- Email: [email protected]
The Road Recently Less Traveled: Public Policy Influences on Coal's Path Forward
Janet Gellici is Chief Executive Officer of the American Coal Council. The ACC’s primary objective is to advance the commercial interests of its member companies, including the development and utilization of American coal as an economic, abundant and environmentally sound fuel source (www.americancoalcouncil.org). Ms. Gellici has served as Communications Director of the Colorado School of Mines’ Management Institute and as Public Information Director of the Western Governors’ Association. In 1998, she was appointed by the U.S. Secretary of Energy to serve on the National Coal Council (NCC), an advisory group to the Secretary of Energy. She currently serves on the NCC Executive Committee and Coal Policy Committee, is a past president and board member of the Washington Coal Club, and serves on the board of directors of the Women’s Mining Coalition. Ms. Gellici is a Certified Association Executive (CAE) and holds an MBA from Regis University.
32
The Road Recently Less Traveled: Public Policy Influences on Coal’s Path Forward A clear path toward enhanced use of abundant domestic coal resources was established by the U.S. government and industry in the 1970s, but more recently that path has become less traveled, overgrown with the underbrush of environmental rules, cheap natural gas, renewable energy mandates, and economic downturns. As we look ahead, taking the path recently less traveled may make all the difference to our nation’s future energy security. Janet Gellici
I. Introduction Coal hasn’t always been a vilified energy resource in our nation. To the contrary, the U.S. coal industry’s response to meeting increased demand for electric power and industrial energy in the 1970s was a contribution much heralded by our citizens and businesses. In October 1973, the Organization of Petroleum
Exporting Countries (OPEC) announced it would be raising the price of oil by 70 percent to $5.11 a barrel (can you imagine!), imposing an oil embargo and curtailing exports in response to political unrest in the Middle East. Use of oil as a weapon resulted in quadrupling of the price of oil to $12 per barrel by 1974 and sent ripples throughout the economies of oil-importing nations.
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
In the U.S., the price of gasoline rose from about 38 cents in May 1973 to 55 cents in June 1974, citizens were asked not to put up Christmas lights, President Nixon requested that gas stations voluntarily refrain from selling gas on the weekends, and a national speed limit of 55 mph was instituted. Gas rationing and market controls were imposed in an effort to conserve supplies of oil and gas and contain prices. he effects of this energy crisis spilled over to the electric power sector in the form of the Powerplant and Industrial Fuel Use Act of 1978 (FUA), which restricted construction of power plants using oil or natural gas as a primary fuel source. FUA encouraged the use of coal, nuclear energy and other alternative fuels. The Act also restricted the use of oil and gas in large industrial boilers. (FUA was repealed, in part, in 1987 by the Natural Gas Utilization Act, opening the door for development of natural gas and oil-fired electric plants and industrial boilers.) The importance of coal’s role in providing the U.S. with electric power was reinforced by the unfortunate Three Mile Island nuclear incident in March 1979. The partial meltdown at the Pennsylvania plant represented a turning point in the global development of nuclear power, resulting in a significant decrease in plant construction. It was during this time that the coal industry established a foothold in U.S. power
T
March 2013, Vol. 26, Issue 2
generation, bolstered by government policies and driven by good old-fashioned American capitalism. The stellar coal industry response to meeting our national energy needs included development of the Powder River Basin in the western U.S., providing a cost-effective solution to meeting Clean Air Act emissions requirements through the use of low-sulfur, subbituminous coal. The coal supply
Today, the growth in coal generation has stalled, coal mines are closing, and railcar and barge loadings of coal are down.
industry also responded with technological innovations in the form of state-of-the-art high-wall mining, long-wall mining, and drag-line equipment which enhanced productivity and the availability of inexpensive coal for electric power. or its part, the U.S. utility industry responded to the clarion call by developing and employing technologies that significantly decreased power plant emissions, including lowNOx burners, FGD scrubbers, electrostatic precipitators, and selective/non-selective catalytic reduction equipment. Since enactment of the Clean Air Act in
F
1970, coal use in the U.S. has more than tripled while emissions of criteria pollutants have decreased by an average of 90 percent.1 U.S. rail, barge, and port facilities, providing a vital link between coal suppliers and coal consumers, also contributed to the cause through technology and productivity improvements in railcars and rail crews, barge equipment, and expansion of inland waterway terminal facilities with blending capabilities. Those in the financial sector joined in as coal buyers and sellers established trading practices and standards to streamline sales transactions across the nation. So, from the hole in the ground to the plug in the wall, the U.S. coal industry responded at a time when our nation most needed an abundant, affordable, and environmentally sound energy resource. Today, the growth in coal generation has stalled, coal mines are closing, and railcar and barge loadings of coal are down. How is it that such a well-worn path has become less trodden?
II. Where We Stand Today Three primary factors account for the recent downturn in the coal industry: a. A stubborn recession that has significantly eroded power demand; b. Abundant and inexpensive domestic supplies of natural gas have been uncovered; and
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
33
c. Public policies targeted at coal production and generation that have hampered coal’s competitiveness. A record buildout of new coalbased electric capacity took place during the 1970s and through the mid-1980s. Throughout the 1990s, however, new coal power plant construction fell off significantly, primarily in response to the growth of natural gas power plants following passage of the 1987 Natural Gas Utilization Act and utility deregulation initiatives at the state level. Coal capacity additions have been minimal throughout the 21st century, with the exception of a spike in 2009 when 6 GW of new coal generation came on line,2 primarily due to natural gas pricing and uncertainty associated with regulations impacting coal supply and utility air emissions. As recently as 1993, coal-based generation fueled 53 percent of U.S. power generation; in 2011 coal’s share was 42 percent and is projected at 39 percent for 2012.3 Coal-to-gas switching and retirement of older, smaller, less efficient coal units, either through normal attrition or in response to regulatory compliance mandates, have resulted in the actual and announced idling of between 25 and 40 GW of coal generating capacity.4 Some analysts are projecting that coal retirements could approach 80 GW should natural gas prices remain low.5 In a recent presentation, National Mining Association (NMA) President and CEO Hal Quinn 34
noted that 45 percent of the existing coal-fueled capacity was at risk of retiring by 2018 under pending regulations.6 ecreased power demand and fuel switching have impacted U.S. coal production as well; suppliers have idled or shuttered production to rationalize operations in light of current market conditions. NMA notes a 200 million ton decrease in utility demand for coal since 2008
D
Coal capacity additions have been minimal throughout the 21st century, with the exception of a spike in 2009.
and Argus Media recently reported a third-quarter decrease of 40 percent from comparables in 2008.7 Hardest hit has been the Central Appalachian supply region, which has experienced a 22 percent production decrease in Q3 2012 versus 2008. Northern Appalachian Q3 production was down nearly 9 percent since 2008, Powder River Basin down 13 percent, and Western Bituminous basins in Colorado and Utah were down 20 percent. The one bright spot has been the Illinois Basin, which experienced a 24 percent increase in production in Q3 2012 versus 2008.
