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Coal gasification plant: worth the tradeoff?
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Thousands of caribou roam the Arctic National Wildlife Refuge. (Photo courtesy of Alaska Coalition)
Iron Rangers are excited about the prospects of a new multi-billion dollar power plant, proposed for Hoyt Lakes. The proposal is part of a controversial energy bill which includes a provision allowing oil exploration in the Arctic National Wildlife Refuge. U.S. Sen. Norm Coleman, R-Minn., says he's tempted to vote for the bill because it has many good things for Minnesota. Supporters say the project will create badly needed electricity for Minnesota, and even more badly needed jobs for the Iron Range. The project's been quietly making headway since first proposed about two years ago.

Hoyt Lakes, Minn. — The 1,000-megawatt Mesabi Energy Project would be the largest power plant of its kind, using what's called coal gasification technology. The process doesn't burn coal -- it turns it into a gas that fires the power plant's boilers.

Sen. Coleman has indicated he will vote for an energy bill that allows oil exploration in Alaska's Arctic National Wildlife Refuge, if the bill also includes hundreds of millions of dollars for the new Mesabi Energy power plant.

When he campaigned for Senate last year, Coleman said he would not support oil drilling in the refuge.

Coleman also wants the bill to include major incentives for development of alternative fuels, like ethanol and biodiesel. He says those incentives would benefit Minnesota farmers. Coleman insists his position has not changed. He says he remains opposed to drilling in ANWR. But he says the potential for major economic development help, along with more help for farmers, would trump his concerns about ANWR.

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Image Sen. Coleman

"I'd be very hard pressed to vote against an energy bill that had 1,000 construction jobs, 600 permanent jobs, $1 billion for development in northeastern Minnesota, as well as a long-term committment to renewable fuels," Coleman says.

Coleman gets no argument from most folks who live on the Iron Range, including Marlene Pospeck, the mayor of Hoyt Lakes. Her town was hardest hit when LTV Steel closed two years ago. She says there's no one in Hoyt Lakes arguing against Mesabi Energy.

"Not in our region. Not in our immediate community. What we're looking at primarily is jobs for our region. That probably overrides all other considerations," says Pospeck.

The plant would employ some 600 workers, and more than 1,000 more would build it over several years. That's a mighty big plum in a region that's lost almost 2,000 taconite mining jobs in two years.

Rep. Tom Rukavina, a DFLer from the Iron Range, says the power plant is a good match for Minnesota's mining country.

"It is an industrial area that's been mined out, and we need the jobs up here," says Rukavina. "The infrastructure that's in place -- I think it all combines to make a very very good project that could bring benefits to the Range in jobs, and benefits to the people of this state in electrcity that's not only available but dependable."

The proposal comes from Thomas Micheletti, a partner in Twin Cities-based Excelsior Energy. He says Mesabi Energy's coal gasification process would nearly eliminate typical emissions like sulfur and nitrogen oxides.

There's nothing about this coal plant that would qualify as to call it clean coal. This would be the largest, or the second-largest, contributor to global warming of any industrial facility in Minnesota.
- Michael Noble, Minnesotans for an Energy Efficient Economy.

"This is the environmental technology of the future. This is the way to produce significant amounts of electricity in a very environmentally friendly manner," says Micheletti.

Some environmental activists disagree. Michael Noble is the executive director of Minnesotans for an Energy Efficient Economy. He says such a plant would produce huge volumes of carbon dioxide, which, he says, would contribute to global warming.

"There's nothing about this coal plant that would qualify as to call it clean coal," says Noble. "This would be the largest, or the second-largest, contributor to global warming of any industrial facility in Minnesota."

Micheletti says the plant would be much cleaner than a conventional coal-fired plant, and less expensive than natural gas.

"Natural gas prices are very, very high. And, all of the predictions that I've seen indicate that they are going to stay very high, and probably increase," he says.

Earlier this year, state lawmakers approved a package giving Mesabi Energy a fast track around some state regulations to construct the plant and powerlines. A purchase agreement guarantees a buyer for about half the plant's proposed electric output.

The Iron Range Resources has approved a credit line for another $1 million, and Mesabi Energy will seek a tax-free Job Opportunities Building Zone.

Micheletti says the $800 million federal loan guarantee in the current energy bill could get the project underway.

"It significantly moves up our time frame. This is a very huge thing for our project, as it would be for a project this size anywhere," says Micheletti.

But it's not a project without risk. According to Stu Dalton of the Electrical Power Research Institute, coal gasification is being used elsewhere, but there's nothing on this scale.

"It's a technology that is emerging. It's not been widely practiced yet," says Dalton. "There are four major coal gasification plants worldwide -- two in the U.S. and two overseas."

Dalton says there's a need for electrical generation in the upper Midwest, and he says while this technology is untried on this scale, it represents electrical generation in the future.

"There are ways the electrical industry can provide clean, safe, reliable generation from coal. And, this is the kind of project," he says.

Sen. Coleman says environmentalists should embrace the effort to build the coal gasification plant, which he says would promote clean air and create hundreds of jobs in one of Minnesota's most economically depressed areas.

Coleman also says talk of him voting to allow oil exploration in ANWR is premature.

"I'm worried that they're trying to kill this prospect for northeast Minnesota over the hypothetical -- the very, very, very hypothetical about whether ANWR is somehow caught up in this," says Coleman. "Let's focus on the opportunity for northeast Minnesota, and put all of the other stuff out of our mind right now."

Environmental groups say they're asking supporters to contact members of Congress about the energy bill. Coleman says his office has been getting a lot of calls, and that environmentalists should "cool their heels" and stop "wringing their hands."

Tom Micheletti says if he gets the federal loan guarantee, he can start the plant's engineering. There's extensive licensing, permitting and environmental paperwork ahead. Actual construction could get underway in 2005, with completion several years later.

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