04 January 2011
Coal Plants Take a Back Seat
Washington — Construction of coal-fired power plants has slowed significantly in the United States as a sluggish economy and uncertainties surrounding future energy policy make electric utilities rethink their investment plans.
Power companies did not break ground on a single new coal plant in 2009 or 2010, the environmental group Sierra Club reported recently. Edison Electric Institute, a trade organization representing the nation’s largest power companies, confirmed the fact.
The federal government’s Energy Information Administration (EIA) said last month that it is not expecting any new plants to begin construction in 2011 either.
Coal-fired electricity accounts for about 28 percent of U.S. greenhouse gas emissions, which is why the U.S. Environmental Protection Agency is targeting power plants in its effort to tackle climate change.
Coal plants provide about 45 percent of the electricity consumed in the United States, down from 51 percent a decade earlier, EIA statistics show.
“There is continuing and ongoing uncertainty around future energy policy, and particularly around carbon,” said Jim Owen, a spokesman for Edison Electric Institute. “Couple that with the great emphasis right now on renewables and energy efficiency, and with relatively low natural gas prices that many people expect to continue for some time. All that tells you that people are not going to line up to build coal any time soon.”
Sierra Club and other groups concerned about clean air have welcomed the coal industry slump. They hope that the emerging market for renewable and clean energy will gradually replace generating capacity and jobs lost in coal.
Meanwhile, a recent drop in natural gas prices has prompted many utilities to replace aging coal plants with gas-fired generation. Natural gas plants release about half the amount of carbon dioxide that coal plants produce, and they are easier to get permission to locate and build.
A GREATER ENERGY MIX
The coal mining industry employs some 84,600 Americans. Another 134,200 people work in the fossil fuel electric-generating industry, federal statistics show.
That means many jobs are at stake when construction of coal plants is delayed — but also that employment is growing in the industries that are taking advantage of federal subsidies and loan guarantees for clean energy projects. The American Wind Energy Association says 85,000 people work in wind today, about the same number of Americans employed in coal mines.
Frank Graves, a principal at the Brattle Group, a Boston-based consulting company with a large energy practice, said coal will continue to be an important — although shrinking — part of the U.S. energy landscape. There are 13,000 megawatts of coal-fired electric generating capacity under construction that will likely come online in the next couple of years, he said.
“It’s not as much as they had planned to construct, but it’s not as if the coal industry has been frozen in its tracks,” Graves said.
A recent Brattle Group study that Graves co-authored with colleague Metin Celebi describes a looming challenge for coal plants: emerging federal rules on emissions of sulfur dioxide, nitrogen oxide and mercury that are considered hazardous to human health.
According to this study, the regulations would cost power companies an estimated $180 billion in plant upgrades and send 20 percent of coal plants into retirement over the next decade.
With the economic picture expected to brighten and demand for energy growing in 2011, utilities will need to boost capacity. To what degree they’ll bet on coal in the future is uncertain.
“The reality is becoming much more complex for utilities,” Graves said. “Gas looks safer and cheaper right now.”
(This is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://www.america.gov)