Another recent boon for U.S. coal producers has been the growth in export markets. A record 123 million short tons was exported in 2012, up from 111 mst in 2011 and besting the former record of 112 mst set in 1981. The extent to which the U.S. can more actively participate in the burgeoning global market for coal will hinge in large part on the ability to build and enhance export port capacity. That has become a political issue, adding yet another political hurdle to the many currently confronting the coal industry.
III. Politics As Usual Economic conditions can be improved upon and markets are already beginning to show signs of rationalizing the natural gas supply–demand–price balance. Public policy impacts on the coal industry, however, are less manageable and certainly less predictable. For the past four years, the Obama Administration has pursued an aggressive regulatory agenda, especially in energy and environmental areas impacting coal production and coal generation.8 The de´ja` vu results of the recent election portend a ‘‘more of the same’’ outlook with the anticipation that the Republicancontrolled House and the Democratic-controlled Senate will remain gridlocked on energy and environmental issues while the Executive Branch advances policy objectives through regulation. It
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
seems destined that policy will continue to be dictated by the courts in what’s become a familiar pattern of ‘‘sue and settle.’’ The return of President Obama to the White House may revitalize an energy and environmental regulatory agenda, one that had been put on hold in the months leading up to the November 2012 election because it was deemed to be too controversial. Some have suggested that there will be less restraint in advancing regulations in a lame duck Administration, and certainly a divided Congress removes potential legislative restraints to curtailing enthusiastic Executive Branch initiatives. It’s likely, however, that at least for the next two years, economic considerations will prevail, trumping other objectives and perhaps effecting a much sought after balance between social, economic, and environmental goals. et to be determined at the time of this writing is appointments to top positions at the Department of Energy (DOE), Department of the Interior (DOI), and the Environmental Protection Agency (EPA). The Administration’s nominations for these key posts will be telling and provide insights into how assertive the President intends to be in his final term on economic, energy and environmental issues. Stay tuned. The Obama Administration has, throughout the election campaign, been advocating an ‘‘all of the above’’ (AOTA) energy policy with the national security
Y
March 2013, Vol. 26, Issue 2
objective of achieving energy selfsufficiency. The key question is will coal be considered an equal partner in an AOTA energy strategy? Are we willing, in the words of Rep. Fred Upton (Mich.) to consider the merits of an ‘‘all may compete’’ energy policy in the interest of providing our citizens and businesses with affordable energy options?9 A case in point. The President’s Blueprint for a
It’s likely that, at least for the next two years, economic considerations will prevail, trumping other objectives.
Secure Energy Future states that: ‘‘The implementation of clean, state-of-the-art coal-based technologies will help insure America’s energy security.’’10 The coal industry is fully supportive of this approach and will continue to work with the Administration toward achieving this objective. The Administration’s first-term spate of regulations, however, has effectively been limiting U.S. energy options, curtailing construction of new, more efficient coal plants that can replace aging and retiring units and foster the development and deployment of cleaner coal
technologies in domestic and international markets. As the President himself said in his 2013 inaugural address,11 ‘‘The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition, we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries, we must claim its promise.’’ The President also renewed his commitment to combating global warming, noting that ‘‘We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.’’ he logical extension in pursuit of these objectives would be support for the development of technologies that reduce carbon emissions, including cleaner, more efficient supercritical and ultrasupercritical coal power plants, as well as carbon capture utilization and storage (CCUS). Supercritical and ultra-supercritical power plants offer improved efficiencies that result in CO2 emissions rates that are up to 25 percent below the average of the existing U.S. coal fleet and more than 40 percent below the oldest plants being replaced.12 Efficiency boosts at existing coal power plants are immediately attainable through retrofit technologies and O&M upgrades such as combustion improvements and enhanced heat transfer. In 2001, the National Coal Council (NCC) identified an
T
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
35
additional 40,000 MW of electricity production capability that could be immediately brought on line through the installation of standard improvements and clean coal technologies.13 Finally, in its most recent study for Energy Secretary Chu, NCC reported that ‘‘advanced coal technology, coupled with capturing carbon emissions for use in EOR (enhanced oil recovery), could lead to annual revenues of $200 billion in industry sales and $60 billion in federal, state, and local taxes, and to the creation of over 1 million jobs. Further, we could reduce our imports of petroleum by over 6 million barrels per day, thereby increasing our energy independence, and reduce carbon emissions equivalent to almost 100 gigawatts of coal-based electric power.’’14 There is a growing consensus that climate goals cannot be achieved without the development and deployment of CCUS technologies. The fact that the U.S. is currently experiencing a shortage of CO2 for EOR applications and the tremendous potential of EOR to reclaim stranded domestic oil reserves suggests that now is the time to renew our efforts for CCUS RDD&D. In fact, on Jan. 1, 2013, the International Energy Agency (IEA) renewed its call for action to accelerate the deployment of carbon capture and storage, noting that ‘‘Despite all the attention given to renewable 36
energy, fossil fuels still produce about four-fifths of the energy consumed worldwide. And there is only one way to burn fossil fuels without adding more CO2 to the atmosphere: carbon capture and storage (CCS).’’15 Juho Lipponen, head of the IEA Carbon Capture and Storage Technology Unit, was also quoted in the referenced article noting that ‘‘For the IEA, carbon capture and storage is not a substitute, but a necessary
There is a growing consensus that climate goals cannot be achieved without the development and deployment of CCUS technologies.
addition to other low-carbon energy technologies and energy efficiency improvements.’’ IEA supports CCS for both new plants and retrofits for the existing global fossil fuel fleet (oil, coal and natural gas) as a necessary component of meeting international GHG emissions reduction goals. iven this backdrop, regulations that discourage the development of CCUS seem to fly in the face of logic. Yet in the first quarter of 2013, EPA is expected to finalize New Source Performance Standards (NSPS) for greenhouse gas (GHG) emissions for new power plants.
