 percent.
To account for such variations, the first step in evaluating the potential world
market for VAM oxidation equipment involved characterizing VAM flows in major
coal-producing countries. To develop a ventilation air emissions baseline, USEPA
sought to compile up-to-date, detailed data for the year 2000 for each study
country. Rather than relying on emissions factors or other generalized approaches
to estimate emissions, when possible USEPA employed the following "bottom up"
analytical approach to characterize methane emissions at the shaft level in terms of
ventilation airflow rates and VAM concentrations:
1. For each study country, typical ventilation shaft airflows were quantified
and both a flow range and a typical value6 were defined.
2. VAM concentrations also were quantified for each country and both a
concentration range and a typical value were defined.
Additionally, total VAM emissions for 2000 were tabulated for each country. The
combination of VAM characterization data and VAM emissions for 2000
constituted the study baseline for each country under evaluation.
5 While conceptually simple, the variation in the type and level of detail of the data available from
country to country often made the country-specific VAM characterization challenging. For example,
not all countries provided both ventilation airflow and VAM concentration data. For countries that did
provide such data, some provided a range as well as a point value (variously reported as average,
weighted average, typical, mean, or median), while others provided either a range or a point value.
US ENVIRONMENTAL PROTECTION AGENCY
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Data for US mines were the most detailed. The US Mine Safety and Health
Administration (MSHA) takes ventilation air samples at gassy underground coal
mine ventilation airshafts on at least a quarterly basis. MSHA provided sampling
data for the past two-and-a-half years. Collating the data for each shaft allowed an
analysis of ventilation airflow and methane concentration to quantify the range and
typical values for those parameters and to illustrate how they vary over time. An
understanding of such variation is important when defining operational parameters
for a given project (e.g., flow-through capacity, supplemental fuel requirements). It
should be noted, however, that although the quarterly data available from MSHA
offer valuable insight into flow and concentration variations, project developers
will need to obtain such data on an hourly or daily basis to support site-specific
project planning.
While other coal-producing countries lacked detailed, shaft-specific VAM
characterization data comparable to that obtained from MSHA for US mines,
USEPA secured country-level VAM emissions data from open literature and in-
country coal-mining experts. These data allowed for similar, albeit less detailed,
bottom-up analyses. For the United Kingdom, however, which represents just
under 1 percent of estimated world 2000 VAM emissions, key VAM
characterization data were unavailable. Thus, for the UK USEPA employed the
following "top-down" analytical approach:
1. Used estimates of 2000 overall CMM emissions for developed countries
previously published by USEPA (2001).
2. Estimated methane emissions from ventilation systems by adjusting the overall
coal-mining emission estimates using country-specific data disaggregating (a)
underground from surface mining emissions and (b) methane captured by
drainage systems versus methane in the ventilation system.
2.5 Country-Specific Baseline VAM Emission Estimates
To represent the overall ventilation air oxidation market, USEPA attempted to
acquire emissions data for major coal-producing countries worldwide. Table 1 lists
the study countries in descending order of annual total coal mining-related
methane release. These countries comprised 28.3 Bm3 of total methane release in
2000, or 85.8 percent of worldwide methane emissions from coal mining. Thus, to
gain perspective on the overall world market potential for VAM oxidation, USEPA
adjusted (increased) the 2000 study country total VAM emissions estimate (14.2
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Bm3) by 17 percent,7 yielding an overall world total VAM emission estimate for
2000 of 16.6 Bm3 or 237.1 MMT of CO2 equivalent (CO2e). USEPA acknowledges,
however, that this estimate of world VAM emissions is only an approximation and
that not all of the VAM emissions estimated for the world as a whole or for a given
country necessarily will support viable VAM oxidation projects (see section 2.6).
Table 1. Countries Analyzed and 2000 VAM Emissions*
Country**
China
United States
Russia
Ukraine
Australia
Germany
Poland
India
Kazakhstan
South Africa
United Kingdom
Czech Republic
Mexico
Study total
Other countries
World total
2000 Methane
Emission***
(Bnf)
12.0
5.5
2.7
2.0
1.4
1.2
1.1
0.7
0.5
0.5
0.4
0.4
0.1
28.3
4.7
33.0
Percent of
World Total
36.4
16.5
8.1
6.0
4.2
3.7
3.3
2.1
1.5
1.5
1.1
1.1
0.4
85.8
14.2
100
Analysis
Performed A
B
B
B
B
B
B
B
B
B
B
T
B
B
2000 VAM
Emissions
(Bnf)
6.5
2.5
0.6
2.1
0.7
0.09
0.4
0.3
0.3
0.4
0.2
0.06
0.1
14.2
2.4
16.6
2000 VAM
Emissions
(MMTC02e)
92.3
36.0
9.2
30.1
9.5
1.2
5.7
4.0
4.5
5.8
2.2
0.8
1.9
203.4
33.7
237.1
Percent of
Study Total
VAM
45.4
17.7
4.5
14.8
4.7
0.6
2.8
2.0
2.2
2.8
1.1
0.4
1.0
100.0
* Totals may not add due to independent rounding.
** In order of 2000 methane emissions.
*** From USEPA (2001 and 2002c) for developed and developing countries, respectively.
A B = Bottom-up, T = Top-down
2.6 Uncertainty in the Baseline Emission Estimates
Uncertainties in the baseline emission estimates include the following:
1. For non-US mines with VAM flow and concentration data, the comparability of
the mean, average, and typical values reported is uncertain.
100/85.8 = 1.166.
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2. The extent to which the ventilation airflow and methane concentration mean,
average, or typical values will represent actual conditions at any given mine is
not known. While site-specific conditions likely fall within the ranges provided,
a project developer will need to thoroughly characterize VAM flows,
concentrations, and variability.
3. The analysis would be improved if VAM flow and concentration data were
available for all countries, thereby allowing a comparable bottom-up analysis
to be performed in all cases.
2.7 Emissions Projection Methodology8
Baseline VAM emission estimates for 2000 provide only a starting point for
emission projections. Equipment manufacturers design VAM oxidation equipment
to function for almost two decades, with current oxidizer manufacturers expecting
an approximate 16-year useful life for their systems. Recognizing that uncertainties
associated with coal production and VAM emission projections increase
dramatically as the projection timeframe is extended, USEPA selected the period
2000-2020 as the focus of this analysis, thus making the study period consistent
with oxidizer manufacturer's expected equipment lifetimes while not unnecessarily
increasing analytical uncertainty.
The analytical process for projecting VAM emissions (in the absence of any VAM
mitigation efforts) built on the baseline emission estimation methodology described
above. For emission estimates using the bottom-up methodology, projections
follow these steps:
1. Underground coal production projections were tabulated for the study period.
Coal production projections were only available for a few years in the 2000-
2020 period, from which production estimates for intervening and subsequent
years were interpolated and extrapolated, respectively.
2. For each study country, a VAM specific emission factor was derived from
baseline data quantifying VAM emissions and underground coal production for
2000.
8 Example calculations illustrating the bottom-up and top-down analytical approaches are presented
in Appendix B.
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3. Future VAM emissions were calculated for each country. Future annual coal
production estimates and the VAM emission factors yielded annual VAM
emission projections.
For the United Kingdom the top-down emission estimates provided the basis for
projecting emissions via the following steps:
1. Future overall coal mining methane emissions were taken from USEPA (2001)
that estimated future total coal mining methane emissions for 2005 and 2010.
2. Using data that distinguishes (a) underground from surface mining emissions
and (b) methane drained versus methane released from ventilation, VAM
emissions were estimated.
3. Emissions were calculated for non-reported years by interpolating and
extrapolating from the existing estimates.
2.8 VAM Emissions Projections
Table 2 provides annual, country-specific VAM emission estimates from 2000 to
2020, which reflect expected underground coal production for that period. By
providing insight into the rate of growth or decline in expected VAM emissions
over time, these projections allowed country-specific estimates of VAM oxidizing
capacity requirements, system design specifications, and costs (see section 3.2).
Data in the table reveal that, worldwide, VAM emissions are expected to increase
by 30 percent between 2000 and 2020 to 308 million tonnes of CO2e. VAM
emission increases are projected to occur in all study countries with the exception
of the Czech Republic, Germany, Poland, and the United Kingdom. Projections for
China show the greatest absolute increase (to almost 130 million tonnes CO2e).
2.9 VAM Emissions Projection Uncertainty
Uncertainties in projecting VAM emissions to the year 2020 include:
1. The accuracy of the VAM emissions projections is related directly to the
accuracy of the coal production estimates and specific VAM emission factors
derived in this analysis.
2. In many countries, uncertainties in the coal industry including privatization,
competition from gas-fired power generation, methane management
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technology improvements (e.g., directional drilling), and environmental policy
affect both coal production and VAM release.
Table 2. Projected Annual VAM Liberation (MMT CO2e) by Country, 2000-2020
Country* 2000 2005 2010 2015 2020 % Change
China
United States
Ukraine
Australia
Russia
South Africa
Poland
Kazakhstan
India
United Kingdom
Mexico
Germany
Czech Republic
Study Total
Other Countries
World Total
92.3
36.0
30.1
9.5
9.2
5.8
5.7
4.5
4.0
2.2
1.9
1.2
0.8
203.4
33.7
237.1
101.6
39.8
37.5
10.5
10.8
7.0
5.6
4.7
4.5
2.1
2.2
1.0
0.8
228.1
37.8
265.9
110.9
40.6
41.3
11.6
11.2
7.0
5.0
4.7
4.8
2.1
1.9
0.6
0.7
242.5
40.1
282.6
120.1
41.1
42.3
12.3
11.6
7.0
4.8
4.7
5.1
2.0
2.0
0.6
0.6
254.2
42.1
296.3
129.3
39.9
43.2
13.6
12.0
7.0
4.5
4.7
5.4
2.0
2.0
0.6
0.5
264.7
43.8
308.5
* In order of 2000 VAM emissions
40.1
10.7
43.3
42.3
29.7
22.2
-21.6
5.5
36.1
-9.6
4.2
-52.7
-42.8
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3. EMISSION REDUCTIONS
3.1 Technology Overview
USEPA (2000) identified two technologies for destroying or beneficially using the
methane contained in ventilation air: the VOCSIDIZER,9 a thermal flow-reversal
reactor developed by MEGTEC Systems (De Pere, Wisconsin, United States), and a
catalytic flow-reversal reactor developed expressly for mine ventilation air by
Canadian Mineral and Energy Technologies (CANMET—Varennes, Quebec,
Canada). Both technologies employ similar principles to oxidize methane
contained in mine ventilation airflows. Based on laboratory and field experience,
both units can sustain operation (i.e., can maintain oxidation) with ventilation air
having uniform methane concentrations down to approximately 0.1 percent. For
practical field applications where methane concentrations are likely to vary over
time, however, this analysis assumes that a practical average lower concentration
limit at which oxidizers will function reliably is 0.15 percent.
In addition, a variety of other technologies such as boilers, engines, and turbines
may use ventilation airflows as combustion air. At least two other technology
families may also prove to be viable candidates for beneficially using VAM. These
are VOC concentrators and new lean-fuel gas turbines.
3.1.1 Thermal Flow-Reversal Reactor
Figure 5 shows a schematic of the Thermal Flow-Reversal Reactor (TFRR). The
equipment consists of a bed of silica gravel or ceramic heat-exchange medium with
a set of electric heating elements in the center. The TFRR process employs the
principle of regenerative heat exchange between a gas and a solid bed of heat-
exchange medium. To start the operation, electric heating elements preheat the
middle of the bed to the temperature required to initiate methane oxidation (above
1,000°C [1,832°F]) or hotter. Ventilation air at ambient temperature enters and
flows through the reactor in one direction, and its temperature increases until
oxidation of the methane takes place near the center of the bed.
1 VOCSIDIZER is a registered trademark of MEGTEC Systems.
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Valve 2
Air&
Valve 1
Valve #1 open = 1
Valve #2 open = '
*Heat recovery piping
not shown
>
I
^
;
Heat Exchange Medium
| Heat t
^ Exchanger
Heat Exchange Medium
^
t
>
|
.^
Valve 1
-> Air,
H2O
_k. Heat*
Figure 5. Thermal Flow-Reversal Reactor
The hot products of oxidation continue through the bed, losing heat to the far side
of the bed in the process. When the far side of the bed is sufficiently hot, the
reactor automatically reverses the direction of ventilation airflow. The ventilation
air now enters the far (hot) side of the bed, where it encounters auto-oxidation
temperatures near the center of the bed and then oxidizes. The hot gases again
transfer heat to the near (cold) side of the bed and exit the reactor. Then, the
process again reverses.
As USEPA (2000) points out, TFRR units are effectively employed worldwide to
oxidize industrial VOC streams. Furthermore, the ability of MEGTEC's
VOCSIDIZER to oxidize VAM has been demonstrated in the field.
3.1.2 Catalytic Flow-Reversal Reactor
Catalytic flow-reversal reactors adapt the thermal flow-reversal technology
described above by including a catalyst to reduce the auto-oxidation temperature
of methane by several hundred degrees Celsius (to as low as 350°C [662°F]).
CANMET has demonstrated this system in pilot plants and is now in the process of
licensing Neill and Gunter (Nova Scotia) Ltd. of Dartmouth, Nova Scotia, to
commercialize the design (under the name VAMOX).
CANMET is also studying energy recovery options for profitable turbine electricity
generation. Injecting a small amount of methane (gob gas or other source) increases
the methane concentration in ventilation air to make the turbine function
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efficiently. Waste heat from the oxidizer is also used to pre-heat the compressed air
before it enters the expansion side of the gas turbine.
3.1.3 Energy Conversion from a Flow-Reversal Reactor
There are several methods of converting the heat of oxidation from a flow-reversal
reactor to electric power, which is the most marketable form of energy in most
locations. The two methods being studied by MEGTEC and CANMET are:
• Use water as a working fluid. Pressurize the water and force it through an air-
to-water heat exchanger in a section of the reactor that will provide a non-
destructive temperature environment (below 800°C [1472°F]). Flash the hot
pressurized water to steam and use the steam to drive a steam turbine-
generator. If a market for steam or hot water is available, send exhausted
steam to that market. If none is available, condense the steam and return the
water to the pump to repeat the process.
• Use air as a working fluid. Pressurize ventilation air or ambient air and send it
through an air-to-air heat exchanger that is embedded in a section of the
reactor that stays below 800°C (1472°F). Direct the compressed hot air
through a gas turbine-generator. If gob gas is available, use it to raise the
temperature of the working fluid to more nearly match the design temperature
of the turbine inlet. Use the turbine exhaust for cogeneration, if thermal
markets are available.
Since affordable heat exchanger temperature limits are below those used in modern
prime movers, efficiencies for both of the energy conversion strategies listed above
will be fairly modest. The use of a gas turbine, the second method listed, is the
energy conversion technology assumed for the cost estimates in this report. At a
VAM concentration of 0.5 percent one vendor expects an overall plant efficiency in
the neighborhood of 17 percent after accounting for power allocated to drive the
fans that force ventilation air through the reactor.
3.1.4 Other Technologies
This market assessment focuses on the TFRR and CFRR technologies because their
vendors are actively pursuing coal mine VAM as a viable market for their
equipment. However, USEPA also is in the process of reviewing a number of other
technologies that may prove able to play a role in and enhance opportunities for
VAM oxidation projects. These are briefly described below.
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Concentrators
Volatile organic compound (VOC) concentrators offer another possible economical
option for application to VAM. During the past 10 years the use of such units to
raise the concentration of VOCs in industrial process-air exhaust streams that are
sent to VOC oxidizers has increased. Smaller oxidizer units are now used to treat
these exhaust streams, which in turn has reduced capital and operating costs for the
oxidizer systems. Ventilation air typically contains about 0.5 percent methane
concentration by volume. Conceivably, a concentrator might be capable of
increasing the methane concentration in ventilation airflows to about 20 percent.
The highly reduced gas volume with a higher concentration of methane might
serve beneficially as a fuel in a gas turbine, reciprocating engine, etc.
Concentrators also may prove effective in raising the methane concentration of
very dilute VAM flows to levels that will support oxidation in a TFRR or CFRR.
There are multiple styles of concentrators employed in industrial applications, with
carbon and zeolite wheels generally being the most popular for hydrocarbon
reduction purposes. Fluid bed concentrators, however, are expected to offer greater
promise for methane concentration. The fluid bed concentrator consists of a series
of perforated plates or trays supporting an adsorbent medium (e.g., activated
carbon beads). The process exhaust stream enters from the bottom and passes
upward through the adsorption trays where it fluidizes the adsorbent medium to
enhance capture of organic compounds. The adsorbent medium, which is now
heavier because of the adsorbed organic material, falls to the bottom of the
adsorber section and is fed to the desorber.
Figure 6. Environmental C & C's Fluidized Bed
Concentrator
The desorber increases the temperature of the
medium, causing it to release the concen-
trated organic material into a low-volume,
inert gas stream. In this continuous operation,
the regenerated medium is fed back to the
adsorber vessel for reuse.
Although several vendors offer concentrator
systems, Environmental C & C, Inc. (Clifton
Park, New York) manufactures the fluid bed
concentrator (see Figure 6). With USEPA
assistance, Environmental C & C is testing that
system's efficacy on simulated VAM using a
series of methane-in-air mixtures.
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Lean-Fuel Gas Turbines
A number of engineering teams are striving to modify selected gas turbine models
to operate directly on VAM or on VAM that has been enhanced with more
concentrated fuels, including concentrated VAM (see "Concentrator" section
above) or gob gas. These efforts include:
Carbureted gas turbine. A carbureted gas turbine (CGT) is a gas turbine in
which the fuel enters as a homogeneous mixture via the air inlet to an
aspirated turbine. It requires a fuel/air mixture of 1.6 percent by volume, so
most VAM sources would require enrichment. Combustion takes place in
an external combustor where the reaction is at a lower temperature
(1200°C [2192°F]) than for a normal turbine thus eliminating any NOx
emissions. Energy Developments Limited (EDL) of Australia is testing the
CGT (see Figure 7) on ventilation air at the Appin coal mine in New South
Wales, Australia. EDL is using a modified Solar gas turbine model 3000R
(rated at 2.7 MW) for this demonstration.
Lean-fueled turbine with catalytic
combustor. CSIRO Exploration &
Mining of Australia, a government
research organization, is develop-
ing a catalytic combustion gas tur-
bine (CCGT) that can use methane
in coal mine ventilation air. The
CCGT technology being developed
oxidizes VAM in conjunction with
a catalyst. The turbine compresses
a very lean fuel/air mixture and
combusts it in a catalytic combus-
tor. The catalyst allows the meth-
ane to ignite at a lower, more eas- Figure 7. EDL Carbureted Gas Turbine Installation
ily achieved temperature. As with the CGT, CSIRO's non-conventional
turbine will not use combustion air for internal cooling, thus allowing the
air intake to contain fuel. CSIRO hopes to operate the system on a 1.0
percent methane mixture to minimize supplemental fuel requirements.
CSIRO also will incorporate a latent heat storage system to even out
variations in VAM concentration, and is planning for future research and
commercialization of the VAM CCGT.
Lean-fuel microturbine. Another US company, Ingersol-Rand Energy
Systems, is developing a microtubine that is planned to operate on a
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methane-in-air mixture of less than 1 percent. This lean-fuel microturbine is
a version of their PowerWorks Microturbine System. The microturbine is
rated at 70 kW and consists of a generator, gasifier turbine, combustor,
recuperator, power turbine, and generator. The system is enclosed in a
sound-attenuating enclosure and can be located indoors or outdoors.
