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Environmental Regulation of Coal Power: Train Wreck or No?

Over the past several months — well, years, really — there’s been a lot of to-and-fro about various new environmental requirements that may or may not face coal-fired powerplants.

Some observers have called it a regulatory “train wreck”, arguing that some of the requirements run at cross-purposes to others, or are planned to be sequenced in a manner that are difficult to manage, so that it will be incredibly costly for owners of coal powerplants to comply, and will drive the retirement of a large portion of the U.S. generating capacity.  For this view, see this report from the American Legislative Exchange Council.

In August, the Congressional Research Service released a report largely refuting this view.  As noted in the Executive Summary, “supporters of the regulations assert that it is decades of regulatory delays and court decisions that have led to this point, resulting in part from special consideration given electric utilities by Congress under several statutes.”  Or, put another way, the fix that coal powerplant owners are in is substantially of their own doing.

As Ezra Klein of the Washington Post asks, “Who’s right?” 

Maybe the more interesting take is from Ken Silverstein of EnergyBiz, whose article headline says it all:  “Coal’s Woes Run Deeper than EPA Regs”.  In particular, mining in Central Appalachia is experiencing significant declines due simply to depletion of the lowest-cost reserves there.  Coal production is not only shifting west to larger and cheaper reserves, but is being threatened by low-cost natural gas due in large part to the boom in shale gas production.

Coal is an industry in retreat and on the defensive, ornery — notwithstanding the sector’s efforts to portray itself to the public in a positive light, such as at America’s Power.  The promise of advancements in so-called “clean coal” technologies involving carbon sequestration has largely failed to bear fruit.  The economic supremacy of coal over other fuels is under seige.  Mining safety incidents and mountaintop removal practices continue to give the industry a black eye.

Yes, coal is abundant, and many of the premises about coal’s enduring place in the energy economy put forth by the seminal MIT study “The Future of Coal” no doubt remain true.  But, as tough as it’s been for the nuclear and renewables sectors, it’s also going to be a rough ride for players in the coal industry.  I wouldn’t want to ride that train, whether or not a train wreck ensues.