Energy industry experts say coal will continue to provide much of the United States’ power generation, despite government regulation on production, emissions and waste that threatens to increase the cost of coal-fired power.
That threat of increasing regulation on coal has utilities turning more often to natural gas. Government data shows an abundant supply, gas burns cleaner than coal, and new technology has made gas-fired generation more efficient.
The U.S. Energy Information Administration says coal provides just under half of all U.S. power; natural gas provides just above 20 percent.
And lobbyists for both industries are keeping score.
Several utilities already have announced plans to switch units from coal to natural gas. Duke Energy this week filed documents with North Carolina regulators saying it will generate more power from natural gas as it phases out all but its largest coal plants by 2015. Duke said the 1 percent of power it produces from gas plants will increase to 9 percent by 2030.
In Colorado, Xcel Energy said it could spend $1.3 billion to convert coal-fired plants to natural gas in Denver as the state cracks down on emissions. Coal supporters, speaking at a Public Utilities Commission hearing in Grand Junction last month, charged the state is favoring natural gas over coal (a second hearing is scheduled for Sept. 23 in Denver).
American Municipal Power Inc. was set to build a coal-fired plant on the Ohio River, but last month said it would construct a 600-megawatt gas-fired plant there instead.
NRG Energy will pay Blackstone Group $1.9 billion for five power plants in California; four of the plants will burn gas. And the TVA, in its recently announced 10-year plan, said it will idle nine coal-fired units, and replace some of that generation with natural gas.
On Capitol Hill, the National Mining Association and the American Coalition for Clean Coal Electricity, among others, continue to tout the benefits of coal.
Hal Quinn, CEO of the NMA, said earlier this year: “Creation of an artificial electricity generation market for natural gas in place of affordable, abundant and reliable coal is bad public policy and undermines the (Obama) administration’s economic and energy objectives.”
Not to be outdone, the ANGA - America’s Natural Gas Alliance – has spent nearly $2 million on lobbying since its 2009 inception. Founders of the trade group of producers, pipelines and distribution companies say ANGA’s annual budget could hit $80 million.
The battle could come down to simple economics. Declining prices for natural gas make it more attractive for utilities, even as coal prices fall. David Goldwyn of the U.S. State Dept., speaking at the Global Shale Gas Initiative Conference two weeks ago, said the price of natural gas is competitive with coal on a Btu basis.
The needle could move in the other direction. Some gas production companies have curtailed operations as the price of gas has fallen. Then again, as more plants burn gas, demand will increase and prices should follow.
Coal’s direction? Even with much gloom and doom over the industry, there are positive signs. The Associated Press reported recently that more than 30 coal-fired plants are under construction or have been built since 2008. The National Energy Technology Laboratory said eight new coal plants went online in 2009, the highest one-year total since 1991.
And if you believe in following the money, remember that in November of last year, Warren Buffett's Berkshire Hathaway invested $34 billion to acquire Burlington Northern Santa Fe Railway. The BNSF deal is BH’s biggest investment, and analysts said it was a bet on the future of coal. Why? Because coal hauled by BNSF reportedly powers one of every 10 U.S. homes.
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