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U.S. coal power boom suddenly wanes

Worries about global warming and rising construction costs give the edge to natural-gas and renewable-energy plants.

By Staff writer of The Christian Science Monitor / March 4, 2008

On the rise: Texas, which already leads the US in wind-power generation, is aggressively putting up more wind turbines, including this one outside Abilene.

Robert Nickelsberg/Getty Images/File

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Concerns about global warming and rising building costs are blocking construction of new coal-fired power plants in the United States and pushing utilities to turn to natural gas and renewable power instead.

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Utilities canceled or put on hold at least 45 coal plants in development last year, according to a new analysis by the US Department of Energy's National Energy Technology Laboratory in Pittsburgh. These moves – a sharp reversal from a year ago, when the industry had more than 150 such plants in development – signal the waning of a major US expansion into coal.

Natural-gas and renewable power projects have leapt ahead of coal in the development pipeline, according to Global Energy Decisions, a Boulder, Colo., energy information supplier. Gas and renewables each show more than 70,000 megawatts under development compared with about 66,000 megawatts in the coal-power pipeline.

This year could diminish coal's future prospects even more. Wall Street investment banks last month said they will now evaluate the cost of carbon emissions before approving power plants, raising the bar much higher for new coal projects, analysts say.

"What you're seeing is a de facto moratorium on coal power right now," says Robert Linden, a senior oil and gas analyst at Pace Global in New York. "You turn off the money spigot, you've turned off those plants."

Aside from the 28 or so coal-fired power plants already under construction, prospects remain tenuous for the half-dozen plants "near construction" and another 80 plants not nearly as far along, says Steve Piper, managing director of power forecasting at Platts, the energy information division of McGraw-Hill. "Expansions [of existing plants] still have a good chance. But others will come under increased pressure for deferral or outright cancellation."

Coal is still booming, some say

Some coal-industry officials say the cancellations belie a surge for coal.

"We're in the middle of a coal building boom with more new coal plants now under construction than anytime since the 1980s," says Joe Lucas, executive director of Americans for Balanced Energy Choices, a lobby group supported by coal companies and electric utilities.

Others call the growing resistance to coal power worrying.

"It is a crisis for us because what we are not really focusing on is: Where is the electricity we need for the next 50 years going to come from?" said Gregory Boyce, chairman of Peabody Energy, at a "clean tech" conference recently in Palm Springs, Calif. "We view it as short-term and very unfortunate because we need to continue to build these new coal plants – that are at least 15 to 20 percent more carbon-efficient than the plants they replace – while we continue to work on technologies for the next generation of plants that are carbon-capture ready or that capture carbon and store it."

With US energy demand growing about 1.2 percent a year, big utilities must get energy from somewhere.

So far, utilities seem to be shifting to natural gas and renewable energy. In Florida, two coal-fired power plants were recently nixed, but natural-gas turbines are to take their place. PacifiCorp, a regional electric utility owned by Warren Buffett's investment company, turned its back on coal-fired power late last year and now emphasizes gas and wind.