Carbon Markets

FAS’ initial analyses have been based upon utilization of coal and lignite as feed stocks to generate liquid hydrocarbon products and a clean solid fuel. The global dominance of coal and lignite as a high-value energy source, their market dynamics, and the need to improve their environmental characteristics drove this focus. Processing high carbon feed stocks such as oil sands have similar economic, process and environmental advantages. Co-feeding renewable biomass is also a potential scenario.

The following analysis of coal as a feed stock is offered as an example of the benefits available from FASForm™. This is the largest available global feed stock source for the technology. FAS re- emphasizes that its value proposition is based on generation of a new, low-cost transportation and heating fuel source. This is done in a very sustainable manner, but FAS is not focused on the facts that is also a clean tech and carbon reduction technology.

Coal is the world’s most abundant and widely distributed fossil fuel. The current proven world coal reserve is estimated at 1,000 billion short tons (890 billion metric tons) spread over 70 countries. The United States alone has a 250 year supply of coal and it is one of the largest US fuel sources for electrical production. According to the U.S. Energy Information Administration, the US energy demand is anticipated to grow more than 50 percent in the next 20 years (Source: Peabody Energy).

China and India still rely heavily on coal-based generation and are rapidly increasing its use. Germany and Japan are considering increasing their coal and lignite use to offset shutting down their nuclear power plants and to offset the grid instability from a high percentage of renewable energy. In addition, the threat of being held hostage to energy imports from Russia and the Middle East is forcing the European Union to reconsider its coal and lignite-based options in order to secure its energy future. Given coal’s and lignite’s low cost, the prospect of utilization continues to grow IF it can be done in an environmentally sustainable manner.

Globally, energy demand continues to grow at a significant rate. According to the 2007 MIT study, "The Future of Coal" – "Coal is certain to play a major role in the world’s energy future for two reasons. First, it is the lowest-cost fossil source for base-load electricity generation… and second, in contrast to oil and natural gas, coal resources are widely distributed around the world."   Most knowledgeable sources agree that a sustainable global energy solution will be based upon more efficient and cleaner generation from a rational combination of conventional and new oil and gas, coal/lignite, oil sands, nuclear, and renewable sources.

It is well understood that current coal and lignite use have large challenges and are contributors to global warming. When directly utilized as a generation fuel, a multitude of contaminants – carbon monoxide, carbon dioxide, sulfur oxides, nitrogen oxides, Arsenic, Mercury, particulates and volatile organic compounds (VOCs) – are released into the atmosphere. Plans are currently in place to clean up, or shutdown, coal-fired power plants in the US as a result of an aggressive US EPA mandate driven by environmental politics and current low natural gas prices. Several smaller, older and less efficient plants in the US Midwest and Eastern US are initial targets.

For the larger, newer and more efficient plants, utilities, and the economies dependent upon them, cannot afford to shut down this generation. Efforts to reduce emissions are focused primarily on maximum achievable control technologies (MACTs) that capture contaminants before they are released into the environment. These MACTs are very expensive to install, and they reduce the efficiency of the power plants. Another option being considered is the even more costly approach of carbon sequestration. This latter approach is expensive, largely untested and ultimately only delays the problem by displacing it for a future generation to solve.

Finally, there are many proposals for green fields coal gasification plants (to medium BTU fuel gas and chemical feed stock, and high BTU pipeline-quality gas), liquefaction plants (to liquid transportation fuels and chemical feed stocks), and natural gas/syngas to liquids plants using Fischer-Tropsch or similar technologies. These are new plants with substantial permitting requirements that have a high first and life cycle cost, use significant water resources, and generate substantial Carbon Dioxide and other pollutants. However, gasification of high-carbon resources to produce chemical feed stocks may become a viable alternative and FASFuel™ may become a profitable feed stock for that application. The significant revenues from liquid fuel sales will offset the high gasification costs. FAS believes the best option for generating low cost hydrocarbon fuels, and reducing power and solid fuel steam plant emissions, is the utilization of the FASForm™ Solid Carbon Fractionation technology which cost-effectively removes the valuable liquid fuels and, incidentally, cleans the coal before it is combusted. These plants can potentially be located on the existing plant site and operating with the existing plant permits and utilities. There are few environmental technologies that generate sustainable profit and, thus, investors and financial institutions are increasingly reluctant to underwrite those solutions that are early stage. FASForm™ does not fall into that category.

Conventional methods of cleaning or upgrading high-carbon resources involve high temperature processing of the coal. While this removes most of the moisture, it does not adequately reduce carbon or other emissions, nor does it appropriately capture and recover, in-process, the marketable commodities in coal. Conventional gasification and liquefaction technologies also convert to fixed carbon in their process. FASForm™ offers a far better solution to this. Through its patented process of fractionation and reformation, marketable liquid hydrocarbon products are recovered or created, and a clean solid fuel is generated which can be utilized for power and steam generation plants. This allows a substantial profit stream for recovered fuels. The solid fuel produced has lower transportation costs, and results in more efficient operation and reduced parasitic loads, superior carbon emissions management, and significant reductions of other hazardous emissions.

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