Utilities are Bailing on Coal

Ken Silverstein | Jun 12, 2012

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Coal’s days are getting dimmer. With environmental regulators coming down on it in combination with extremely cheap natural gas prices, it is losing market share. But it’s also losing some support in the utility community.

Make no mistake. Power companies don’t want to forego their productive assets and be forced to build new electric generators, or buy power on the open market. But many now recognize that expending the political capital to fight for plants built in the middle of last century is not worth it -- especially when they can construct combined cycle natural gas facilities with relative regulatory ease while releasing roughly half of the emissions in the meantime. 

It’s not personal. It’s business. Those older coal facilities can take much of the credit for increasing this country’s net worth. But their useful lives are over. And now the utilities that own them have been forced by regulators to either retrofit them with new pollution control equipment, or to retire them. Rather than cooperate and live up to their “clean coal” campaigns, many of the utilities and their coal counterparts for years chose to fight the rules. They lost. 

Altogether, 112 coal plants totaling more than 42,800 megawatts have been retired, or soon will be, says the Beyond Coal campaign. That is since January 2010.

“Just as there’s been no hesitation to call upon coal to assist in the utility industry’s political, operational and technical agendas, coal is relying on assistance from its utility partners to combat the anti-coal forces ....,” writes Chris Hamilton, in his blog at the West Virginia Coal Forum. “After all, we are ‘partners of sorts’ and the general coal economy is now asking for greater staying power from its energy partner.”

Hamilton, who is a friend of this writer and who is a coal industry lobbyist, adds that the coal industry in West Virginia is responsible for 60 percent of all business taxes paid. In 2008, the industry employed 20,500 people and paid them $1.5 billion in that state. As for cheap natural gas prices: Don’t expect it to always be that way and when prices rise, coal will be there to fill the void -- if the industry can get some regulatory relief, the group says.

Critics of coal have a different take. They say that the industry has, historically, gotten a regulatory pass. And now that it must comply with stricter air and water regulations, the cost of its product is rising relative to what it cost to generate power from competing sources. The Environmental Protection Agency, for example, often cites health care costs tied to coal-related respiratory illnesses.

The Alternatives

A legal case has been underway in the southern counties of West Virginia where coal has long been the favored industry. Hundreds of residents just settled a suit Tuesday they had against Alpha Natural Resources, formerly Massey Energy. The plaintiffs maintained that underground injections of washed coal, called coal slurry, befouled their drinking water supplies. The terms of the settlement have not been disclosed.

Other fights are taking place elsewhere. In Kentucky, hundreds of coal miners are protesting for economic fairness while environmental activists are saying that the state’s leading resource is not coal -- but its people, and their health. One-third of all coal mined in the country is found there, says a report by the International Business Times. Already, 1,000 coal workers there have been laid off, it adds. The loss of mining in that state is devastating to those workers with few alternatives

“Certainly regulations that require improved emissions at coal-fired power plants will create temporary jobs for those installing the equipment and those merchants who benefit secondarily from their commerce,” says Sterling Burnett, an analyst with National Center for Policy Analysis. “But a great many of the power plants affected by the regulations will simply be shuttered, putting thousands of workers, who have been in a relatively high-paying field, out of work.”

Burnett, who spoke with this reporter, also says that EPA tends to overstate both the economic and health benefits associated with switching away from coal. Generally, he says that as communities and countries prosper, they are then in a better position to enact more environmental safeguards and to improve health.

Coal’s friends in Congress are introducing legislation to get EPA off of the sector's tail. But those bills are going nowhere. Shale gas, though, might save the day for Central Appalachia where a plethora of coal resources are located. The area is also rife with the unconventional gas: Trillions of cubic feet are located there and could provide hundreds of thousands of jobs, all at competitive energy prices.

The region has a brighter future. But it’s not likely with coal, which should have assisted its utility partners 20 years ago and provided the skills and resources to make those plants the best they could be. Together, they fought regulatory efforts and now that the outcome is all but certain, many of its close utility allies are bailing and coal is getting left in the dark.


EnergyBiz Insider is named a 2012 Finalist for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been named one of the Top Economics Journalists by Wall Street Economists.

Twitter: @Ken_Silverstein

energybizinsider@energycentral.com

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Comments

COAL USE DOWN FOR SHORT TERM

No surprise that older coal-fired plants have been retired and that the lower Natural Gas pricing has prompted switching to NG for base-load operations.

 

See my previous published articles

 

Goodwin, R.W.; “Natural Gas Power Plants’ Fuel of Choice”; Energy Pulse Weekly; July 26, 2011

 

 

Goodwin, R.W; “Shale Gas - Friend of Foe”; Energy Pulse Weekly; February 1, 2012

 

But as the price of Natural Gas increases over the next few years due to its greater use in electric power generation, coal use should treand upward.

 

Richard. W. Goodwin West Palm Beach FL 6 25 12

Overdue

Let us not forget that coal-based utilities contended in 1977 that their plants should be grandfathered from stringent new Clean Air Act Amendment rules because they would be retired in short order.  Then they slow-rolled the plant retirements, and our nation's environment suffered greatly as a result.  This trend is welcome, Ken, but 35 years overdue.

