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Global Mining  

Is Coal Dead?

Are the EPA's pollution regulations reducing the use of coal, or just shifting trade patterns?
 US coal exports hit record levels
 
 

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Over the last few years, the Environmental Protection Agency has aggressively pursued regulations to get rid of coal in the US. In addition to low natural gas prices, the stricter pollution rules will make many facilities unprofitable and forced to shut down.

Last month, the EPA effectively achieved a de facto ban on new coal-fired power plants, leaving little hope for remaining sites. Under the Clean Air Act's “new source performance standards,” new utilities will be required to install equipment to control CO2 emissions, such as carbon capture and sequestration—some of the most expensive and complex industrial equipment on the market.

According to the EPA, the new rule will cost $0—not one job will be lost and it will have no major effect on the economy. However, there won't be any benefits either. Under those estimates, the EPA assumes that the US will never build another coal-fired plant again, and older plants will just phase out over time. According to another program known as New Source Review, whenever an existing power plant makes an upgrade, it must comply with every rule in the book. At that point, it will no longer be economically viable to remain in operation.

THE DOMINO EFFECT

Today, 25 states get more electricity from coal than from any other source. As resources shift, those states will have to rebuild new infrastructure as coal becomes increasingly costly. Many coal-fired plants have already started shutting down across the country.

In January, FirstEnergy Corp announced that six of its coal-fired plants would be retired throughout Ohio, Pennsylvania and Maryland, accounting for about 10 percent of the total electricity the company produces. The company has said that once the plants are officially retired by September, nearly all of its power will come from low emissions sources. In light of the new environmental regulations released by the EPA, FirstEnergy decided that it would be more cost-effective to shut down the plants all together than to get them up to compliance with new standards.

Read more in May's issue of Energy Digital: The Military Edition

"Make no mistake, these plants were operating well-beyond their intended lifespan for a reason: it has been cheap to be dirty," NRDC's Henry Henderson wrote on a Council website. "And utilities have taken advantage." He also noted that the company's investments in clean energy "will ultimately create more jobs in Ohio and the region."

Chicago, once hailed as one of the “world's largest markets of coal,” also bid farewell to dirty fuel after shutting down two Model-T-era coal-fired plants in February—a huge win for Chicago Clean Power Coalition, ending a century-long reign of one of the most successful clean energy campaigns in the country.

"For over ten years our communities have been fighting for the right to breathe clean air, clean land and clean water. Today we are ending over 100 years of pollution for profits and showing the power of community," said Kimberly Wasserman of LVEJO, an environmental organization. "Hopefully, this is the first of many victories in Illinois, as citizens and politicians come together to hold corporate polluters accountable and usher in a clean energy future."

GenOn Energy Inc., American Electric Power Co. Inc. and Edison International have also announced similar retirements. According to a survey by the Associated Press, over 32 more coal-fired power plants in a dozen states will likely be forced to shut down and an additional 36 could be closed as a result of the new federal air pollution regulations. US domestic demand for coal is expected to decrease from the current 44 percent of US electrical production to as low as 22 percent within the next 20 years, according to some analysts.

TRADE

Although coal is experiencing a slow death in the US, it's starting to gain new life in other parts of the world. As the demand for coal declines in the US, Europe and Asia offer an outlet, where US coal exports have reached a two decade high.

“There’s no question that our supplies of coal are adequate. The question is, how do we find new markets for coal to keep the share of electricity generation strong?” said Luke Popovich with the National Mining Association. “While its use is relatively declining here, it is absolutely soaring in most other places.”

According to an analysis by the Associated Press, coal exports topped 107 million tons of fuel worth almost $16 billion last year—the highest level since 1991. The analysis also showed that exports to South Korea grew by over 80 percent, while Japan's grew by 110 percent as the nation desperately seeks alternatives to nuclear power post-Fukushima.

Arch Coal Inc. predicts that export capacity could reach as much as 245 million tons over the next few years. That will mean expanding coal ports on the West and Gulf coasts or even along the East Coast and in Texas. So, how effective are the EPA's restrictions on coal in the long run? The world will still burn the dirty fossil fuel—now with the added pollution from the transportation of it out of the US.

“Because the impacts of CO2 emissions are global in nature, it makes no difference from a climate change perspective whether coal mined in Wyoming is consumed in Chicago or Shanghai,” said a July, 2011 report by the Columbia Law School’s Center for Climate Change. “With coal export volumes poised to increase dramatically in the near- to medium-term, circumstances call for more comprehensive legal and policy response.”

Environmentalists who spent decades filing countless lawsuits to block new coal plants in the US have now turned their attention to the industry's recent export proposals. Otherwise, what would the point be in reducing domestic coal use if the fuel were to be simply burned elsewhere?

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