The cost of fossil fuels is not showing any signs of letting up. Over the past few months, costs of fossil fuel have been galloping. Oil hit the $ 135 per barrel mark in May 2008. Coal has been registering an all time high of $155 per tonne, more than a threefold increase in the past three years.

Such price increases have refocused attention on efficient utilisation of fuels. Clearly there is no getting away from the use of fossil fuels in the short and medium term – various estimates indicate that about 80 – 90% of global energy demand in 2030 will still be met through fossil fuels. With the oil shock or the 1970s, oil is no longer a significant fuel for power generation, (although there have been some intermittent instances of ill-planned moves such as the liquid fuel policy of 1998). Gas continues to be a preferred fuel, when available. Gas is clean burning, and significantly more efficient when combined cycle technologies are used. However global availability of gas is heavily reliant on difficult regimes in the Persian Gulf, Central Asia and Russia. Hence, the renewed focus on “king coal”.

However, even as coal continues to be the dominant fuel, the way the world uses it could stand significantly altered in the coming years. High commodity prices, coupled with severe environmental concerns on coal use, there is a global move to make coal based generation technologies cleaner and more efficient. Several breakthrough technologies are on verge of commercialization, even as conventional technologies become more efficient.

To begin with, it is worth looking at the traditional pulverized coal technologies. In the last decade there has been a rapid move towards supercritical (upto 800 MW) and ultra supercritical (1000 MW) power plants. This march has been led by China, but now India is catching on as well. A very significant portion of new thermal power capacity in India is being planned on supercritical technology, and by 2014 the country would have an estimated 40 - 50 GW of such plants. China has made even more significant strides. About 16 GW of capacity in China is based on ultra supercritical technology has been commissioned or is close to commissioning. These units are about 25% more efficient than conventional sub-critical technology (using 250 MW unit size as reference), thus saving on costs as well as mitigating environmental concerns to a significant extent.

However, quantum jumps in efficiency and environmental impact mitigation require frontier technologies beyond ultra supercritical boilers. The world is eagerly looking at Integrated Gasifier Combined Cycle (IGCC) combined with carbon capture and storage to deliver the goods in this regard. IGCC combines the efficiency benefits of combined cycle gas based generation with the advantages of coal availability across the world. Essentially IGCC uses synthetic gas (syngas) derived from coal gasification. syngas is produced in a gasification unit in the plant which has been optimized for the plant's combined cycle. The gasification process produces heat, and this is reclaimed by waste heat boilers. Steam turbines use this steam.

Over the last few years, IGCC technology has achieved substantial maturity, and is awaiting deployment on a commercial scale. Technology issues, including environmental pollution issues arising from effluents like arsenic, celenium and cyanide have been addressed substantially. By 2011-12, a large number of IGCC plants are expected to come on stream across the world – particularly in the US and China. Besides coal, IGCC can also use refinery residues, biomass and other hydrocarbon fuels.

IGCC is now stated to be "capture ready" and could potentially capture and store carbon dioxide. When combined with carbon capture and sequestration, the true environmental benefits of IGCC can be harnessed since the carbon emissions are effectively reduced to nil. India is a part of the “Future Gen” project on carbon sequestration that is led by the US.

With the technology issues being rapidly ironed out, the key impediment to IGCC deployment remains cost levels. IGCC is inherently expensive as compared to conventional coal and natural gas technologies. Even as the costs have been coming down, and are expected to come down sharply with commercial deployment of the technology, market integration at the current cost levels is a significant issue. There is considerable reluctance to finance the projects unless policy mandates and regulatory interventions to reduce costs, guarantee offtake and ensure cost recovery. Interventions in the form of carbon tax imposition on conventional coal technologies have also been considered in several countries, but not taken forward due to socio-political considerations.

In India, an additional issue to be considered is the high ash content of domestic coal. This poses technology challenges and increases the costs of the gasifier unit. However these challenges can never be addressed unless we make the necessary moves to develop the technology. A joint venture between NTPC and BHEL has been on the cards for a long time, but has not moved ahead substantially due to issues of commercial nature between the two organizations. This is indeed disconcerting, and it is time that the Government steps in to ensure that organizational issues do not impede the development of such frontier technologies in India, else the world would steal a march over us as we watch with regret.