Ingersol-Rand recently introduced a 250 kW microturbine to the power
industry. Additional R&D effort is required to complete the system design
on the 70 kW unit and to adapt the 250 kW unit to run in a lean-fuel mode.
Ingersol-Rand is seeking funding to further pursue this market.
Lean-fueled catalytic microturbine. Two US companies, FlexEnergy and
Capstone Turbine Corporation, are jointly developing a line of
microturbines, starting at 30 kW, that will operate on a methane-in-air
mixture of 1.3 percent. FlexEnergy, using funding from the US Department
of Energy/National Renewable Energy Laboratory and the California Energy
Commission, expects to have a 30 kW prototype unit ready for field service
in mid-2003. Each unit's components fit inside a compact container that
requires no field assembly. The single moving part, rotating on an air
bearing, is a shaft on which is mounted the compressor and the turbine
expander. Other components include: a recuperator that preheats the VAM
mixture, a catalytic combustion chamber with low-temperature ignition, a
generator, and a generator cooling section. To better serve the VAM market,
FlexEnergy is investigating designs that will reduce required VAM
concentration to below 1.0 percent and increase unit sizes to over 100 kW.
Hybrid coal and VAM-fueled gas turbine. CSIRO is also developing an
innovative system to oxidize and generate electricity with VAM in
combination with waste coal. CSIRO is constructing a 1.2-MW pilot plant
that cofires waste coal and VAM in a rotary kiln, captures the heat in a
high-temperature air-to-air exchanger, and uses the clean, hot air to power
a gas turbine. Depending on site needs and economic conditions, VAM can
provide from about 15 to over 80 percent (assuming a VAM mixture of 1.0
percent) of the system's fuel needs, while waste coal provides the
remainder. Waste coal and ventilation air enter the rotating kiln in the same
direction. The coal's heat of combustion ignites the VAM and a large
percentage of that heat is transferred to an air-to-air heat exchanger that
operates at about 900°C (1,652°F). Ambient air, pressurized by the gas
turbine's (Allison C-18) compressor, flows through the heat exchanger's
secondary loop, heats to 900°C, and expands through the turbine's power
section. Part of the compressor's output is directed to the turbine cooling
path. This system is especially well suited for mines, such as those in
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Australia, that generate a significant percentage of waste coal and that can
market the lightweight expanded aggregate that is produced in the kiln.
VAM Used as an Ancillary Fuel
While the primary focus of this assessment is on strategies that oxidize major
fractions of global VAM emissions, a brief mention of technologies that use VAM
only as an ancillary or supplemental fuel is in order. Such technologies rely on a
primary fuel other than VAM and are able to accept VAM as all or part of their
combustion air to replace a small fraction of the primary fuel. The largest example
of ancillary VAM use occurred at the Appin Colliery in Australia, where 54 one-
MW Caterpillar engines used mine ventilation air containing VAM as combustion
air. Similarly, the Australian utility, Powercoal, is installing a system to use VAM as
combustion air for a large coal-fired steam power plant. In addition, the US
Department of Energy funded a research project to use VAM in concentrations up
to 0.5 percent as combustion air in a turbine manufactured by Solar. Even the
CSIRO hybrid coal and VAM project described in the preceding paragraph falls in
the category of ancillary VAM use when waste coal combustion is maximized and
VAM use is limited to prescribed levels of combustion air.
3.2 Cost Analysis
Although the lowest project costs will be associated with installations that simply
oxidize VAM, this analysis assumes that VAM projects will include equipment to
allow heat recovery and electricity generation so as to obtain revenues from
electricity sales. If energy revenues are insufficient to defray capital and operating
costs plus a reasonable profit, they incur a net project cost, expressed as cost per
tonne of CO2e of the abated methane emissions. Unitized net project cost10
decreases as VAM concentration increases.
This analysis does not take project size, a less influential parameter, into account
because small ventilation flows, which occur largely in developing countries, cause
only minor cost increases that may be largely offset by lower costs for labor and
miscellaneous supplies in these countries.
10 Project costs were not adjusted to account for local differences in labor costs, tariffs, etc. because
the initial system cost estimates available at the time of this assessment were too preliminary for such
refinements to be meaningful. Furthermore, it is expected that local costs will have only a minor
impact on overall system cost because 1) most of the cost relates to capital costs, which are relatively
immune to local cost conditions, and 2) some of these cost differences offset each other (e.g., lower
labor cost would be offset by high importation fees). Moving costs are included as O & M cost.
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Project costs, for this analysis, are the net present value (NPV)11 of (1) initial capital
cost (including profit), plus (2) annual operating costs, minus (3) revenues from
electric power sales. The net project cost of projects implemented at any given
VAM concentration represents a marginal cost (i.e., the additional cost that must be
offset to make the project profitable). Marginal costs increase with projects having
lower and lower VAM concentrations, and one can use marginal abatement cost
(MAC) curves to depict this relationship.
To construct a MAC curve for VAM projects, one first must calculate the cost of
implementing a project over a range of VAM concentrations and then identify the
number of tonnes of VAM abated, within a large sample of VAM emissions, that
matches each discrete concentration percentage. To reflect cost differences
resulting from changes in VAM concentration, USEPA estimated the net marginal
costs (per tonne of CO2e) for each discrete level of VAM concentration.
$NPV per tonne CO2e = Capital cost + ($NPV (O&M cost - revenues))
tonnes CO2e x N years
USEPA expresses the cost to oxidize VAM (in tonnes of CO2e) as a net present
value (NPV) adjusted to year 0 for all projects analyzed. This method places all
projects within a consistent frame of reference so that they are comparable. An
alternative would have required a comparison of a particular year's "real-time" cost
(e.g., comparing costs for year 1 for a number of projects), but this would have the
disadvantage of not being able to account for varying project lives, inflation of
various cost and revenue items, and different dates of commencement. NPV carbon
emission reduction costs tend to be less than real-time costs, primarily because of
the 15 percent discount rate used in this analysis.
The following describes how MAC curve calculations were developed from these
cost estimates.
11 Net present value (NPV) is the combination of capital and operating costs and revenues of a project
incurred during the project term discounted to the present (year 0 for each project) using an
appropriate discount rate. The formula for calculating NPV is:
Present Value = CF0 + CFi_ + CF2_ + CF3_ + CFn_
(1 + r)1 (1 + r)2 (1 + r)3 (1 + r)n
where: CFX = cash flow in period x, n = the number of periods, r = the discount rate.
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3.2.1 Methodology
Individual Country MAC Curves
In developing country-specific MAC curves, USEPA used the distribution curve of
VAM concentration and flow reported by MSHA for the 58 gassiest ventilation
shafts at underground coal mines in the US and adjusted it for application to other
countries. Specifically, USEPA employed the following five steps to build the MAC
curves, first for the US and next for non-US coal-producing countries.
US MAC Curve—Carbon Mitigation Cost
1. A model was constructed using cost and performance data supplied by the two
vendors of flow-reversal technology. The model yielded a net cost, expressed as
the NPV of abating VAM emissions, equivalent to one tonne of CO2. Sensitivity
analysis revealed that methane concentration would have the greatest effect on
the net oxidation cost of VAM.
2. Net VAM project costs were estimated for VAM concentrations from 0.2 to over
1.0 percent, taking into account the following assumptions:
• Discount rate. While discount rates may vary considerably from country to
country, the model used in this analysis applied a 15 percent rate to be
conservative and assumed that most projects will be privately sponsored.
This rate represents a reasonable average for a private project with blended
(i.e., leveraged) debt and pre-tax equity investment. (See further discussion
on the discount rate in the "Uncertainties" section below.)
• Project size. The model assumed project airflow capacities of 100 cubic
meters per second—large enough to achieve good economy of scale and to
fit most modern mining enterprises. In some developing countries where
smaller ventilation airflows are common, USEPA assumed that lower
prevailing labor costs will tend to cancel out the higher unit costs of smaller
plants.
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• Project life. VAM projects will take place both at bleeder shafts,12 which
tend to have higher VAM concentrations, and at main shafts, which tend to
have longer economic lives. The analysis assumed an economic life of 16
years (with project startup occurring in 2002), during which the VAM
project modules will have been moved once for a main shaft and three
times (every four years) for a bleeder shaft. Moreover, it further assumed
that the salvage value of some plant components will likely offset part of the
post-project decommissioning costs.
• Use of gob gas. System vendors may depend somewhat on gob gas
availability, for example to enhance VAM concentration or to raise the
temperature of the compressed hot air to reach the design temperatures of a
gas turbine. If no gob gas or other supplemental fuels are available, power
production will fall off, in some cases substantially, and many mines may
not have sufficient gob gas to optimize the performance of every potential
project. The analysis included a charge of $1.00 per MBtu ($0.95 per
million kilojoules) for the gob gas, but the impact on net project cost is
small (i.e., cents per tonne CO2e), because gob gas use increases the value
of revenues from additional power generated. (See the discussion of gob gas
availability in the "Uncertainties" section below.)
• Royalty. The model did not include any royalty payment to the mine,
because it assumed that the mine receives remuneration for its VAM out of
project profits.
• Project debt. No formal accounting for debt was necessary, because the
discount rate accounted for a blend of debt and equity financing.
• Income tax. The model assumed a "before tax" return; therefore, it did not
address income taxes or depreciation.
• Electricity sale price. The model assumed a power price of $0.03 per kWh.
Revenues may accrue to a project by calculating the retail value of power
savings resulting from the mine purchasing less from its traditional supplier
(adjusted by payments for backup, if any), or by selling the power to the
12 Some mines use bleeder shafts to increase ventilation at individual or groups of longwall panels.
Bleeder shafts are smaller in diameter than main mine ventilation shafts (e.g., 4 to 8 feet versus 8 to 28
feet, respectively). Generally, the concentration of methane found in bleeder shafts is somewhat
higher (e.g., <2 percent) than that found in main mine ventilation airflows (e.g., <1 percent). Available
information indicates that currently only the US and Russia make use of bleeder shafts.
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grid. The $0.03 price represents the mid point of anecdotal reports of
current pricing in the deep coal-mining regions of the US Rockies and
Appalachia.
• Value of waste heat. Some of the system configurations being studied by the
vendors will produce marketable thermal energy, but the model did not
assume any such revenues, since thermal markets could be small,
intermittent, or non-existent. Potential uses for thermal energy will depend
on site-specific factors that vary worldwide. However, such uses could
include coal drying and district heating systems in mining communities. To
the extent that projects can take advantage of thermal revenues, the analysis
was conservative.
3. A distribution table for VAM emissions was constructed using the VAM flow
rates for the US shafts, ranked according to concentration, and grouped by
discrete methane concentration percentages according to the following
procedure.
• Range of VAM concentrations. The analysis ranked the 58 US ventilation
shafts monitored by MSHA in the order of their VAM concentrations, and
grouped the shafts into discrete bands of concentration. For example, all
projects working with VAM concentrations ranging from 0.15 to 0.25
percent are labeled 0.2 percent, and so on. At concentrations below 0.15
percent, the oxidation units will not be able to sustain the minimum
temperature necessary for oxidation (i.e., methane auto-oxidation
temperature). Thus, this analysis assumes that 0.2 percent is the lowest
practically viable category. The last point on the curve represents the few
shafts that have concentrations from 0.95 to over 1.2 percent. To be
conservative, this analysis assumed that flows in that range will be 1.0
percent.
4. The results from Step 2 (VAM oxidation costs per tonne of CO2e) were added to
the Step 3 distribution table (for the US a no-power case that does not include
the cost of power generation equipment also was developed).
5. The cumulative tonnage of VAM that would be oxidized (if project developers
were to take advantage of available opportunities) was plotted against each
discrete incremental change in the cost of methane oxidation.
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US MAC Curve—Electricity Price
Another way of evaluating the conditions necessary to economically oxidize VAM
is to construct a MAC curve that is keyed to the sale price of electricity. The
electricity price MAC estimates the number of tonnes of CO2e that would be
mitigated annually using a range of electric prices. Project revenues from the VAM
power projects would accrue from electricity sales and do not include carbon
mitigation revenues (i.e., a zero cost per tonne of CO2e).
The US electricity price MAC was constructed in a similar manner to Steps 1
through 3 described under the "US MAC Curve—Carbon Mitigation Cost"
methodology, with the following exceptions:
• All financial and cost assumptions remained the same except for the
electric price, which became an independent variable.
• Project revenues were assumed to accrue solely from electricity sales.
• A table was created that recorded each pair of VAM concentration and
electric price.
• The distribution table of VAM flow rates for US shafts ranked according to
concentration (Step 3) was added to the concentration-electric price table
assembled above.
• The cumulative tonnage of VAM that could be oxidized was plotted against
each discrete incremental change in the price of electricity.
Applying the process outlined above resulted in the MAC curves for the US, which
are presented in Figures 8 and 9 (see Section 3.2.2).
Non-US Country MAC Curves
Data from a large sample of gassy ventilation shafts provided airflow volumes and
VAM concentrations that made construction of the US MAC curve a fairly
straightforward procedure. USEPA received only generalized information from 11
of the other 12 coal mine countries assessed (i.e., shaft-specific data were not
available except for some 1995 data from Poland), therefore USEPA used the US
distribution curve and adjusted it for application to other countries.
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Methane Concentration Distribution
Using the US distribution curve of VAM concentrations should provide a
reasonable approximation because US data (1) were derived from a range of coal
basins, (2) result from actual field readings, and (3), with data from 58 shafts,
should represent a sufficient variability of mines. The following adjustments,
however, were made to improve the accuracy of the application of the US MAC
curve.
• Concentration percentage ranges. For the UK, where data were unavailable
to quantify VAM concentration percentage ranges, the MAC analysis
assumed a reasonable range of 0.1-0.7 percent, which is typical of
countries that do not employ bleeder shafts.
• Concentration percentage of the median VAM emission rate. This is the
concentration at which half of each country's annual VAM flow (volume of
methane released per unit time) has a higher concentration and half has a
lower concentration. Where the median concentration value was
unavailable, the analysis used a value that best approximated this point.
Power Prices
Correspondents in seven countries (including India and South Africa for which
MAC curves were not constructed) supplied power pricing information that was
useful for generating MAC curves in their respective countries.
• Germany—Radgen (2002) reported that 0.0665 euros (US$0.065)13 per kWh
can be paid for electricity generated at installations with an electrical
capacity of over 500 kW using gas from coal mines, and this analysis thus
assumed that price for power produced in Germany.
• China—Wenge (2002) gathered data that sampled both wholesale and retail
power rates in China. These suggest that US$0.035 may be available for VAM
projects.
• Australia—Mallet (2002) supplied actual Australian pricing data, which
indicated that a fair price for VAM power would be approximately US$0.02.
; Currency conversion based on November 2002 rates.
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• United Kingdom—O'Quigley (2002) supplied information indicating that the
wholesale electric rate has fallen to about US$0.03 in the UK.
• Ukraine—Filippov (2002) reported that US$0.03 would be a reasonable price
to apply for Ukrainian industrial power.
• India—Singh (2002) provided an estimate of what a mine may be willing to
pay to a VAM project, which at US$0.07 is the highest estimate encountered
in this study.
• South Africa—Lloyd (2002) described energy prices as very low and "likely to
remain so." His data supported a price of only about US$0.01 per kWh.
For countries where power pricing information was not available through direct
contact with in-country experts, USEPA secured 2001 industrial electricity price
data from IEA(2002).
Non-US VAM MAC Methodology
The method for creating a new VAM MAC for each country used the data shown in
Appendix A and proceeded as follows:14
1. The distribution of US VAM mitigated was ranked and the median
concentration was identified (0.39 percent).
2. The cumulative distribution of annual US VAM flow (by concentration) was
converted to a percentage distribution.
3. The mid-point of each country's concentrations was identified.
4. A decimal fraction (factor) representing the difference between each nominal
increment of the US percentage range and the top and median of the US range
was calculated. For example, the US distribution has a span of 0.61 percent
from the median of 0.39 percent to the highest concentration grouping of 1.0
percent, while the reported range from China's high of 0.75 percent to its
"average" of 0.45 percent spans only 0.3 percent. It is necessary to use a ratio
of these US and China spans to distribute the upper half of China's oxidized
14 A separate calculation was necessary for concentrations above and below the median because
reported patterns of mid-points and ranges are not consistent with each other or with the US pattern—
an illustrative example of this calculation flow is provided in Appendix B.
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methane (in tonnes of CO2e) according to the US curve, as follows in Steps 5
and 6.
5. The top of each country's concentration range and the difference between that
percentage and the median selected in Step 3 were identified.
6. A new concentration range (above the median only) was constructed using the
factors developed in Step 4 and the range identified in Step 5.
7. To distribute the bottom half of the curve from the mid-point to the lower end
of a country's range, Steps 4, 5, and 6 were repeated.
8. The new concentration range was matched with the NPV cost per tonne of
CO2e by interpolating the US concentration/cost relationships.
9. The new concentration range for each country was matched to the US
distribution, as converted to percentages in Step 1.
10. That new concentration percentage distribution was multiplied by the tonnes of
VAM (expressed as tonnes of CO2e) that are emitted by each country.
11. The two series resulting from Steps 8 and 10 become the bases for each
country's MAC curves.
The resulting MAC curves for 11 of the 13 countries are in Appendix A. According
to information received from India and South Africa, VAM concentrations are
generally too low for VAM-fueled oxidation so this study did not produce MAC
curves for those countries.
Global MAC Curve
USEPA estimates global emissions of VAM in 2002 to be 247 million metric tons
(MMT) CO2e. USEPA constructed the global MAC curve using the same data as for
the county MAC curves, adjusted upward by a factor of 17 percent, which
represents the difference between the 11 countries included in the analysis and the
global methane emissions from coal mining.15 The data were combined, sorted,
distilled into eleven distinct ranges of NPV cost, and then plotted against
15 USEPA acknowledges that this adjustment may result in an overestimate or an underestimate of
actual total global VAM emissions, but data available at the time of this analysis were not adequate to
support a more precise estimate.
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cumulative volume of CO2e. Figures 10 and 11 (see Section 3.2.2) show the global
MAC curves.
3.2.2 Analysis of the MAC Curves
To interpret the information provided in a MAC curve, one can select a specified
value of emission reduction value (e.g., Y-axis in Figure 8) or electric power price
(e.g., Y-axis in Figure 9) and then read the expected emissions reductions (on the X-
axis) from the appropriate curve. To provide perspective on the relationship
between electric power sales revenue and overall project cost and profitability,
note that Figure 8 includes a second cost line that represents the unitized cost of
methane abatement in the absence of any electric power sales.
Two MAC curves are provided for each country individually and all study countries
grouped at the global level. One MAC curve depicts the amount of methane that
can be oxidized at a given carbon value ($ per tonne of CO2e) assuming a fixed
electricity sales price. A second curve is provided to illustrate the methane
oxidation potential at various electricity prices where power generation is the only
revenue source.
US MAC Curves
The US MAC curves (see Figures 8 and 9) offer a valuable frame of reference for
estimating the effect of changes in net project costs. In the US a relatively low net
project cost (marginal cost) could make profitable VAM oxidation projects that
would remove much of the mine ventilation methane currently released to the
atmosphere. For example, Figure 8 reveals that a marginal cost of $2.00 per tonne
of carbon dioxide equivalent (net present value) could subsidize a reduction of
almost 7 MMT annually.