G
This, in turn, will trigger an obligation for EPA to promulgate an NSPS rule for existing plants, an initiative being strongly advanced by environmental NGOs. The currently proposed NSPS require new fossil fuel (coal and natural gas) electric generating units (EGUs) to emit less than 1,000 lb of CO2 per MWh. According to EPA, 95 percent of all natural gas combined cycle (NGCC) power plants presently meet this standard; no existing coal plants even come close to doing so (the more efficient coal units emit about 1,800 lb CO2/ MWh on average). New coal plants could meet the standard if equipped with CCS technology but that would add anywhere from 35 percent (for a new integrated gasification combined cycle, or IGCC, facility) to 80 percent (for a new pulverized coal plant) to the cost of the plant. Obviously, these regulatory standards and compliance costs effectively preclude the building of new coal generation and severely constrict the deployment of supercritical and ultrasupercritical technologies. Despite the entrenched Congressional gridlock, Press Secretary Jay Carney has acknowledged that President Obama will pursue both legislative and regulatory approaches to advance his climate change agenda. Many feel the likelihood and need for a legislative approach to climate change is moot, most notably Sen. Barbara Boxer (Calif.), chair of the
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
Senate Environment Committee. In response to queries on the prospects for a climate change bill in the 113th Congress, Senator Boxer responded that ‘‘There doesn’t have to be a bill. I’m telling you right now, EPA has the authority in the transportation sector, the electricity sector, and the industrial sector under the Clean Air Act’’ to do everything that legislation might otherwise do.16 A regulatory agenda will rule on climate issues. he prospect of a carbon tax ‘‘solution’’ to climate change has also reared its head, most recently in discussions related to the Fiscal Cliff situation. In December 2012, it was bandied around not necessarily as a fix to the carbon ‘‘problem’’ but as a prospective revenue generator. With round two of the Fiscal Cliff debate pending this spring, we may yet see renewed efforts on this front. EPA’s primary focus over the past four years has been on air regulations, many of which are currently in litigation. One that recently made it out of the courts was the Cross-State Air Pollution Rule (CSAPR), which was originally issued by EPA in July 2011. On Jan. 24, the U.S. Circuit Court of Appeals in the District of Columbia declined petitions by EPA and various states, cities and environmental groups for a rehearing en banc of the threejudge panel which had vacated the rule in August 2012 on the basis that EPA had exceeded its authority in creating CSAPR. Under CSAPR, 28 states would
have been required to reduce their cross-state power plant emissions of sulfur dioxide (SO2) and nitrogen oxide (NOx). No word yet on whether EPA intends to pursue its final avenue of recourse in the Supreme Court. Rulings on EPA’s capstone air regulation, the Mercury Air Toxics Standard (MATS), are expected in 2013 as well. Initially
W
T
March 2013, Vol. 26, Issue 2
to 23 GW of coal plant retirements by 2015.17 On Jan. 22, EPA filed its brief in response to those filed by petitioners in opposition to MATS, principally refuting that its proposed rule is scientifically flawed and that the Agency violated notice and comment period requirements. EPA hopes to finalize the rule as early as March 2013, pending the court’s ruling. ater is the new air. EPA is expected to set its sights and its pen on water regulations in 2013 and move to gain increased oversight authority under the Clean Water Act (CWA). Regulation of existing utility cooling water intakes (CWA 316 b) is expected to be finalized in June 2013. In January, EPA reported that it had sent to the Office of Management and Budget a draft proposal for utility wastewater effluent guidelines, regulation of which is subject to an April 2013 deadline. In the mining sector, efforts to finalize the Stream Protection Rule – which replaces the 2008 Stream Buffer Zone (SBZ) rule – may be revived. The rule is being promulgated by the Office of Surface Mining Reclamation and Enforcement (OSM) in an effort to ‘‘better protect streams from the adverse effects of coal mining’’18 and is being undertaken in cooperation with the Department of Interior, EPA and U.S. Army Corps of Engineers. In its more recent incarnations, the SBZ rule targets coal – just coal, no other industries – in six
proposed in December 2011, the MATS regulation requires both existing and new coal power plants to install emission controls for hazardous air pollutants by 2015, with some limited time extensions permitted. EPA has estimated that the annual cost of MATS will be $9.6 billion in 2015; an estimate of the total cost of the rule has not been provided by EPA. In an analysis conducted by NERA Economic Consulting for the American Coalition for Clean Coal Electricity (ACCCE), the annual cost of the regulation was projected to be $10.4 billion in 2015, total compliance costs $94.8 billion, peak year job losses 180,000 to 215,000 in 2015, and up
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
37
Appalachian states – just six coal mining states, no others. The pending rule will be closely watched in terms of the extent of authority it confers on EPA versus the Corps and state governments. The concern is grounded in precedence. In March 2012, the courts ruled that EPA had exceeded its authority when it revoked a Clean Water Act permit for Arch Coal’s Spruce Mountain Mine No. 1 in Logan County, W. Va. Sen. Joe Manchin (W. Va.) has already announced that among his legislative priorities for 2013 are plans to re-introduce a bill that would limit EPA’s authority under the Clean Water Act to veto dredge-and-fill permits (CWA 404c) issued by the Corps. A final rule from EPA on the regulation of coal ash (Disposal of Coal Combustion Residuals from Electric Utilities) was postponed yet again during the pre-election run up and it remains unclear when, or if, we’ll see any activity this year. The delayed ruling has created some strange bedfellows united in an effort to secure a final ruling on this issue in a timely fashion. Environmental groups and industry are both pushing for a decision to be made sooner than later, albeit for different reasons. nvironmental NGOs are advocating for a rule that would designate coal ash as a hazardous waste under Subtitle C of the Resource Conservation and Recovery Act of 1976 (RCRA); their urgency relates to wanting to get on with the job of curtailing coal generation literally at the back door of the utility plant.
E
38
Industry groups, on the other hand, are advocating for a nonhazardous designation (RCRA Subtitle D) in keeping with EPA’s prior two such rulings. Industry is eager to have a final decision to counter the spiraling demand destruction for beneficially used ash that has resulted from the delayed rulemaking. Engineers, concrete manufacturers,
safety program launched in 2012 by the National Mining Association – CORESafety – coal producers have established a goal of 0:50:5 – zero fatalities and a 50 percent reduction in the rate of mining injuries within five years.19 More than 125,000 coal and hardrock mining employees are currently participating in the CORESafety program which relies on a management system designed to prevent accidents before they happen.
