EnviRes sees bright future for ESL coal gasification project

EAST ST. LOUIS - The future home of EnviRes LLC doesn't look like much of a launch pad for an energy revolution.
The 20-acre swath of East St. Louis jutting into Sauget is bounded by a Mississippi River levee, railroad tracks and the Diamond Cabaret topless nightclub.
But a Kentucky coal baron wants to bet big that the experimental coal gasification technology planned for development in East St. Louis will one day achieve the electric industry's Holy Grail: a power plant so clean and efficient it doesn't need smokestacks.
Within the last year, the proposed size of its East St. Louis project has quadrupled -- to $254.2 million from the original $58 million.
But doubts still surround EnviRes regarding regulatory approval and government funding.
EnviRes held its "official" groundbreaking ceremony in April 2004, but since then not a shovel of dirt has turned. EnviRes largely blames problems in getting an air permit from the Illinois Environmental Protection Agency.
Bill Renner, EnviRes' vice president for finance, sees blue skies ahead for the project, which uses chemistry instead of combustion to release coal's energy. The coal will yield a clean-burning gas to fuel generator turbines.
Meanwhile, carbon dioxide and other harmful emissions can be removed and used profitably elsewhere, Renner said.
This contrasts with what traditional coal-fired power plants do. They burn pulverized coal and release pollutants such as mercury and sulfur into the air, along with vast amounts of carbon dioxide, the most abundant and troublesome greenhouse gas.
"We can literally turn Illinois into the Middle East of energy with our coal reserves," Renner said.
Investors in Lexington, Ky.-based EnviRes hope the U.S. Department of Energy will pay half the cost for the project, which could consume as much as 1,000 tons of Illinois coal per day.
The EnviRes plans initially included a plant for recycling old motor oil and a facility for gasifying coal. Now plans also call for a 113-megawatt power plant -- enough juice to light up more than 100,000 homes.
Goal gasification has been around for a century. EnviRes' version uses a patented Hy-Melt system that injects the coal into a bath of molten iron. The process was tested in Sweden, but it has yet to be used on a commercial scale.
The molten bath busts apart molecular bonds, making it easy to trap hydrogen, sulfur and other chemicals before they enter the atmosphere.
The process makes carbon monoxide to heat nearby factories, hydrogen for vehicle fuel cells and super-clean diesel fuel for trucks and cars. EnviRes can pump its waste carbon dioxide into Illinois' aging oil wells and coal mines, squeezing to the surface oil and natural gas that were once inaccessible, Renner said.
"You sequester the CO2, you get energy back, that would be the ideal situation," he said.
EnviRes also stands to make money if the federal government, as expected, places limits on power plant carbon-dioxide emissions. If that occurs, then EnviRes can earn dollars by selling carbon "credits" to power plants that exceed federal caps.
In addition to delays in getting regulatory approval for the project, another hurdle centers on funding.
So far, the city of East St. Louis has promised to contribute $1.5 million in infrastructure improvements, while the empowerment zone has agreed to make a $2.5 million low-interest loan.
The Energy Department passed over the EnviRes project in the second round of funding under its Clean Coal Initiative.
If EnviRes is passed over in the third round of Energy Department funding decisions, then it could be in real financial trouble, Renner said.
"We do have a proposal in to the Department of Energy for another funding mechanism for the plant," Renner said. "So all our eggs are not in one basket relative to DOE funding."
Then there's the track record of EnviRes' chairman and biggest investor, Robert Addington of Ashland, Ky., the scion of one of Kentucky's leading coal families and a prominent Republican campaign donor.
Addington owns a 49 percent stake in EnviRes. He came to EnviRes after the coal conglomerate his family ran, AEI Resources, filed for bankruptcy protection in 2002.
Since then, Addington and his brother Larry ran a firm called EnviroPower that promised to build power plants in Indiana, Kentucky and Southern Illinois that were supposed to use waste coal for fuel.
But plans for those plants have stalled, and the Addingtons sold their stakes in EnviroPower to an overseas company before construction began on any of the power plants.
John Blair, the director of Valley Watch, an environmental group in Evansville, Ind., said Robert Addington's role in EnviroPower raises questions about his dealings elsewhere.
"If I was somebody making a decision on whether or not to give these guys government support, I would look very closely at their history," Blair said.
Robert Addington could not be reached for comment.
Renner said the Addingtons' role in those other ventures has no bearing on EnviRes.
"They're totally separate projects, separate companies," Renner said. "We don't have any relationship with them."
EnviRes' two-year delay in starting construction on the East St. Louis site also stems from its failure to hold a public hearing among local residents on the project's impact. The failure to hold a hearing has kept it from receiving a state air permit.
EnviRes already held two public hearings before the East St. Louis City Council and the federally funded St. Louis Empowerment Zone.
But for the air permit, EnviRes opposes a public hearing because the law mandating it applies to landfills and shouldn't cover the EnviRes project, Renner said.
"We felt it was redundant," Renner said.
Kathy Andria, the president of the American Bottoms Conservancy, sees the company's opposition to a public hearing in a different light.
"My personal thoughts on that is probably they could've had to answer questions from the public on the record in sworn testimony," said Andria, who opposes the EnviRes project because it's too near the river and poses a potential threat to nearby neighborhoods.
State Sen. James Clayborne, D-Belleville, and state Rep. Wyvetter Younge, D-East St. Louis, sponsored a General Assembly bill to exempt EnviRes from the public hearing. The statehouse approved it this past spring.
Renner said he expects the state to issue an air permit within the next six months. And once that happens, then construction on the project's first phase -- the oil recycling plant -- could begin six months later, Renner said.
"We're real excited about that," he said.
Contact reporter Mike Fitzgerald at mfitzgerald@bnd.com or 239-2533.