Correction to This Article
Earlier versions of this article, including in the print editions of The Washington Post, 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.
Page 3 of 3   <      

Coal's burnout: Have investors moved on to cleaner energy sources?

Discoveries of new ways to tap natural gas trapped in shale rock have unlocked supplies that could keep prices in check for years to come.

"When we do need new capacity, it is highly likely that we will look to natural gas plants instead of coal, especially if natural gas prices remain as low as projected," Hemlepp says. "The plants are less expensive to build, and current forward price projections favor gas over coal."

It's a decision being made by utilities across the country. A recent Deutsche Bank report says that if gas prices remain between $4 and $6 a thousand cubic feet, "we believe that a coal to gas switch makes sense."

States have their plans

Even though Congress failed to enact climate legislation, more than half the states have adopted measures requiring utilities to use more renewable energy. To meet those targets, most investment will probably go into solar, wind, nuclear and energy efficiency projects.

Environmental groups are gearing up to challenge coal plants state by state. The Sierra Club is expanding its ranks this year so that 100 full-time staffers will be working on the issue, and the Environmental Defense Fund is hiring additional lawyers to wage battle against coal.

Given the age of the coal fleet, many of the oldest plants also run afoul of clean air guidelines on traditional pollutants.

As a result, the Colorado Public Utilities Commission recently adopted a $1.4 billion plan that will end coal-fired electricity generation in the Denver area. It calls for Xcel Energy to close four coal-fired units in the region, switch another to natural gas and build a new gas-fired plant to help meet federal clean-air standards. The units are all more than 40 years old.

The plan was required under the Colorado Clean Air-Clean Jobs Act, signed by Gov. Bill Ritter (D) in April.

"Coloradans across the state made it clear that they did not want coal in their stockings this year," said Pam Kiely of Environment Colorado. "The PUC delivered an early Christmas present by deciding to stop burning dirty coal in the metro area."

Action without legislation

The Obama administration might also target coal-fired power plants as a way to meet its goals for reducing greenhouse gas emissions, even if legislation remains beyond its grasp. Administration officials have spoken of negotiating guidelines with big utilities, similar to automobile fuel efficiency standards, but utility executives say such talks are not yet taking place.

Deutsche Bank's Parker thinks that a path to lower coal use not only makes financial sense but climate sense as well.

"Switching coal to natural gas and renewable energy with a modest buildup of nuclear energy is achievable and could lead to a 29 percent reduction in CO2 emissions from the U.S. power sector by 2020 and a 44 percent reduction by 2030 compared to a 2005 baseline," the bank wrote in its November report on a low-carbon energy plan for the United States.

At international climate talks, negotiators often use the year 2005 as a baseline. At the Copenhagen climate talks a year ago, the Obama administration pledged a 17 percent reduction in overall U.S. emissions by 2020.

In 2002, there were plans to install 36,000 megawatts of new coal-fired power by 2007. Only one-eighth of that was completed.

Deutsche Bank predicts coal's share of electric power generation will tumble further, from 47 percent in 2009 to 34 percent in 2020 and 22 percent in 2030.

It put it this way in its report: "Based on today's energy fundamentals, the rational economic decision is to shutter inefficient coal plants and replace them with natural gas combined-cycle power plants."


<          3

© 2011 The Washington Post Company