The beginning of the end for coal?

Michael Blumberg’s charity Blumberg philanthropies recently made a 50 million dollar donation to the nation’s largest environmental group, the Sierra Club. The full amount is expected to be used to help bolster funding for the beyond coal campaign, an initiative striving to end coal based power generation in the US.  The organization appears to be finding success. In March of 2011 Beyond Coal was instrumental in helping negotiate an agreement between TransAlta and Washington’s governor that will shut down a 1600MW coal plant by 2025. (1) This just the latest in a growing number of forces working against coal use in the US. In December of 2011 the U.S. Environmental Protection Agency (EPA) announced new regulations that will require coal power plants to reduce emissions of mercury, arsenic and cyanide by 2014. EPA estimates suggest the measure could “prevent 11,000 premature deaths per year and 4,700 heart attacks, as well as thousands of cases of asthma and bronchitis.” (2) The Associative press reports compliance with the measure will be prohibitively expensive for many power plants and suggest as many as 36 coal fired power plants will close as a result. (3)

At the same time natural gas prices continue to decline in the face of large increases in domestic production (Kyle Cooper of IAF Energy Advisors was recently quoted as saying “barring a new Ice Age” $2/mmBtu gas would be here soon) (4).  The Energy Information Administration’s (EIA) 2012 annual energy outlook predicts gas-generated electricity will rise from 24 to 27 percent of total US power generation by 2035; with coals share dropping from 45 percent to 39 percent during the same period. (5) With the continued development of shale gas reservoirs domestic natural gas production is projected to triple in the next 25 years, with the expectation that much of the produced gas will be exported. The EIA report suggests the US will be a net exporter of natural gas by 2021. (6)

The tides appear to be turning on big coal. Environmentalist groups are making headway and new emissions regulations are being put into law. What if this momentum were to continue? In light of increasingly cheap gas, significant domestic production and interest by increasingly well-funded groups in a more environmentally friendly alternative to coal natural gas may well be the successor to coal for base power production in the United States.

(1)    http://action.sierraclub.org/site/MessageViewer?em_id=198802.0

(2)    http://www.nj.com/news/index.ssf/2011/12/nj_to_benefit_from_new_epa_reg.html

(3)    http://www.google.com/hostednews/ap/article/ALeqM5jVCVJahDx6CEGJoFJw1h1jslWpdA?docId=303e00f3a4314b55bf2755e9991fecd7

(4)    http://blogs.wsj.com/marketbeat/2012/01/20/natural-gas-dead-cat-bounces/?KEYWORDS=natural+gas

(5)    http://www.eia.gov/todayinenergy/detail.cfm?id=4950

(6)    http://online.wsj.com/article/AP3a6b27ec2bb84e05a796c19b2f5266e1.html?KEYWORDS=natural+gas

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4 Comments

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4 responses to “The beginning of the end for coal?

  1. csheble

    I think the phrase “beginning of the end” is quite premature. The energy infrastructure of the United States is like a freight train that’s been building momentum for over a hundred years, so changing its direction is not a rapid process. Additionally, growing energy demands most likely will mean the growth of Natural Gas will supplement the existing coal generation, rather than replace it. Even ignoring that, will alone cannot ween us off coal so quickly. First, even the suggestion of shifting off of coal is dangerous politically. In an NPR article published a year ago, an energy expert points out that “22 states in the U.S. that have some level of coal production.” “And, of course,” he continues, “that’s not all the states that care about it, because there are a number of other states whose electric power systems are heavily dependent on coal.” (1) Whenever there are a large group of varied people whose livelihoods depend on an industry, even the mention of shrinking that industry can backfire. Second, there are alternatives (such as carbon sequestration and coal conversion technologies) that would be palatable to the coal industry if the policy conditions were right. An MIT study on coal in 2007 claimed that companies would rebound and innovate to reduce carbon and heavy metal emissions if policy were used to created the right economic pressures. (2) Oglethorpe, a conglomeration of 39 electric utilities in Georgia, saw it exactly that way a year later. They have a substantial interest in coal with 3.4 GW of power coming from coal plants. They understand that coal isn’t going anywhere, but that clean coal technology will be the middle ground between environmentalists and industry. (3) The bottom line might be summed up best by David Mohler of Duke Energy (in an interview with The Atlantic): “Emotionally, we would all like to think that wind, solar, and conservation will solve the problem for us … Unfortunately, the math doesn’t work that way.” (4) No, coal will be around for a long time. Luckily, there are ways to mitigate its disadvantages , both technologically and regulatively.

    (1) http://www.npr.org/templates/story/story.php?storyId=122952836

    (2) http://web.mit.edu/coal/The_Future_of_Coal.pdf

    (3) http://www.opc.com/MeetingDemand/TheNeedForMorePower/TheFutureofCoal/index.htm

    (4) http://www.theatlantic.com/magazine/archive/2010/12/dirty-coal-clean-future/8307/2/

  2. Similar to the first commenter, I think “the end for coal” as a title may be overdramatizing the point. The original post notes that 36 coal-fired power plants may close as a result of new emission regulations. Even if these closures happened, there would still be 545 coal plants left in the US. (1) It’s also worth noting that 35 coal power generators are up for retirement in the next year, regardless of new emission rules. (2) As pointed out in the earlier comment, an industry this robust will need far more than a couple years and a few regulations to be threatened by a looming e-n-d.

