Why Should You Care About Coal?

    September 3, 2014 2:53 PM by Russell Ray, Chief Editor, Power Engineering

    As masses of arctic air swept down from the North Pole to engulf much of the U.S. last winter, the nation’s fleet of coal-fired power plants was called on to keep us warm amid frigid temperatures spawned by what’s popularly known as the polar vortex.

    Demand for electricity to heat homes and businesses soared in January and February. Nearly all of the increased demand was met with power produced by coal-fired plants, many of which are scheduled to be retired in a few short years. During the cold spell, power plants fueled with natural gas ran at much lower capacities or sat idle as gas supplies were re-routed to end users for home heating.

    “Two of the largest coal-burning utilities in the country – AEP (American Electric Power) and Southern Co. – told us that more than three quarters of the required demand that they met this past January and February came from coal plants that are going to get retired in the next couple of years,” said Ben Yamagata, executive director of the Coal Utilization Research Council.

    Last winter’s cold spell is just one example of how coal-fired power has played a critical role in maintaining a reliable U.S. grid and why it should be preserved.

    Coal is the cheapest and most abundant fuel in the world. It fosters economic stability by providing low-cost power to manufacturers and has long been a buffer to the volatility of fluctuating natural gas prices. Yet, the U.S. is expected to retire about 54 GW of coal-fired capacity by 2016 amid a campaign by environmental groups to end the use of coal in the U.S.

    As the U.S. discourages the use of coal through misguided regulation, the rest of the world is turning to coal to stabilize chaotic power markets and provide electricity to regions of the world in desperate need of reliable and affordable power. In Germany, where renewable power supplies are sold at guaranteed prices and dispatched to the grid before conventional resources, power prices have skyrocketed, utilities have recorded huge financial losses and reliability has suffered. To mitigate these problems, Germany plans to add more than 7,000 MW of coal-fired power by 2015. 

    Meanwhile, Africa, India and China continue to build coal-fired generation to meet the energy needs of millions.

    Imposing unrealistic limits for carbon dioxide emissions from new and existing coal-fired plants in the U.S. will do little, if anything, to reduce climate change.  

    “If we eliminate all of the coal plants in the U.S., we will have effectuated 3 percent of the total global greenhouse gas emissions,” Yamagata said last month during the keynote session at COAL-GEN 2014. “By 2019, in China and India, coal plants planned or under construction will emit annually as much or more CO2 than the entire U.S. coal fleet currently emits annually.”

    The U.S. Environmental Protection Agency’s Clean Power Plan, unveiled in June, would require existing power plants to reduce carbon dioxide emissions 30 percent below 2005 levels by 2030. By EPA’s own estimates, the rule would force power producers to close more than 60 percent of the nation’s coal-fired generation. Debate over the timeline, the cost and the methods for compliance will continue for months or even years as the industry challenges the rule in court.

    One thing is certain. If the rule is not withdrawn or redesigned, costs will rise and jobs will be lost over a plan that will have little or no effect on global greenhouse gas emissions.

    “A 10-percent increase in electricity costs leads to a 1 percent decrease in GDP (gross domestic product) and a loss of as much as 1.5 million jobs,” Yamagata said. “There are all kinds of projections about the consequences of the 111(d) rule. I don’t know what the right answer is. What I know for certain is it’s going to cost money. Price matters.”

    But the costly requirements of EPA’s proposal may never be realized, said Jeff Holmstead, former assistant administrator of the EPA and one of the nation’s leading climate change lawyers. The rule will likely be overturned by the courts because the EPA has no authority to regulate greenhouse gas emissions from power plants under section 111(d) of the Clean Air Act, Holmstead said.

     “If the Supreme Court stays the way it is today, I’m 100 percent confident there are at least five votes that would say this goes well beyond what the EPA is authorized to do under the Clean Air Act,” Holmstead said last month during a forum in Nashville, Tenn. “The idea that this 111(d) somehow gives the EPA authority to require all states to fundamentally change the way electricity is produced and consumed in their state is a real stretch. This is something that won’t withstand judicial scrutiny.”

    What’s more, the controversial rule could easily be scuttled by a Republican administration, Holmstead said.

    “There are some EPA regulations that are very difficult to undo. But this is not one of those,” he said. “It will be very easy for a new administration to come in and say this isn’t consistent with our view of the agency’s authority.”

    If you have a question or a comment, contact me at russellr@pennwell.com.


Russell Ray

The Power Points blog, written by Russell Ray, managing editor of Power Engineering, covers all forms of power generation, including coal, gas, nuclear and renewable. It examines a wide range of issues and advancements in pricing, policy and technology. You can follow Russell on Twitter @RussellRay1.

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