The upper curve in Figure 8 represents projects that have no opportunity to
produce electricity and are installed without generating equipment (i.e., with
oxidizers only). The lower curve represents projects that benefit from both power
production and emissions reduction, and include power generation costs. In most
cases, carbon dioxide mitigation costs are higher for projects without power gen-
eration potential due to the absence of power revenues. As the capital cost burden
of power generation equipment increases, however, carbon mitigation costs for
power production projects can exceed those of oxidation-only projects. In Figure 8
this is illustrated where the two curves converge (and even cross) because of a
decreasing effect from electric power sales coupled with the capital cost burden of
power generation equipment for the lower curve. This is because the quantity of
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$3.50
$3.00
$2.50
$2.00
£ $1.50
$1.00
$0.50
$0.00
-$/tC02at
$0.03/kWh
- $/t CO2 with no
power
10 15 20 25
Methane Oxidized (MMT CO2e per year)
30
35
VAM (going from left to right
and expressed as CO2e oxi-
dized) increases as a function
of CO2e oxidation costs. The
upper end of the curve repre-
sents projects oxidizing the
lower VAM concentrations.
Therefore, in the oxidation-
with-power-production case,
net electric power revenues for
these projects decrease be-
cause more and more oxidizer
energy must be used to operate
the fans (i.e., parasitic loss)
relative to the volume of in-
flowing methane. With less
electric power revenue, more Figure 8. MAC Analysis for the United States—Carbon Mitigation
subsidy is needed per tonne of CO2e oxidized, so the curve tends to become steep
at the upper end.
It is also possible to estimate how a change in emission reduction value will create
opportunities for additional projects. For example, if the price to mitigate a tonne of
carbon dioxide equivalent were to rise from $2.00 to $3.00 it would create an
incremental US market for economically sustainable projects that would reduce
annual emissions by more than
25 MMT of carbon dioxide
equivalent. Such increases in
emission reduction value can im-
prove the economics of already
profitable projects or could trans-
form economically unattractive
projects into ones that are worth
pursuing.
Figure 9 illustrates the relation-
ship between the electric power
price received by a VAM project
and the level of carbon emission
reductions it could achieve.
CO2e oxidized increases only as
a function of higher electric
o
o
0.15
0.12
Q.
tf
0.03
0.00 -I
10 15 20 25
Methane Oxidized (MMT CO2e per year)
Figure 9. MAC Analysis for the United States—Power Production
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$4.00
o
o
$3.50 -
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
100 150
Methane Oxidized (MMT CO2e per year)
0.14
8 0.12
: 0.10
I 0.08
»
u
•5 0.04
0.02
0.00
prices. At the upper end ever
higher prices are needed to
overcome the rising effects of
parasitic losses.
With a low electric price, only
projects with high VAM con-
centration would be imple-
mented in the US. Conversely,
a very high electricity price
would be sufficient to support
projects that might oxidize
most of the available VAM in
the US at concentrations as low
as 0.2 percent. In the US, pro-
Figure 10. Global MAC Analysis—Carbon Mitigation ;ects WOuld need to secure
power revenues at a minimum of about $0.05 per kWh to begin making VAM
oxidation viable.
Global MAC Curves
The global MAC curves (see Figures 10 and 11) cover project opportunities in all
countries with underground mining. They can be read in the same way as the US
curves. For example, Figure 10 illustrates that with a marginal carbon abatement
cost of about $2.00 one might
expect affordable VAM pro-
jects to oxidize over 60 MMT
of CO2e annually. At $3.00,
almost 160 MMT of CO2e
could be oxidized per year,
which represents nearly a 100-
MMT increment due to the
one-dollar marginal cost rise.
Figure 11 reveals that globally,
if project revenues derive only
from electricity sales, substan-
tial levels of VAM emission
mitigation begin to be feasible
if electric power prices exceed
$0.06 per kWh.
50
100 150
Methane Oxidized (MMT CO2e per year)
200
250
Figure 11. Global MAC Analysis—Power Production
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3.2.3 Opportunity Cost of VAM Recovery and Use
Fluctuations in the price of electricity will affect the overall profitability of a
project, and thus the minimum acceptable price of carbon recovery. Such
fluctuations may be caused by market forces, negotiated contracts, or the
restructuring or privatization process that many transitional countries are
undergoing. Regardless of cause, electricity prices will vary over time. Thus it is
useful to display the MAC analysis results in terms of opportunity costs that
illustrate the relationship between varying electricity prices and carbon costs at
different levels of VAM recovery. Figure 12 provides such an opportunity cost
graph for the global market. Opportunity cost graphs also are provided for each
study country in Appendix A.
In countries where 50 percent
of the country's CMM is avail-
able at a concentration of 0.39
percent or more, the costs per
ton of CO2 equivalent dip into
the negative values at higher
electricity prices. But the
project-specific VAM concen-
tration must be higher than 0.8
percent and the price of elec-
tricity greater than US$0.06. For
countries below the 0.39-
percent CMM concentration
threshold, carbon prices in all
cases will be positive.
$4.00
$3.50 -
$3.00 -
$2.50 -
$2.00
$1.50
$1.00
$0.50
Global VAM CO e
Capture Percentiles
$0.00 4
$0.01
$0.02
$0.03 $0.04 $0.05 $0.06
Price of Electricity ($/kWh)
$0.07
Figure 12. Global Opportunity Cost Curve
The opportunity curves display a cumulative relationship for the amount of VAM
capturable at a given electricity price level and the corresponding carbon emission
mitigation cost. This is shown ranked by percent of global VAM captured, thus the
tenth percentile represents the highest quality of VAM capturable. On the graphs
displaying the opportunity cost relationships for each country shown in Appendix
A, the median value is indicated as a highlighted line.
The trend in these opportunity charts indicates that, should the value of carbon
emission reductions be sufficient, electricity generation would not be needed. The
NPV price of CO2e mitigated in this analysis ranges from US$2 to US$4.
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3.2.4 VAM Carbon Mitigation Cost in the Absence of Power
Generation
$4.00
$3.50 -
O $3.00 -
I $2.50 -
IT $2.00 -
o
,*! $1.50 -
« $1.00 -
O
$0.50 -
$0.00
0.00
As the opportunity curves show (see Figure 12), VAM mitigation projects are viable
at low electricity prices, with the corresponding carbon emission mitigation costs
within a currently reasonable market range. Figure 13 provides perspective on
carbon emission mitigation costs
for the US that would result from
VAM oxidation projects that do
not include electric power gen-
eration (i.e., projects where no
turbine is purchased and no
power is sold).
Figure 13 shows the carbon
emission mitigation costs that
would be associated with pro-
jects oxidizing various VAM
concentrations. As would be ex-
pected, lower VAM concen-
trations equate with higher
carbon emission mitigation unit
costs.
0.20
0.40 0.60 0.80
VAM Concentration Level (%)
1.00
1.20
Figure 13. US Carbon Mitigation Cost in the Absence of Power
Generation
3.2.5 Uncertainties
A number of uncertainties underlie the assumptions used in this analysis. Some of
these uncertainties will tend to increase the estimated cost of VAM oxidation, while
others will result in lower cost estimates. The discussions presented below describe
the significance of each uncertainty and, where possible, explain how the study has
attempted to mitigate the impact of each on the MAC curves.
Cosf Implications
This analysis reflects a host of factors that affect VAM project costs, as is discussed
below.
• Conservatism in the analysis. This analysis employed conservative
assumptions as necessary in the absence of requisite data elements or in
interpreting and adopting existing data to meet analytical needs, and that
conservatism tended to increase estimated costs. Therefore, it is expected
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that as the uncertainties that required such assumptions are resolved, VAM
oxidation cost estimates will decrease as compared with those reflected
herein.
• Technology maturation. As VAM oxidation technologies mature and are
employed in coal producing countries, economies of scale may drive down
manufacturing costs somewhat. Similarly, new technologies for
productively using VAM may evolve over time that are less costly (in terms
of either capital or operating cost) than those reviewed in this analysis.
• Plant downtime. The costing model used to develop the MAC curves allows
for a 10-percent downtime to cover scheduled and unscheduled plant
outages. Thus, any downtime in excess of 10 percent will raise project costs
above those considered in the model, while downtime below 10 percent
will reduce project costs. Cost-constrained project economics will likely
prohibit a facility from adding a unit to cover downtime and raise plant
availability to near 100 percent.
• Shaft transitions. Plant designers will select ventilation shafts that appear to
have a reasonably long economic life (four years or more) so that the plant
does not have to relocate too frequently. Before each move, however, it is
possible that some shafts will not maintain expected VAM flows, or
conversely, after each move some may not reach expected flows. Both
circumstances would increase costs and reduce revenues.
• Moving interval and time. The MAC analysis estimated that periods
between moves would be four years for bleeder shafts and eight years for
main shafts. If each relocation, including dismantling, transporting, and
reassembling, were to use up two months, lost time would amount to about
4 percent and 2 percent for the bleeder and main shafts, respectively.16
Shorter move intervals will decrease revenues and increase costs; shorter
move times will increase revenues and decrease costs.
• Siting difficulties. Some ventilation shaft evases are located in areas that
may be unsuitable or unavailable for transporting and installing the heavy,
large components of a VAM project. Such constraints could involve difficult
16 These estimates are approximations based on dialogue with Brian King, Senior Consultant, Neill &
Gunter (Nova Scotia-Canada) Ltd., Dartmouth, Nova Scotia, Canada.
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access roads and steep inclines, and either could add to capital and moving
costs.
• Development delay. In the real world of project development, considerable
delay occurs between the time a project becomes an economically viable
candidate and the day it commences commercial operation. When delay
becomes extreme, it can add to project capital costs.
• Institutional issues. For a variety of reasons (e.g., financial instability,
inability to strike an agreement with a developer) not every potential mine
host will welcome a project. Some of these issues may work out over time,
but the solutions might subject the project to higher fees, interest costs, or
operating costs.
• Lack of capital. In some areas of the world, project opportunities have
difficulty finding affordable investment capital, so the cost of capital could
rise for those projects that do receive funding.
• Political and domestic issues. History suggests that some countries
encounter unsettled periods when it is difficult to implement sound,
profitable ventures that take advantage of otherwise attractive project
development opportunities. To bring about projects in spite of such
eventualities, the developer may incur additional costs.
• Currency fluctuations. Changes in the currency exchange rate over time
may constitute a significant cost issue in international projects.
VAM Data
The first source of uncertainty has to do with the VAM characterization data
available for each country under evaluation. Data gathered by MSHA were the
basis for US VAM characterization.
For VAM information from other countries, the analysis relied on data from in-
country coal mining industry experts. Current, detailed projections of VAM
production rates and methane concentrations were sometimes available. Where
data gaps existed, USEPA used conservative assumptions to project or interpolate
values. Appendix A contains country-specific details.
The extent to which the extrapolation from study country VAM emission totals to
world VAM emission totals, based on the ratio of 2000 overall coal mining
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methane emissions for the study countries versus the global total, results in an
accurate world estimate is unknown.
Probability of Declining and Fluctuating
Ventilation Airflow or VAM Concentration
A review of several years' VAM data from gassy US mines revealed significant
fluctuations in shaft-specific ventilation airflow and VAM concentration. If the
airflow decreases while the concentration holds steady, a developer might be able
to stage a gradual plant relocation to a new shaft, using most modules during the
transition.
To account for expected transitions, the analysis allocated a reasonable amount to
a reserve fund in the economic model to cover plant moving costs every four years
for bleeder shafts and eight years for main shafts. Note that, while the continuity of
concentration and flow over time varies at the shaft level, the overall national-level
concentrations and flows are relatively constant.
A number of factors affecting the market will change over time, including:
• Amount of coal mined
• Ratio of VAM released per unit of coal mined
• Quantity of methane drained from the vicinity of active mining
• Portion of overall liberated VAM exiting a given shaft, especially in the later
years of a shaft's economic life
• Ventilation airflows
• VAM concentrations
Variations in methane flows and concentrations are a function of and are
determined by mining conditions underground, and these parameters will not be
changed to accommodate VAM oxidation project needs at the surface. Only by
carefully observing recent history and understanding current mine plans can a
project manager create a strategy that is as immune to such variability as possible.
At some mines drained but unused methane (e.g., gob gas) may be available to
serve as a supplemental fuel to reduce variations in VAM concentration (estimates
of the total amount of CMM available in each study country are provided in the
country analyses in Appendix A). In the absence of supplemental fuel, without very
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high subsidies a project cannot afford to install modules that would sit idle for
significant periods, so the plant size typically will match below-average anticipated
flows. For the most variable shafts this would leave substantial intermittent VAM
flows unabated. After viewing the standard deviation averages for US shafts
grouped according to airflow and VAM flow, USEPA assumes that this
phenomenon would amount to 20-25 percent of the VAM for each project. The
shafts with higher air and VAM flow rates exhibit less variability, quarter to quarter,
than do shafts with the smaller flows.
Concerns remain about the potential for dips or gradual declines in VAM
concentration, even while the host shaft is still functioning at full flow. The Appin
Colliery project in Australia presents a real example of this phenomenon. VAM
concentration there declined for several years after the project first started, due,
according to one account (Bray, 1999), to the degasification effects of a drainage
program. A developer might be able to define the risk of reduced VAM by gaining
an understanding of the long-term mine plan and then budgeting accordingly.
Assumed Heat Rate
Heat rate is the ratio of energy (in this case VAM) flowing into a system to that
flowing out (in this case electricity). The MAC curves presented herein reflect a
typical heat rate developed from information provided by oxidizer manufacturers
and an assumed VAM concentration. However, in practice VAM concentrations at
a given project site may be significantly higher or lower than the assumed value,
and such variation would have marked effect on the actual heat rate achieved. If
other factors are constant, projects oxidizing lower VAM concentrations would
encounter higher parasitic losses due to the need to move large volumes of
ventilation air through the system to assure an adequate VAM flow to the oxidizer.
This would degrade (increase) the heat rate. Alternatively, projects encountering
higher VAM concentrations could be expected to achieve improved (decreased)
heat rates.
New Technological Application
While oxidizers have been commercially deployed for many different industrial
applications, neither Neill and Gunter (Nova Scotia) Ltd.'s catalytic VAMOX system
nor MEGTEC's thermal VOCSIDIZER has operated at full commercial scale at an
underground coal mine, and small pilot demonstrations have not yet been
equipped to produce electric power. Therefore, certain aspects of their operation
remain to be demonstrated. For example, the vendors' ability to build and operate
an efficient and reliable heat exchanger in very hot reactor environments appears
to be feasible but not absolutely certain. As a result of such technical uncertainties
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and the lack of actual pilot plants, USEPA asked the two system vendors to provide
realistic yet conservative estimates of system performance and economic
projections at various levels of VAM concentration. While overall system (oxidizer,
heat exchanger, and power production) costs are still somewhat uncertain, a large
amount of work has gone into engineering studies and cost estimates.
Availability of Gob Gas
As mentioned above, many project sites could have insufficient gob gas to optimize
the performance of every potential project. For such cases, several options now or
soon may exist to compensate for gob gas shortfalls. These include:
• Installing a concentrator in the ventilation airflow to create an auxiliary fuel
source
• Redesigning the prime mover in one of several ways to reduce the need for
auxiliary fuel
• Operating the power generator at a lower output
• Purchasing natural gas or another suitable fuel
The inclusion of gob gas at $1.00 per MBtu in the model is probably a reasonable
estimate for cases where gob gas is available and for the first two options listed
above. The last two options listed above will have the net effect of significantly
raising the cost of projects using VAM to generate electricity.
Selection of a Realistic Power Price
A VAM project with electricity-generation capability will need a substantial and
predictable revenue stream from power sales to be credible with potential sources
of financial support. A project can either export its power to the grid or sell it to the
host mine who would then reduce power purchases from the local utility and pass
the savings along to the project entity. However, small producers that sell to the
grid may not obtain full value for their power because, in the US for example,
markets usually prefer blocks of power amounting to over 50 MW while most VAM
projects could only produce about 10-15 MW. Also, while selling to the host mine
could displace the higher retail price normally paid by the mine, the developer will
have to assure the mine owner that back-up power purchased during periods when
the project is off-line will not use up any savings offered by the project.
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The findings from this preliminary research effort for both exported and self-
generated power could not be supported by a statistically valid database. However,
USEPA selected a conservative average price of $0.03 per kWh for US projects,
and that is consistent with prices mentioned in informal discussions held during the
preparation of this report.
It should be noted that in most countries it may not be possible to count on a
steady power price for the entire project duration because prices react to ever-
changing demand and supply conditions. Since the project's financial backers will
require assurance that the expected revenue stream from power sales is secured
contractually (at least through the term of the project loan), project developers will
need to execute long-term power sales agreements.
For further discussion on the basis for the power price, see Appendix C.
Uncertainties Relating to Financial Assumptions in the Model
To select financial assumptions to complete this analysis, USEPA faced several
issues. The first was the question of what discount rate to use. One reasonable
approach would be to assume a leveraged financing where a 15 percent discount
rate might represent a blend of 75-percent debt at 9 percent plus a 25-percent
equity share earning a pre-tax internal rate of return (IRR) of 33 percent. The 15-
percent rate may be conservative for projects that can leverage higher than 75
percent, obtain a lower interest rate on debt capital, or accept a slightly lower IRR.
Second, using depreciation and income tax calculations in the economic analysis
proved difficult because of the great variety of financing structures and tax profiles
of developers most likely to implement a VAM project. Therefore, USEPA modeled
all scenarios on a pre-tax basis. While this decision offers a transparent and simple
analysis, it produces somewhat conservative estimates when compared to the
anticipated cost savings that will accrue to developers who use creative financial
structures to gain tax-loss credits in the project's early years.
A third issue involves the project term, for which the analysis used a 16-year
economic life. These power projects will probably realize a small salvage value for
reusable equipment at the end of the project's economic life, but that value may be
offset with decommissioning costs, so no salvage value was assumed. This
assumption appears to be a realistic match to the plant's true economic life. In
summary, the analysis used conservative values for all of the three key economic
modeling assumptions, so it offers an overall conservative outcome.
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3.2.6 Estimating the Effects of Uncertainties
on the MAC Curves
The study's uncertainties affect the accuracy of the economic models and the
resulting accuracy of the MAC curves. The following points offer some perspective
on the impact of these on the actual implementation of VAM projects.
• Questions of cost. If the cost models have underestimated or overestimated
the cost of oxidizing a tonne of CO2e (or the energy revenues), the effect
will be to delay or accelerate the implementation of projects that match
each discrete level of CO2e value. However, such cost/revenue forecasting
problems should not affect the overall MAC concept or the shape of the
curves.
• Questions of average field data. The MAC analysis is susceptible to possible
over- and underestimates of VAM flow data, on a shaft-by-shaft basis,
because most US (MSHA) readings reflect only one day per quarter, and no
overseas data were available for individual shafts. Taken as a whole,
however, the flow data probably represent a fair picture of the market.
• Questions of available supplemental fuel. Some concern may exist about
the availability of gob gas or other supplemental fuel, which is needed for
optimal performance of some technologies. As discussed previously,
technologies exist that may prove able to cost-effectively concentrate VAM
to use as a fuel supplement or to allow the plants to achieve acceptable
efficiencies with less supplemental fuel.
• Questions of flow and concentration variability. An analysis of airflow and
concentration for 58 US ventilation shafts showed a slight bias for increased
variability as airflows became smaller. The data were significantly affected,
however, by the variation of shafts that were either just starting up or
nearing their end. Project managers should be able to cope with most of the
effects of variability by being fully aware of mine plans.
