Coal’s return depends on new plants: Officials
President Donald Trump administration’s effort to ease the regulatory burden on the coal industry has not been enough to stem the sector’s slide in the US.
What is needed now is more support to build new, more efficient coal plants to replace lost capacity, industry executives said at the US Energy Association’s 15th Annual State of the Energy Industry Forum yesterday.
More coal-plant closures in the past year have meant a permanent loss in power demand for producers, said Betsy Monseu, who is chief executive of the American Coal Council, an industry group.
Exports have been a bright spot for the industry but have not been enough to offset the continuing fall in US demand, which industry officials have long blamed on government regulation.
The coal industry “has had to absorb a lot regulatory compliance costs over the last 10 years. Plant owners were forced to make a decision to retire or retrofit,” National Mining Association (NMA) chief executive Hal Quinn said.
Coal’s share of the electric power generation mix fell to 28pc in 2018 from 45pc in 2010, according to the US Energy Information Administration (EIA). The EIA predicts the industry’s share will decline to just 24pc in 2020.
The Trump administration has helped, the executives said, by moving to replace the Obama-era Clean Power Plan, an effort to cap CO2 emissions on coal plants, with the less-stringent Affordable Clean Energy plan and by easing other regulatory burdens.
Even so, the industry lost 18GW of coal-fired capacity in 2018, as natural gas and renewable energy continue to make market gains.
Industry officials point to a better outlook outside the US, where coal remains a popular fuel of choice among some countries.
“Coal-fired power plants capacity has grown 62pc globally since 2000, exceeding 2,000GW in 2018,” according to a new report produced by NMA and the consultancy Wood Mackenzie. In contrast, the US’ capacity fell by 0.9pc as older, less efficient plants closed, the report said.
One difference NMA points to are the lower costs of building high efficiency, lower emissions coal plants in other countries than in the US.
The capital costs associated with these coal-pants are seven times higher in US and can take up to three additional years to build, the report said.
Policymakers should work to reduce the costs to build these newer, more efficient plants, which can help be support renewable plants that deliver power intermittently, industry executives said.
Support of newer, more efficient coal plants can “counter the impacts of earlier policies and regulations resulting in coal plant closures and permanent loss of market,” Monseu said.
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- On January 25, 2019