Underground Coal Gasification (UCG) is a technique in which wells are drilled to gain access to a coal seam, a permeable linkage established between an injection point and a production well, enabling partial combustion of the coal in situ (the combustion process hollowing out a gasification chamber) in the presence of steam, and oxygen or air, producing a synthesis gas (syngas) which is drawn off through the production well.
While UCG has had, and may have future negative environmental impacts through subsidence and groundwater pollution which could well constrain the locations in which deployment is considered acceptable, with modern practices and regulation, local environmental factors are unlikely to fundamentally slow the development of the industry.
On the other hand, UCG has the potential to extend (and increase) coal use significantly, and unless carbon capture and storage (CCS) were widely incorporated, this would bring severe negative consequences for the global climate. UCG proponents suggest that it could increase global economic coal reserves by 300-400%, although these figures are contested. For illustration, using 300% more coal – unabated – is estimated to add 2.76°C to global temperatures.
If CCS were applied, UCG would probably utilise some form of pre-combustion CCS, rather than the post-combustion systems most widely discussed for conventional coal power generation. In practice, this report finds that UCG is unlikely to be widely deployed with more than partial CCS1: in some applications levels above 50% capture are impractical while in the power sector, higher levels are possible, but costly.
Even partial CCS on large scale deployment of UCG would require the storage of significant amounts of CO2 (11-55 Gt by 2050). Should lower estimates of global storage capacity prove to be correct, such amounts could have negative consequences for the future availability of suitable geological storage for other sources of CO2 such as negative emissions techniques.
Advocates’ claims for effective carbon storage in the UCG cavity or surrounding strata are not yet proven. Even if demonstrated, such methods would be unlikely to provide capacity for more than partial CCS.
UCG has not yet achieved commercial technological readiness, but technical advances in directional drilling and seismic modelling have brought it close to that point.
The current economics (and remaining technology risk) of UCG make it unlikely to replace conventional (unabated) coal use for power generation in the near future. And where natural gas prices remain depressed, it seems unlikely to significantly displace use of gas either. On the other hand the economics of coal to liquid fuel based on UCG appear relatively attractive at present.
The effective linkage of UCG with CCS has yet to be fully technically proven, and appears likely to add significantly to the costs of UCG, especially if more than partial CCS is required. Worse, in liquid fuels applications, overall levels of CCS above 50% are implausible.
Although absolute costs remain uncertain, it seems likely that the future addition of CCS to UCG could be achieved more cheaply than its application to conventional gas or coal combustion. But even if CCS on UCG proves cheaper than CCS on conventional power generation, this alone will not guarantee its application, even to a partial level, as UCG without CCS will remain significantly cheaper than UCG with CCS, unless carbon prices rise significantly, or effective regulatory incentives are applied.
UCG is being pursued with most vigour where it offers particular benefits for energy security, either as a fuel for power generation or as a feedstock for the production of synthetic liquid fuel.
In both technical and economic terms UCG could break through to become a mainstream option for power generation or liquid fuel production within the next two decades. Ongoing pilot schemes are expected to lead to demonstration at commercial scale in several countries within the next 3-5 years. This review identified around 7 pilot schemes and 50 other proposed developments in 22 countries at the current time.
The most likely scenarios for the development of the sector are considered to be continued ‘niche development’ for 5-10 years, followed by either a ‘focus on liquid fuels’, or a ‘dash for gas power’ (depending on whether natural gas prices have converged globally at a relatively low level, or risen in the interim).
In the latter case (‘dash for gas power’), strong regulatory intervention could ensure affordable application of CCS to a large proportion of UCG facilities if the technical challenges of integration are overcome. But in the ‘focus on fuels’ case the best outcome for the climate would involve substantial application of only partial CCS, with a significant residual climate risk, and in the worst case carbon emissions would grow rapidly and significantly as a result.
To download the full report, return to the UCG project page