The MAC curves described above should offer encouragement to the firms and
individuals who hope to abate the largest source of CMM emissions, ventilation air
methane. With a comprehensive set of actual emission data from the majority of
US VAM, the analysis used reliable cost and performance information based on
many years of engineering by two vendors of VAM oxidation technology.
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3.2.7 Worldwide Market Potential
If all VAM on the MAC curve costing less than $3 per tonne of CO2 were mitigated
with the installation of power projects, a substantial number of projects would
come into being and offer a sizeable market for hardware and important economic
activity. Table 3 presents forecasts of the net electric power capacity sales and
revenues that would be created by all feasible VAM projects in each country (based
on estimated emissions in 2002).
Table 3. Potential Worldwide Market for VAM Projects (at under $3.00/tonne CO2e)
Country*
Total 2002 2002 VAM
VAM Emissions <$3.00 Net Electric Equipment Annual
Emissions Tonne CChe Capacity Sales Revenue
")m3) (Bm3) (MW) (US$000,000) (US$000,000)
China
United States
Ukraine
Russia
Australia
Poland
Kazakhstan
United Kingdom
Mexico
Germany
Czech Republic
Study Totals"
Other Countries
World Totals
* In order of 2002 VAM
6.7
2.6
2.2
0.7
0.7
0.4
0.3
0.2
0.1
0.08
0.06
14.8
2.5
17.3
emissions
5.47
1.81
1.13
0.61
0.37
0.26
0.04
0.13
0.10
0.07
0.04
10.04
1.7
11.7
1,365
457
264
141
96
52
11
31
27
16
5
2,464
409
2,873
3,802
1,213
912
498
243
258
29
96
62
63
54
7,229
1,199
8,428
431
124
71
56
17
22
2
8
11
9
2
754
125
880
** Numbers may not equal totals due to rounding.
As the table reveals, China alone theoretically could create 1,365 MW of net
useable capacity, almost half of the world total of 2,979 MW. Assuming the
equipment value for each project (sized at a nominal 100 m3-per-second airflow)
equals approximately $10 million, the possible world total equipment market
estimate would be $8.7 billion. Finally, the annual revenue column estimates net
power revenues (i.e., power produced minus parasitic power consumed by the
plant) from each country. These revenues, which are functions of VAM
concentrations and power prices, total $908 million annually.
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4. SUMMARY AND CONCLUSIONS
This report estimates the market potential for oxidizing ventilation air methane
worldwide using newly available technology that can operate on VAM
concentrations down to a practical limit of 0.2 percent to produce useable energy.
To quantify the current and future US market USEPA used current, detailed VAM
data at the ventilation shaft level. Non-US data were, to varying degrees,
incomplete and generalized. To complete country-by-country and global
characterizations, the analysis used overseas data with the US distribution curve of
VAM flow versus concentration. The analysis then combined these results with
project cost estimates supplied by system vendors to construct marginal abatement
cost curves.
The MAC curves for the 11 countries that appear to have viable project
opportunities (presented in Appendix A) indicate a significant potential for the
development of VAM projects worldwide. They demonstrate that the cost of VAM
oxidation is low. The curves indicate that at an NPV cost of $3.00 per tonne of
carbon dioxide equivalent projects could abate almost 160 million tonnes of CO2
annually.
Of course these marginal abatement cost estimates will improve as actual
installations provide increasingly reliable VAM emissions and project cost data. But
the uncertainties that affect each step of this analysis should not detract from the
report's basic message: that large-scale VAM use offers a low-cost opportunity to
reduce greenhouse gas emissions.
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5. REFERENCES
Bray (1999): E-mail communication with Geoff Bray, President, Bray Solutions Pty
Limited, Oyster Bay, New South Wales, Australia, November 1, 1999.
Filippov (2002): E-mail communication with Alexander Filippov, Programs
Coordinator, Partnership for Energy and Environmental Reform, Kiev, Ukraine,
January 16, 2002.
Filippov (2002): E-mail communication with Alexander Filippov, Programs
Coordinator, Partnership for Energy and Environmental Reform, Kiev, Ukraine,
June 25, 2002.
IEA (2002): Fourth quarter 2001 (or later) data obtained from the International
Energy Agency web site (http://www.iea.org/statist/keyworld2002/key2002/
keystats.htm).
IPCC (2001): Climate Change 2001: The Scientific Basis, Intergovernmental Panel
on Climate Change, Cambridge University Press, New York, United States.
Lloyd (2002): E-mail communication with P.J.D. Lloyd, Energy Research Institute,
University of Cape Town, Cape Town, South Africa, September 12, 2002.
Mallet (2002): E-mail communication with Dr. Cliff Mallett, Commonwealth
Scientific and Industrial Research Organization, Kenmore, Queensland,
Australia, October 15, 2002.
O'Quigley (2002): E-mail communication with Philip O'Quigley, Energy Finance
Limited, Dublin, Ireland, November 21, 2002.
Radgen (2002): E-mail communication with Dr. Peter Radgen, Project Manager,
Fraunhofer ISI, Karlsruhe, Germany, October 15, 2002.
Singh (2002): E-mail communication with Umesh Prasad Singh, Deputy Chief
Engineer, Coal India, Ltd., Calcutta, India, September 27, 2002.
USEPA (2000): Technical and Economic Assessment: Mitigation of Methane
Emissions from Coal Mine Ventilation Air, US Environmental Protection
Agency, Office of Air and Radiation, EPA-430-R-001, February 2000.
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USEPA (2001): Non-CO2 Greenhouse Gas Emissions from Developed Countries:
1990-2010, US Environmental Protection Agency, Office of Air and Radiation,
EPA-430-R-01-007, December 2001.
USEPA (2002a): Inventory of US Greenhouse Gas Emissions and Sinks: 1990-2000,
US Environmental Protection Agency, Office of Atmospheric Programs, EPA-
430-R-02-003, April 15, 2002.
USEPA (2002b): US Inventory Changes—Revision 2, working draft, US
Environmental Protection Agency, Office of Atmospheric Programs, January 3,
2002
USEPA (2002c): Non-CO2 Greenhouse Gas Emissions from Developing Countries:
1990-2020, US Environmental Protection Agency, Draft, February 2002.
Wenge (2002): E-mail communication with Liu Wenge, Project Manager, China
Coalbed Methane Clearinghouse, Beijing, China, August 20, 2002.
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APPENDIX A
COUNTRY-SPECIFIC ANALYSES
(2000-2020)
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This appendix details the process employed in estimating country-specific current
and future ventilation air methane emissions. It specifies data sources, explains
assumptions, and discusses country-level uncertainties. Table A provides an
overview of the input data used and the VAM estimation results obtained for all
countries evaluated.
Each country discussion provides background information on a country's
underground coal mining industry and potential VAM release. An explanation
follows of the data sources used and specific methodology employed in estimating
current and future VAM emissions.
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Table A. Summary of VAM Liberation Projections, 2000-2020
VAM
Release
(m3 per VAM Cone.
Country tonne) (%)
Airflow
m3/s
2000 2005 2010 2015 2020 Change
China
(Bottom-up analysis)
6.80 Range: 0.0-0.75
Typical: 0.3-0.6
Average: 0.46
United States
(Bottom-up analysis)
7.45 Range: 0.1-1. 6
Median: 0.388
Ukraine
(Bottom-up analysis)
26.6 Range: 0.1-0.6
Typical: 0.2-0.4
Average: 0.3
Australia
(Bottom-up analysis)
10.50 Range: 0.1-0.7
Average: 0.4
Russia
(Bottom-up analysis)
10.18 Range: 0.0-0.75
Average: 0.38
South Africa
(Bottom-up analysis)
2.83 Range: 0.05-0.2
Mean: 0.1
Poland
(Bottom-up analysis)
Range:
0.1-0.4(1993);
3.91 0.1-0.7 (2000)
Wt. ave. 8 gassy
mines: 0.259
Range: 16.7-333.3
Average: 161
Range: 17-1,833
Median: 214.4
Range: 51-215
Average: 133
Range: 150-300
Average: 225
Range: 1.4-295
Average: 43
N/A
Wt. ave. 8 gassy mines:
221
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
949.1 1045.0 1140.0 1235.0 1330.0
6.5 7.1 7.8 8.4 9.0
92.3 101.6 110.9 120.1 129.3
338.2 373.3 381.4 385.8 374.5
2.5 2.8 2.8 2.9 2.8
36.0 39.8 40.6 41.1 39.9
79.2 98.5 108.7 111.1 113.5
2.1 2.6 2.9 3.0 3.0
30.1 37.5 41.3 42.3 43.2
63.6 69.8 77.0 82.1 90.4
0.7 0.7 0.8 0.9 0.9
9.5 10.5 11.6 12.3 13.6
63.5 74.0 76.8 79.6 82.3
0.6 0.8 0.8 0.8 0.8
9.2 10.8 11.2 11.6 12.0
142.1 173.7 173.7 173.7 173.7
0.4 0.5 0.5 0.5 0.5
5.8 7.0 7.0 7.0 7.0
102.1 101.0 90.0 85 80.0
0.4 0.4 0.4 0.3 0.3
5.7 5.7 5.0 4.8 4.5
40.1
10.7
43.3
42.3
29.7
22.2
-21.6
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VAM
Release
(m3 per VAM Cone.
Country tonne) (%)
Airflow
m3/s
2000 2005 2010 2015 2020 Change
Kazakhstan
(Bottom-up analysis)
38.30 Range: 0.07-0.5
Mean: 0.29
India
(Bottom-up analysis)
4.02 Range: 0.1-O.3
Typical: 0.1
United Kingdom
(Top-down analysis)
12.2 N/A
Mexico
(Bottom-up analysis)
28.36 Range: 0.4-0.8
Average: 0.5
Germany
(Bottom-up analysis)
2.75 Range: 0.08-0.8
Average: 0.3
Czech Republic
(Bottom-up analysis)
3.91 Range: 0.1-0.7
Wt. ave.: 0.259
Range (4 shafts): 150-
221
Average (4 shafts):
185.5
Range: 10-40
Typical: 40 at large
mines
N/A
Range: 91-197
Average: 140
N/A
Wt. ave.: 221
Study Total
Other Countries
World Total
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
106 tonnes UG
coal prod.
Bm3VAM
MMT C02e
MMT C02e
MMT C02e
MMT C02e
8.2 8.7 8.7 8.7 8.7
0.3 0.3 0.3 0.3 0.3
4.5 4.7 4.7 4.7 4.7
69.1 78.2 84.0 89.0 94.0
0.3 0.3 0.3 0.4 0.4
4.0 4.5 4.8 5.1 5.4
-25
0.2 0.1 0.1 0.1 0.1
2.2 2.1 2.1 2.0 2.0
4.8 5.4 4.8 5.0 5.0
0.1 0.2 0.1 0.1 0.1
1.9 2.2 1.9 2.0 2.0
31.7 26.0 15.0 15.0 15.0
0.09 0.07 0.04 0.04 0.04
1.2 1.0 0.6 0.6 0.6
14.9 13.7 11.8 10.0 8.5
0.06 0.05 0.05 0.04 0.03
0.8 0.8 0.7 0.6 0.5
203.4 228.1 242.5 254.2 264.7
33.7 37.8 40.1 42.1 43.8
237.1 265.9 282.6 296.3 308.5
5.5
36.1
-9.6
4.2
-52.7
-42.8
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VAM OXIDATION MARKET
POTENTIAL: CHINA
Background
China ranks number one in world coal production and is
responsible for over 45 percent of the total VAM emissions
from the countries evaluated in this analysis. China's coal industry is expected to
remain strong over the next two decades to meet the energy needs of its rapidly
growing economy. It has large reserves of gassy, high-rank coal that contain
coalbed methane (CBM) resources estimated at twice those of the US, and its
overall coal mine methane (CMM) emissions are the largest worldwide.
Exploitation of China's coalfields will expand over time as the country strives to
upgrade the size, safety, and efficiency of its mines.
Roughly 85-90 percent of methane released to the atmosphere from coal mining in
China originates in underground mines, with about 88 percent of that total exiting
via mine ventilation systems. In 1999, approximately 6 billion m3 of methane was
released to the atmosphere from ventilation systems (Zhu, 2001).
Business Climate
China is the world's most populous country, with a rapidly growing economy that
has led to sharp increases in energy demand. Growth in electricity consumption is
projected at 5.5 percent per year through 2020. The largest gainer in terms of fuel
share in the future is expected to be natural gas, due largely to environmental
concerns in China's rapidly industrializing coastal provinces. If a truly competitive
market for electric power develops as planned, the
Chinese market may become attractive to foreign
investment.
China 2000 Data Summary
China is currently attempting to upgrade the size, safety,
and efficiency of its mines, and part of that process
involves a concerted effort to develop its CMM re-
sources. Chinese companies with gassy coal mine assets
are actively seeking potential project developers and
investors. China and the US are cooperating to identify
and support the commercialization of CMM projects. To
date, that initiative has identified eight mining
companies that have both attractive CMM resources and
UG Coal Production (MMT)
Unit VAM Release (rrWtonne)
VAM Concentration (percent)
Average Shaft Ventilation
Airflow (m3/sec.)
VAM Emission:
MMTC02e
Bm3
Drained CMM Available (Mm3/yr)
"Average
949. 1
6.8
0.5*
161.0*
92.3
6.5
220
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
market potential and thus that appear to offer the best CMM project development
opportunities in China. For each mine, development plans and utilization markets
have been documented and are now available to international investors. Further
support is being offered by the Asian Development Bank, which will allocate
US$200 million to finance CBM and CMM projects in the country. This strong
desire to secure support and partnership for developing a range of CMM
development projects, including power generation, may offer a positive business
climate for VAM oxidation and electricity generation. In fact, some Chinese mining
companies, such as the Yangquan Coal Group, have acknowledged that they are
anticipating future application of VAM oxidation technologies once economic
feasibility is proven (World Coal, 2001).
Methodology
Zhu (2002) reported typical ventilation airflow rates for small and medium mines
that range from 16.7 to 83.3 m3 per second (averaging 50 m3 per second), for large
mines that range from 83.3 to 166.7 m3 per second (averaging 125 m3 per second),
and for very large very gassy mines that range from 166.7 to 333.3 m3 per second
(averaging 250 m3 per second). Zhu also quantified underground coal production
for each mine class for the years 1999 and 2000. Those coal production data reveal
that, in China, the trend in underground coal production is moving away from
smaller mines toward larger mines. The share of coal production from such large
mines grew almost 10 percent from 1999 to 2000. Zhu (2001) reported that the av-
erage VAM emission rate per unit coal production in China is 6.8 m3 per tonne of
coal produced. He also pro-
vided a VAM concentration
range of 0.0-0.75 percent, with
typical concentrations ranging
from 0.3 to 0.6 percent. Wenge
(2002) provided additional data
characterizing ventilation air at
gassy underground mines in
China. His data indicate an av-
erage VAM concentration of
0.46 percent and an average
ventilation airflow rate of 161
m3 per second. Being of more
recent origin, the values re-
flected in the data provided by
Wenge were used for this analy-
sis. Zhu (2002) reported under-
"a?
0
O
0)
c
ro
.c
1
&
0)
o_
,&
o
8
HI
$noi
$018
$0 0Q ^-^^^
$nnfi *^^
0 20 40 60 80 100
Methane Oxidized (MMT CO2e per year)
Figure A-1. MAC Analysis for China—Power Production
US ENVIRONMENTAL PROTECTION AGENCY
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$3.50
$3.00
$2.50
$2.00
$1.50
.5> $1.00
ground and surface coal pro-
duction levels for 1999 and
2000, and Zhu (2001) reported
total coal production projec-
tions for 2005 and 2015.
USEPA interpolated and ex-
trapolated from those coal pro-
duction data points to estimate
future annual coal production
for the 2000-2020 study pe-
riod. The 1999 and 2000 coal
production data revealed that
roughly 95 percent of coal pro-
duced in China is mined un-
derground. Because future coal
production projections were
not disaggregated, USEPA used
the 95-to-5 ratio (underground to surface) reported for the 1999-2000 period to
project future underground production.
Applying the 6.8 m3 per tonne coal VAM emission rate to the annual underground
coal production projections yielded annual VAM emissions in Bm3, which were
then converted to units of MMT of CO2e.
$0.50
$0.00
10
20
30 40 50 60 70
Methane Oxidized (MMT CO2e per year)
90
100
Figure A-2. MAC Analysis for China—Carbon Mitigation
Data from Huang (2002) quantifying CMM degasification and utilization in China
in 2000 revealed that over 220
Mm3 of drained CMM per year
is vented to the atmosphere and
could be available for use as
supplemental fuel for VAM oxi-
dation projects.
Uncertainties
Zhu (2001) reports that
increased exploitation
of deeper, gassy mines
over time will likely in-
crease the average vol-
ume of methane re-
leased per tonne of coal
produced nationwide
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o
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
between now and 2015. Thus, using the current ratio to estimate the level
of methane released per tonne of coal produced may underestimate future
releases.
• Projections of the actual expected mix of production from small versus
medium versus large underground mines would provide a better basis for
calculating an average value for ventilation airflow.
• Estimates of the trend in surface to underground coal production through
the study period would improve the VAM emission projections.
Market Potential
With methane abatement costs at $3.00 per tonne of CO2e, VAM-derived power
projects in China, which emits almost 40 percent of the world's VAM, could
theoretically create 1,365 MW of net useable capacity, almost half of the world
total of 2,979 MW. If the equipment value for each project were rounded to $10
million, the total equipment market estimate for China would be almost $4 billion.
Finally, the annual revenues that could accrue from such power sales in the
country could amount to over $430 million.
References
Huang (2002): "Potential for Commercial Development of Coal Methane in
China," paper presented by Huang Shengchu, Vice President, China Coal
Information Institute, China Coalbed Methane Clearinghouse, at the 2001
International CMM/CBM Investment and Technology Symposium, Shanghai,
China, 2001.
Wenge (2002): E-mail communication with Liu Wenge, Project Manager, China
Coalbed Methane Clearinghouse, Beijing, China, October 17, 2002.
World Coal (2001): "Reducing CBM in Yangquan Coal Field," World Coal, March
2001, Volume 10, Number 3.
Zhu (2001): E-mail communication with Zhu Chao, China Coalbed Methane
Clearinghouse, Beijing, China, July 31, 2001.
Zhu (2002): E-mail communication with Zhu Chao, China Coalbed Methane
Clearinghouse, Beijing, China, February 7, 2002.
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VAM OXIDATION MARKET
POTENTIAL: UNITED STATES
Background
In recent years, US mines have begun to employ an
innovative means of underground coal mine degasifica-
tion: the use of small-diameter bleeder shafts at longwall coal mines. Used in
conjunction with main mine ventilation shafts, bleeders provide supplemental
ventilation in the immediate vicinity of longwall faces. USEPA (2000) provides an
overview of the use of main mine ventilation shafts versus bleeders, which use
much smaller airflows and typically have higher VAM concentrations, offering
particularly attractive opportunities for VAM project development.
Business Climate
The US is the world's largest energy producer, consumer,
and net importer. US power demand is increasing
rapidly, with a forecasted 1.8 percent average annual
growth in electricity sales through 2020. This increase
will require a significant addition in generating capacity.
The US has more experience with CMM recovery than
any other nation. In 2000 the US emitted over 4.0 Bm3 of
CMM from underground coal mines and recovered 86
percent, or over 1.0 Bm3, of the gas liberated through
drainage systems. This represents an almost three-fold
increase from the less than 0.4 Bm3 recovered in 1990
(USEPA, 2002a).
