Home News King Coal Will Not Be Dethroned

King Coal Will Not Be Dethroned

Alternative Energy, Current Energy, Industry News

Report says new EPA regulations and low natural gas prices will not stymie long-term global coal demand.

Font size
Manufacturing Group December 18, 2012

In the United States., reports of the death of King Coal by regulation may well be premature. Certainly, the Obama White House and the EPA anti-coal evangelists are hoisting new regulations that are aimed at reducing domestic coal usage. But, many utilities are burning natural gas as a base load fuel instead of coal simply because natural gas is now dirt-cheap in the U.S.

The EIA expects United States' utilities to shutter about 40GW of older, inefficient coal-fired plants in the next five years while still running the remaining larger plants -- hardly the death of the industry. 

Even with these capacity reductions, EIA forecasts that coal-fired plants will remain the biggest source of power in the U.S. generation mix for at least the next two decades. Rising U.S. electricity demand should require the remaining coal-fired plants to operate at a higher utilization rate, offsetting the effect of lost capacity.

What about the potential for U.S. coal exports? How is coal faring in global markets?

In Europe, demand for coal has surged as a result of sky-high natural-gas prices in international markets and declining output from nuclear power as Germany phases out its fleet of reactors. London-traded natural gas futures currently fetch about $11 per million British thermal units–more than triple prevailing prices in the United States.

In the eurozone, coal-fired generation has increased by 14% year over year despite the recession there. India continues to build coal-fired power plants at a rapid pace, fueling demand for thermal coal; the nation's coal imports have already surged 15% in 2012.

What about China? Coal provides 80% of China's electricity, compared to about 50% in the United States. In the past five years, China has added coal capacity that exceeds all US power plants combined. And it is predicted that by 2015 Chinese coal-fired capacity will triple that of the US. According to the China Electricity Council, China's coal demand should reach 4.3 billion tons by 2015. 

U.S. coal companies are in position to ship $1.3 billion in coal exports annually to China if projects to build West Coast coal ports move forward. And, U.S. coal companies already profit from China's voracious appetite for coal through their coal reserves in the Pacific Rim.

Bottom line -- coal-fired plants in both the U.S. and global markets will continue to provide the bulk of base load power generation for years to come. King Coal still sits on the world's power throne.

From Elliott Gue's Energy & Income Advisor
 

Add a comment:

 

Post Comment
* TES - Today's Energy Solutions reserves the right to edit or remove reader comments for any reason it deems appropriate.