The rising price of oil is prompting a broader debate over how to preserve as many power source options as possible. And it is beginning to provide a reprieve for one energy source under heavy pressure: Coal.
Before the eruptions from MENA (the Middle East and North Africa), it was a foregone conclusion that coal would be declining as a fuel for power generation in the U.S. Certainly, coal-fired plants would not be disappearing completely in the near future … yet the balance was clearly swinging in favor of natural gas and even renewables.
Most had expected that the battle over carbon capture and storage would be the watershed event marking the end of the coal industry. That fight is now delayed – but hardly forgotten – inside the D.C. beltway.
What happened instead is the introduction of new non-carbon regulations, set to begin next January, for mercury, sulfurous, and nitrous oxide emissions. (See "Two Non-Carbon Regulations About to Rock the Coal Sector," October 29, 2010). These were expected to move more power generation from coal plants to gas-fueled ones.
With significant coal-fired generating capacity coming off-line in this decade, we were beginning to hear the swan song for coal. But then …
The Turmoil Abroad Is Changing Priorities
The security implications of relying upon oil from unsettled areas abroad have emerged (again) as a domestic issue of importance. This time, all parties agree, the U.S. understands that the instability in countries upon which we depend for crude oil will not be lessening any time soon.
As a consequence, renewed discussion has taken place about the desirability of retaining as many genuine energy options as possible. And that discussion certainly includes coal.
The rising instability has prompted some unexpected political results, too. Some states, such as North and South Carolina, are introducing provisions to expedite regulatory review for new nuclear power plants. Others are providing generating companies with relaxed environmental standards (always expressed as a "temporary" measure).
This move to retain sources not dependent upon foreign provision of crude oil has made its way into some interesting changes in approaches to coal.
The New Mantra: Let's Keep Our Options Open
Minnesota state lawmakers are moving closer to overturning a ban on new coal-fired power plants and new imports of electricity from such facilities. These moves would comprise a major revision in state energy policy that was previously considered more or less settled.
On March 9, both houses of the Minnesota state legislature approved parallel bills that would overturn a ban on coal plants larger than 50 megawatts (MW) – the category of plants producing the very carbon dioxide emissions that the state legislators had previously sought to curtail. That ban also extended to new arrangements to import electricity generated by coal-first plants.
The move in Minnesota reflects similar strategies emerging elsewhere. These involve major utilities – Green River Energy and Xcel Energy (NYSE:XEL) in the Minnesota example – and elected officials joining forces to support the lifting of bans against coal-fired power plants.
The about-face in Minnesota is also breathing new life into coal producers in the region, especially in North Dakota and Montana. Even states with strong environmental movements are now considering similar moves.
It is not that new coal-fired plants would actually be constructed – a rather long-term project, at best. In fact, neither of the companies in Minnesota have long-term plans to add any base load generation at all. Rather, it improves the prospects of other states exporting electricity generated from coal to neighbors that had been passing regulations against accepting it, for environmental reasons.
The same goes for nuclear. The genuine likelihood of a new nuclear power station is not the issue. The option of moving in that direction, if necessary, is.
The mantra, these days, is keeping our "future options" open.
The decision in Minnesota also provides what could well be a major change in another approach challenging coal. In 2007, the state passed legislation that bars new coal-fired power plants -- unless the owner buys carbon allowances or develops mitigation projects to offset emissions from the planned plant.
Such moves were tantamount to placing the environmental impact burden squarely on the generating companies. It translated into establishing a statewide target of cutting 15% of the carbon emissions by 2015 and 80% by 2050.
It is still too early to conclude that a massive shift back to coal is underway under the guise of national energy security. Yet the longer the oil crisis remains, the greater the prospect that reliance on coal will be seen as the lesser of many evils.
Due to MENA unrest, reports of King Coal's death may have been greatly exaggerated. (With my apologies to Mark Twain.)