Methodology
United States 2000 Data
Summary
UG Coal Production (MMT) 338.2
Unit VAM Release (m3/tonne) 7.4
VAM Concentration (percent) 0.4*
Average Shaft Ventilation
Airflow (m3/sec.) 214.4*
VAM Emission: MMTC02e 36.0
Bm3 2.5
Drained CMM Available (Mm3/yr) 250
"Median
To predict US VAM emissions over time, USEPA accessed detailed, historical,
mine-specific ventilation emissions data. Average VAM concentration and
ventilation airflow values were derived from US Mine Safety and Health
Administration (MSHA) ventilation shaft sampling data, reported for 58 gassy mine
shafts that are monitored quarterly by MSHA. Although different mines had varying
numbers of quarterly sampling results, data for multiple quarters were available in
all cases.
US ENVIRONMENTAL PROTECTION AGENCY
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o
o
0.12
0.09-
0.03
0.00
10 15 20 25
Methane Oxidized (MMT CO2e per year)
Figure A-4. MAC Analysis for the United States—Power Production
USEPA (2002b) lists under-
ground coal production for
2000 (372.8 million short tons;
338.2 million tonnes) and ven-
tilation system methane emis-
sions for 2000 (2.5 Bm3) from
which USEPA derived a unit
VAM emission rate of 7.45 m3
per tonne. The US Energy Infor-
mation Administration (2001)
quantified underground coal
production for 2005, 2010,
2015, and 2020. Interpolation
from those data provided pro-
duction estimates for interven-
ing years. USEPA projected an-
nual VAM emission estimates
$3.50
$3.00
O $2.50
$2.00
$1.50
$1.00
$0.50
$0.00
by applying the unit VAM emission rate to the annual underground coal production
estimates. In developing MACs that reflect likely VAM oxidation market potential in
the US, however, the total VAM emission level reported in USEPA (2002b) was
reduced to reflect the fact that the gassy mines surveyed by MSHA and that have
VAM flows for which oxidation is technically feasible are responsible for
approximately 82 percent of total US VAM emissions.
Data from USEPA (2002c)
quantifying CMM degasification
and utilization in the US in
2000 revealed that approxi-
mately 250 Mm3 of drained
CMM per year is vented to the
atmosphere and could be avail-
able for use as supplemental
fuel for VAM oxidation projects.
10 15 20 25
Methane Oxidized (MMT CO2e per year)
30
35
Uncertainties
Figure A-5. MAC Analysis for the United States—Carbon Mitigation
The mine-specific data
obtained from MSHA
offered highly detailed
insight into the charac-
teristics of VAM flows
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
from gassy mines in the US, as well as some understanding of the variability
over time of those flows. Thus, the US analysis is based on the most
detailed data of any of the country analyses.
• An analysis of airflow and concentration for 58 US ventilation shafts
showed a slight bias for increased variability as airflows became smaller.
The data were significantly affected, however, by the variation of shafts that
were either just starting up or nearing their end. Project managers should be
able to cope with most of the effects of variability by being fully aware of
mine plans.
Market Potential
With methane abatement costs
at $3.00 per tonne of CO2e,
VAM-derived power projects in
the US, which emits over 15
percent of the world's VAM,
could theoretically create 457
MW of net useable capacity. If
the equipment value for each
project were rounded to $10
million, the total equipment
market estimate for the US
would be over $1.2 billion.
Finally, the annual revenues that
could accrue from such power
sales in the country could
amount to over $120 million.
- $4.00
0.20% CH 4
0.30% CH4
-$1.00
$0.01 $0.02 $0.03 $0.04 $0.05
Price of Electricity ($/kWh)
$0.06
0.39% CH4
0,50% CH4
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0.90% CH<
$0.07
Figure A-6. Opportunity Costs for the United States
References
USEIA (2001): World Energy Outlook, US Energy Information Administration, December
12,2001.
USEPA (2000): Assessment of Potential Lifetime of a Methane Oxidation System on
Main and Longwall Bleeder Shafts, Coalbed Methane Outreach Program
publication, October 2000. Available online at http://www.epa.gov/coalbed.
USEPA (2001): Non-CO2 Greenhouse Gas Emissions from Developed Countries:
1990-2010, US Environmental Protection Agency, EPA-430-R-01-007,
December 2001.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
USEPA (2002a): Data retrieved from internet site, http://www.epa.gov/coalbed/
about.htm, July 2002.
USEPA (2002b): Inventory of US Greenhouse Gas Emissions and Sinks: 1990-2000,
US Environmental Protection Agency, Office of Atmospheric Programs, EPA-
430-R-02-003, April 15, 2002.
USEPA (2002c): US Inventory Changes—Revision 2, working draft, US
Environmental Protection Agency, Office of Atmospheric Programs, January 3,
2002.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET
POTENTIAL: UKRAINE
Background
Commercialization and rationalization of the coal indus-
try in Ukraine has yet to be accomplished. State subsidies
for unprofitable mines substantively influence coal markets, for example by
requiring coal to be sold to utilities and other "strategic users" whether they can
pay or not (World Coal, 2000). Eight mines were scheduled for privatization in
1999, but the fact that the state would retain majority holdings in each frustrated
that process. Although the state owns coal mines and coal resources, including
methane (Triplett et al., 2001), mines can be leased, as many successful mines are.
In 2000, Ukraine had 232 active coal mines, of which all but three were
underground workings (Triplett et al., 2001). Even though the industry faces
substantial challenges deriving from the lack of commercialization and reform,
annual coal production is expected to grow. Filippov (2002) provided total coal
production projections for 2001 through 2005 and for 2010. He cited subsequent
annual increases in total coal production anticipated at 120-125 million tonnes per
year by 2030. Interest in developing the country's CBM resources has grown
markedly in recent years, as has the search for investors who can develop projects
for pipeline gas injection or other beneficial use.
Filippov (2000) reported VAM concentrations at Ukrainian
to 0.6 percent (the lower value is the sensitivity limit of
being used), with typical values ranging from 0.2 to 0.4
percent. He noted that 0.75-percent methane is the
maximum allowable concentration (measured at the
top of the ventilation shaft) and observes that, although
such higher concentrations do occur, they are abnor-
mal events. Triplett (2002) observed that bleeder shafts
currently are not employed in Ukraine, probably
because the average working depth of mines there is
over 700 meters.
Filippov (2000) also quoted a ventilation airflow range
from 51 m3 per second to 215 m3 per second (reflect-
ing the range of flow rates evidenced at a sample of
mines ranging from 0.1
the methane detectors
Ukraine 2000 Data Summary
UG Coal Production (MMT) 79.2
Unit VAM Release (rrWtonne) 26.6*
VAM Concentration (percent) 0.3**
Average Shaft Ventilation
Airflow (rrWsec.) 133"
VAM Emission: MMTC026 30.1
Bm3 2.1
Drained CMM Available (MrrWyr) 130
"Weighted average
"Average
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
about 30 mines) and observed that a given mine may have from two to five
ventilation shafts in place. Methane emissions in Ukraine declined from almost 3.9
Bm3 in 1990 to over 2.0 Bm3 in 2000.
Business Climate
Ukraine's energy sector is plagued by a lack of domestic energy sources, increasing
foreign debt, and outdated and inefficient equipment. The country's electric
consumption was 146.7 billion kWh in 1999. In 1998 and 1999 new laws and
decrees improved the business climate for CBM/CMM development by making
CBM production projects potentially eligible for certain tax benefits, by establishing
legal and civil commitments relating to natural resource development in Ukraine,
and by establishing Free Economic Zone status in the Donbass region to provide for
tax incentives that can attract investment there. Recently the Partnership for Energy
and Environmental Reform (PEER), with support from the USEPA, made available
an inventory of Ukrainian CMM emissions and a Ukrainian coal mine development
handbook. In addition, to date PEER also has developed business plans for two of
the 29 mines addressed by the handbook. Thus, at present the regulatory and tax
environments in Ukraine are more favorable than they ever have been for
CBM/CMM development. However, in 2000 Ukrainian mines captured 12.4
percent of the total methane liberated, and only 27.9 percent of the methane
captured was utilized. These low percentages of methane capture and use result
from inadequate funds being available for proper gas collection system
maintenance or to support
new development projects.
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Methane Oxidized (MMT CO2e per year)
Figure A-7. MAC Analysis for Ukraine—Power Production
Methodology
Partners In Economic Reform
(PIER, 2000) reports that un-
derground coal production is
responsible for 98.5 percent of
the total in Ukraine. PEER
(2002a) provided underground
coal production and ventila-
tion system methane emissions
for 2001 and 2002, from
which a weighted average spe-
cific VAM emissions value of
26.6 m3 per tonne was de-
rived.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Production estimates for 1999-
2020 were interpolated and
extrapolated from the annual
production reported by Filip-
pov (2002). Using these pro-
jections and the 1999 under-
ground-to-total coal produc-
tion ratio of 98.5 percent, the
analysis developed annual un-
derground coal production
estimates. The VAM emission
rate was then applied to the
estimated annual underground
coal production levels to esti-
mate annual VAM emissions.
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10 15 20 25
Methane Oxidized (MMT CO2e per year)
Figure A-8. MAC Analysis for Ukraine—Carbon Mitigation
Data from PEER (2002b) quantifying CMM degasification and utilization in Ukraine
in 2000 revealed that over 130 Mm3 of drained CMM per year is vented to the
atmosphere and could be available for use as supplemental fuel for VAM oxidation
projects.
Uncertainties
Expansion of coal mine methane drainage could result in lower VAM
emissions in future years, but no data are available to quantify such
reduction.
Market Potential
With methane abatement costs
at $3.00 per tonne of CO2e,
VAM-derived power projects
in Ukraine, which emits over
12 percent of the world's
VAM, could theoretically cre-
ate 264 MW of net useable
capacity. If the equipment
value for each project were
rounded to $10 million, the
total equipment market esti-
mate for Ukraine would be
over $910 million. Finally, the
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Price of Electricity ($/kWh)
0.20% CH4
0.24% CH4
0.30% CK,
0.35% CH4
0.40% CH4
0.50% CH4
0.60% CH4
$0.07 $0.08
Figure A-9. Opportunity Costs for the Ukraine
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
annual revenues that could accrue from such power sales in the country could
amount to over $70 million.
References
Filippov (2000): E-mail communication with Alexander Filippov, Programs
Coordinator, Partnership for Energy and Environmental Reform, Kiev, Ukraine,
December 20, 2000.
Filippov (2002): E-mail communication with Alexander Filippov, Programs
Coordinator, Partnership for Energy and Environmental Reform, Kiev, Ukraine,
January 16, 2002.
PEER (2002a): Coal production and ventilation system methane emission data
provided by Partnership for Energy and Environmental Reform, Kiev, Ukraine,
August 2002.
PEER (2002b): Data obtained from the Partnership for Energy and Environmental
Reform website at http://www.peer.org.ua/New-1.html.
PIER (2000): Inventory of Methane Emissions from Coal Mines in Ukraine:
1990-1999, Partners In Economic Reform, Incorporated, prepared in
cooperation with the Alternative Fuels Center, Kiev, Ukraine, sponsored by the
US Environmental Protection Agency, August 2000.
Triplett (2001): E-mail communication with Jerry Triplett, Partnership for Energy
and Environmental Reform (PEER), Kiev, Ukraine, September 13, 2002.
Triplett et al. (2001): Jerry Triplett, Alexander Filippov, and Alexander Pisarenko,
Coal Mine Methane in Ukraine: Opportunities for Production and Investment
in the Donetsk Coal Basin, January 2001.
World Coal (2000): Industry in Motion, World Coal, February 2000, Volume 9,
Number 2.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET POTENTIAL:
AUSTRALIA
Background
Mutmansky (2002) observed that, in general, Australian
underground coal mining practices closely resemble those in
the US and that coal seam characteristics (thickness, etc.) also are similar.
Australian mining companies have led the world in demonstrating techniques to
oxidize VAM. At the Appin Colliery, BMP Engineering Pty. Ltd. with Energy
Developments Ltd. (EDL) gathered VAM from a ventilation shaft evase and used it
as combustion air for 54 one-MW Caterpillar engine-generators (Bray, 1998). More
recently, Australian engineers are designing and testing a number of promising
VAM-use technologies. At one mine site BMP and MEGTEC Systems recently
demonstrated the use of a VOCSIDIZER unit on VAM and extracted thermal energy
from the reactor bed in the form of low-pressure steam. That project has been
dismantled, and a commercial-scale demonstration is being designed under the
Australian Greenhouse Gas Abatement Program (GGAP). EDL is developing a lean-
fueled, carbureted gas turbine that will operate on a methane mixture of 1.6
percent. The CSIRO Exploration & Mining of Australia has two technologies under
development. The first is a lean-fueled turbine with a catalytic combustor. The
system will introduce a 1.0 percent fuel/air mixture into the air intake, compress it,
combust it in the catalytic combustor, and expand it through the turbine. The other
system is a hybrid system that cofires waste coal and VAM in a rotary kiln, captures
the heat in a high-temperature air-to-air heat exchanger, and uses the clean, hot air
to power a gas turbine. Powercoal, an electric utility, has another noteworthy
project in the planning stage. The company will link the
air intake of the Vales Point coal-fired power station to
two mine ventilation systems (Endeavour and Munmorah
Collieries) and use the VAM to supplement the station's
fuel supply.
Australia 2000 Data Summary
UG Coal Production (MMT tonnes) 63.6
Business Climate
Australia's energy consumption habits are similar to
those of the United States and Canada. Australia's
energy demand increased about 3 percent per year
during the 1990s, but has slowed to under 2 percent in
2001 and 2002.
Unit VAM Release (rrWtonne) 10.5
VAM Concentration (percent) 0.4*
Average Shaft Ventilation
Airflow (rrWsec.) 225*
VAM Emission: MMT C026 9.5
Bm3 0.7
Drained CMM Available (MrriVyr) 50
*Average
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
$0.16
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$0.04
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Australia produces in excess of 55 percent of its electrical power from domestic
coal. Being relatively clean, Australia's coal can be burned without incurring high
costs for sulfur control, and this contributes to the low cost of electricity in the
country.
Through the Greenhouse Gas Abatement Program (GGAP), Australia is actively
promoting implementation of activities that will reduce greenhouse gas emissions
and sequester carbon. To that
end, the program is making
$24 million available to two
projects that will capture and
combust methane to produce
electricity at three underground
coal mines in Queensland and
New South Wales. Those
projects are expected to result
in reductions of over 1 million
tonnes of methane release per
year.
Methodology
Wendt et al. (2000) undertook
a study of the potential to use
coal mine methane exiting
Australia's underground coal
mines in drainage and ventila-
tion systems. That study re-
ported typical ventilation air-
flow rates of 150-300 m3 per
second and VAM concentra-
tions of 0.0-1.0 percent, with
typical flows in the 0.1 to 0.7
percent range, and noted that
safety regulations mandate that
VAM concentrations be less
than 1 percent in main ventila-
tion air returns. From those
data, USEPA calculated aver-
age parameter values to be 0.4
percent for concentration and
4 6 8
Methane Oxidized (MMT CO2e per year)
Figure A-10. MAC Analysis for Australia—Power Production
NPV Carbon Mitigation Cost ($/tonne CO2e at $0.02/kWh)
$4.00
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Methane Oxidized (MMT CO2e per year)
Figure A-11. MAC Analysis for Australia—Carbon Mitigation
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
225 m3 per second for flow.
Wendt et al. also reported an-
nual surface and underground
coal production data for the
country, which revealed that
27.5 percent of coal mined in
Australia originated at under-
ground mines in 1997-1998.
Furthermore, Wendt et al. cited
VAM specific emissions for a
subset of underground mines
along with coal production data
for those mines. From those
data USEPA calculated a
weighted average specific emis-
sions value of 10.5 m3 VAM per
tonne of coal mined.
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$0.08
Figure A-12. Opportunity Costs for Australia
To estimate future annual VAM emissions, USEPA first adjusted total (surface and
underground) national coal production projections from Saghafi (2002) for 2000,
2005, 2010, 2015, and 2020 by a factor of 27.5 percent to estimate future
production from underground coal mines. The VAM specific emissions value then
was applied to the coal production estimates to estimate annual VAM emissions for
those five years. USEPA interpolated from those estimates to obtain VAM emissions
for the intervening years.
Data from USEPA (2001) quantifying CMM degasification and utilization in
Australia in 2000 revealed that over 50 Mm3 of drained CMM per year is vented to
the atmosphere and could be available for use as supplemental fuel for VAM
oxidation projects.
Uncertainties
• The extent to which the surface to underground coal production ratio
reported for 1997-1998 will accurately represent the actual situation
throughout the 2000-2020 study period is not known.
Market Potential
With methane abatement costs at $3.00 per tonne of CO2e, VAM-derived power
projects in Australia, which emits 4 percent of the world's VAM, could theoretically
create 96 MW of net useable capacity. If the equipment value for each project
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
were rounded to $10 million, the total equipment market estimate for Australia
would be $243 million. Finally, the annual revenues that could accrue from such
power sales in the country could amount to over $17 million.
References
Bray (1998): The Appin and Tower Collieries Methane Energy Project, a BMP
Engineering Pty. Ltd. report provided by Geoff Bray, Project Engineer,
September 26, 1998.
Mutmansky (2002): Personal dialog with Professor Emeritus Jan Mutmansky,
Pennsylvania State University, January 17, 2002.
Saghafi (2002): E-mail communication with Abouna Saghafi, Commonwealth
Scientific and Industrial Research Organisation, Sydney, New South Wales,
Australia, September 16, 2002.
USEPA (2001): Non-CO2 Greenhouse Gas Emissions from Developed Countries:
1990-2010, US Environmental Protection Agency, EPA-430-R-01-007,
December 2001.
Wendt et al. (2000): Methane Capture and Utilisation Final Report, Commonwealth
Scientific and Industrial Research Organisation, Exploration and Mining Report
#723R, Australian Coal Association Research Program (ACARP) Report #8058,
May 2000.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET
POTENTIAL: RUSSIA
Background
Russia's coal industry has undergone sub-
stantial restructuring to make it viable in a market economy. As elsewhere,
unprofitable mines have been closed, and that process will continue. In addition,
commercial privatization of the mines began in 1997 with the sale of state shares in
two coal companies to Russian and other investors. As commercialization of
potentially viable mines continues, market pressures will decree which mines
remain operational and which close.
The largest and most important coal-producing region in Russia, the Kuzbass,
located in the south-central part of the country, has hard coal reserves estimated to
be on the order of 14.5 billion tonnes. USEPA (1996) reported that about one-third
of the coal produced in Russia came from the Kuzbass. Other coal-producing
regions in Russia that have the potential for CBM/CMM development are the
Donetsk Basin, which Russia shares with Ukraine, and the Pechora Basin in the
north.
Tailakov (2000a) states that 1998 underground coal production in Russia was
approximately 80 million tonnes, with 19.4 percent of that total originating at gassy
mines. He also quantified the percent of drained methane (not available to the
ventilation system) at 30 percent. Thus, 70 percent of the methane liberated at
gassy mines exits in the ventilation airflow. Tailakov (2000b) noted that the
application of degasification in gassy Russian mines may increase in future years,
along with coal production from underground mines.
Russian mines sometimes employ bleeder shafts that emit
VAM at high concentrations, and these may offer excellent
opportunities for VAM projects.
