Earlier versions of this article, including in the print editions of The Washington Post, were illustrated with a photo showing charred wood, not coal. The photo has been removed from this version. The article also incorrectly said that completing the East Kentucky Power Cooperative's now-canceled Smith Unit No. 1 coal plant would have cost an estimated $819 million in addition to the $150 million already spent. The $819 million estimate is for the total cost, including the $150 million. This version has been corrected.
Sunday, January 2, 2011
The headline news for the coal industry in 2010 was what didn't happen: Construction did not begin on a single new coal-fired power plant in the United States for the second straight year.
This in a nation where a fleet of coal-fired plants generates nearly half the electricity used.
But a combination of low natural gas prices, shale gas discoveries, the economic slowdown and litigation by environmental groups has stopped - at least for now - groundbreaking on new ones.
"Coal is a dead man walkin'," says Kevin Parker, global head of asset management and a member of the executive committee at Deutsche Bank. "Banks won't finance them. Insurance companies won't insure them. The EPA is coming after them. . . . And the economics to make it clean don't work."
From 2000 to 2008, construction started on 20 units in 19 plants, according to Edison Electric Institute. Last year, utilities and power-generating companies dropped plans to build 38 coal plants while announcing that they would retire 48 aging, inefficient ones, according to the environmental group Sierra Club.
Although 2010 saw the collapse of climate legislation in the Senate, the Sierra Club is trumpeting such statistics as a sign that "coal is a fuel of the past."
The battle over coal plants could sharpen in 2011, as the Environmental Protection Agency deploys regulations to improve the efficiency - and lower the greenhouse gas emissions - of big power plants.
Starting Sunday, the EPA will require builders of plants big enough to emit 75,000 tons of carbon dioxide a year to use the "best available control technology" in order to obtain air permits, needed before construction. Utilities, oil refiners and other industries argue that this will add prohibitive costs, and many Republican lawmakers have vowed to handcuff the EPA, which is also planning to issue broader guidelines later in the year.
In the wake of the midterm elections, President Obama identified promotion of natural gas use as an area of potential bipartisan action. He hopes to prod utilities and manufacturers into switching from coal to natural gas, which emits half the amount of greenhouse gases. The choice looms large given that the average age of the U.S. coal fleet is 43 years, with more than half the plants built before 1967.
Word of coal's death might be premature, says Luke Popovich, spokesman for the National Mining Association. He said that several coal-fired plants begun earlier are still under construction. Duke Energy, for example, is expecting to finish its Cliffside and Edwardsport coal plants in 2012.
Other companies have scrambled to get permits before the EPA regulations take effect, and projects in Texas, Kansas and Illinois have succeeded. A project in Mississippi is poised to break ground, though the Sierra Club is still fighting in court to revoke the plant's permits.
Moreover, Popovich adds, the federal Energy Information Administration expects that the nation will need to build 30 to 40 new plants to supply the 21 gigawatts of new electricity demand expected by 2035.