November 29, 2012

Natural gas revolution pushing coal aside

And an old coal plant in Salem, Mass., one of the state's 'Filthy Five,' is headed for demolition.

By STEVEN MUFSON The Washington Post

SALEM, Mass. – Peter Furniss, the fair-haired chief executive of Footprint Power, gives a tour of the aging coal and oil plant that towers over sailboats in this historic harbor.

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An old coal plant in Salem, Mass., one of the state's 'Filthy Five,' is headed for demolition, as natural gas – a cheaper and cleaner source of energy – becomes more popular.

Washington Post

The Ivy League-educated lawyer, clad in unsoiled work boots and a pinstripe jacket, circles a mound of coal and walks inside a rusting oil storage tank. He gingerly steps into a tunnel where a conveyer belt carries coal into the plant's furnaces.

Inside the plant, Furniss points out the Roman arches and graceful columns in the turbine room and the half-century-old control panel, an antique compared with the computers that run equipment now. From the roof, he surveys the scenic coastline, which fades into the autumn fog.

For years, this coal plant -- known as one of the state's "filthy five" -- has flirted with closure and avoided a costly overhaul that would bring its toxic emissions in line with modern pollution standards. In 2003, Gov. Mitt Romney, R, stood in front of the plant and declared: "I will not create jobs that kill people. That plant kills people."

Nine years later, two of Salem Harbor power plant's generating units are still operating and the other two, including an oil-fired unit, closed last December.

Now, however, the prospect of long-lasting cheap natural gas supplies has sealed the fate of the plant. In August, Footprint Power, run by a group of former utility executives, bought the roughly 60-year-old plant from Dominion Resources and announced they would tear it down in 2014 and replace it with a cleaner, more economical natural-gas-fired unit.

"When we were first looking at the overall project, it really was a toss-up as to whether it would be more the environmental rules or the gas price that was going to drive coal plants to shut down," said Furniss, 45. "It now is very clearly the gas price."

Salem Harbor is a case study of how the shale gas revolution is overthrowing assumptions about energy by undercutting coal prices and usurping it as the nation's fuel of choice for electric power generation.

Across the country, utilities are switching from coal to cheap natural gas. In April, for the first time, natural gas pulled even with coal as a fuel source for power plants. Through August, the use of coal to generate electric power had tumbled 17 percent while the use of natural gas jumped 27 percent, according to the Energy Information Administration.

As of July, companies had announced plans to close down 30 gigawatts of coal-fired plants, or about 10 percent of the nation's total coal plant capacity, by 2016, according to a study by the Brattle Group, a consulting firm. These aren't models of efficiency; the EIA says that the average coal-fired generator to be retired this year is 56 years old.

Overall, this transition might cause the loss of jobs in some coal mines, but it is also creating jobs in areas rich in shale gas. Moreover, the gas glut is cutting utility bills for households and businesses, giving a much-needed boost to the lackluster economy.

In Ohio, for example, households and businesses in 2011 saved about $1.85 billion, or about 20 percent of gas and electricity fuel costs compared with the average from 2007 through 2009, according to Richard Smead, a director of the eco nomic advisory firm Navigant Consulting. The average household saved $232.

Natural gas emits about half as much carbon dioxide as coal does in a power plant. In the first quarter of 2012, carbon dioxide emissions from coal burning fell to the lowest level for any quarter since 1986, according to the EIA.

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