Russia 2000 Data Summary
Business Climate
Russia has sufficient power production potential to supply
domestic consumers and to export power to other
countries. However, increased industrial demand for
electricity also has forced power stations to operate at
higher capacity, straining power companies' ability to
procure fuel supplies. A lack of fuel supplies at power
UG Coal Production (MMT) 63.5
Unit VAM Release (rrWtonne) 10.2
VAM Concentration (percent) 0.4*
Average Shaft Ventilation
Airflow (rrWsec.) 43*
VAM Emission: MMT C026 9.2
Bm3 0.6
Drained CMM Available (MrrWyr) 260
"Average
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
stations has already led to periodic power outages. Although Russia continues to
struggle to establish a modern market economy, recent improvements in certain
economic indicators and renewed governmental efforts to achieve needed reforms
have combined to raise expectations of improved business investment
opportunities in the country during the next decade. The real GDP growth rate in
Russia was 8.3 percent in 2000 and 4.7 percent in 2001.
CBM and CMM development in Russia has been actively promoted and supported
by the Russian Coalbed Methane Center, established in 1995 in Kemerovo. In June
2002 the Center attained the status of an independent, non-profit entity named the
International Coal & Methane Center (ICMC) "Uglemetan" (www.uglemetan.ru). By
continuing and building on the CBM Center's work, Uglemetan will focus its
energies on disseminating information on CMM use in Russia, offering resource
assessment and laboratory analytical services, conducting project feasibility and
economic studies, facilitating CMM industry networking, developing and providing
training, and offering other CMM development consulting and logistical services.
Through prior USEPA-supported efforts of the CBM Center, Uglemetan can make
available Russian coal permeability and desorption property data, providing a
sound information base to support identification of CMM project opportunities. In
addition, certain site-specific projects already have been proposed for
implementation. Thus, the business climate for CMM development in Russia at this
time is very supportive.
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10
Figure A-13. MAC Analysis for Russia—Power Production
Methodology
Tailakov (2002a) provided un-
derground, surface, and total
coal production figures for
1990-2001. Tailakov (2002b)
confirmed VAM concentration
and ventilation airflow ranges
and typical values previously
provided, but clarified that the
range values actually relate to
regulatory limits rather than to
in-field conditions. However,
since the "typical" values pro-
vided very closely match the
median concentration and flow
values derived for the US from
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
shaft-specific monitoring data, USEPA considered them to be adequate and
appropriate for application in this analysis. Tailakov (2000a) provided total coal
production projections for the years 2000, 2005, and 2010. These projections were
adjusted to estimate underground coal production assuming that the proportion of
underground coal production remains constant at 29 percent over the next two
decades. Tailakov's coal production projections provided both minimum and
maximum production estimates, and USEPA based its analysis on the minimum
production values and interpolated and extrapolated from the 2000, 2005, and
2010 projections.
The ratio of 1998 underground
coal produced and methane
released in gassy underground
coal mine ventilation systems
was used to predict ventilation
air methane emissions through
2020. In 1998, 798.5 Mm3 of
methane were released in Rus-
sia from underground coal
mine ventilation air systems.
With underground coal pro-
duction of 78.48 MMT that
year, that emission equates
with a unitized VAM release
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Figure A-14. MAC Analysis for Russia—Carbon Mitigation
rate of 10.18 m per tonne
produced. Combining that value with the annual total coal production projections
yielded annual VAM emissions estimates.
Data from USEPA (1996) quantifying CMM degasification and utilization in Russia
in 1994 revealed that over 260 Mm3 of drained CMM per year is vented to the
atmosphere and could be available for use as supplemental fuel for VAM oxidation
projects.
Both US and Russian underground coal mines employ bleeder shafts to enhance
degasification at longwall operations. Therefore, in constructing the MAC curve for
Russia, the analysis applied the full US distribution of VAM concentration and
ventilation airflow. Russian bleeder shaft management is different from that in the
US, however. Brunner (2000) noted that Russian bleeder shafts are managed so that
they drain methane at higher concentrations than is the case in the US, discharging
that gas through explosion-proof fans at the surface. Tailakov (2002b) corroborated
this practice and reported that the Russian bleeder shafts exhibit methane
concentrations as high as 3-12 percent.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
£•
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
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Uncertainties
Figure A-15. Opportunity Costs for Russia
The possible increase in
degasification at gassy
Russian mines noted by
Tailakov (2000b) may
result in a reduction in
the amount of methane
exiting from mine venti-
lation systems per unit of
coal produced, thus
causing this analysis to
overestimate the actual
emissions. However, the
possible increase in un-
derground coal produc-
tion also noted by Taila-
kov may offset the methane release reduction attributable to increased gas
drainage. No basis for quantifying this relationship is available at this time.
• Projections of the likely trend in future underground versus surface coal
production would improve the VAM emission analysis.
Market Potential
With methane abatement costs at $3.00 per tonne of CO2e, VAM-derived power
projects in Russia, which emits almost 4 percent of the world's VAM, could
theoretically create 141 MW of net useable capacity. If the equipment value for
each project were rounded to $10 million, the total equipment market estimate for
Russia would be $498 million. Finally, the annual revenues that could accrue from
such power sales in the country could amount to almost $56 million.
References
Brunner (2000): Summary of Kuzntesk Coal Basin Mining Conditions and their
Implications on Methane Emissions Reduction Projects, trip report submitted to
US Environmental Protection Agency, Coalbed Methane Outreach Program,
March 28, 2000.
Tailakov (2000a): E-mail communication with Oleg Tailakov, Director, Russia
Coalbed Methane Center, August 30, 2000.
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Tailakov (2000b): E-mail communication with Oleg Tailakov, Director, Russia
Coalbed Methane Center, Kemerovo, Russia, December 18, 2000.
Tailakov (2002a): Underground, surface, and total coal production data provided
by Oleg Tailakov, Director, Russia Coalbed Methane Center, Kemerovo,
Russia, July 11, 2002.
Tailakov (2002b): Personal dialog with Oleg Tailakov, Director, Russia Coalbed
Methane Center, Kemerovo, Russia, December 19, 2002.
USEPA (1996): Reducing Methane Emissions from Coal Mines in Russia: A
Handbook for Expanding Coalbed Methane Recovery and Use in the Kuznetsk
Coal Basin, US Environmental Protection Agency, Office of Air and Radiation,
EPA-430-D-95-001.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET
POTENTIAL: SOUTH AFRICA
Background
Because methane drainage is not currently employed in
South Africa, essentially all of the methane liberated from
gassy underground coal mines is released via mine ventilation systems at very low
concentrations. Furthermore, although mining gassy anthracite coal will decline in
South Africa, mining deeper bituminous coals will increase, so these factors will
balance out, and the average ratio of methane released per tonne of coal mined
underground should stay about the same through 2020 (Nlundlall, 2001).
Annual underground coal production estimates for the period 2000-2005 were
provided by Nundlall (2001), but that source did not supply projections from 2006
and beyond. An earlier reference (Lloyd et al., 2000), however, did project overall
coal production for the period 1990-2030. That source predicted an approximate 7
percent rise in production from 2000 to 2007, followed by a drop to a level
roughly 3 percent below 2000 levels by 2020. Thus, on average, underground coal
production for the period 2000-2020 will approximate that exhibited in 2000.
Business Climate
Although South Africa's economic growth has been
somewhat sluggish in recent years, its economy on the
whole is strong. Thus, where technically feasible VAM
development opportunities present themselves, business
and economic factors in the country should be supportive
of project development and implementation.
Methodology
Based on the expected trend in underground coal
production revealed in Lloyd et al. (2000), the annual
underground coal production level reported by Nundlall
assumed to approximate the average production level for the
South Africa 2000 Data Summary
UG Coal Production (MMT) 142.1
Unit VAM Release (m3/tonne) 2.8
VAM Concentration (percent) 0.1*
Average Shaft Ventilation
Airflow (rrWsec.) N/A
VAM Emission: MMT C026
Bm3
5.8
0.4
Drained CMM Available (Mm3/yr) N/A
"Mean
(2001) for 2005 was
period 2006-2020.
Nundlall (2001) indicates that the typical ventilation airflow rates at South African
mines are "extremely variable" and that VAM concentrations range from 0.05
percent to 0.2 percent. Thus, the higher end of the concentration range falls at the
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
lower end of the current VAM oxidation technology capability range. Because of
these very low VAM concentrations, South African mines were not viewed as
attractive candidates for oxidation technologies at this time. This conclusion was
confirmed by Lloyd (2002), who stated that the average depth of underground coal
being mined in the country is only about 80 meters, and the coal therefore is often
largely degassed. This condition is reflected in recent studies in such mines that
have yielded measurements of methane in return airways of 0.08 percent, plus or
minus 0.0002 percent.
Nundlall (2001) also provided data quantifying the rate of methane release per
tonne of coal mined underground at 2.83 m3 per tonne. That figure was applied to
the estimates of annual underground coal projections to obtain annual estimates of
VAM release throughout the study period.
Data to quantify drained CMM available for use as supplemental fuel for VAM
oxidation projects in South Africa were unavailable.
Uncertainties
• Although typical VAM concentrations at South African coal mines are
below levels considered necessary to support current VAM oxidation
technologies, the percentage of mines with concentrations higher than the
average, and thus potentially able to support oxidation projects, is not
known. It is possible that viable project potential does exist at some mines
in the country.
Market Potential
The study did not include a MAC curve for South Africa, which emits less than 3
percent of the world's VAM, because of low VAM concentrations.
References
Lloyd et al. (2000): P.J.D. Lloyd, D. van Wyk, A. Cook, and X. Provost, SA Country
Studies: Mitigating Options Project, Emissions from Coal Mining, Final Report,
June 2000.
Lloyd (2002): E-mail communication with P.J.D. Lloyd, Energy Research Institute,
University of Cape Town, Cape Town, South Africa, September 10, 2002.
Nundlall (2001): E-mail communication with Vijay Nundlall, Senior Inspector of
Mines, Occupational Hygiene, Pretoria, South Africa, September 24, 2001.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET POTENTIAL:
POLAND
Background
In Poland hard coal is produced at underground mines and the
vast majority (about 95 percent) of Poland's underground coal
currently is produced in the Upper Silesian Coal Basin (USCB).
Projections estimate that the basin will continue to supply over 90
percent of total production through the next two decades (World Coal, 2001 a).
USEPA (1995) reports that 28 percent of methane liberated is drained, 79 percent
of which is utilized. Thus, 72 percent of methane liberated by underground mining
exits through ventilation systems.
A government program enacted in 1998 and titled "Reform of the Hard Coal
Industry in Poland in 1998-2002" is striving to rationalize the country's
underground coal mining industry. That is being achieved by increasing the
productivity and, hence, the economic viability of its domestic mining entities
(World Coal, 2001 b and 2001 c). The country requires a stable, market economy-
based underground coal industry, because it produces essentially all of its electric
power from coal, and projections indicate that hard coal will remain the primary
power production resource through the next two decades (World Coal, 2001 a).
Poland 2000 Data Summary
Business Climate
Poland has an expanding economy and is in the process of
restructuring and reforming its energy industry. Its
abundant reserves of coal provide a secure source of
energy and foreign exchange, but heavy reliance on coal
is also a major source of pollution. The Polish government
expects electricity demand to grow by over 50 percent by
2020.
Grzybek (2001) reports that coalbed methane has been
captured and productively used in Poland since 1952. ^^^^^^^^^^^^^
Although CMM use declined sharply in 1993 when pipeline injection ceased, the
increase in its use by the power sector has offset that decline. Furthermore, CMM
use has diversified through its increased application in the chemical and oil
refining industries. Thus, the value of CMM is recognized in Poland and conditions
at present and into the future are good for implementing CMM projects.
UG Coal Production (MMT) 102.1
Unit VAM Release (rrWtonne) 3.9
VAM Concentration (percent) 0.3*
Average Shaft Ventilation
Airflow (m3/sec.) 221*
VAM Emission: MMTC02e 5.7
Bm3 0.4
Drained CMM Available (Mm3/yr) 45
*Weighted average
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
"aT
0)
c
c
o
t&
X
.c $012-
»
•c
0.
0)
111
^^^^
^^
3123'
Methane Oxidized (MMT CO2e per year)
t
Figure A-16. MAC Analysis for Poland—Power Production
The real GDP growth rate was 4
percent in 2000 and 2.5 percent
in 2001.
Methodology
Kwarcinski (2000) provided
VAM releases for 1991 to 1996
and hard coal production for
1995 to 2000, 2005, 2010,
2015, and 2020. Those data re-
veal a VAM emission rate of
3.91 m3 per tonne of coal pro-
duced underground in Poland.
Data in World Coal (2001 a)
confirmed the rate of decline in
production levels reported by
Kwarcinski. USEPA interpolated
from the underground coal pro-
duction data points to estimate
future annual coal production
for the 2000-2020 period.
USEPA derived VAM emission
projections for the study period
by applying the VAM emission
rate obtained from Kwarcinski
to the projections of annual
coal production.
Kwarcinski (2000) characterized
the range of VAM concentration
in Poland as 0.1-0.7 percent.
Because USEPA has detailed,
mine-specific VAM characteri-
zation data available for the subset of gassy mines in Poland, however, those data,
which in 1993 reflected a VAM concentration range of 0.1-0.4 percent (USEPA,
1995), were used in this analysis. Thus, the market potential for Poland presented
in this analysis underestimates the market if the more recent VAM concentration
range estimate is correct. USEPA (1995) provides underground coal production
statistics for 32 Polish mines, 16 of which also have VAM concentration and
ventilation system airflow statistics reported. From those data, USEPA derived a
NPV Carbon Mitigation Cost ($/tonne CO2e at $0.048/kWh)
tetetetetetetete
OO-^-^NJNJWW
ssssssss
^^^*
/^
wr
1234
Methane Oxidized (MMT CO2e per year)
Figure A-17. MAC Analysis for Poland—Carbon Mitigation
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
weighted average VAM concen-
tration (0.26 percent) and
ventilation system airflow (221
m3 per second) for the subset of
mines that have VAM concentra-
tions high enough to support
oxidation projects. Data from
USEPA (1995) quantifying CMM
degasification and utilization in
Poland in 1993 revealed that ap-
proximately 45 Mm3 of drained
CMM per year is vented to the
atmosphere and could be avail-
able for use as supplemental fuel
for VAM oxidation projects.
Uncertainties
- $4.00
O
O $3.50
c
| $3.00
gation Cos
NPV Carbon
$2.50
$2.00
$1.00
$0.00
0.20% CH4
0.30% cm
0.40% CH4
$0.01 $0.02 $0.03 $0.04 $0.05 $0.06 $0.07 $0.08
Price of Electricity ($/kWh)
Figure A-18. Opportunity Costs for Poland
• The extent to which the ventilation flow characterization data reported by
USEPA (1995) reflect conditions at Polish mines at present is unknown.
Market Potential
In generating the MAC curves for Poland the total annual volume of VAM emitted
by the country overall was reduced to reflect the fact that data in USEPA (1995)
reveal that the mines in Poland that are gassy enough to offer viable VAM oxidation
opportunities equate with 65 percent of all VAM released there. With methane
abatement costs at $3.00 per tonne of CO2e, VAM-derived power projects in
Poland, which emits over 2 percent of the world's VAM, theoretically could
produce 52 MW of net useable capacity. If the equipment value for each project
were rounded to $10 million, the total equipment market estimate for Poland
would be $258 million. Finally, the annual revenues that could accrue from such
power sales in the country could amount to over $22 million.
References
Grzybek (2001): "Utilization of Coalbed Methane in Poland," I. Grzybek, in
Proceedings of the 4th International Symposium on Eastern Mediterranean
Geology, Isparta, Turkey, May 24-25, 2001.
Kwarcinski (2000): E-mail communication with Jan Kwarcinski, Polish Geological
Institute, Upper Silesian Branch, September 2000.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
USEPA (1995): Reducing Methane Emissions from Coal Mines in Poland: A
Handbook for Expanding Coalbed Methane Recovery and Utilization in the
Upper Silesian Basin, US Environmental Protection Agency, Office of Air and
Radiation, EPA/430-R-95-003, April 1995.
World Coal (2001 a): "Hard Coal in Poland: Changes and Prospects," World Coal,
November 2001, Vol. 10, No. 11.
World Coal (2001 b): "An Industry in Reform," World Coal, November 2001, Vol.
10, No. 11.
World Coal (2001 c): "Fifty Years of Activity," World Coal, November 2001, Vol.
10, No. 11.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET
POTENTIAL: KAZAKHSTAN
Background
As of 2000, most coal operations in Kazakhstan were
privately owned. Through this privatization process, enhanced by legislative
changes that have liberalized trade, the future of Kazakhstan's underground coal
mines appears to be sound. (World Coal, 2000)
Business Climate
Kazakhstan is important to world energy markets because it has significant oil and
natural gas reserves. As foreign investment pours into the country's oil and natural
gas sectors, the landlocked Central Asian state is beginning to realize its enormous
production potential. With sufficient export options, Kazakhstan could become one
of the world's largest oil producers and exporters in the next decade.
Conditions for CMM project development in the country
are sound, with the Kazakhstan Climate Change
Coordination Center actively providing legal and other
support for such initiatives. Broad-scale activities include
approval of the Methane Center of Kazakhstan's work
program and schedule of activities relating to greenhouse
gas emission mitigation. Specific initiatives include
improving the country's methane inventory (including
methane emitted from underground coal mines), assess-
ing CBM reserves, conducting degasification demonstra-
tion projects, analyzing the legislative and investment
environment affecting and barriers faced by CMM project
developers, training, and information transfer. Those '
efforts should substantially improve the body of information
effective project identification and planning.
Kazakhstan 2000 Data Summary
UG Coal Production (MMT) 8.2
Unit VAM Release (m3/tonne) 38.3
VAM Concentration (percent) 0.3*
Average Shaft Ventilation
Airflow (m3/sec.) 186
VAM Emission: MMTC02e 4.5
Bm3 0.3
Drained CMM Available (Mm3/yr) 25
"Mean
available to support
Data from Republic State Enterprise (2002) quantifying CMM degasification and
utilization in Kazakhstan in 2000 revealed that over 25 Mm3 of drained CMM per
year is vented to the atmosphere and could be available for use as supplemental
fuel for VAM oxidation projects.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
o
o
$0.16
$0.14
$0.12-
13 $0.10
$0.08
$0.06
$0.04
$0.02
$0.00
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50
Methane Oxidized (MMT CO2e per year)
4.00
4.50
Figure A-19. MAC Analysis for Kazakhstan—Power Production
$4.00
$3.50
•ft $3.00
O
o
£ $2.50
~ $2.00
C/>
g $1.50
is
O)
S $1.00
s
c
£ $0.50
ro
O
%. $0.00
1.50 2.00 2.50 3.00 3.50
Methane Oxidized (MMT CO2e per year)
Figure A-20. MAC Analysis for Kazakhstan—Carbon Mitigation
Methodology
Shvetz (2001) reported a meth-
ane concentration range of
0.07-0.5 percent, with a mean
of 0.29 percent for (spat Karmet
mines, Kazakhstan's largest un-
derground coal company. He
also stated that the volume of
methane entering the atmos-
phere from Ispat Karmet under-
ground coal mine ventilation
systems in 2000 was 314 Mm3
and that those mines produced
8.2 million tonnes. USEPA
used those data to calculate a
methane release rate of 38.3
m3 per tonne of underground
coal produced. Shvetz pro-
jected that annual production
from Ispat Karmet underground
mines in 2001 would be 8.5
million tonnes and for the pe-
riod 2001-2005 would be 8.65
million tonnes per year. In the
absence of additional informa-
tion regarding future under-
ground coal production, USEPA
assumed that the production
level for the 2001-2005 period
also reflects that for the 2006-
2020 period and interpolated
and extrapolated from the given
figures to obtain annual underground coal production estimates for the study
period. Combining the VAM emission rate with annual underground coal
production yielded estimates of annual VAM liberation.
