This from the Wall Street Journal today:
From coast to coast, plans for a new generation of coal-fired power plants are falling by the wayside as states conclude that conventional coal plants are too dirty to build and the cost of cleaner plants is too high.
If significant numbers of new coal plants don’t get built in the U.S. in coming years, it will put pressure on officials to clear the path for other power sources, including nuclear power, or trim the nation’s electricity demand, which is expected to grow 1.8% this year. In a time of rising energy costs, officials also worry about the long-term consequences of their decisions, including higher prices or the potential for shortages.
As recently as May, U.S. power companies had announced intentions to build as many as 150 new generating plants fueled by coal, which currently supplies about half the nation’s electricity. One reason for the surge of interest in coal was concern over the higher price of natural gas, which has driven up electricity prices in many places. Coal appeared capable of softening the impact since the U.S. has deep coal reserves and prices are low.
But as plans for this fleet of new coal-powered plants move forward, an increasing number are being canceled or development slowed. Coal plants have come under fire because coal is a big source of carbon dioxide, the main gas blamed for global warming, in a time when climate change has become a hot-button political issue.
For the full text, click here (and click soon, as the WSJ only gives free access for a few days).
It is also worth noting that — notwithstanding WSJ’s reportage — this isn’t really driven by new environmental considerations as much as by 30-year-old environmental considerations, when we effectively stopped building new coal plants but still had enough reserve margin in the system to keep increasing coal use without new construction.
Current increases in capital costs are largely to comply with the Clean Air Act — which the old grandfathered plants were exempted from. Carbon control is clearly a big uncertainty moving forward, only likely to increase the costs further, but it is striking that we’re seeing so much price increase and uncertainty in coal-derived power even without it.
This points out a larger issue with power plant regulation. Namely, these plants last a long time. The Clean Air Act was well intended, but it took three decades for it to start to impact the use of dirty coal, by virtue of the fact that it only impacted new facilities. Compare this to new vehicle regs, where the much shorter lifetime of cars means that we can get a quicker phase-out. Thus, we can eliminate leaded gasoline quickly, but can’t really impact SOx and NOx from central plants for much longer.
This is precisely why the auction vs. allocation issue is so important for greenhouse-gas control. Every carbon cap-and-trade system that grandfathers in the old plants’ right to pollute (witness Kyoto & RGGI as examples thereof) is going to face similar delays in carbon reduction — delays that we cannot afford.