    That said the post addresses a timely question: to what extent will the recent natural gas boom will take over coal power generation? The coal-fired power plant in Washington mentioned in this post is the Centralia plant run by TransAlta. Plans are underway to develop a new natural gas plant (3) in its place, but this transition won’t begin until 2025. (4) Centralia is the largest baseload power source in the state – it’s also the only coal plant in the state. (5) If shutting down this one coal plant in Washington is considered a milestone, one can imagine the challenges ahead for shutting down coal plants in industry-based states like Pennsylvania. It may be that with cheap gas prices, power generators eventually find it more economical to replace coal plants with natural gas. But this transition would take decades worth of economic analyses, interest group battles, and technological advancements, and would probably be less a result of donations to environmental groups.

    (1) http://www.eia.gov/electricity/annual/pdf/table5.1.pdf
    (2) http://www.eia.gov/electricity/annual/pdf/table1.5.pdf
    (3) http://www.transalta.com/node/878
    (4) http://www.triplepundit.com/2011/03/transalta-coal/
    (5) http://www.transalta.com/facilities/plants-operation/centralia

  3. elwaite

    I agree, csheble, the “beginning of the end” for coal may be a bit premature. While the point concerning cheap natural gas replacing coal in U.S. energy consumption is a completely valid and likely scenario, another important aspect of the future of coal relies on the fact that even if energy production in the United States moves away from coal as a fuel, there will still be other nations to buy coal from American companies.

    One of the largest consumers of coal is China, whose coal consumption is expected to increase their current level of coal consumption of 3.70 billion short tons by 40% in the next twenty years [1] [2]. China has become one of the top importers of coal in the world, and, with growing industrialization, China is likely to continue seeking large amounts of coal imports for the foreseeable future [3]. The U.S. already ships coal to China, sending 4,071,837 short tons of coal in 2010, and this number is only projected to grow [4].

    The point being that even with a decrease of demand in the U.S., coal will continue to be a large player in global energy production, especially in China and other industrializing nations. It should not be assumed that U.S. coal companies are going to start closing down when global demand has not yet hit its peak.

    [1] http://www.eia.gov/todayinenergy/detail.cfm?id=4390

    [2] http://www.worldenergy.org/documents/p001038.doc

    [3]http://www.nytimes.com/imagepages/2010/11/22/world/asia/22fossil_graphic.html?ref=earth

    [4] http://www.eia.gov/cneaf/coal/quarterly/html/t7p01p1.html

  4. Obviously the end of coal as a power source for producing electricity will not occur in the foreseeable future. [1] It will take at least one significant change for coal to become less attractive as a major fuel for electricity generation. However, some believe that at least one aspect of coal, its cost, will change significantly in the near future. [2] No-one is saying that we are running out of coal or that coal’s price will skyrocket overnight, but the price of all commodities have a way of increasing when it is least convenient for everyone.
    While no-one can predict the future, if the price of coal begins to climb, energy companies will have limited options. Most will simply raise their rates, at least initially, thereby passing on the increased cost of coal to the consumers. However,this will only last for so long as the rates will eventually reach a point that the consumers cannot, and will not, tolerate.
    For an analogy, we need look no further than the present gasoline prices. [3]. When gas prices rose in the past, and as they are rising now, people will change their driving habits. Thus, as people drive less often, use other types of fuel, or utilize public transportation, the demand for gasoline will decease, and the price will, eventually, decrease. But, the important point to note here is that as the price of a commodity increase, people will use less of that commodity.
    Therefore, by analogy, as the cost of electricity increases due to the cost of its main fuel, coal, consumers will use less electricity. While the argument can be made that any analogy between electricity and gasoline is speculative at best because they are two different commodities, consumers are already finding ways to use less electricity because of its cost, which most people find reasonable. It seems that everyday, at least in the US, there is a news story or blog or article about another company “going green.” (See for example [4]). It is only a matter of time and money before the cost of “going green” and using less coal fueled electricity, is less than that of the price of electricity from coal. When that day happens, at it will sooner or later, the end of coal as a major fuel source will occur. It won’t happen tomorrow, but it will happen. So while the end of coal is a long way off, it is fair to say that the beginning of the end has occurred with the advent of more efficient green technologies, less expensive natural gas, and, hopefully, the revitalization of nuclear power.

    [1] http://www.celsias.com/article/the-beginning-of-the-end-for-coal/

    [2] http://www.energybulletin.net/stories/2011-07-15/end-cheap-coal

    [3] http://articles.cnn.com/2011-02-17/us/high.price.gas_1_gasoline-prices-crude-oil-prices-fuel-conservation-techniques?_s=PM:US

    [4] http://www.electric.co.uk/news/businesses-in-the-united-states-are-going-green-12342050.html

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