IV. The Path Ahead
contractors, and state governments are less inclined to commit to using coal ash beneficially without assurances that their ash-containing products will not be classified as hazardous somewhere down the road. Regulatory limbo is not good for business. A non-hazardous designation ruling has strong bipartisan support in both the House and Senate. Efforts are anticipated in both chambers to expedite a ruling. For coal miners, 2012 was the second safest year on record; there were 19 unfortunate fatalities last year – one more than the record low of 18 in 2009. Through a new industry initiated
Coal is an essential component of a secure and balanced energy portfolio for U.S. utility and industrial consumers. It promotes fuel diversity and inter-fuel competition, and advances our nation’s job and economic growth objectives. NMA expects improving conditions for U.S. coal consumption and production in 2013.20 The Association projects a 5.4 percent increase in domestic coal consumption in 2013 (versus 2012), with coal accounting for 40.5 percent of domestic electricity generation in 2013 (versus 39 percent in 2012). NMA expects U.S. coal to benefit from recent and planned construction of higher-efficiency power plants with higher output rates and lower emissions. Following attrition of announced coal plant retirements, it’s expected that the remaining coal fleet will be larger, more efficient, and will run at higher capacity, potentially
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
recovering 100 million tons of U.S. coal production lost to retirement of older units. omestic coal consumption growth will also occur in response to new demand from recent and forthcoming fleet additions, including: Prairie State’s Energy Campus (1,600 MW) supercritical coal plant that became operational in 2012. American Electric Power’s (600 MW) ultra-supercritical Turk coal plant in Arkansas that came on line in December 2012. Duke’s Cliffside new Unit #6 (825 MW) that came into service year-end 2012. Power4Georgians (850 MW) supercritical pulverized coal plant in Washington County, Ga., slated to start construction in April 2013. Duke Energy’s (618 MW) IGCC plant in Edwardsport, Ind., scheduled to come on line mid2013. Mississippi Power’s (582 MW) IGCC plant in Kemper County scheduled to commence operations in mid-2014. There is also significant potential for U.S. coal suppliers to service international demand for coal, especially in booming Asia markets. In its Medium-Term Coal Market Report released in December 2012, the International Energy Agency (IEA) noted that ‘‘coal demand is growing everywhere but the United States.’’21 The Agency projects that by 2017, coal will surpass oil as the world’s top energy source. China and India will account for
D
March 2013, Vol. 26, Issue 2
almost three-quarters of projected non-OECD coal demand growth through 2035; by 2025, India is expected to overtake the U.S. as the world’s second-largest coal consumer. merging Asian economies are using abundant, affordable coal resources not only to advance their economic objectives and improve the lives
E
of their citizens; they’re also installing advanced coal plants to improve the environment. By 2015, 50 percent of the world’s most efficient coal power plants will be located in China and India.22 The ability of the U.S. to compete in these international markets will, as noted earlier, depend on the success of industry’s efforts to expand existing and develop new export port facilities. In its 2013 forecast, NMA projects a 10 percent decline in U.S. exports, from 123 million tons in 2012 to 111 million tons in 2013. It will also depend on political and industry support for development of clean energy technologies that can advance the
environmental objectives of the U.S. and developing countries. The potential exists to significantly enhance U.S. coal and coal technology exports in support of President Obama’s National Export Initiative.23
V. The Last Word Coal creates wealth and social progress which enhances environmental stewardship. In nine reports that it has prepared by the Secretary of Energy since 2000, the National Coal Council has documented a clear vision for coal in the 21st Century. These reports define a path forward based on energy efficiency and clean coal technologies that will advance U.S. economic, energy and environmental objectives. That technology path includes taking the following steps toward achieving a near-zero emissions goal: 1. Efficiency improvements at existing plants; 2. Building new supercritical and ultra-supercritical plants; 3. Demonstrating and deploying IGCC and carbon capture utilization and storage; 4. Advancing carbon capture utilization and storage and Btu conversion; 5. Retrofitting existing coalbased generation with carbon capture/storage up to 90 percent lower CO2; and 6. CO2-enhanced oil recovery, producing 4 million b/d. Failure to tend and nurture the path toward energy
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
39
self-sufficiency that is afforded by domestic U.S. coal resources is a folly we cannot afford to indulge. It’s a failure that will indeed, in the words of President Obama, ‘‘betray our children and future generations.’’& I shall be telling this with a sigh Somewhere ages and ages hence: Two roads diverged in a wood, and I, I took the one less traveled by, And that has made all the difference. – Robert Frost
Endnotes: 1. Benefits from Investments in Clean Coal Technology, Coal Utilization Research Council, June 2011, at http: //www.coal.org/userfiles/file/ FINAL%20Benefits%20of%20 Investment%20in%20Coal%20 RD&D.pdf. 2. Tracking New Coal-Fired Power Plants, National Energy Technology Laboratory, Office of Strategic Energy Analysis & Planning, Erik Shuster, Jan. 13, 2012. 3. Annual Energy Outlook 2013 Early Release, Energy Information Administration, U.S. Dept. of Energy, Dec. 2012. 4. EPA Misery Index Coal Plant Retirements Due to EPA Regulations, Count on Coal, National Mining Association, at www.countoncoal.org. 5. Utility Regulatory Update: Implications & Strategic Considerations for Compliance, Block Andrews and Mike Borgstadt, P.E., Burns &
40
McDonnell Engineering Co., presentation at American Coal Council Coal Market Strategies Conference, Aug. 2012. 6. The World Economy Rebounds with Coal, Hal Quinn, National Mining Association presentation at United States Energy Assn., Jan. 16, 2013. 7. State of the Coal Industry 2013: Cautious Optimism – and Healthy Realism, Ross Allen, Argus Media, presentation at American Coal Council Coal Q&A Web cast, Jan. 24, 2013. 8. According to the Heritage Foundation, President Obama has created more regulations with an estimated cost of $100 million or more annually than any other president in U.S. history. Obama Tops Bush with More, Costlier Regulations, Heritage Foundation, March 18, 2012, at http:// blog.heritage.org/2012/03/18/chartof-the-week-obama-tops-bush-withmore-costlier-major-regulations/ 9. My Op-Ed: Rethinking America’s Energy Policy, Rep. Fred Upton, Upton for all of US, April 10, 2012. 10. The Blueprint for a Secure Energy Future, The White House, March 2012. 11. Inaugural Address by President Obama, Jan. 21, 2013. 12. Coal Related Greenhouse Gas Management Issues, National Coal Council, May 2003. 13. Increasing Electricity Available from Coal-Fired Generation in the Near-Term, National Coal Council, May 2001. 14. Harnessing Coal’s Carbon Content to Advance the Economy, Environment, and Energy
Security, National Coal Council, June 2012. 15. CCS is a Necessity for a World Hooked on Fossil Fuels, International Energy Agency, Jan. 1, 2013. 16. The Real Obama Climate Deal, ST. J., Jan. 25, 2013.
WALL
17. NERA Economic Consulting, An Economic Impact Analysis of EPA’s Mercury and Air Toxics Standards Rule, March 1, 2012. 18. Building a Stream Protection Rule, Office of Surface Mining Reclamation and Enforcement. 19. CORESafety, National Mining Association, at http://www. coresafety.org/ 20. Coal Production & Consumption Forecast – 2013, National Mining Association, Jan. 2013. 21. Medium-Term Coal Market Report 2012 Factsheet, International Energy Agency, Dec. 2012. 22. IEA: Coal Will Be the World’s Dominant Fuel by 2030, ENERGYFACTSWEEKLY, Jan. 22, 2013, at www.energy-facts.org. 23. ‘‘We need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America . . . We will double our exports over the next five years, an increase that will support 2 million jobs in America . . . We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.’’ President Barack Obama, State of the Union Address, 2010.
