Report says EPA rules not cause of upsurge in coal closures
CHARLESTON, W.Va. -- More coal-fired power plants are expected to close over the next four years, but low-priced natural gas -- not tougher environmental rules -- are the cause, according to a recent report by an international economics and regulatory consulting firm.
The Brattle Group increased its projection of the number of coal plants that utilities will retire by 2016, and its conclusions have added to the industry campaign critical of the Obama administration's regulatory policies.
But in a 13-page report issued last week, the Brattle Group offers a much more measured analysis than the "war on coal" rhetoric that continues to be tossed around in the presidential race and regional political campaigns.
"The questions concerning what impact the new air quality regulations will have on power prices and resource adequacy continue to be important and difficult to answer definitively," the report said.
"This 2012 reassessment indicates that somewhat more retirements are likely (about 25 [gigawatts]) than we foresaw in late 2010," it said. "However, that change is primarily due to changing market conditions, not environmental rule revisions, which have trended towards more lenient requirements and schedules."
Especially in Appalachia, the coal industry is struggling in the face of cheap natural gas, competition from other coal basins, declining reserves of quality coal and the finalization of long-mandated reductions in toxic air pollution from coal-fired power plants.
Coal's share of U.S. electricity generation dropped to about 36 percent earlier this year, far below the 50 percent still often cited by industry supporters. The U.S. Department of Energy projects that annual Central Appalachian coal production will be cut in half by 2035.
Coal company officials and regional politicians have tried to blame the industry's woes on the Obama administration, but the number of miners working in Appalachian mines actually rose during the first three years of the administration.
But a string of layoffs has come since the first of the year, and coal-mining employment in West Virginia dropped by about 1,300 jobs in the second quarter of 2012, according to data from the U.S. Mine Safety and Health Administration.
West Virginia's major utilities -- American Electric Power and FirstEnergy -- have both moved up the dates for closing some of their oldest power plants, smaller facilities without the most modern pollution control equipment.
Nationally, the new Brattle Group report projected that between 59 gigawatts and 77 gigawatts of coal generation would be retired between 2012 and 2016. That's about 25 gigawatts more than the projection in the firm's 2010 report for the same time period.
The earlier Brattle Group report noted that most of the coal plant retirements involved older and smaller plants where power companies felt it was not economical to spend money on modern pollution controls.