Uncertainties
• The extent to which the Ispat Karmet mines are representative of the other
underground coal mines in Kazakhstan is not known.
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
o
• The extent to which the underground coal production projection for the
2001-2005 period will represent actual production in the 20-year study
period is unknown.
Market Potential
With methane abatement costs
at $3.00 per tonne of CO2e,
VAM-derived power projects
in Kazakhstan, which emits
almost 2 percent of the
world's VAM, could theoreti-
cally create 11 MW of net
useable capacity. If the equip-
ment value for each project
were rounded to $10 million,
the total equipment market
estimate for Kazakhstan would
be $29 million. Finally, the
annual revenues that could
accrue from such power sales
in the country could amount
to almost $2 million.
$4.00
$3.50
$3.00 -
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
0.20% CH4
0.29% CH,
0.36% CH4
0.43% CH4
0.50% CH4
$0.01 $0.02 $0.03 $0.04 $0.05 $0.06
Price of Electricity ($/kWh)
$0.07
$0.08
Figure A-21. Opportunity Costs for Kazakhstan
References
RSE (2002): Kazakhstan! CHC Emissions Inventory From Coal Mining and Road
Transportation, Republic State Enterprise, Kazhydromet, July 2002.
Shvetz (2001): E-mail communication with Igor A. Shvetz, Director, Ispat Karmet
JSC, Karaganda, Kazakhstan, September 7, 2001.
World Coal (2000): "Industry in Motion," World Coal, February 2000, Volume 9,
Number 2.
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET POTENTIAL:
INDIA
Background
In India, underground coal production currently comprises
approximately 25 percent of total production, and annual
tonnage of underground coal produced there has remained
essentially steady over the past two decades (World Coal, 1999). Singh (2001 a)
observes India's trend toward a decrease in the share of underground coal
production. That trend, however, appears to derive primarily from a dramatic
increase in surface production in recent years rather than from a drop in absolute
production from underground mines (World Coal, 1999). The coal seams currently
being exploited are not particularly gassy, and methane concentrations in
ventilation airflows even at the gassiest mines are low, typically below 0.3 percent.
This is because underground coal mining in India is very labor intensive and high
ventilation airflows are necessary to provide adequate air for the many miners
working below ground. Also, less methane is released into the workings per unit
time than is the case in highly mechanized mines such as those in the United States
(Singh, 2002). Therefore, until deeper, gassier seams are tapped, India's potential
for profitable VAM oxidation projects will remain modest at best. Singh (2001 b)
states that 66 percent of the underground mines emit less than 1 m3 per tonne of
coal produced, 27 percent of underground mines emit from 1 to 10 m3 per tonne,
and the remaining mines (7 percent) emit over 10 m3.
India 2000 Data Summary
UG Coal Production (MMT)
Unit VAM Release (rrWtonne)
VAM Concentration (percent)
Average Shaft Ventilation
Airflow (m3/sec.)
VAM Emission:
Business Climate
India, the world's sixth largest energy consumer, plans major
energy infrastructure investments to keep up with increasing
demand—particularly for electric power. India also is the
world's third-largest producer of coal, and relies on coal for
more than half of its total energy needs.
India is trying to expand electric power generation capacity,
as current generation is seriously below peak demand.
Although about 80 percent of the population has access to electricity, power
outages are common, and the unreliability of electricity supplies is severe enough
to constitute a constraint on the country's overall economic development. The
government has targeted capacity increases of 107,000 MW by 2007. As of January
MMTC02e
Bm3
Drained CMM Available (Mm3/yr)
* Typical
69.1
4.0
0.1*
40*
4.0
0.3
N/A
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Jfi
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
1999, total installed Indian power generating capacity was 103,445 MW, and it
appears that the increase will fall short of expectations.
Methodology
For this analysis, Singh (2001 a) provided estimates of underground coal production
for 1999, 2006, and 2011; total VAM release for those years; VAM concentrations
at gassiest mines (typically below 0.3 percent and often below 0.1 percent); and a
typical ventilation airflow rate (i.e., 10-15 m3 per second in small mines and 40 m3
per second in larger mines). From the coal production and VAM release data,
USEPA derived a value for unit methane release per tonne of coal produced of 4.02
m3 per tonne. Also, USEPA interpolated and extrapolated from the three sets of coal
production and VAM release data points to estimate future annual coal production
and VAM release for the 2000-2020 study period.
Data to quantify drained CMM available for use as supplemental fuel for VAM
oxidation projects in India were unavailable.
Uncertainties
• The schedule of exploitation of gassy, deep coal is unknown at this time.
Such exploitation, however, is expected to result in gassier ventilation air
streams thus offering the potential for future VAM project development.
Market Potential
The study did not prepare a MAC curve for India, which emits less than 2 percent
of the world's VAM, because of low VAM concentrations.
References
Singh (2001 a): E-mail communication with Umesh Prasad Singh, Deputy Chief
Engineer, Coal India, Ltd., Calcutta, India, July 11, 2001.
Singh (2001 b): Indian Coalbed Methane Scenario, paper presented by Umesh
Prasad Singh, Deputy Chief Engineer, Coal India, Ltd., Proceedings of the 2001
International Coalbed Methane Symposium, Tuscaloosa, Alabama, May 14—18, 2001.
Singh (2002): E-mail communication with Umesh Prasad Singh, Deputy Chief
Engineer, Coal India, Ltd., Calcutta, India, September 27, 2002.
World Coal (1999): "Indian Coal: The Future?" World Coal, April 1999, Volume 8,
Number 4.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
t?
VAM OXIDATION MARKET POTENTIAL:
UNITED KINGDOM
Background
UK underground coal production and consumption has been in
decline for years. In 1999, underground mines accounted for 21
million tonnes, or 58.3 percent of overall coal production, down from
its 80.2 percent contribution in 1990. More telling in terms of trends
is the fact that from 1990 to 1999 surface coal production declined by
slightly over 15 percent while underground production declined by more than 70
percent.
This decline in coal production partly results from a move away from coal-fired
electricity generation, the UK's largest industrial sector consumer of coal, to newer,
combined-cycle, gas turbine-based generation. Although initiatives have been
introduced to stabilize the current underground coal industry and redress to some
extent the social impacts of that industry's collapse, the growth in gas-fired
generation in the UK and Europe continues. Although coal-fired generation
accounted for about 65 percent of the UK's power production in 1990, projections
suggest that it will fall to less than 20 percent by 2012 (World Coal, 2000).
Business Climate
Prospects for methane emission control projects appear
bright. The government has established a budget of £150-
£200 million ($247.9-$330.6 million)17 over five years to
support a greenhouse gas emission trading market. In that
market, firms can bid in a competitive auction for £215
million ($355.3 million) of government incentive money in
return for pledges to cut emissions. UK Coal recently bid
successfully for £21 million ($34.6 million) in emissions
reductions under that program that they will achieve by
installing CMM-based electricity generation equipment at a
number of their 13 deep mines.
UK 2000 Data Summary
UG Coal Production (MMT) -25
Unit VAM Release (m3/tonne) 12.2
VAM Concentration (percent) N/A
Average Shaft Ventilation
Airflow (rriVsec.) N/A
VAM Emission: MMT C026 2.2
Bm3 0.2
Drained CMM Available (MrrWyr) 80
Currency conversion based on January 2003 rates (£1 =$1.647).
US ENVIRONMENTAL PROTECTION AGENCY
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Electricity Price ($/kWh at $0/tonne CO2e)
A I
^^
*>•"*"
0.00 0.50 1.00 1.50 2.00 2.50
Methane Oxidized (MMT CO2e per year)
Figure A-22. MAC Analysis for the United Kingdom—Power Production
$3.50
§ $3.00
$2.50
$2.00
O $1.50
S $1.00
•C $0.50
ro
O
I
$0.00
0.00
0.50 1.00 1.50 2.00
Methane Oxidized (MMT CO2e per year)
2.50
Methodology
King (2002) reported ventila-
tion shaft emissions and an-
nual coal production for the
13 active underground mines
owned by UK Coal, which
constitute 90 percent of un-
derground coal production in
the country. From those data,
a weighted average specific
VAM emission of 12.2 m3 per
tonne was calculated. British
Coal Technical Services
(BCTS, ND) reported that at-
mospheric methane emissions
data (i.e., emissions from
ventilation and drainage sys-
tems) reviewed for their study
of deep coal mines in the UK
indicated that roughly 70 per-
cent of those emissions origi-
nated at ventilation fan drifts.
Lacking data that projects fu-
ture UK underground coal
production, USEPA used the
top-down methodology de-
scribed earlier to estimate fu-
ture VAM emissions. Analysts
applied the underground coal
production percentage re-
ported by King (2002)—61
percent—to estimates of over-
all methane liberation from coal mining (in million tonnes of CO2e) reported in
USEPA (2001) for 2000, 2005, and 2010 to estimate that portion of methane
emission attributable to underground mining. The analysis then applied the 70-
percent VAM figure cited above to those values to disaggregate that portion of the
projected overall underground methane emissions that would exit through mine
ventilation systems.
Figure A-23. MAC Analysis for the United Kingdom—Carbon Mitigation
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
o
Data from USEPA (2001) quantifying CMM degasification and utilization in the UK
in 2000 revealed that over 80 Mm3 of drained CMM per year is vented to the
atmosphere and could be available for use as supplemental fuel for VAM oxidation
projects.
Uncertainties
• The viability of underground mining in the UK is not clear, and therefore
the availability of active underground mines to support VAM oxidation
projects is uncertain.
Market Potential
With methane abatement costs
at $3.00 per tonne of CO2e,
VAM-derived power projects
in the United Kingdom, which
emits less than 1 percent of the
world's VAM, could theoreti-
cally create 31 MW of net
useable capacity. If the equip-
ment value for each project
were rounded to $10 million,
the total equipment market
estimate for the United King-
dom would be $96 million.
Finally, the annual revenues
that could accrue from such
power sales in the country
could amount to over $8
million.
$4.00
O
O
0>
c
c
o
t;
o
O
o
>
0.
$3.50 -
$3.00
$2.50 -
$2.00
= $1.50 -
$1.00
$0.50 -
$0.00
0.31 %CH4
0.40% CH,
0.55% CH4
0.60% CH4
0.70% CH4
$0.01 $0.02 $0.03 $0.04 $0.05 $0.06 $0.07 $0.08
Price of Electricity ($/kWh)
Figure A-24. Opportunity Costs for the United Kingdom
References
BCTS (ND): "Quantification of Methane Emissions from British Coal Mine Sources,"
British Coal Technical Services and Research Executive, report prepared for the
Working Group on Methane Emissions, The Watt Committee on Energy.
King (2002): Data provided by Brian King, Senior Consultant, Neill and Gunter
(Nova Scotia) Ltd., Dartmouth, Nova Scotia, Canada, December 8, 2002.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
USEPA (2001): Non-CO2 Greenhouse Gas Emissions from Developed Countries:
1990-2010, US Environmental Protection Agency, EPA-430-R-01-007,
December 2001.
World Coal (2000): "Prospects for UK Coal," World Coal, September 2000,
Volume 9, Number 9.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET
POTENTIAL: MEXICO
Background
USEPA had access to relevant data for the major gassy
mines in Mexico, even though the country produces small
amounts of coal. Santillan-Gonzalez (2001) provided overall coal production
information and ventilation system methane liberation data for 2000, obtained for
the five largest gassy underground coal mines in Mexico, which reflected a VAM
emission rate of 28.4 m3 per tonne. In addition, Santillan-Gonzalez (2001) also
estimated 2000 coal production for one other gassy mine in the region.
Pacific
Ocean
Mexico 2000 Data Summary
UG Coal Production (MMT) 4.8
Unit VAM Release (rrWtonne) 28.4
VAM Concentration (percent) 0.5*
Average Shaft Ventilation
Airflow (m3/sec.) 140*
VAM Emission: MMTC026 1.9
Bm3 0.1
Drained CMM Available (Mm3/yr) N/A
"Average
Business Climate
Mexico's electricity sector is at a crossroads. Although
generation has increased rapidly over the past decade,
supply is not expected to meet demand growth over the
next two decades. Given current grid capacity
constraints, shortages could result. Failure to make
substantial investments in generation capacity and
infrastructure could adversely affect the international
competitiveness of key northern industrial regions.
Although about 95 percent of Mexican households
currently are electrified, there are still many thousands
of rural towns without electricity. It is reported that
consumption growth over the next five years will be 45
percent.
Methodology
Santillan-Gonzalez (2001 and 2002) observed that the eight mines he represents
are the only underground coal mines in Mexico likely to support VAM projects and
reported VAM characterization and coal production for those mines for 2000 and
2002-2012. His data reveal a VAM concentration range of 0.4-0.8 percent, with
an average of 0.5 percent, and a ventilation airflow range of from 91 m3 per second
to 197 m3 per second, with an average value of 140 m3 per second. USEPA
interpolated from the reported coal production data to obtain an estimate for 2001.
Because production estimates were relatively constant for 2008-2012, USEPA
assumed that the value reported for 2012 (5.0 million tonnes) will be representative
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
$0.16 i
$0.00
0.00
0.20
0.40 0.60 0.80 1.00 1.20
Methane Oxidized (MMT CO2e per year)
1.40
Figure A-25. MAC Analysis for Mexico—Power Production
C02e at $0.048/kWh)
0)
c
c
O
c
O
ro
O)
i
c
ro
O
$2.40
$2.10
$1.80
$1.50
$1.20
$0.90
$0.60
$0.30
$0.00
0.
T
^^^*
B
^
S^^
s
00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60
Methane Oxidized MMT (CO2e per year)
Figure A-26. MAC Analysis for Mexico—Carbon Mitigation
of the period 2013-2020.
Santillan-Gonzalez's projec-
tions indicate that coal produc-
tion at three of the eight mines
will have been completed by
2008. Thus, the other five
mines represent prospects for
long-term VAM projects in
Mexico. Combining the VAM
unit emission value (28.4 m3
per tonne) with the projected
annual coal production esti-
mates provided a basis for
projecting annual VAM emis-
sions from 2000 to 2020. Data
to quantify drained CMM avail-
able as supplemental fuel for
VAM oxidation projects in
Mexico were unavailable.
Uncertainties
• If available, annual coal
production projections
for the study period
could be used with the
data quantifying meth-
ane emissions per unit
of coal produced
underground provided
by Santillan-Gonzalez
(2001) to refine the
annual VAM emission
estimated.
Market Potential
With methane abatement costs at $3.00 per tonne of CO2e, VAM-derived power
projects in Mexico, which emits less than 1 percent of the world's VAM, could
theoretically create 27 MW of net useable capacity. If the equipment value for each
project were rounded to $10 million, the total equipment market estimate for
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
A
$3.50
$3.00
$2.50
r $2.00
o
o
c
o
$1.50
j? $1.00
Mexico would be $62 million.
Finally, the annual revenues that
could accrue from such power
sales in the country could
amount to over $11 million.
References
Santillan-Gonzalez (2001): E-
mail communication with
Mario Alberto Santillan-
Gonzalez, Mining Engineer,
Minerales Monclova S.A.
de C.V., Palau, Coahuila,
Mexico, July 19, 2001.
Figure A-27. Opportunity Costs for Mexico
Santillan-Gonzalez (2002): E-
mail communication with Mario Alberto Santillan-Gonzalez, Mining Engineer,
Minerales Monclova S.A. de C.V., Palau, Coahuila, Mexico, September 21 and
25, 2001.
I
re
O
Q.
$0.50
$0.00
-$0.50
0.50% CH4
0.65% cm
0.80% cm
$0.01
$0.02
$0.03 $0.04 $0.05 $0.06
Price of Electricity ($/kWh)
$0.07 $0.08
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET POTENTIAL:
GERMANY
Background
Current expectations anticipate a fairly stable demand for hard coal in
Germany over the next two decades (World Coal, 1999). However,
probable mine closures will result in decreased underground coal
production. Although 10-12 collieries are expected still to be operating in the
country by 2005, annual hard coal production will have fallen 40 percent below
1996 levels by that time. In Germany all hard coal is produced from underground
mines, but at present none of those mines are employing bleeder shafts.
Radgen (2000 and 2002) reports that 61 percent of methane liberated in
underground mining in Germany is released in the ventilation system, while 39
percent is drained (69 percent of which is used and 31 percent of which is vented
to the atmosphere). Recent government incentives for environmentally sound,
alternative power production (which includes that produced from coal mine
methane) may result in accelerated utilization of CMM available from drainage
systems as well as that in ventilation air (see below).
Germany 2000 Data Summary
UG Coal Production (MMT)
Unit VAM Release (rrWtonne)
VAM Concentration (percent)
Average Shaft Ventilation
Airflow (m3/sec.)
VAM Emission:
MMT C02e
Bm3
Business Climate
Germany is one of the world's largest energy consumers.
Because it has limited indigenous energy resources
(except for coal), Germany is heavily import-reliant to
meet its energy needs.
The German government has announced plans to at least
double the contribution of renewable energy technologies
in the country's overall electricity production technology
mix by 2010, raising it from its current level of 5 percent
to 10 percent (World Coal, 2000). As methane from coal
mines is included in the mix of alternative fuels that are the focus of that transition,
more aggressive methane drainage might be employed in the coming years.
Specifically, in 2000, the government enacted legislation designed to provide for
environmental protection while increasing the country's energy supply reliability.
The act considers coal mine methane to be a renewable resource and provides for
Drained CMM Available (Mm3/yr)
"Average
31.7
2.8
0.3*
N/A
1.2
0.09
80
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
$0.16
$0.14
$0.12
g $0.10 -
$0.08
oi $0.06
$0.04 -
$0.02
$0.00
0.40
0.60
0.80
Methane Oxidized (MMT CO2e per year)
compensation in the amount of
0.0767 euros (US$0.07)18 per
kWh to be paid for electricity
from installations with a gen-
eration capacity of under 500
kW using renewable resources
and 0.0665 euros (US$0.06)
per kWh for electricity from
such installations with a capac-
ity of over 500 kW (Radgen
2002).
Methodology
Figure A-28. MAC Analysis for Germany—Power Production
0
o
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
-$0.50
Underground coal production
data for 2000, 2001, 2005, and
2010 were obtained from World Coal (2000, 2001 a, and 2001 b) and Radgen
(2001 a and 2002). Radgen (2001 b) also supplied a specific methane liberation rate
of 3-12 m3 per tonne of coal produced underground, at an average of 4-5 m3.
Adjusting that average by applying the 61 percent figure reported for ventilation
system methane releases yielded an average VAM release rate of 2.75 m3 per tonne
of underground coal. In an earlier communication, Radgen (2000) noted that, by
law, ventilation air methane concentrations must fall below 1 percent and reported
a VAM concentration range of
0.08-0.8 percent, with an aver-
age value being approximately
0.3 percent.