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
32
The Road Recently Less Traveled: Public Policy Influences on Coal’s Path Forward A clear path toward enhanced use of abundant domestic coal resources was established by the U.S. government and industry in the 1970s, but more recently that path has become less traveled, overgrown with the underbrush of environmental rules, cheap natural gas, renewable energy mandates, and economic downturns. As we look ahead, taking the path recently less traveled may make all the difference to our nation’s future energy security. Janet Gellici
I. Introduction Coal hasn’t always been a vilified energy resource in our nation. To the contrary, the U.S. coal industry’s response to meeting increased demand for electric power and industrial energy in the 1970s was a contribution much heralded by our citizens and businesses. In October 1973, the Organization of Petroleum
Exporting Countries (OPEC) announced it would be raising the price of oil by 70 percent to $5.11 a barrel (can you imagine!), imposing an oil embargo and curtailing exports in response to political unrest in the Middle East. Use of oil as a weapon resulted in quadrupling of the price of oil to $12 per barrel by 1974 and sent ripples throughout the economies of oil-importing nations.
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
In the U.S., the price of gasoline rose from about 38 cents in May 1973 to 55 cents in June 1974, citizens were asked not to put up Christmas lights, President Nixon requested that gas stations voluntarily refrain from selling gas on the weekends, and a national speed limit of 55 mph was instituted. Gas rationing and market controls were imposed in an effort to conserve supplies of oil and gas and contain prices. he effects of this energy crisis spilled over to the electric power sector in the form of the Powerplant and Industrial Fuel Use Act of 1978 (FUA), which restricted construction of power plants using oil or natural gas as a primary fuel source. FUA encouraged the use of coal, nuclear energy and other alternative fuels. The Act also restricted the use of oil and gas in large industrial boilers. (FUA was repealed, in part, in 1987 by the Natural Gas Utilization Act, opening the door for development of natural gas and oil-fired electric plants and industrial boilers.) The importance of coal’s role in providing the U.S. with electric power was reinforced by the unfortunate Three Mile Island nuclear incident in March 1979. The partial meltdown at the Pennsylvania plant represented a turning point in the global development of nuclear power, resulting in a significant decrease in plant construction. It was during this time that the coal industry established a foothold in U.S. power
T
March 2013, Vol. 26, Issue 2
generation, bolstered by government policies and driven by good old-fashioned American capitalism. The stellar coal industry response to meeting our national energy needs included development of the Powder River Basin in the western U.S., providing a cost-effective solution to meeting Clean Air Act emissions requirements through the use of low-sulfur, subbituminous coal. The coal supply
Today, the growth in coal generation has stalled, coal mines are closing, and railcar and barge loadings of coal are down.
industry also responded with technological innovations in the form of state-of-the-art high-wall mining, long-wall mining, and drag-line equipment which enhanced productivity and the availability of inexpensive coal for electric power. or its part, the U.S. utility industry responded to the clarion call by developing and employing technologies that significantly decreased power plant emissions, including lowNOx burners, FGD scrubbers, electrostatic precipitators, and selective/non-selective catalytic reduction equipment. Since enactment of the Clean Air Act in
F
1970, coal use in the U.S. has more than tripled while emissions of criteria pollutants have decreased by an average of 90 percent.1 U.S. rail, barge, and port facilities, providing a vital link between coal suppliers and coal consumers, also contributed to the cause through technology and productivity improvements in railcars and rail crews, barge equipment, and expansion of inland waterway terminal facilities with blending capabilities. Those in the financial sector joined in as coal buyers and sellers established trading practices and standards to streamline sales transactions across the nation. So, from the hole in the ground to the plug in the wall, the U.S. coal industry responded at a time when our nation most needed an abundant, affordable, and environmentally sound energy resource. Today, the growth in coal generation has stalled, coal mines are closing, and railcar and barge loadings of coal are down. How is it that such a well-worn path has become less trodden?
II. Where We Stand Today Three primary factors account for the recent downturn in the coal industry: a. A stubborn recession that has significantly eroded power demand; b. Abundant and inexpensive domestic supplies of natural gas have been uncovered; and
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
33
c. Public policies targeted at coal production and generation that have hampered coal’s competitiveness. A record buildout of new coalbased electric capacity took place during the 1970s and through the mid-1980s. Throughout the 1990s, however, new coal power plant construction fell off significantly, primarily in response to the growth of natural gas power plants following passage of the 1987 Natural Gas Utilization Act and utility deregulation initiatives at the state level. Coal capacity additions have been minimal throughout the 21st century, with the exception of a spike in 2009 when 6 GW of new coal generation came on line,2 primarily due to natural gas pricing and uncertainty associated with regulations impacting coal supply and utility air emissions. As recently as 1993, coal-based generation fueled 53 percent of U.S. power generation; in 2011 coal’s share was 42 percent and is projected at 39 percent for 2012.3 Coal-to-gas switching and retirement of older, smaller, less efficient coal units, either through normal attrition or in response to regulatory compliance mandates, have resulted in the actual and announced idling of between 25 and 40 GW of coal generating capacity.4 Some analysts are projecting that coal retirements could approach 80 GW should natural gas prices remain low.5 In a recent presentation, National Mining Association (NMA) President and CEO Hal Quinn 34
noted that 45 percent of the existing coal-fueled capacity was at risk of retiring by 2018 under pending regulations.6 ecreased power demand and fuel switching have impacted U.S. coal production as well; suppliers have idled or shuttered production to rationalize operations in light of current market conditions. NMA notes a 200 million ton decrease in utility demand for coal since 2008
D
Coal capacity additions have been minimal throughout the 21st century, with the exception of a spike in 2009.
and Argus Media recently reported a third-quarter decrease of 40 percent from comparables in 2008.7 Hardest hit has been the Central Appalachian supply region, which has experienced a 22 percent production decrease in Q3 2012 versus 2008. Northern Appalachian Q3 production was down nearly 9 percent since 2008, Powder River Basin down 13 percent, and Western Bituminous basins in Colorado and Utah were down 20 percent. The one bright spot has been the Illinois Basin, which experienced a 24 percent increase in production in Q3 2012 versus 2008.
