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US Coal System No Longer Cost-Effective

Originally published on ClimateProgress
by Jeff Spross

Aging and inefficient plants, competing energy sources, and the looming reality of climate change are all catching up with the coal industry.

According to a new report from the Union of Concerned Scientists — updated from 2012 numbers — as much as 17 percent of coal-fired power in the United States is already uncompetitive, just compared to natural gas and using mid-range estimates.

The report looked at the operating costs for current coal plants, which are older and have largely paid off their capital costs, up against natural gas plants that have also paid off their capital costs. The operating costs also included all the necessary upgrades to bring the coal plants in line with pollution and carbon dioxide regulations. That yielded 329 coal units that are economically uncompetitive, or a total of 59 gigawatts of electricity-generating capacity — 17 percent of the 347 gigawatts of coal power throughout the United States.


Image Credit: Union of Concerned Scientists

That number of uneconomic coal units could also get considerably larger depending on what the future holds. If a price of $20 per ton of carbon dioxide emissions were to be put in place, 131 gigawatts would be uncompetitive. If the production tax credit (PTC) for wind energy is preserved, 71 gigawatts of current coal capacity will be uncompetitive by comparison, versus just 22 gigawatts if the PTC is allowed to expire.


Image Credit: Union of Concerned Scientists

The points about the carbon price and the PTC are especially noteworthy. Right now the economic playing field is tilted in favor of fossil fuels, because their price on the marketdoesn’t factor in the damage done by climate change.

A price on carbon, through either a carbon tax or a cap-and-trade system, would be the most effective correction. (In fact, most analysis suggests the appropriate price for carbon emissions is considerably higher than $20 per ton.) Alternative policies like the PTC or the upcoming carbon dioxide regulations from the Environmental Protection Agency aren’t as efficient as a direct price, but they approach the same effect.

The reasons these plants are being undercut by other sources of energy are myriad. For one thing, they averaged 45 years in age — well past the 30-year life span for most coal plants. That means they’re less advanced, less efficient, and more expensive to operate. As a result, they’re already run less than other plants for purely business reasons, even before factoring in the climate-related concern that, being old and inefficient, they’re also quite dirty.

Seventy percent of the coal plants the UCS identified were missing at least three of the four major technologies used to control coal’s damage to the environment and human health. Upgrading them to cut down on particulate matter, mercury, sulfur dioxide and nitrous oxide emissions would be considerable, not to mention bringing them into line with the EPA’s carbon regulations.

In 2012, the UCS also pointed to reports on the growth of renewable energy and other projections, which showed the U.S. will have 145 gigawatts of excess electricity-generating capacity by 2014, giving the country plenty of wiggle room to retire the identified coal power and shift to cleaner sources. Not to mention that “uncompetitive” means, by definition, that there’s money to be made by replacing those plants with alternatives.

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