Thursday, June 27, 2013

Net effect of Obama's plan will be increased exports of US coal to India, China, & Europe

Obama's war on coal will only serve to increase exports of US coal to plants in India and China that have inferior emissions control. The net result will be an increase of global emissions, bankruptcy of US electricity plants, increased energy costs & job losses, with no benefit to the climate.

Big Coal to Fight Obama Plan

Mining Firms Fear Impact of President's Proposals to Combat Global Warming


WSJ.COM 6/27/13: The beleaguered domestic coal industry, bracing for the possibility that no more coal-burning power plants will ever be built on U.S. soil, is teaming up with other business groups to blunt the impact of President Obama's climate-change agenda, while also shifting its business focus to exports.

Following the president's announcement Tuesday of a sweeping plan to cut greenhouse-gas emissions, including at existing coal-fired power plants, some company officials said Wednesday there is also greater urgency to develop clean-coal technology, including a cost-effective way to capture and store carbon dioxide.

The coal industry plans to coordinate lobbying efforts with manufacturers and other business groups to fight rules they argue will raise electricity costs. Several groups plan to reach out to members of Congress from states that rely heavily on coal generation. "It'll be interesting, for sure, and loud," Kevin Crutchfield, chief executive of Bristol, Va., coal producer Alpha Natural Resources Inc., said in an interview. The Environmental Protection Agency is expected to develop the regulations over the next year.

While final climate-plan details are unknown, one thing is clear: The domestic market for coal that is used to produce electricity will shrink as a result of the new rules and other market forces, most notably a surge in U.S. production of low-priced and cleaner-burning natural gas.

"The U.S. market for coal is going to be smaller going forward. It doesn't take a rocket scientist to figure it out," said Mr. Crutchfield. "The question is, 'How much smaller could it get?' "

Mr. Crutchfield said Alpha and other coal producers will pursue more exports of coal to China, India and Europe, including both thermal coal used to generate electricity and higher-grade metallurgical coal used to make steel. "You'll see more of a pivot on everybody's part," he said.

President Obama, as part of his plan to combat climate change, called for cutting greenhouse-gas emissions 17% from 2005 levels by 2020, to be partly achieved by cutting carbon emissions from power plants. The rules could require utilities to add new equipment to lower emissions and make less-efficient plants unprofitable to operate, experts say. Increasing costs to burn coal would prompt utilities to use more existing capacity for natural gas and other fuels and to build new plants to increase that type of power generation.

Energy analysts say the new rules, combined with environmental standards now being implemented, could push about one-third of the U.S. coal-fired fleet into retirement.

The administration's plan to reduce carbon emissions didn't surprise anyone in the coal industry. EPA rules to lower other pollutants have already led to the retirement of coal-fired power plants and lower coal demand, prompting greater focus on exports.

Last year, U.S. utilities burned 825 million tons of coal, down from 1.045 billion tons in 2007. Meanwhile, coal companies exported 126 million tons last year, up from 59 million tons in 2007.

At the same time, China's coal consumption soared to 4.33 billion tons last year, up from 2.97 billion tons in 2007. Global demand for coal is currently about eight billion tons a year. Officials in India, which uses coal to produce more than half its electricity, recently said they intend to boost coal imports to avoid power outages that have hit the country.

"The world will continue to consume fossil fuels at an increasing rate in the coming decades regardless of potential unilateral action by the United States," Brett Harvey, chief executive of Pittsburgh-based Consol Energy Inc., which produces both coal and natural gas, said in an emailed statement. He said he doesn't think Mr. Obama's climate proposal aligns with "energy realities."

Consol, however, stands to benefit from regulations favoring natural gas, which produces about half the carbon emissions as coal. Consol currently gets about 14% of its revenue from natural-gas production. "We'll be able to supply our customers with natural gas if that's the route [the administration] chooses to go," said Steve Winberg, Consol's vice president of research and development.

Gregory Boyce, chief executive of St. Louis-based Peabody Energy Corp., noted on Wednesday that global consumption of coal is expected to grow by about 1.4 billion metric tons over the next five years. [17.5% increase]

In the U.S., experts say it would take decades to develop enough capacity from other fuel sources to supplant coal. Last year, cheap natural gas pushed electricity generation from coal down to 37%, but coal has rebounded to about 40% this year as natural-gas prices have increased.

Coal companies are expected to continue shutting higher-cost mines, bringing more economic pain to states like West Virginia and Kentucky. In the first quarter of this year there were 900 active coal mines, down 17% from a year earlier. The top 100 producing mines account for 80% of the U.S. coal supply.
"There's going to be further attrition," said Paul Forward, an analyst with Stifel, Nicolaus & Co.

At the same time, he said, utilities that have invested billions of dollars already in emissions controls will want to continue burning coal, a reliably cheap fuel source when compared to historically more volatile natural gas, for decades. "For a very long time there's going to be room in the energy mix for low cost sources of coal," he said.


  1. "What Obama also fails to understand is that the Earth is not flat, keeping in line with his derisive comment. So dismantling our coal-fired power plants, which provide 38% of our country's electricity, will have absolutely no effect. What gets burned in China, India, even Russia, travels around the planet on the Jet Stream expressway. Our planet is round. The United States does not live under a glass dome contrary to what the president would have us believe."

  2. see also:



  5. The government should find ergonomic ways on how to stabilize the economy.