Another recent boon for U.S. coal producers has been the growth in export markets. A record 123 million short tons was exported in 2012, up from 111 mst in 2011 and besting the former record of 112 mst set in 1981. The extent to which the U.S. can more actively participate in the burgeoning global market for coal will hinge in large part on the ability to build and enhance export port capacity. That has become a political issue, adding yet another political hurdle to the many currently confronting the coal industry.
III. Politics As Usual Economic conditions can be improved upon and markets are already beginning to show signs of rationalizing the natural gas supply–demand–price balance. Public policy impacts on the coal industry, however, are less manageable and certainly less predictable. For the past four years, the Obama Administration has pursued an aggressive regulatory agenda, especially in energy and environmental areas impacting coal production and coal generation.8 The de´ja` vu results of the recent election portend a ‘‘more of the same’’ outlook with the anticipation that the Republicancontrolled House and the Democratic-controlled Senate will remain gridlocked on energy and environmental issues while the Executive Branch advances policy objectives through regulation. It
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
seems destined that policy will continue to be dictated by the courts in what’s become a familiar pattern of ‘‘sue and settle.’’ The return of President Obama to the White House may revitalize an energy and environmental regulatory agenda, one that had been put on hold in the months leading up to the November 2012 election because it was deemed to be too controversial. Some have suggested that there will be less restraint in advancing regulations in a lame duck Administration, and certainly a divided Congress removes potential legislative restraints to curtailing enthusiastic Executive Branch initiatives. It’s likely, however, that at least for the next two years, economic considerations will prevail, trumping other objectives and perhaps effecting a much sought after balance between social, economic, and environmental goals. et to be determined at the time of this writing is appointments to top positions at the Department of Energy (DOE), Department of the Interior (DOI), and the Environmental Protection Agency (EPA). The Administration’s nominations for these key posts will be telling and provide insights into how assertive the President intends to be in his final term on economic, energy and environmental issues. Stay tuned. The Obama Administration has, throughout the election campaign, been advocating an ‘‘all of the above’’ (AOTA) energy policy with the national security
Y
March 2013, Vol. 26, Issue 2
objective of achieving energy selfsufficiency. The key question is will coal be considered an equal partner in an AOTA energy strategy? Are we willing, in the words of Rep. Fred Upton (Mich.) to consider the merits of an ‘‘all may compete’’ energy policy in the interest of providing our citizens and businesses with affordable energy options?9 A case in point. The President’s Blueprint for a
It’s likely that, at least for the next two years, economic considerations will prevail, trumping other objectives.
Secure Energy Future states that: ‘‘The implementation of clean, state-of-the-art coal-based technologies will help insure America’s energy security.’’10 The coal industry is fully supportive of this approach and will continue to work with the Administration toward achieving this objective. The Administration’s first-term spate of regulations, however, has effectively been limiting U.S. energy options, curtailing construction of new, more efficient coal plants that can replace aging and retiring units and foster the development and deployment of cleaner coal
technologies in domestic and international markets. As the President himself said in his 2013 inaugural address,11 ‘‘The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition, we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries, we must claim its promise.’’ The President also renewed his commitment to combating global warming, noting that ‘‘We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.’’ he logical extension in pursuit of these objectives would be support for the development of technologies that reduce carbon emissions, including cleaner, more efficient supercritical and ultrasupercritical coal power plants, as well as carbon capture utilization and storage (CCUS). Supercritical and ultra-supercritical power plants offer improved efficiencies that result in CO2 emissions rates that are up to 25 percent below the average of the existing U.S. coal fleet and more than 40 percent below the oldest plants being replaced.12 Efficiency boosts at existing coal power plants are immediately attainable through retrofit technologies and O&M upgrades such as combustion improvements and enhanced heat transfer. In 2001, the National Coal Council (NCC) identified an
T
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
35
additional 40,000 MW of electricity production capability that could be immediately brought on line through the installation of standard improvements and clean coal technologies.13 Finally, in its most recent study for Energy Secretary Chu, NCC reported that ‘‘advanced coal technology, coupled with capturing carbon emissions for use in EOR (enhanced oil recovery), could lead to annual revenues of $200 billion in industry sales and $60 billion in federal, state, and local taxes, and to the creation of over 1 million jobs. Further, we could reduce our imports of petroleum by over 6 million barrels per day, thereby increasing our energy independence, and reduce carbon emissions equivalent to almost 100 gigawatts of coal-based electric power.’’14 There is a growing consensus that climate goals cannot be achieved without the development and deployment of CCUS technologies. The fact that the U.S. is currently experiencing a shortage of CO2 for EOR applications and the tremendous potential of EOR to reclaim stranded domestic oil reserves suggests that now is the time to renew our efforts for CCUS RDD&D. In fact, on Jan. 1, 2013, the International Energy Agency (IEA) renewed its call for action to accelerate the deployment of carbon capture and storage, noting that ‘‘Despite all the attention given to renewable 36
energy, fossil fuels still produce about four-fifths of the energy consumed worldwide. And there is only one way to burn fossil fuels without adding more CO2 to the atmosphere: carbon capture and storage (CCS).’’15 Juho Lipponen, head of the IEA Carbon Capture and Storage Technology Unit, was also quoted in the referenced article noting that ‘‘For the IEA, carbon capture and storage is not a substitute, but a necessary
There is a growing consensus that climate goals cannot be achieved without the development and deployment of CCUS technologies.
addition to other low-carbon energy technologies and energy efficiency improvements.’’ IEA supports CCS for both new plants and retrofits for the existing global fossil fuel fleet (oil, coal and natural gas) as a necessary component of meeting international GHG emissions reduction goals. iven this backdrop, regulations that discourage the development of CCUS seem to fly in the face of logic. Yet in the first quarter of 2013, EPA is expected to finalize New Source Performance Standards (NSPS) for greenhouse gas (GHG) emissions for new power plants.
