By Daniel Tyson REGISTER-HERALD REPORTER | Posted
As a number of coal companies file for bankruptcy protection and more teeter on the edge of chapter 11, there was a bit of good news this week about an industry slugged by declining need and tougher environmental regulations.
Moody’s Investors Service boldly predicted that coal isn’t going away anytime soon. Yes, the beleaguered industry is suffering from domestic and international pressures, but coal will always be needed to keep the power on.
A day after the report was released, a federal appeals court Tuesday ordered the Environmental Protection Agency to relax some limits it set on smokestack emissions that cross state lines and taint downwind areas with air pollution from power plants.
At the same time, the court upheld the EPA’s right to impose the clean-air standards, rejecting an argument by states and industry groups that the rule was overly burdensome.
The report reads that 27 percent of the electricity generated in the U.S. comes from coal-fired power plants. That is down from 31 percent a decade ago, according to the report.
The 11-page report, authored by analysts Jairo Chung, states over the next several years the decline in coal-fired generation capacity is “expected to be minimal — no massive coal-fired generation retirement is expected beyond 2015. Furthermore, the output also increased form 2012 to 2014, although there were some coal-fired power plants retired.”
Also, the report states, coal plants are becoming more efficient, especially as less efficient plants are decommissioned. The report states it doesn’t make economical sense for most states to replace coal-fired plants with solar, wind or nuclear power.
Moving to those energy sources, the report states, “would result in required revenue increases ranging from 11 percent to 65 percent likely to create customers and regulatory pushback. These potential rate increases do not factor in additional costs of stranded costs associated with retiring generating assets.”
The report calls into question converting coal-fired plants to natural gas. One of the argument for natural gas is that it’s cheaper than coal.
The report takes issue with that argument. Eventually, the report states, power produced by coal-fired plants will be higher than natural gas.
“The overall efficiency of the remaining coal-fired generation fleet will continue to improve,” according to the report.
The report examines the uncertainty of proposed federal regulations concerning coal-fired plants, including limits on carbon dioxide emissions and the Mercury and Air Toxic Standards.
Chung writes the regulations lack cost considerations and has a high possibility of implementation being delayed.
Those problems, according to the report, could keep some existing coal-fired plants in operation longer than expected.
Tuesday’s ruling issued by the U.S. Court of Appeals for the District of Columbia Circuit orders the EPA to redo sulfur-dioxide and nitrogen-oxide standards for 13 states, mostly in the South and Midwest, that contribute to soot and smog along the East Coast.
Texas and South Carolina would see limits for both forms of pollution adjusted, while new limits for either sulfur dioxide or nitrogen oxide would be set in 11 other states: Alabama, Georgia, Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Virginia and West Virginia.
The ruling follows a Supreme Court decision last year upholding the so-called Cross-State Air Pollution Rule, which blocks states from adding to air pollution in other states.
The April 2014 ruling was an important victory for the Obama administration and capped a decades-long effort by the EPA to ensure that states are good neighbors and don’t contribute to pollution problems elsewhere.
The Associated Press contributed to this report.