0.00 0.20 0.40 0.60 0.80
Methane Oxidized (MMT CO2e per year)
1.00
1.20
Figure A-29. MAC Analysis for Germany—Carbon Mitigation
USEPA interpolated from the
underground coal production
data points to estimate future
annual coal production for the
2000-2010 period. Specific
underground coal production
data for the post-2010 period
were unavailable. World Coal
(1999) reports that a substantial
decrease in production is ex-
1 Currency conversion based on November 2002 rates.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Q
$4.00
_ $3.50
$3.00
$2.50
$2.00
15 $1.50 --
$1.00
$0.50
$0.00
-$0.50
$0.01
$0.02
$0.03 $0.04 $0.05 $0.06
Price of Electricity ($/kWh)
Figure A-30. Opportunity Costs for Germany
pected to be evidenced by 2010
but that the German government
does intend to maintain some
level of production for energy
security reasons. Thus, the
analysis assumed that the annual
production will remain constant
at the 2010 level from 2011
through 2020. Combining the
average methane release rate
with annual underground coal
production estimates yielded an-
nual VAM release estimates for
the 20-year study period.
Data from Radgen (2002) quan-
tifying CMM degasification and
utilization in Germany in 2000
revealed that 80 Mm3 of drained
CMM per year is vented to the atmosphere and could be available for use as
supplemental fuel for VAM oxidation projects.
Uncertainties
• An increase in the extent to which coal mine methane is captured and used
from both active and abandoned mines may also result in a decrease in the
volume of methane released to the ventilation system per unit of coal
produced.
Market Potential
With methane abatement costs at $3.00 per tonne of CO2e, VAM-derived power
projects in Germany, which emits less than 1 percent of the world's VAM, could
theoretically create 16 MW of net useable capacity. If the equipment value for each
project were rounded to $10 million, the total equipment market estimate for
Germany would be over $63 million. Finally, the annual revenues that could
accrue from such power sales in the country could amount to over $9 million.
References
Radgen (2000): E-mail communication with Dr. Peter Radgen, Project Manager,
Fraunhofer ISI, Karlsruhe, Germany, August 28, 2000.
0.20% CH4
0.23% CH4
0.30% CK,
0.40% CH4
0.72% CH4
0.80% CH4
$0.07
$0.08
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Radgen (2001 a): E-mail communication with Dr. Peter Radgen, Project Manager,
Fraunhofer ISI, Karlsruhe, Germany, September 1, 2001.
Radgen (2001 b): E-mail communication with Dr. Peter Radgen, Project Manager,
Fraunhofer ISI, Karlsruhe, Germany, December 31, 2001.
Radgen (2002): E-mail communication with Dr. Peter Radgen, Project Manager,
Fraunhofer ISI, Karlsruhe, Germany, October 15, 2002.
World Coal (1999): "Facing the Future," World Coal, February 1999, Volume 8,
Number 2.
World Coal (2000): "Coal Industry and Energy Supply in Germany," World Coal,
October 2000, Volume 9, Number 10.
World Coal (2001 a): "Outlook for German Coal," World Coal, September 2001,
Vol. 10, No. 9.
World Coal (2001 b): "Life After Coal: Regeneration or Decline?," World Coal,
September 2001, Vol. 10, No. 10.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
VAM OXIDATION MARKET
POTENTIAL: CZECH REPUBLIC
Background
The majority of coal produced in the Czech Republic is
lignite produced from surface mines; all hard coal
produced in the country is mined underground. Although once a major element of
the Czech Republic's economy, domestic coal production has declined due to a
variety of environmental and economic factors. Transition from coal-fired to natural
gas-fired electric generation, competition from cheaper imported coal, and similar
factors have driven that trend, which is expected to continue. As a result, projected
VAM emissions also are expected to decline nationwide during the 2000-2020
study period.
Czech Republic 2000 Data
Summary
UG Coal Production (MMT) 14.9
Unit VAM Release (m3/tonne) 3.9
VAM Concentration (percent) 0.3*
Average Shaft Ventilation
Airflow (m3/sec.) 221*
VAM Emission: MMTC02e 0.8
Bm3 0.06
Drained CMM Available (Mm3/yr) 10
Business Climate
The Czech Republic moved into positive economic
growth in 2000 following three years of recession. Both
electricity generation and consumption generally have
been rising. The country is a net exporter of electricity.
Methodology
USEPA (1992) reported that in 1990 in the Ostrava-
Karvina District, which produces 90 percent of the ^^^^^^^^^^^^^_
Czech Republic's coal, 73 percent of methane liberated from coal mining was
emitted to the atmosphere from underground coal mine ventilation systems. Gavor
(2002) reported coal production levels for 2000 and 2001 and also provided a
production projection for 2020. USEPA extrapolated from those data to obtain
production estimates for the intervening years. Mutmansky (2002) and USEPA
(1992) note that the Czech Republic shares the Silesian coal basin with Poland and
conditions are virtually the same on both sides of the border. Thus, for this analysis
USEPA assumed that mining methods and VAM characteristics (i.e., weighted
average VAM concentration of 0.259 percent and ventilation airflow of 221 m3 per
second) are similar to those in Poland as well. The VAM specific emissions value
obtained for Poland (i.e., 3.91 m3 per tonne of underground coal) was applied to
the underground coal production projections to obtain VAM emission estimates for
the study period.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Jli
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Electricity Price ($/kWh at $0/tonne CO2e)
$0.24 -j
$0.08 -
^^-^^^
^^
0.00 0.10 0.20 0.30 0.40 0.50 0.60
Methane Oxidized (MMT CO2e per year)
Figure A-31. MAC Analysis for the Czech Republic—Power Production
NPV Carbon Mitigation Cost ($/tonne CO2e at $0.047/kWh)
ff)ff)ff)ff)ff)ff)ff)tf)
OO-^-^NJNJWW
ocnocnocnocn
oo o o o o o o o
^^
/^
B--
00 0.10 0.20 0.30 0.40 0.50 0.60
Methane Oxidized (MMT CO2e per year)
Figure A-32. MAC Analysis for the Czech Republic—Carbon Mitigation
Data from USEPA (2001)
quantifying CMM degasifica-
tion and utilization in the
Czech Republic in 2000 re-
vealed that over 10 Mm3 of
drained CMM per year is
vented to the atmosphere and
could be available for use as
supplemental fuel for VAM
oxidation projects.
Uncertainties
• The extent to which
the ventilation system
emissions reported by
USEPA 1992 for the
Ostrava-Karvina Dis-
trict reflect current or
future VAM emissions
is not known.
Market Potential
As was done for Poland, in
generating the MAC curves for
the Czech Republic, where
mining conditions are similar
to those in Poland, the total
annual volume of VAM emit-
ted by the country overall was
reduced to reflect the fact that
data in USEPA (1995) reveal
that the mines in Poland (and
by extension in the Czech
Republic which shares the Sil-
esian coal basin with Poland)
that are gassy enough to offer viable VAM oxidation opportunities equate with 65
percent of all VAM released there. With methane abatement costs at $3.00 per
tonne of CO2e, VAM-derived power projects in the Czech Republic, which emits
less than 1 percent of the world's VAM, could theoretically create 5 MW of net
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
-------
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Q
useable capacity. If the equip-
ment value for each project
were rounded to $10 million,
the total equipment market esti-
mate for the Czech Republic
would be $54 million. Finally,
the annual revenues that could
accrue from such power sales in
the country could amount to
over $2 million.
References
Gavor (2002): E-mail communi-
cation with Dr. Jiri Gavor,
Partner, ENA Ltd., Prague,
Czech Republic, November
6, 2002.
$4.00
o
> $0.50
a.
$0.00
$0.01 $0.02 $0.03 $0.04 $0.05 $0.06
Price of Electricity ($/kWh)
$0.07 $0.08
Figure A-33. Opportunity Costs for the Czech Republic
Mutmansky (2002): Personal dialog with Professor Emeritus Jan Mutmansky,
Pennsylvania State University, January 17, 2002.
USEPA (1992): /Assessment of Potential for Economic Development and Utilization
of Coalbed Methane in Czechoslovakia, US Environmental Protection Agency,
Office of Air and Radiation, EPA-430-R-92-1008, October 1992.
USEPA (2001): Non-CO2 Greenhouse Gas Emissions from Developed Countries:
1990-2010, US Environmental Protection Agency, EPA-430-R-01-007,
December 2001.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
APPENDIX B
SAMPLE CALCULATIONS
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Illustrative Bottom-up Annual VAM Emission Calculation: China
Given:
• VAM specific emission rate = 6.8 m3 methane/tonne coal
• 2000 underground coal production = 949.05x106 tonnes
Then:
• 6.8 m3 VAM/tonne coal x 949.05x106 tonnes mined = 6.45 Bm3 or 92.29
MMT CO2e
Illustrative Top-down Annual VAM Emission Calculation: United
Kingdom
Given:
• 2000 overall coal mining methane emissions = 5.2 MMT CO2e
• In 1999 underground mines accounted for 61 percent of overall coal
production
• 70 percent of those emissions originated at ventilation fan drifts
Then:
• 2000 overall coal mining methane emissions x 61% = 2000 emissions from
underground mines:
5.2 MMT CO2e x 0.61 =3.17 MMT CO2e
• 2000 emissions from underground mines x 0.7 = 2000 VAM emissions:
3.17 MMT CO2e x 0.7 = 2.2 MMT CO2e
Illustrative Non-US MAC Curve Development: China
Refer to the spreadsheet that follows the analytical steps described below in text to
find the results of each step.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
The method for creating a new VAM emissions distribution curve for each country
used the data shown in Appendix A and proceeded as follows:19
1. The distribution of US VAM mitigated was ranked and the median
concentration was identified (0.39 percent).
2. The cumulative distribution of annual US VAM flow (by concentration) was
converted to a percentage distribution.
3. The mid-point of each country's concentrations was identified.
4. The shape of the VAM distribution curve that plots oxidized methane (in
tonnes of CO2e) against methane concentration needs to be created for
each country. This was accomplished by fitting (using interpolation) the top
half of the US curve to each country's top range (i.e., the interval between
the median and the highest concentration). This involved calculating a
decimal fraction (factor) representing each increment in the US tonnage-
concentration curve (e.g., a 0.1 percent increment between 0.9 and 0.8
percent) divided by the US mid-point-to-top interval. The US distribution
has a span of 0.61 percent from the median of 0.39 percent to the highest
concentration grouping of 1.0 percent, and each increment down to 0.4
percent represents about 0.164 of that range. Steps 5 and 6 apply that factor
to the top half of each country's range to distribute the tonnage-
concentration points.
5. The top of each country's concentration range and the difference between
that percentage and the median selected in Step 3 were identified. For
example, the reported range from China's high of 0.75 percent to its
"average" of 0.46 percent spans an interval of 0.3 percent.
6. A new concentration range (above the median only) was constructed using
the factors developed in Step 4 and the range identified in Step 5. For the
Chinese case, the factor of 0.164 multiplied by 0.3 percent—about 0.05
percent—becomes the concentration interval associated with each
increment of the US tonnage distribution (see Step 8).
7. To distribute the bottom half of the curve from the mid-point to the lower
end of a country's range, Steps 4, 5, and 6 were repeated.
19 A separate calculation was necessary for concentrations above and below the median because
reported patterns of mid-points and ranges are not consistent with each other or with the US pattern.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
8. The new concentration range was matched with the NPV cost per tonne of
CO2e by interpolating the US concentration/cost relationships.
9. The new concentration range for each country was matched to the US
distribution, as converted to percentages in Step 1.
10. That new concentration percentage distribution was multiplied by the
tonnes of VAM (expressed as tonnes of CO2e) that are emitted by each
country.
11. The two series resulting from Steps 8 and 10 become the bases for each
country's MAC curves.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
CHINA MAC Curve: Calculation Steps
Step3
Mid point concentration = 0.45%
Step 5 »
Step 4
VAM
cone %
group
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.388
0.30
0.25
0.20
0.10
US
factor
0.163
0.163
0.163
0.163
0.163
0.163
0.020
0.306
0.174
0.174
0.347
Values
cumulative
CO2
% of total
4.48%
8.36%
9.94%
14.48%
19.87%
34.76%
45.74%
50.00%
71.33%
84.86%
98.02%
100.00%
AA
step 2
cost
NPV
$/t CO2
$0.73
$0.93
$1.13
$1.33
$1.52
$1.72
$2.19
$2.25
$2.66
$2.89
$3.13
China Values
VAM
cone %
group
0.750
0.701
0.652
0.603
0.554
0.505
0.456
0.450
0.313
0.234
0.156
0.000
AA
steps 6&7
approx approx
distribut'n distribute
CO2% CO2mmt/y
4.48%
8.36%
9.94%
14.48%
19.87%
34.76%
45.74%
50.00%
71.33%
84.86%
4.30
8.03
9.55
13.90
19.08
33.37
43.92
48.01
68.49
81.48
98.02% 94.12
100.00% 96.02
AA AA
step 9 step 10
adj
NPV cost
$/t CO2
$1.23
$1.33
$1.42
$1.52
$1.62
$1.73
$1.93
$1.957
$2.60
$2.96
AA
step 8
electric
price
$/kWh
$0.07
$0.07
$0.07
$0.07
$0.08
$0.08
$0.09
$0.09
$0.12
$0.14
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
APPENDIX C
BASIS FOR POWER PRICE
USED IN THE ANALYSES
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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pt
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane ;
Selection of a Realistic Power Price
A VAM project with electricity-generation capability will need a substantial and
predictable revenue stream from power sales to be credible with potential sources
of financial support. USEPA estimated that a contract covering the anticipated plant
output for five to seven years would be sufficient to satisfy the debt suppliers (i.e.,
repay their investment), since short contracts and spot pricing thereafter will likely
pose little downside risk. Moreover, the outstanding principal on major project
loans should be insignificant by that time, or secured by another asset, or both. The
following discussion addresses the issues involved in predicting what prices might
be available to a VAM project in the US for the purposes of executing a MAC
analysis.
In the attempt to gather realistic cost estimates for this evaluation, USEPA posed the
following two scenarios for consideration by persons active in the electric utility
industry:
1. Export the power to the grid (either directly to the local utility or indirectly
through a third party), or
2. Self-generate electricity so that the mine would save on power purchases and
pass the savings along to the project entity.
Selecting a power price for the US analysis was a challenge because events that
affect supply and demand in the electricity supply business are changing rapidly
and are causing different effects in different areas of the country.
In view of the findings from this preliminary research effort for both exported and
self-generated power, USEPA decided to assume an arbitrary average price of
$0.03 per kWh for US projects. The $0.03 price reflects anecdotal reports of
current pricing in the deep coal-mining regions of the US Rockies and Appalachia.
Non-US Power Prices
Where possible USEPA obtained estimates of representative industrial power
pricing for other countries through direct contact with in-country coal industry
experts. For countries where estimates were unavailable through direct contact,
USEPA used power price data published by the International Energy Agency.
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Power Price Summary
The following table lists the country-specific electric power prices employed in this
analysis, and identifies the sources from which those prices were obtained.
Country
Australia
China
Czech Republic
Germany
India
Kazakhstan
Mexico
Poland
Russia
South Africa
United Kingdom
Ukraine
United States
Rate
(US$ per kWh)
0.02
0.035
0.0468
0.065
0.07
0.018
0.0475
0.0476
0.044
0.01
0.03
0.03
0.03
Source
Shi Su, CSIRO Exploration and Mining,
Kenmore, Queensland, Australia
Liu Wenge, Project Manager, China
Coalbed Methane Clearinghouse, Beijing,
China
International Energy Agency, World
Electric Prices, IEA2002
Dr. Peter Radgen, Project Manager,
Fraunhofer ISI, Karlsruhe, Germany
Umesh Prasad Singh, Deputy Chief
Engineer, Coal India, Ltd., Calcutta, India
International Energy Agency, World
Electric Prices, IEA2002
International Energy Agency, World
Electric Prices, IEA2002
International Energy Agency, World
Electric Prices, IEA2002
International Energy Agency, World
Electric Prices, IEA2002
P.J.D. Lloyd, Energy Research Institute,
University of Cape Town, South Africa
Phillip O'Quigley, Energy Finance
Limited, Dublin, Ireland
Alexander Filippov, Programs
Coordinator, Partnership for Energy and
Environmental Reform, Kiev, Ukraine
Richard Winschel, CONSOL Energy,
South Park, Pennsylvania, USA; Patrick
Reinks, Ingersoll-Rand Company - Energy
Systems, Davidson, North Carolina, USA
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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11
Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
APPENDIX D
TECHNOLOGY DEVELOPER/VENDOR
CONTACT INFORMATION
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Thermal Oxidizer
MEGTEC Systems
830 Prosper Road
P.O. Box 5030
De Pere, Wisconsin 54115-5030
United States
Contact:
Kenneth P. Zak
Director, Marketing and Business
Development
Phone: (920) 339-2797
Fax: (920) 339-2784
E-mail: kzak@megtec.com
Catalytic Oxidizer
Neill and Gunter (Nova Scotia) Ltd.
130 Eileen Stubbs Avenue
Suite 1 South
Dartmouth, NSB3B2C4, Canada
Contact:
Brian King
Senior Consultant
Phone: (902)434-7331
Fax: (902)462-1660
E-mail: bking@ngns.com
Lean-Fuel Microturbine
Ingersol-Rand Energy Systems
800-D Beaty Street
Davidson, North Carolina 28036
United States
Contact:
Patrick Rienks
Market Development Manager
Phone: (704) 896-4358
Fax: (704) 896-4372
E-mail: patrick_rienks@irco.com
Concentrator
Environmental C & C, Inc.
898 Route 146
Clifton Park, New York 12065
United States
Contact:
Hal Cowles
Phone: (518)373-0005
Fax: (518)373-0006
E-mail: hal@ecnc.com
Lean-Fuel Catalytic Turbine;
VAM/Coal Co-Firing
CSIRQ Australia
P.O. Box 883
Kenmore, Queensland, Australia
4069
Contact:
Dr. Michael Wendt
Phone: 61-7-33274679
Fax: 61-7-3274455
E-mail: michael.wendt@csiro.au
Catalytic Microturbine
FlexEnergy
22922 Tiagua
Mission Viejo, CA 92692-1433
United States
Contact:
Edan Prabhu, President
Phone: (949) 380-4899
Fax: (949) 380-8407
E-mail: edanprabhu@cox.net
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
Carbureted Gas Turbine
Energy Developments Ltd. (EDL)
Australia Operations
Northhampton Dale Road
P.O. Box 83
Appin, New South Wales, Australia 2560
US Operations
7700 San Felipe Road
Suite 480
Houston, Texas 77063
United States
Contact:
Tom Chapman
E-mail: Tom.Chapman@edl.com.au
Australia
Phone: 61-2-4631-6200
Fax: 61-2-4631-1324
United States
Phone: (713)781-5353
Fax: (713)781-5303
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
APPENDIX E
CMOP CONTACT INFORMATION
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
C O A
METHANE
OUTREACH
P R O 0 R A M
For more information about the Coalbed Methane Outreach Program, contact:
Clark Talkington
Phone: 202-564-8969
Fax: 202-565-2134
E-mail: talkington.clark@epa.gov
Or visit the Program's web site at www.epa.gov/coalbed.
US ENVIRONMENTAL PROTECTION AGENCY
COALBED METHANE OUTREACH PROGRAM
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Assessment of the Worldwide Market Potential for Oxidizing Coal Mine Ventilation Air Methane
US ENVIRONMENTAL PROTECTION AGENCY COALBED METHANE OUTREACH PROGRAM
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United States
Environmental Protection Agency
(6202-J)
Washington, DC 20460
Official Business
Penalty for Private Use
$300
www.epa.gov/coalbed
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