Trump gift to coal industry won’t halt decline – report

Coal-fired power plant in Arizona. Stock image.

Since peaking in 2008, US coal consumption has fallen 39% to the lowest level in 40 years.

A Federal Energy Regulatory Commission report shows the total available installed generating capacity of coal stood at 257.5 gigawatts (slightly less than renewable energy sources for the first time US history). According to BloombergNEF another 41GW are slated for retirement and a further 105GW of capacity is deemed at risk of closure.

US president Donald Trump has done his utmost to make good on promises to ease restrictions on coal power since taking office and earlier this month the Environmental Protection Agency gave the industry another boost with a new set of rules that make it easy and cheap to comply with what’s left of Obama-era regulations.

But a new report suggest the rewritten Affordable Clean Energy (ACE) rules will do little to stem the decline of the industry.

Moody’s Investors Service says while the rules are credit positive for merchant coal generators because the “investments required to comply are minimal,” coal-fired plants will continue to be less economical than natural gas powered generators:

We project natural gas prices to remain within a band of $2.50 per one
million British Thermal Units (MMBtu) to $3.50/MMBtu and more likely on the lower end because of the abundant US supplies of natural gas from shale, along with rapidly increasing associated gas from shale oil production.

Additionally, coal-fired generation faces substitution risk from renewables such as wind, solar and battery storage as technology improvements have dramatically increased their cost competitiveness.

The ACE rule does not mitigate any of these overarching market trends that are creating strong headwinds for merchant coal generators nor does it address the impact of changing consumer preferences which appears to be supportive of using sustainable, lower carbon-emitting generating resources.

Finally, says Moody’s, just like Clean Power Plan (CPP) passed by the Obama administration, the ACE provisions could be legally challenged and eventually repealed.

5806 0

Comments

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More USA News