'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.
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"Coal's problem is really that natural gas prices have come down, while coal prices have remained relatively stable and will be rising over the long term because of demand from overseas," says Christopher Van Atten, lead author of the M.J. Bradley report. "That's why it's been a pinch for them, that difference in price."
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Retirements and a dearth of new coal-fired power plants will mean about 20.5 million fewer tons of coal burned between now and the end of the year than during that period in 2011 – a 7 percent drop, according to a new study by SNL Energy, a division of SNL Financial, a financial-news and data provider.
That's bad news for coal mine owners. Alpha Natural Resources, based in Bristol, Va., said Sept. 18 it would immediately shut down eight mines and lay off 1,200 miners across Appalachia. Alpha said that it ultimately expected to reduce its workforce by 9 percent. Kevin Crutchfield, Alpha's chairman and CEO, blamed both "a regulatory environment that's aggressively aimed at constraining the use of coal" and "the evolving demands of a changing global coal market."
For their part, coal-industry groups insist that the burden from Environmental Protection Agency regulations remains significant.
One EPA regulation will require costly filtering systems for many coal-fired plants to remove mercury emissions and other toxins, though the rule will not take effect until at least 2015 and the EPA is giving leeway beyond that date. In addition, an EPA rule restricting greenhouse gas emissions on new coal-fired power plants will start in 2013, though existing plants are exempt.
When it comes time for utility officials to decide whether to retire older coal-fired power plants, the prospect of hundreds of millions of dollars of scrubber and filter upgrades could loom large. The new federal rules will "prematurely" close 204 coal units in 25 states, says Mike Duncan, president of the American Coalition for Clean Coal Electricity. Many of those units are concentrated in the electoral swing states of Ohio, Pennsylvania, Virginia, and North Carolina.
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