America’s War on Coal?

How Clever is it?

The Environmental Protection Agency’s (EPA) rules say new coal power plants built after April 2013 must have “carbon-capture” technology, which the coal industry claims will virtually rule out new power plant construction because of high costs.  Further, the EPA has set a March 2013 deadline to make final its standards for mercury emissions that’s a byproduct of burning coal.

Environmental groups say the Obama administration is moving in the right direction by enforcing such EPA regulations especially when taking into consideration the current availability of cheaper cleaner-burning natural gas; add to that the EPA's finding that greenhouse gases pose a threat to human health; with such calamities as Global Warming, it’s hard to justify an opposing position.

In addition, it’s well-known facts that burning coal causes smog, soot, acid rain, and numerous toxic air emissions, the most dangerous of which may be the dumping of around 3,000 tons of Mercury into the atmosphere every year in the US alone.  It’s most likely safe to say that there’s not anyone unaware that mercury is harmful to humans as well as most other living breathing critters. 

In any event, Natural gas prices are currently (Sept. 2012) around $2.70 per million British Thermal Units (BTU); Some say that Natural gas prices must reach $4 per million BTUs, in order to be equal to the cost of burning coal which certain people figure is most likely to happen by the time a new power plant dependent upon coal can be completed.  Keep in mind these plants take as few years to build, not a few months.

On the other hand other ‘experts’ argue prices will have a hard time going above $3 per million BTU’s (on the average, one thousand cubic feet of natural gas has a heating value of approximately 1.028 million BTU), the level at which Natural gas currently tends to lose market share over coal for electric power generation.

Natural gas prices have hit such a low price during the troubled times of late, you might be wondering why.  It's not real hard to figure, you see the sharp decline in Natural gas prices that occurred in 2009 was in response to the global economic collapse that drastically cut demand.  Additionally, in 2008 and 2009 many newly-discovered natural gas fields were brought online resulting in a glut of Natural gas that put additional downward pressure on prices.

In fact, various shale formations are now being tapped for so much Natural gas that the supply exceeds demand or pipeline capacity in many areas. You see, new drilling technology makes it possible to extract quantities of Natural gas from tight shale formations that were simply unproductive in past years. 

Then too burning Natural gas results in considerably less emissions (around 50% less carbon) than when burning coal, in addition, the emission reduction situation applies to oil, gasoline and diesel fuel too.  But in truth this well-known fact has had a smaller impact on Natural gas prices than it has impacted the rallying cries against coal usage.

Perhaps the above referenced ‘experts’ have already forgotten how Natural gas prices suddenly spiked up to $15 per million BTU several weeks after Hurricane Katrina hit in 2005. This reason alone may justify arguments by Coal supporters who believe the administration should leave the door open to new coal plants just in case Natural gas prices rise sharply or supplies get cut off again. In short, the reliability of the U.S. power grid is apt to be at stake.

Sadly it’s true that in the last year, citing environmental standards and changing market conditions, numerous power companies have announced the retirement of 31,000 megawatts of coal-fired capacity in the US; since 2010, plant operators have announced 106 retirements of coal powered facilities; that represents 13 percent of the U.S. fleet.

Such declines in coal-fired power plants ultimately have adverse effects on coal-mining companies too. Alpha Natural Resources Inc., the biggest coal producer in Appalachia, for example, said last week it was slashing nearly 10% of its work force, closing mines in Virginia, West Virginia and Pennsylvania and cutting operations in the Wyoming Powder River Basin where the thickness of coal is measured in feet, rather than in inches, which common sense implies low production costs in Wyoming.

Companies seeking to build conventional coal-fired plants, say that even if the mercury rule turns out to be manageable, under the greenhouse-gas rule they face, they’d need billions of dollars in financing for new technology and equipment to meet the April 2013 deadline for carbon-capture regulations.  Clearly the cost for such technological capabilities must be reduced, a lot!  In other words, the answer to the age old question “are we there yet?” in carbon capture technology is thus far a definite NO.

The U.S. coal industry, as always, if facing major problems but the current drop in electrical power generation is mostly due to competition generated from cheap Natural gas; this free market event has undoubtedly crippled many coal producing companies.  Yes, there are other factors that will continue to assist in pushing coal out of the electricity generating business. They include but are not limited to: An aging fleet of power plants, cost-competitive renewable energy programs, new clean air regulations, and a strong anti-coal movement; when all these are combined, a good job in reducing the attractiveness of coal is the clear result.

It’s also true that Natural‐gas‐fired power generation plants continue to expand their share of total generation at the expense of coal‐fired generation. If you’re wondering, during the first quarter of 2012 alone, natural gas accounted for 28.7 percent of total power generation compared with 20.7 percent during the same quarter in 2011. In contrast, coal’s share of total power generation dropped from 44.6 % to 36.0 % over the same period.

President Obama has described his energy plan as an “all of the above” approach that makes use of oil, natural gas, nuclear, renewable energy and clean coal. The White House says it has committed nearly 6 Billion Dollars for advanced coal research.  In short, the president says he supports clean-coal technology and use; further he asserts  policies of the GOP will harm our environment, which undoubtedly proves that he strongly believes that Global Warming is real and not a myth as has been aserted by some. Perhaps those 6 Billion research dollars should be doubled at the very least; it wouldn’t be the first time government has ‘insured’ the continuation of free market enterprise; or on the other hand perhaps a more clever and cost effective approach would be to simply extend the April 2013 deadline for carbon capture until such time that the worse economic crises the world has experienced since the Great Depression is behind us.

Sources:                                                                                                                       http://online.wsj.com/article/SB10000872396390444083304578014263085473262.html http://in.reuters.com/article/2012/09/24/markets-nymex-natgas-idINL1E8KO6CX20120924                                                                                                                 http://geology.com/articles/natural-gas-prices/                                                               http://thinkprogress.org/climate/2012/05/14/483432/us-coal-generation-drops-19-percent-in-one-year-leaving-coal-with-36-percent-share-of-electricity/?mobile=nc                      http://www.zealllc.com/2006/tacgas.htm http://www.ucsusa.org/clean_energy/coalvswind/c01.html