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Coal is the right fuel for electricity generation, but power producers said Monday that it must burn cleaner to meet tougher standards for air quality.

Advances in clean-coal technology allow electric utilities to use the abundant and cost-efficient fuel while also reducing smokestack pollutants, industry leaders were told during the first day of the Eastern Coal
Council's annual meeting at the MeadowView Convention Center.

"Coal is the answer," said Michael Morris, chief executive officer for American Electric Power. "That's where we are placing our bet."

Investing in clean-coal technology takes money, and AEP is opening its wallet by building a $1 billion integrated gasification combined cycle generation plant, Morris said.

The plant, which will convert coal to cleaner-burning gas and is more efficient with fewer emissions, could generate electricity by 2010. It costs substantially more to build the clean-burning plant than a traditional facility, but AEP is convinced the plant will be more cost-effective in the long run as air quality standards tighten, he said.

Electricity demand will grow steadily, especially in developing nations such as China, industry officials say. Utilities can meet the demand by spending money to maintain existing generation plants and by building more facilities, Morris said.

Fuel choices are plentiful, but coal tops the list, he said.

Natural gas was the fuel of choice five years ago and industry leaders "were licking their chops," Morris said. Natural gas burns clean and is cheap, but production problems that have caused prices to spike will not go away soon, he said.

Oil is "off the market" for electricity generation and renewable energy, such as wind generators, is inefficient and too expensive to market, he said.

The time will come when fuels will have to be burned without emitting carbon, and power producers must look to the future, according to Morris.

There is plenty of federal money around for clean coal research and development, but AEP is building its gasification plant on its own, he added.

"We don't need the government as a partner," Morris said.

Instead, AEP is looking for a state that shares its vision for the gasification plant, Morris said. The company will announce the plant location in June, but Ohio appears to be the frontrunner. Southwest Virginia hopes to land a similar facility for its coalfields.

"It really does offer a solution to environmental constraints," said U.S. Rep. Rick Boucher, D-9th. "If we don't get the first plant, I'm confident that over time, we will be able to attract an IGCC plant to Virginia."

The AEP's gasification plant will not only burn coal efficiently, but will be environmentally friendly, Boucher said. Most of the mercury emissions are removed in the burning process and half of the nitrogen oxide and sulfur dioxide are reduced, he said.

"It becomes the global answer," Boucher said.

The coal conference continues at 8 a.m. today.

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