Coal was the fuel that fired the industrial revolutions in the U.S. and Europe.
Market share for the material has plummeted in the U.S. over the past decade, which has seen its percentage of electrical power production plummet.
According to the U.S. government’s Energy Information Administration, “coal's share of total net generation dropped to 34 percent—the lowest level since at least January 1973 (the earliest date for which EIA has monthly statistics). Despite seasonally low loads, natural gas-fired generation grew markedly and accounted for 30 percent of overall net generation by March 2012.” Two years ago, coal’s share of U.S. electric power generation fell below 40%, the lowest level since 1978.
Coal generation decreased 29 billion kilowatt hours from March 2011 to March 2012, while natural gas generation increased 27 billion kilowatt hours during the same time period. In March 2012, coal's share of total generation was 34% compared to natural gas at 30%. Natural gas is now tied with coal as America's top source of electricity, with each fuel now providing 32 percent of the nation's power. Like it or not, the U.S. power sector is undergoing the fastest, largest change in American history – and coal is increasingly losing ground.
Pointing fingers, the coal industry is nervously awaiting the Environmental Protection Agency’s imminent unveiling of new regulations under President Barack Obama's new climate action plan, which sets a carbon emissions rate standard for new fossil fuel power plants, and the prognosis doesn’t look good. If the new standards are as strict as the industry expects, it could end new coal plant construction. Analysts are nervously contemplating the fate of West Virginia’s 700 megawatt Longview thermal plant, which declared bankruptcy on 30 August.
The EPA is due to issue an emissions–rate standard for new fossil fuel power plants by September 20. Proposed standards on existing plants will follow in 2014.
Obama instructed the EPA to resubmit a regulation that it proposed in 2012, utilizing a proviso in the federal Clean Air Act requiring all new power plants, including those that use coal, to meet a standard of 1,000 pounds of carbon dioxide per megawatt hour, the average rate of a natural gas–fired thermal power plant. Accordingly, America’s older and environmentally dirtier coal-fired thermal power plants are increasingly uneconomical. Seeing the writing on the wall, U.S. plant owners and operators are preparing to retire 27 gigawatts' worth of coal generation, or about 8.5 percent of the coal fleet, within the next three years.
It gets worse. Two months ago the EIA published new research prognosticating that the United States will likely see a full 17 percent of the country’s coal-fired thermal power plants retired by 2020.
Worse for Big Coal, the problem with coal-fired thermal plants is escalating worldwide. Even in energy hungry China, the government is beginning to pay attention to the problems caused by coal-fired thermal power plants. In January, Beijing’s air pollution rose to 900 micrograms per cubic meter in some districts, over 25 times higher than the maximum level considered healthy by the U.S. Environmental Protection Agency. Researchers estimated that people in northern China, who rely on coal for heating, have a life expectancy 5.5 years less than those in southern China, who don’t.
The only possible silver lining in an otherwise dark cloud for U.S. coal producers is if U.S. economic growth is exceptionally high, with rising electricity demand perhaps assisting in keeping some of the country’s older coal thermal plants open.
And coal usage is surging around the world, particularly in China and India, creating a potentially vast market for U.S. coal exports. Accordingly, U.S. coal producers, including Arch Coal and Alpha Natural Resources are seeking to construct large export terminals in the U.S. Pacific Northwest to supply surging Asian markets.
But coal’s immediate future in the U.S. seems as dark as a miner’s lungs.
By. John C.K. Daly of Oilprice.com