For the first time in U.S. history, natural gas generated as much electricity as coal. Which raises the question, will natural gas surpass coal in generating electricity? There have been times before when coal's demise has been prematurely predicted, most notably in the 1980s. This time though, University of California's fossil fuel expert, David Victor says it's different. Coal is on the way out because of the EPA, new regulations and natural gas.
"We could see coal down at 15 or 20 percent of electric supply over the next decade, that would be a huge change in an industry that historically has relied on coal for 50 percent or more of the electric supply." Remembering back to the warnings in the 1980's, People were talking about the death of the coal industry, but coal was half of the electric power supply. "Now," according to Victor, "we're talking about terminal illness for coal in the advanced industrialized countries, and it is actually happening."
Amid historically low natural gas prices and the warmest March ever recorded in much of the United States, coal's share of total net generation dropped to 34%, the lowest level since they began keeping records back in January 1973. Despite seasonally low loads, natural gas-fired generation grew markedly and accounted for 30% of overall net generation by March 2012. Total electricity demand fell this winter as warmer weather reduced home heating requirements.
Coal generation decreased 29 billion kilowatt hours from March 2011 to March 2012, while natural gas generation increased 27 billion kilowatt hours during the same time period. In March 2012, coal's share of total generation was 34% compared to natural gas at 30%. Natural gas prices were near 10-year lows this winter, leading the generators in some states (such as Ohio and Pennsylvania) to increase their dispatch of natural gas-fired plants. Newer vintage natural gas-fired units operate at higher efficiency than older, fossil-fired units, which increases the competitiveness of natural gas relative to coal.
In a recent NPR related story, the general consensus is that the Environmental Protection Agency and tough new regulations are the main culprits behind what's hurting the coal industry. Back in March, the EPA announced standards that require all new coal-fired electricity plants to cut carbon emissions by half. It's an expensive proposition, and it's leading many power companies to back away from coal.
For example, at one of Georgia Power Co.'s newest plants in metro Atlanta, two gas turbines and one steam turbine generate about 840 megawatts, enough energy to supply about 25,000 homes, says plant manager Tony Tramonte. "It is part of our commitment to our customers to provide reliable, low-cost energy," he says.
"There's a 100 percent reduction in mercury emissions and a 50 percent reduction in the rate of carbon dioxide production." He also says there's a 99 percent reduction in sulfur dioxide and about a 90 percent reduction in nitrous oxide, with a plant that's now five times larger than the one it replaced.
Its All About The Money
Domestic natural gas is killing coal because it's cheap and abundant. Four years ago, electricity generated by gas was twice as expensive as coal. Today, gas is less than half the price of coal. "What that means is, literally, natural gas is going to kill more coal-fired power plants than the EPA regulations," says Michael Zenker, a coal analyst for Barclays.
In 2012, Zenker says, a perfect storm of sorts took place that sent coal down a deep spiral: an unseasonably warm winter, a significant reduction in electricity demand and, most importantly, hydraulic fracturing or fracking. Fracking is the controversial process by which gas can be extracted by drilling deep into rock formations. A decade ago, not a single drop of American gas was produced this way; today one-third of all our gas is now the product of fracking.
Damage To The Industry And Its Workforce
Last month, Arch Coal, the operator of one of the biggest mines in the county, announced a round of devastating layoffs that effected more than 1,300 employees in West Virginia and Kentucky alone. Between the other big players in central Appalachia is Consol, Patriot and Alpha which thousands more jobs have been lost. Patriot Coal recently filed for bankruptcy protection.
According to the NPR story, this time the end of coal may be coming to a reality. "I've never seen anything as quick as this to devastate the market, and this many layoffs at one time," says Thomas Clark, publisher of The Echo newspaper and a mine inspector for the past four decades. "It's been a landslide." A few miles from Webster Springs, outside the town of Cowen, W.Va., a massive steel hopper stands silent like an abandoned roller coaster.
Just a few weeks ago, it was humming with the sound of thousands of tons of black coal coming down the mountaintop mine along a giant conveyor belt and into a silo the size of a 15-story building.
For 19 years, Rich Lewis worked as a miner on this mountain and for most of those years he was able to work as much as he needed, including weekends and overtime. "For 17 years it was work all you want to work," Lewis says. "We were shipping anywhere from 30 to 35 trains a month. In the last year and a half, it went down to 20 trains a month." Today, there are no trains to collect the coal, and they won't be coming back here ever.
When Arch Coal gathered all 170 employees to make the grave announcement, Lewis' superintendent told them they were selling the coal at $56 a ton, but it was costing $70 a ton to operate with all of the equipment they used. Everyone, including Lewis would be laid off. Of the three mines in Webster County, just one is still operating today. Todd Bragg, a friend of Lewis' and fellow miner, had been mining since he was 19. Before he was laid off by Arch Coal a few weeks ago, the 37-year-old had been making more than twice the median income of $25,000 in Webster County.
Now, that's gone too.
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