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'War on coal'? Why Obama might not be industry's worst enemy.

Environmental regulations by the Obama administration come at a cost to coal plants and mines, but the rise of cheap natural gas appears to be a greater threat.

By Staff writer / September 26, 2012

Coal miners walk by a sign supporting Republican presidential candidate Mitt Romney at the American Energy Corp. in Beallsville, Ohio, on Aug. 14.

Shannon Stapleton/REUTERS/File

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Deep in the heart of Ohio coal country, Mitt Romney and Paul Ryan are on a campaign bus tour that hits President Obama for environmental policies they say are responsible for shuttering coal-fired power plants and the mines that feed them.

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It's a message that could resonate in Ohio and other coal-producing states. In a regional 30-second television ad aired last week called the "War on Coal," one coal worker says "Obama is ruining the coal industry." Another in a hard hat says White House policies are "attacking the coal industry." The ad features Mr. Romney telling ranks of miners, "We have 250 years of coal; why wouldn't we use it?"

Striking the same theme, the Republican-controlled House of Representatives on Friday passed a bill dubbed the Stop the War on Coal Act to roll back environmental laws that affect the fossil-fuel industry, although the Senate will almost certainly block it.

To be sure, environmental regulations designed to make coal-fired power plants cleaner are raising costs for the industry and having an effect, but the "war on coal" is coming less from the Obama administration than from natural gas, say some experts.

Coal-fired power plants and coal mines are being shuttered at an unprecedented pace mainly because the price of natural gas has dropped so far that it has made coal power uncompetitive. Specifically, electricity from natural gas power plants comes at less than half the cost of electricity from coal generators. As utility executives hustle to remain competitive in the deregulated marketplace, they are increasingly turning to the cheaper alternative, power market experts say.

Examples include: 

  • In PJM Interconnection, a 13-state electricity market that serves more than 60 million people from Delaware to Illinois, natural gas-fired power plants now run about 50 percent of the time – a statistic called "capacity utilization." A decade ago, natural gas-plant utilization was 15 percent.
  • In the 11-state Midwest Independent Transmission System Operator grid, coal-plant utilization has fallen to 45 to 55 percent from 70 to 80 percent in 2010-11, according to RBN, a Houston-based energy market-research firm. Meanwhile, natural gas utilization averaged 35 percent this year, up from 10 to 20 percent in past years.
  • In the first half of this year, 165 new power generators were added in 33 states, but among the 10 states with the bulk of new generating capacity, "most of the new capacity uses natural gas or renewable energy," the Energy Department's Energy Information Administration (EIA) reported in July. The trend is expected to continue, with natural gas-fired plants accounting for 60 percent of capacity additions between 2011 and 2035, EIA found. Coal is expected to account for 7 percent.
  • While gas-fired power plants are popping up like dandelions across America, just one coal-fired generator was brought on line in the first half of 2012, the EIA reports. There were no new reports of planned coal-fired generators, and just one of 14 in the pipeline advanced from pre-construction to under-construction status, the agency found in its 2011 annual survey.
  • Coal provided 45 percent of the nation's electricity in 2010, but is projected to fall to 39 percent by 2035, the Department of Energy estimates. Closures, combined with weak demand for electricity nationwide tied to the slow economy, have translated into less overall US demand for coal.
  • Since January 2010, utilities have announced retirements for about 12 percent of the nation’s coal-fired generating fleet, according to a July study of power plant emissions by M.J. Bradley & Associates, an environmental consulting firm in Concord, Mass. Most are "small, old, and lack advanced pollution control equipment," the study found.
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