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  • Coal and Electricity Generation

    Posted by Carl from Chicago on July 11th, 2010 (All posts by )

    World Wide Growth In Coal

    Per the official US Energy Information Administration statistics (they have an excellent site, the link to this data is here, the use of coal for electricity generation will continue to grow over the next 25 years (their forecast goes through 2035). In 2007, the world generated 7.92 trillion kilowatt hours using coal, or 42% of global energy generation. In 2035, they predict that 15.02 trillion kilowatt hours of energy will be produced using coal, or 43% of global energy generation. Thus in an ABSOLUTE sense power generating by the use of coal will increase by approximately NINETY PERCENT over the next 25 years (through 2035), and the total output of power generated by coal in 2035 will be approximately equal to EIGHTY PERCENT of power being generated from ALL sources today (coal will be 15.02 trillion kwh in 2035 vs. 18.77 in 2007, the year with the most recent statistics available).

    The purpose of this background is to explain that the continued use of coal for the world as a whole will continue at the same approximate percentage that it provides today (about 42-43%) and that the absolute generation of power utilizing coal will almost double in the next 25 years (increases 90%).

    Thus for all the talk of alternative energy, the reality, world-wide, is that coal is the largest share of generation and will continue to remain this way for the foreseeable future. So if you believe that we are moving to alternative energy as a whole, it isn’t true, and if you believe that coal is going away, if anything it is going to almost double in the next 25 years.

    The reality is that everything that we make that is energy intensive won’t be made in the US – it will be made overseas (along with the jobs and tax revenues that come with this), and it will just be exported to us. It is the same net outcome for the planet as a whole, except that we won’t produce what we need and we will have to find some way to pay the other countries that provide it for us. And if there is an issue with rising temperatures, what we do in the US isn’t going to matter overall because we are not the largest part of the economy and huge investments in coal fired generation are occurring around the world despite our thoughts to the contrary.

    The United States and Coal

    For all of our talk about “renewable” generation, coal remains the largest component of US electricity generation. The United States has abundant reserves of coal and coal technologies are proven and cost efficient. The US Environmental Protection Agency (EPA) recently proposed new emissions guidelines that, if passed, will result in the shut down of many older coal plants that would require significant re-fitting. From the article:

    The rules will probably trigger the closing of the “smallest and dirtiest coal plants” when coupled with new limits expected from the EPA for mercury emissions from coal- fired generators, K. Whitney Stanco, a Washington-based analyst with Concept Capital, said in a research note to clients today before the regulations were announced. The agency doesn’t know whether the regulations would result in shutting plants, McCarthy of the EPA said.

    The part of the quote that I find most howlingly funny is that the EPA doesn’t know if this new rule would result in the closure of older coal plants – the sad part is that this is probably true, because why would they care about the practical impact of a rule that they are considering?

    Building a Coal Plant in Illinois

    The Chicago Tribune recently wrote an article about the Prairie State Energy Campus, a massive new 1600 MW facility being built in downstate Illinois, titled “Clean coal dream a costly nightmare“.

    In the past I have taken journalists who write about energy to task for their misrepresentations and, while this isn’t a terrible article, the headline writer mis-represents the situation. The new plant being built was NEVER a “clean coal” plant as planted in the popular imagination; this plant was the last of the old-school coal plants with scrubbers. The plant will be one of the largest emitters of pollutants as now defined by the EPA just because it is large and will be run continuously (while many of the smaller coal plants will likely end up getting shut down, see above), since the citizens of Illinois seem to like their air conditioning and to run whatever industry remains in our state. There simply is very little base load generation being built, anywhere, so once this plant is up it will run probably for the rest of our lifetimes.

    This plant is a “mine mouth” plant which means that the coal is mined locally and doesn’t have to cross the country to reach the site, which reduces operating costs. The plant also is linked to the nearby coal fields, so not only does it supply generating capacity, it is linked to its own fuel source should the price of coal increase in the future.

    The cost of this plant has more than doubled since original estimates were made, to $4.4 billion dollars. The plant was proposed in 2001 but never-ending environmental protests and the non-value adding permitting and government process put it years behind schedule. In the mean time I can only imagine how many coal plants were put up in China and I have to believe that their cost / MW is a fraction of ours in the USA, even adjusted for the fact that this plant has modern scrubbers and many of the Chinese plants have little in the way of emissions controls (this is now changing, and it is likely that future clean coal technologies will come out of China since they are making it a priority and the costs to build a plant and the time lines are so much better than in the litigious USA).