G
This, in turn, will trigger an obligation for EPA to promulgate an NSPS rule for existing plants, an initiative being strongly advanced by environmental NGOs. The currently proposed NSPS require new fossil fuel (coal and natural gas) electric generating units (EGUs) to emit less than 1,000 lb of CO2 per MWh. According to EPA, 95 percent of all natural gas combined cycle (NGCC) power plants presently meet this standard; no existing coal plants even come close to doing so (the more efficient coal units emit about 1,800 lb CO2/ MWh on average). New coal plants could meet the standard if equipped with CCS technology but that would add anywhere from 35 percent (for a new integrated gasification combined cycle, or IGCC, facility) to 80 percent (for a new pulverized coal plant) to the cost of the plant. Obviously, these regulatory standards and compliance costs effectively preclude the building of new coal generation and severely constrict the deployment of supercritical and ultrasupercritical technologies. Despite the entrenched Congressional gridlock, Press Secretary Jay Carney has acknowledged that President Obama will pursue both legislative and regulatory approaches to advance his climate change agenda. Many feel the likelihood and need for a legislative approach to climate change is moot, most notably Sen. Barbara Boxer (Calif.), chair of the
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
Senate Environment Committee. In response to queries on the prospects for a climate change bill in the 113th Congress, Senator Boxer responded that ‘‘There doesn’t have to be a bill. I’m telling you right now, EPA has the authority in the transportation sector, the electricity sector, and the industrial sector under the Clean Air Act’’ to do everything that legislation might otherwise do.16 A regulatory agenda will rule on climate issues. he prospect of a carbon tax ‘‘solution’’ to climate change has also reared its head, most recently in discussions related to the Fiscal Cliff situation. In December 2012, it was bandied around not necessarily as a fix to the carbon ‘‘problem’’ but as a prospective revenue generator. With round two of the Fiscal Cliff debate pending this spring, we may yet see renewed efforts on this front. EPA’s primary focus over the past four years has been on air regulations, many of which are currently in litigation. One that recently made it out of the courts was the Cross-State Air Pollution Rule (CSAPR), which was originally issued by EPA in July 2011. On Jan. 24, the U.S. Circuit Court of Appeals in the District of Columbia declined petitions by EPA and various states, cities and environmental groups for a rehearing en banc of the threejudge panel which had vacated the rule in August 2012 on the basis that EPA had exceeded its authority in creating CSAPR. Under CSAPR, 28 states would
have been required to reduce their cross-state power plant emissions of sulfur dioxide (SO2) and nitrogen oxide (NOx). No word yet on whether EPA intends to pursue its final avenue of recourse in the Supreme Court. Rulings on EPA’s capstone air regulation, the Mercury Air Toxics Standard (MATS), are expected in 2013 as well. Initially
W
T
March 2013, Vol. 26, Issue 2
to 23 GW of coal plant retirements by 2015.17 On Jan. 22, EPA filed its brief in response to those filed by petitioners in opposition to MATS, principally refuting that its proposed rule is scientifically flawed and that the Agency violated notice and comment period requirements. EPA hopes to finalize the rule as early as March 2013, pending the court’s ruling. ater is the new air. EPA is expected to set its sights and its pen on water regulations in 2013 and move to gain increased oversight authority under the Clean Water Act (CWA). Regulation of existing utility cooling water intakes (CWA 316 b) is expected to be finalized in June 2013. In January, EPA reported that it had sent to the Office of Management and Budget a draft proposal for utility wastewater effluent guidelines, regulation of which is subject to an April 2013 deadline. In the mining sector, efforts to finalize the Stream Protection Rule – which replaces the 2008 Stream Buffer Zone (SBZ) rule – may be revived. The rule is being promulgated by the Office of Surface Mining Reclamation and Enforcement (OSM) in an effort to ‘‘better protect streams from the adverse effects of coal mining’’18 and is being undertaken in cooperation with the Department of Interior, EPA and U.S. Army Corps of Engineers. In its more recent incarnations, the SBZ rule targets coal – just coal, no other industries – in six
proposed in December 2011, the MATS regulation requires both existing and new coal power plants to install emission controls for hazardous air pollutants by 2015, with some limited time extensions permitted. EPA has estimated that the annual cost of MATS will be $9.6 billion in 2015; an estimate of the total cost of the rule has not been provided by EPA. In an analysis conducted by NERA Economic Consulting for the American Coalition for Clean Coal Electricity (ACCCE), the annual cost of the regulation was projected to be $10.4 billion in 2015, total compliance costs $94.8 billion, peak year job losses 180,000 to 215,000 in 2015, and up
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
37
Appalachian states – just six coal mining states, no others. The pending rule will be closely watched in terms of the extent of authority it confers on EPA versus the Corps and state governments. The concern is grounded in precedence. In March 2012, the courts ruled that EPA had exceeded its authority when it revoked a Clean Water Act permit for Arch Coal’s Spruce Mountain Mine No. 1 in Logan County, W. Va. Sen. Joe Manchin (W. Va.) has already announced that among his legislative priorities for 2013 are plans to re-introduce a bill that would limit EPA’s authority under the Clean Water Act to veto dredge-and-fill permits (CWA 404c) issued by the Corps. A final rule from EPA on the regulation of coal ash (Disposal of Coal Combustion Residuals from Electric Utilities) was postponed yet again during the pre-election run up and it remains unclear when, or if, we’ll see any activity this year. The delayed ruling has created some strange bedfellows united in an effort to secure a final ruling on this issue in a timely fashion. Environmental groups and industry are both pushing for a decision to be made sooner than later, albeit for different reasons. nvironmental NGOs are advocating for a rule that would designate coal ash as a hazardous waste under Subtitle C of the Resource Conservation and Recovery Act of 1976 (RCRA); their urgency relates to wanting to get on with the job of curtailing coal generation literally at the back door of the utility plant.
E
38
Industry groups, on the other hand, are advocating for a nonhazardous designation (RCRA Subtitle D) in keeping with EPA’s prior two such rulings. Industry is eager to have a final decision to counter the spiraling demand destruction for beneficially used ash that has resulted from the delayed rulemaking. Engineers, concrete manufacturers,
safety program launched in 2012 by the National Mining Association – CORESafety – coal producers have established a goal of 0:50:5 – zero fatalities and a 50 percent reduction in the rate of mining injuries within five years.19 More than 125,000 coal and hardrock mining employees are currently participating in the CORESafety program which relies on a management system designed to prevent accidents before they happen.
