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Comeback in coal-fired power generation may be short-lived

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Michael Bastasch Contributor
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The coal industry may be catching a break, as coal-fired power generation has been on the rise due to rising natural gas prices, according to government energy projections. But the industry believes this “coal renaissance” will be short-lived as looming environmental regulations make it impractical to build a coal plant in the U.S.

The Energy Information Administration expects that coal will be used to produce 39.1 percent of the country’s total electricity generation in 2013 and 2014, up from 37.4 percent last year. This is due to rising natural gas prices.

The EIA reported that natural gas prices will average around one dollar more in 2013 and 2014 over the 2012 average — $3.53 per million British thermal units in 2013 and $3.84 per MMBtu in 2014. The average price was $2.75 per MMBtu in 2012.

Despite the bump in coal-fired power generation, pending environmental regulations could derail coal’s comeback.

“This change, however, will not be a coal renaissance in the electric power sector since new and pending regulations by the Environmental Protection Agency (EPA) will ensure no new coal-fired plants are built and older coal-fired plants will find it uneconomic to continue operating because of increasingly-stringent EPA regulations,” according to the Institute for Energy Research.

“Lower‐than‐projected natural gas prices along with the industry’s response to future environmental regulations could cause the coal share of total generation to fall below this forecast,” EIA administrator Adam Sieminski told Congress.

New regulations promulgated by the Obama administration make it uneconomical to build a coal-fired power plant. Plants will have to upgrade their pollution control technology if it makes economic sense, switch to burning natural gas, or shut down.

According to the the American Coalition for Clean Coal Electricity, more than 280 coal-fired generating units are slated to be shut down partly due to stricter EPA regulations.

“Regrettably, the number of coal units being forced to close continues to grow,” said Mike Duncan, president and CEO of ACCCE. “Yet, EPA continues to downplay the damage its regulations are causing to the U.S. economy and to the many states that depend on coal for jobs and affordable electricity.”

A report last year by the National Economic Research Associates found that seven major EPA regulations would cost the electrical sector $16.7 billion per year and cause 887,000 job losses per year. These regulations would also contribute to the shutdown of 69,000 megawatts of coal-fired power.

The EPA recently delayed finalizing a new rule that would limit carbon dioxide emissions from power plants. The rule would limit emissions to 1,000 pounds-per-megawatt-hour — standards only combined-cycle power plants that are powered by natural gas can meet.

To comply with the new standards, coal plants would have to use carbon capture and sequestration technology, which the industry argues is not commercially viable.

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