Sunday, December 8, 2013
The Associated Press
NEW YORK - The future of coal is getting darker.
Coal passes through a loading terminal earlier this year at the Spring Creek mine near Decker, Mont. U.S. coal production is on track to fall to a 20-year low in 2013.
The Associated Press
Economic forces, pollution concerns and competition from cleaner fuels are slowly nudging nations around the globe away from the fuel that made the industrial revolution possible.
The U.S. will burn 943 million tons of coal this year, only about as much as it did in 1993. Now it's on the verge of adopting pollution rules that may all but prohibit the construction of new coal plants. And China, which burns 4 billion tons of coal a year -- as much as the rest of the world combined -- is taking steps to slow the staggering growth of its coal consumption and may even be approaching a peak.
Michael Parker, a commodities analyst at Bernstein Research, calls the shift in China "the beginning of the end of coal." While global coal use is almost certain to grow over the next few years -- and remain an important fuel for decades after that -- coal may soon begin a long slow decline.
Coal has been the dominant fuel for power generation for a century because it is cheap, plentiful and easy to ship and store. But it emits pollution-forming gases and soot particles, and double the greenhouse gas emissions of its closest fossil fuel competitor, natural gas.
Now utilities are relying more on natural gas to generate electricity as discoveries around the world boost the fuel's supplies. The big, expanding economies of China and India are building more nuclear and hydro-electric power plants. Renewable energy sources such as wind and solar, while still a small fraction of the global energy mix, are growing fast as they get cheaper. And a greater emphasis on efficiency is tempering global growth in electricity demand.
In the U.S., coal production is on track to fall to a 20-year low of just over 1 billion tons this year. In the first half of the year, 151 U.S. coal mines that employed 2,658 workers were idled, according to a study conducted by SNL Energy, an energy-market data and analysis firm. Last month the U.S. government held an auction for mining rights to a prime, coal-rich tract of land in Wyoming and didn't attract a single bid.
Later this week, the Obama administration is expected to announce a rule that would cap the amount of carbon dioxide that new power plants are allowed to emit. The new limits appear to be impossible for coal plants to meet without carbon-trapping technology that analysts say would be prohibitively expensive -- if it were even available commercially yet.
The coal industry and energy forecasters have long known that clean-air rules and competition from natural gas would make the U.S. a tough market for coal. But they predicted that rising coal demand in Asia, and particularly China, would more than make up for the slowing U.S. demand and power strong growth for coal companies for years to come.
Now even that last great hope for coal may be fading. In a report published earlier this month Citibank analysts suggested that "one of the most unassailable assumptions in global energy markets" -- that coal demand would continue to rise in China for the foreseeable future -- may be flawed. Bernstein Research reached similar conclusions in a report published in June.
Both reports predict coal demand in China will peak before 2020. The Chinese economy is expected to require less energy to grow, and other forms of generation such as nuclear, hydro-electric and renewables are elbowing into coal's turf.
"The era of wanton Chinese coal demand growth is approaching an end," wrote Citibank analyst Anthony Yuen.
The shift would be give a major boost to efforts to curb emissions of carbon dioxide, a greenhouse gas, and pollutants such as mercury and sulfur dioxide.