IV. The Path Ahead
contractors, and state governments are less inclined to commit to using coal ash beneficially without assurances that their ash-containing products will not be classified as hazardous somewhere down the road. Regulatory limbo is not good for business. A non-hazardous designation ruling has strong bipartisan support in both the House and Senate. Efforts are anticipated in both chambers to expedite a ruling. For coal miners, 2012 was the second safest year on record; there were 19 unfortunate fatalities last year – one more than the record low of 18 in 2009. Through a new industry initiated
Coal is an essential component of a secure and balanced energy portfolio for U.S. utility and industrial consumers. It promotes fuel diversity and inter-fuel competition, and advances our nation’s job and economic growth objectives. NMA expects improving conditions for U.S. coal consumption and production in 2013.20 The Association projects a 5.4 percent increase in domestic coal consumption in 2013 (versus 2012), with coal accounting for 40.5 percent of domestic electricity generation in 2013 (versus 39 percent in 2012). NMA expects U.S. coal to benefit from recent and planned construction of higher-efficiency power plants with higher output rates and lower emissions. Following attrition of announced coal plant retirements, it’s expected that the remaining coal fleet will be larger, more efficient, and will run at higher capacity, potentially
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal
recovering 100 million tons of U.S. coal production lost to retirement of older units. omestic coal consumption growth will also occur in response to new demand from recent and forthcoming fleet additions, including: Prairie State’s Energy Campus (1,600 MW) supercritical coal plant that became operational in 2012. American Electric Power’s (600 MW) ultra-supercritical Turk coal plant in Arkansas that came on line in December 2012. Duke’s Cliffside new Unit #6 (825 MW) that came into service year-end 2012. Power4Georgians (850 MW) supercritical pulverized coal plant in Washington County, Ga., slated to start construction in April 2013. Duke Energy’s (618 MW) IGCC plant in Edwardsport, Ind., scheduled to come on line mid2013. Mississippi Power’s (582 MW) IGCC plant in Kemper County scheduled to commence operations in mid-2014. There is also significant potential for U.S. coal suppliers to service international demand for coal, especially in booming Asia markets. In its Medium-Term Coal Market Report released in December 2012, the International Energy Agency (IEA) noted that ‘‘coal demand is growing everywhere but the United States.’’21 The Agency projects that by 2017, coal will surpass oil as the world’s top energy source. China and India will account for
D
March 2013, Vol. 26, Issue 2
almost three-quarters of projected non-OECD coal demand growth through 2035; by 2025, India is expected to overtake the U.S. as the world’s second-largest coal consumer. merging Asian economies are using abundant, affordable coal resources not only to advance their economic objectives and improve the lives
E
of their citizens; they’re also installing advanced coal plants to improve the environment. By 2015, 50 percent of the world’s most efficient coal power plants will be located in China and India.22 The ability of the U.S. to compete in these international markets will, as noted earlier, depend on the success of industry’s efforts to expand existing and develop new export port facilities. In its 2013 forecast, NMA projects a 10 percent decline in U.S. exports, from 123 million tons in 2012 to 111 million tons in 2013. It will also depend on political and industry support for development of clean energy technologies that can advance the
environmental objectives of the U.S. and developing countries. The potential exists to significantly enhance U.S. coal and coal technology exports in support of President Obama’s National Export Initiative.23
V. The Last Word Coal creates wealth and social progress which enhances environmental stewardship. In nine reports that it has prepared by the Secretary of Energy since 2000, the National Coal Council has documented a clear vision for coal in the 21st Century. These reports define a path forward based on energy efficiency and clean coal technologies that will advance U.S. economic, energy and environmental objectives. That technology path includes taking the following steps toward achieving a near-zero emissions goal: 1. Efficiency improvements at existing plants; 2. Building new supercritical and ultra-supercritical plants; 3. Demonstrating and deploying IGCC and carbon capture utilization and storage; 4. Advancing carbon capture utilization and storage and Btu conversion; 5. Retrofitting existing coalbased generation with carbon capture/storage up to 90 percent lower CO2; and 6. CO2-enhanced oil recovery, producing 4 million b/d. Failure to tend and nurture the path toward energy
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
39
self-sufficiency that is afforded by domestic U.S. coal resources is a folly we cannot afford to indulge. It’s a failure that will indeed, in the words of President Obama, ‘‘betray our children and future generations.’’& I shall be telling this with a sigh Somewhere ages and ages hence: Two roads diverged in a wood, and I, I took the one less traveled by, And that has made all the difference. – Robert Frost
Endnotes: 1. Benefits from Investments in Clean Coal Technology, Coal Utilization Research Council, June 2011, at http: //www.coal.org/userfiles/file/ FINAL%20Benefits%20of%20 Investment%20in%20Coal%20 RD&D.pdf. 2. Tracking New Coal-Fired Power Plants, National Energy Technology Laboratory, Office of Strategic Energy Analysis & Planning, Erik Shuster, Jan. 13, 2012. 3. Annual Energy Outlook 2013 Early Release, Energy Information Administration, U.S. Dept. of Energy, Dec. 2012. 4. EPA Misery Index Coal Plant Retirements Due to EPA Regulations, Count on Coal, National Mining Association, at www.countoncoal.org. 5. Utility Regulatory Update: Implications & Strategic Considerations for Compliance, Block Andrews and Mike Borgstadt, P.E., Burns &
40
McDonnell Engineering Co., presentation at American Coal Council Coal Market Strategies Conference, Aug. 2012. 6. The World Economy Rebounds with Coal, Hal Quinn, National Mining Association presentation at United States Energy Assn., Jan. 16, 2013. 7. State of the Coal Industry 2013: Cautious Optimism – and Healthy Realism, Ross Allen, Argus Media, presentation at American Coal Council Coal Q&A Web cast, Jan. 24, 2013. 8. According to the Heritage Foundation, President Obama has created more regulations with an estimated cost of $100 million or more annually than any other president in U.S. history. Obama Tops Bush with More, Costlier Regulations, Heritage Foundation, March 18, 2012, at http:// blog.heritage.org/2012/03/18/chartof-the-week-obama-tops-bush-withmore-costlier-major-regulations/ 9. My Op-Ed: Rethinking America’s Energy Policy, Rep. Fred Upton, Upton for all of US, April 10, 2012. 10. The Blueprint for a Secure Energy Future, The White House, March 2012. 11. Inaugural Address by President Obama, Jan. 21, 2013. 12. Coal Related Greenhouse Gas Management Issues, National Coal Council, May 2003. 13. Increasing Electricity Available from Coal-Fired Generation in the Near-Term, National Coal Council, May 2001. 14. Harnessing Coal’s Carbon Content to Advance the Economy, Environment, and Energy
Security, National Coal Council, June 2012. 15. CCS is a Necessity for a World Hooked on Fossil Fuels, International Energy Agency, Jan. 1, 2013. 16. The Real Obama Climate Deal, ST. J., Jan. 25, 2013.
WALL
17. NERA Economic Consulting, An Economic Impact Analysis of EPA’s Mercury and Air Toxics Standards Rule, March 1, 2012. 18. Building a Stream Protection Rule, Office of Surface Mining Reclamation and Enforcement. 19. CORESafety, National Mining Association, at http://www. coresafety.org/ 20. Coal Production & Consumption Forecast – 2013, National Mining Association, Jan. 2013. 21. Medium-Term Coal Market Report 2012 Factsheet, International Energy Agency, Dec. 2012. 22. IEA: Coal Will Be the World’s Dominant Fuel by 2030, ENERGYFACTSWEEKLY, Jan. 22, 2013, at www.energy-facts.org. 23. ‘‘We need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America . . . We will double our exports over the next five years, an increase that will support 2 million jobs in America . . . We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.’’ President Barack Obama, State of the Union Address, 2010.
1040-6190/$–see front matter # 2013 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2013.02.004
The Electricity Journal