With the proposal of the EPA’s new GHG emission standards voices have accused the government of waging a “war on coal.” The regulations, it is alleged, are job killers designed to drive coal-fired power plants, the mines and railroads that supply them, and the miners, engineers, and technicians that operate them, out of business.
But do these charges hold water? Is there a “war on coal?” And, if so, who is fighting it?
As most coal used in the US is burned to generate electricity, the “war” should impact electrical generation first. If there is a “war on coal,” then there should have been a drop in coal use over the last decade. Using generation data maintained by the Energy Information Administration — i.e., how much electricity has been generated by specific types of fuel — we can build a timeline of coal use from 1990 to 2012. Graphing the proportion of coal used in total US electrical production versus overall coal capacity (how much generation potential is available using coal) year on year yields the following:
This is a complex story. While the percent of coal used in generation has declined markedly in recent years this decline begins well before the accusations of a war on coal and usage currently stands at 35%. But the amount of coal generating capacity has risen sharply in the last several years. Because it takes years to permit and build new power plants in the US, most of this new coal capacity was planned in the early 2000s, and is only now coming online. Despite this surge in new capacity, the proportion of electricity generated by coal has continued to fall. This suggests that the decline in coal usage isn’t due to the retirement (forced or otherwise) of coal plants, but due to the expansion in use of other fuels, notably natural gas, over the last decade.
Most importantly, the decline in the use of coal for generation happened largely without regulatory prodding. The Clean Air Act was last amended in 1990; new ozone regulations were put on hold until the conclusion (still outstanding) of a 2013 regulatory review; sulfur dioxide were tightened in 2010, but remain within the technical capabilities of modern power plants; mercury standards were loosened in 2013. The new GHG emission standards proposed in September of 2013 are clearly impactful, but their impact won’t appear for several years (as they only apply to coal plants that are not already built or in-progress). The decline in coal’s proportion of energy generation happened without them.
Of course, the new GHG emission standards will have a major impact on the construction of new coal plants. With the new limit of 1,100 pounds of CO2 per megawatt hour, all new coal plants will require carbon capture & sequestration technology, making them dramatically more expensive. The EIA agrees with this assessment, predicting that there will be no new coal plants built after 2018 (when the last plant currently under construction comes online). However, this assumed away any new regulations (including the GHG standards). In other words, the EIA predicts that there would be no new coal plants built in the US past 2018, regulation or no regulation.
Why is this? As is usually the case in the energy sector, the answer is simple: economics.
Coal and natural gas are the two largest sources of electricity in America. Coal’s long, slow decline is a result of coal becoming more expensive relative to gas. The new coal capacity coming on-line in the last two years was planned in the early 2000s, when coal was very cheap. However, the shale revolution led to a precipitous drop in gas prices, pushing out the more expensive coal. The graph above clearly shows a period of very low gas prices in the 1990s. This led directly to a boom in gas plant construction in the early 2000s. A similar result is predicted for the current gas boom, but it may follow a different path. Much of the gas plants brought online in the early 2000s served as extra generators to meet peak demand, rather than directly replacing the coal plants meeting baseload demand. With gas increasingly cheaper than coal, this generation is meeting a larger portion of demand — largely at the expense of coal. This has resulted in the accelerated retirement of older, less-economical coal plants.
So yes, there is a “war on coal.” But it’s happening slowly, and the private sector, driven by market fundamentals, is waging it. Coal use would be declining without EPAs new GHG regulations, thanks to the rise of cheap gas and the aging coal fleet. The new GHG emission standards may help things along, but they will do little beyond ensuring that coal plants are either considerably cleaner or not built at all. From a public health standpoint this is an unambiguously good thing; from an economic standpoint it is increasingly clear that coal’s dominance of cheap power is over.