China

Ken,

A very well written story as always. I won't argue the merits of coal or its impact on the US economy. These are all givens. My comment is that I was in an international energy conference last week. The Chinese attendees were presenting numerous papers on the advanced coal systems they were building and developing including many ultra super critical plants. These plants are being built without scrubbers and SCRs for pollution control, They are depending on the plant's higher efficiency to result in reduced pollution compared to the smaller plants they replace. The problem is that they are building 50GWs year in additional capacity. To put it in the proper context, the US could shutter all its coal plants tomorrow and the new Chinse plants would far exceed the total pollution of the plants eliminated. In a few years they would outnumber the capacity and pollution of the plants removed from service.  The new plants are cleaner, but their economy needs power to grow and they intend on supplying it. They have ready access to coal and they are going to use it. Who can really blame them.

compensation question

If the coal lobbiest really stated that 20,000 coal workers in West Va are getting $1.5 billion, the math seems to indicate that they are averaging over $70k each.  Could this be true or is that stat just skewed because it includes top executive pay?  Too many of these 'facts' from the coal industry are destined to go in the 'clean coal circular file'.

ng gas carbon footprint

response to jack. i have written about this study to which you reference. everytime i source it, i get hit by a barrage of special interest letters ... they all say the same thing and so i think that someone finds these stories and sends them out to their members. they all say basically the same thing that this study is flawed and they explain why. i mention those arguments in my original story. I don't have time now but google the keywords using energybiz insider and my name and it will come up. the essence of the argument is something like this (for people reading this exchange betw jack and me:) NG releases a lot more methane, which is the most potenti greenhouse gas of them all. But methane is a much shorter-lived gas than carbon and others. I think it is 25 years versus 100 years. 

Ken S

Carbon Footprint of Gas is Higher than Coal

Ken,

 

Good article, as usual. The one thing I am concerned about, though, is that you continue to spread, as much of the rest of the media does, the misinformation that the carbon footprint of natural gas is actually less than coal. True, natural gas burns much cleaner than coal, so it doesn't have the same air pollution issues that coal does, and it doesn't release as much carbon dioxide in combustion as coal. However, according to a study by David Hughes and colleagues at Cornell University, for instance (there are other studies, too), if you take into account the energy it takes to get shale gas out of the ground and to market and, more importantly, the methane emissions of the leakage in the process, then the greenhouse gas emissions of shale gas are actually higher than coal. In fact, using the same criteria, by some estimates, even conventional gas is higher than coal. I am not a supporter of coal, but I just think when we are considering natural gas -- especially shale gas -- as an alternative, we need to be honest and realistic about the impact of that fuel, too.

 

http://www.eeb.cornell.edu/howarth/Marcellus.html

 

Jack

 

agree on progress, but

Coal has made great progress because of previous clean air laws that have passed but let's not forget that the industry fought those laws as well. I also agree with the writer who says that it is not too late for coal to still try and reinvent itself. If the industry would have participated in the discussions and not tried to beat them, it would have found itself with more bargaining power but it did not do that. 

Why trade cheap for expensive?

According to "Toll from Coal" emissions from coal plants have been reduced by about 75% because of the Clean Air Act in the last decade, "without significantly increasing the cost of electricity." It's unfortunate that the quest for money by utilities has kept them silent on this. Will the fracking for all that natural gas and the resulting contaminated water, earthquakes, and significant increased costs for electricity for citizens and manufacturers be a good trade-off for some CO2 emission savings? Will "fuel poverty" as experienced in Europe over increased utility rates be justified because of some unproven "better health" effect? Seems to me we're trading cheap affordable energy for expensive more damaging energy than ever before? Everyone has their hand in the "pot" with no thoughts of the "common good" which is what our country's constitution is based on. It will take us down.

Writing has been on the wall for a long time!

While I feel for the workers who are being laid off, the demise of the coal industry hasn't been a well-kept secret! 

With ocean acidifciation, climate change, air and water pollution, erosion issues and externalized costs for health care that is the direct result of mining and burning coal, the writing has been on the wall for a long time.

Instead of blinding attempting to hold back this ocean of negative forces alligned against it, the coal industry should have and could have diversified itself so that it would be able to transition itself into other aspects of energy generation or out of the energy business altogether.

In fact, it's not too late!  The facts of the matter are that while gas is cheap now, it won't stay that way for long and even if it does stay low, it will still be a long time before we ween ourselves off of coal altogether.  Therefore, there is still time for the industry to transition.  For the sake of the workers, I hope that it does!

 

Bob "The Clean Energy Guy" Mitchell

Writing has been on the wall for a long time!

While I feel for the workers who are being laid off, the demise of the coal industry hasn't been a well-kept secret! 

With ocean acidifciation, climate change, air and water pollution, erosion issues and externalized costs for health care that is the direct result of mining and burning coal, the writing has been on the wall for a long time.

Instead of blinding attempting to hold back this ocean of negative forces alligned against it, the coal industry should have and could have diversified itself so that it would be able to transition itself into other aspects of energy generation or out of the energy business altogether.

In fact, it's not too late!  The facts of the matter are that while gas is cheap now, it won't stay that way for long and even if it does stay low, it will still be a long time before we ween ourselves off of coal altogether.  Therefore, there is still time for the industry to transition.  For the sake of the workers, I hope that it does!

 

Bob "The Clean Energy Guy" Mitchell