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Obama Delivers a Death Blow to the Coal Industry

Posted By Rich Trzupek On March 30, 2012 @ 12:40 am In Daily Mailer,FrontPage | 39 Comments

The coal industry and coal-fired power has been dealt a series of body blows by the Obama administration over the last four years. Yesterday, the EPA delivered the coup de grace to coal, in the form of a new rule that – unless overturned by Congress or a future administration – will ensure that no new, modern coal-fired power plants will be built in the United States.

The EPA released Subpart TTTT of New Source Performance Standards yesterday, a proposed rule that limits carbon dioxide emissions from new power plants. No coal-fired power plant can meet the emission limit (1,000 pounds of carbon dioxide per megawatt of power produced), but natural gas-fired power plants can. This will lead to some significant changes in the power energy once the rule goes final, sometime next year.

It is now estimated that around 50,000 to 80,000 megawatts of coal fired power will be retired from the grid over the next few years. Coal fired power is base load power (that is, power that has to be available all of the time) and neither solar nor wind can provide base load power anywhere but in the President’s green fantasies. Biomass (wood, energy crops, etc.) can provide base load power, but there’s not nearly enough of the fuel to replace so much coal. More nuclear power could easily shoulder the load, but there’s no way that we can permit and build enough nuclear plants in the time available. That leaves natural gas as the only fuel that can possibly be used to replace all of that coal.

Right now, natural gas is looking pretty good. Thanks to shale gas, we have abundant supplies (over one hundred years of proven reserves, even in the worst-case demand scenario) and prices are incredibly low. New, highly efficient combined-cycle gas-fired power plants are actually competitive with coal-fired power at today’s prices.

Replacing all of that coal with natural gas should soothe global warming alarmists as well. (I say “should” because everyone knows that the environmental doom industry cannot and will not ever admit that it is satisfied with any level of reductions until we’re living in caves.) Natural gas generates much less carbon dioxide per unit of energy as compared to coal and, as noted above, natural gas-fired power plants can be much more efficient. The combination of these two effects means that carbon dioxide emissions in the United States, which have been declining for the last five years in any case, will drop even more precipitously in the future.

So, one might be tempted to ask: what’s the big deal? If natural gas is cheap and if burning natural gas might cause at least a few hysterical enviro-types to lower the volume of their incessant shrieking just a tad, it’s all good – right? Well, not quite.

Historically, natural gas prices have been very volatile and, despite the current glut, there is no reason to believe that supply will so greatly outstrip demand in the long run. The big energy players in natural gas, companies like Chesapeake, Cabot and Chevron, are working hard to create new markets, increase demand and thus get prices back up. A major South African chemical company recently announced plans to build a plant here that will produce gasoline from natural gas feedstock. Several players in the energy market are in the initial stages of planning Liquefied Natural Gas (LNG) terminals with exports to Europe and Asia in mind. There are plans in the works to create more natural gas infrastructure so that the nation’s truck fleet will convert over from diesel to natural gas.

Perhaps most importantly, using natural gas to generate thousands of megawatts of power will consume huge quantities of the fuel, thus necessarily causing prices to rise as more new power plants come on line. It’s no surprise that the two big manufacturers of natural gas fired-turbines – GE and Siemens – have been flooding the airwaves with commercials extolling the virtues of their wares. Both companies stand to make a whole lot of money in the next few years thanks to the Obama administration’s all-out war on coal.

In contrast to the volatility of natural gas prices, coal prices have always been pretty steady. Thus the coal fleet (along with the nuclear fleet) has helped to dampen out any fluctuations in natural gas that affects that relatively small portion of energy production in the United States. As we shift away from coal and put more of the energy burden on natural gas, electricity prices are likely to fluctuate more than they ever have and are likely to increase substantially over the long term as well.

It’s a shame that we’re knowingly abandoning such a cheap, reliable and plentiful resource like coal in a foolish effort to fulfill a ridiculous crusade led by eco-puritans. It’s maddening that such a decision was made not by Congress, nor by the voters, but by a few faceless bureaucrats hiding behind global-warming pseudo-science that has become the twenty-first century’s version of alchemy. But that’s where we are and, unless something changes this November, that’s where we’re likely to be for quite a while.

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