    The Ultimate Outcome:

    Thus here are the conclusions based on the data above:

    1) the world will continue to rely on coal for the largest portion of power generation
    2) the ABSOLUTE volume of power generated by goal will almost double in the next 25 years
    3) building coal plants in the USA is exceedingly difficult, expensive and time consuming
    4) there is a lot of regulatory uncertainty about what the EPA is trying to do, and they don’t even bother considering the economic impacts of their actions
    5) the future decisions about how to provide base load power for the USA are going to be difficult and costly because coal is out and nuclear power is substantially delayed and non-economic; we are just relying on our existing resources until they run out and will then have to pick up the pieces
    6) these items will go with a power shift towards places that use low cost coal to run their economies vs those that choose to go with high cost sources; we will still use the same economic goods, but we will just have to buy them from someone else, similar to how we are hostage to those that provide us foreign oil today

    Cross posted at LITGM

     

    9 Responses to “Coal and Electricity Generation”

    1. Mrs. Davis Says:

      And things will happen that we don’t know about. For example, when Baby boomers lose control of the reins of power they are succeeded by a generation that realizes how irrational environmentalism was. Especially after they fight a war of the magnitude of WWII or the Civil War. I am confident that King Coal will stay on top for a long time.

    2. Mike H Says:

      This article is such a crock. Obama’s election will herald a new era in our energy infrastructure where electric powered cars and Ipods will be fueled by unicorn farts and our sense of self entitlement (a power source certain to grow in the future).

      All kidding aside, when Chicago finally wins its fight against Midwest Gen and Dynegy and State Line, Fisk and Crawford are shut down in the next 10-15 years, regulating the Chicagoland areas electric supply will be like balancing an anvil on a pin. That’s progressive progress for ya!

    3. newrouter Says:

      does anyone see the weirdness that there may be a mosque near ground zero before the wtc is replaced? the bureaucratic inertia is killing this country. look at the empire state building or hoover dam construction and compare that to Prairie State Energy. the legal bribery needed to build useful industry needs to be exposed.

    4. david foster Says:

      Carl, given the apparent vastly-increased availability of natural gas, why would there not be a transition from coal to NG even absent regulatory pressures? My understanding is that an NG combined-cycle plant has significantly lower capital expenses than a coal-fired plant, owing mainly to the elimination of the need for coal-handing machinery, rail spurs or docks for coal delivery, etc.

    5. Carl from Chicago Says:

      There are a bunch of issues here and I will try to find time for them in a future post.

      The cities in Illinois that commissioned this plant wanted to build a new base load plant and diversify their fuel sources. Back in 2001 when they started this nuclear was totally dead (it is mostly dead now, but that is a different story) and natural gas was viewed more as a “peak” capacity than base load.

      Thus if the cities wanted to have any sort of base load capacity, the only choice seemed to be coal. Unlike utilities today, who just will pass on increases to customers and make big $ off higher costs, cities have to remain conscious of rates today and in the future. Thus they need to have something “in the hopper” for future demand when existing plants wear out and to provide for growth. The electric utilities don’t care as much because they don’t have the same “duty to serve” so once again if the cheap (paid for) generation gets shut down, they will just charge more and ho-hum it comes out in the end.

      Today it isn’t economics that kills coal it is the endless rounds of lawsuits, delays and EPA uncertainty that make it a loser. You can’t build a coal plant unless you have amazing guts and dedication. Needless to say, new ones aren’t coming.

      So the bottom line is that today, in 2010, it is natural gas or nothing, or hot air about “clean coal” or some nuclear pipe dream (for most of the country). We will just let everything get older w/out a plan to replace it and slide the burden on to future rate payers. That’s leadership.

    6. Paul Milenkovic Says:

      If you believe the late Thomas Gold, or the present J. F. Kenney for that matters, natural gas is a primordial constituent of the Earth’s upper mantle and should be abundant, that is if you drill deep enough or don’t confine yourself to sedimentary basins.

      So maybe the switch to natural gas as the primary fuel for electric generation, which is the defacto policy of fighting coal, indifference towards nuclear, and thinking that wind power constitues a major new source of power (it is a stalking horse for natural gas), is correct policy?

    7. Michael Kennedy Says:

      Perhaps some natural, or “man caused” disaster will break the strangle hold that fantasy and wishful thinking have on the political class. Most of them are lawyers and have never taken a math or science class beyond “Chemistry in the Community” and algebra. They simply don’t know what they are doing. California relies on Arizona for over 25% of its electricity. When the boycott over the new Arizona immigration law was passed by the LA City Council, a member of the Arizona power board of directors sent a letter asking if they wished to renounce the electricity contract. The answer was no.

    8. Carl from Chicago Says:

      One of my favorite quotes came from somewhere and it was talking about US electricity policy. They said every time the industry bet on a new “base” fuel, it came out badly. This goes back from hydro to nuclear to coal and now onto natural gas.

      You do need to have some fuel diversity so that if the cost to run a particular type of fuel goes way up you have some options, or if the US government rules change making your existing plant no longer cost effective.

    9. Jim Miller Says:

      Carl – Thanks for this exceeding useful summary, which I just linked to.

      You may be interested in my own
      brief post, giving an example of just how “abundant” those coal reserves are.