Coal has been the fastest-growing source of the world’s energy for some six years now.
It’s plentiful in many of the globe’s biggest energy consumers: China, the US, India, to name a few. It’s also still a fairly cheap source of electricity. So on cost/supply and energy security, it compares favourably with, say, oil, as Gregor has pointed out.
It’s also extremely polluting; and not only in terms of greenhouse gas emissions.
And coal is only cheap so long as externalities are not priced in. How much longer will this be the case? Even emerging economies are showing signs of weighing up the lure of coal with its polluting price.
India, a country expected to fuel a big portion of its fast-growing energy demand from its own coal reserves, is having second thoughts about allowing access to the commodity, the FT reports:
Mining companies in India will be blocked from tapping up to a third of the country’s biggest coal reserves after the Congress party-led government declared them “no-go” areas for mining because of their environmental sensitivity.
The country’s environment minister, Jairam Ramesh, told the FT the decision to ban mining in heavily-forested areas was an attempt to better protect the environment. Concerns over the political effect of mining on poor tribal people are also an issue. But the move has caused anger among many large power and mining companies.
In the US, changes to regulations of sulfur dioxide and mercury may affect coal plants — to the extent that some analysts believe US coal power will go into ‘secular decline’. And this is under regulatory moves that are (so far) separate from the attempts to introduce federal climate legislation – although that could change.
The US Environmental Protection Agency (EPA) is legally obliged to introduce some of the changes to pollution laws that may impede coal-fired power — and although there are questions over how it will do this, the uncertainty alone is enough of a problem for some generators, as E&E News reported last month (link not available):
Two midsize coal plants in Georgia may shut down because of concerns over environmental regulations, according to Georgia Power Co.
The company cited confusion about pending EPA rules, in a regulatory filing. Meanwhile last month Colorado’s largest utility, Xcel Energy, said it would shut down three coal-fired plants in the Denver area — or convert them to gas-fired — due to new state pollution laws.
The US response is not surprising; a study last year estimated the cost of coal-fired power on human health, crop yields, and other factors such as vistas, at 3.2c/kWh — and that’s excluding climate effects.
And in Australia, the world’s biggest exporting country, shares of coal mining companies fell on Monday on news of a proposed new resources tax. While the effects on coal companies, who would see the national resource tax replace existing state-based royalties, are not clear cut, investors are clearly concerned.
Argus points out that Australia is a small part of US giant Peabody’s coal production – but the most profitable. This is not a pollution move (in fact Australia has just canned an emissions trading scheme for at least several years), but perhaps another indication that coal is not immune to resource nationalism.
Related links:
The death of US coal - FT Energy Source
Will nat gas profit from the death of US coal? FT Energy Source
Coal industry braces for interesting times - FT Energy Source
