Coal industry left fighting over US plants
FOR THE latest front in the war on coal, look no further than the Coffeen Power Station, about 60 miles south of Springfield, Illinois.
Trains roll into Dynegy Inc.’s plant hauling coal mined halfway across the country in Wyoming’s Powder River Basin – even though there’s a mine just a few miles down the road.
That galls Illinois state representative John Bradley, who’s pushing for legislation that’ll boost the use of the state’s own supply.
“Powder River Basin coal is not as good as coal from Illinois,” Bradley, a Democrat, said by phone.
“Illinoisans are sitting on better coal than any other in the country.”
America’s coal miners are so desperate, beaten down by the lowest prices in eight years, increasing competition and mounting environmental regulations, that they’re battling each other for scraps.
Alpha Natural Resources Inc., once the second- largest US coal producer, filed for bankruptcy last Monday.
The dominant energy source since the Industrial Revolution, coal has seen its role reduced. Details emerging ahead of the release of President Barack Obama’s Clean Power Plan on Monday show pressure to curb its use will only intensify over the next 15 years, escalating the industry’s fight for survival.
The fiercest war of all is emerging between the resurgent Illinois Basin and the Powder River Basin, which has long been king of coal.
Up for grabs is the business from a collection of power plants located chiefly in the Midwest and Southeast, which have long been fed by Powder River producers.
Mining costs are low at the vast open pits of Wyoming and Montana.
The region boomed after the Clean Air Act expanded in 1990 because many plants found it cheaper to haul in the region’s less-polluting coal than install costly scrubbers to clean up Illinois’s high-sulfur grade.
On the other hand, Powder River coal is low in heat content and expensive to ship far.
Illinois Basin’s coal output jumped 34 per cent to 132.1 million tons a year in 2013 from five years earlier, compared with 407.6 million tons for Powder River, after regulations forced utilities to install scrubbers – thus enabling the boilers to use the high-sulfur fuel.
Miners in the Illinois Basin, who feasted off the Central Appalachian market, are looking to new markets after running out of plants to steal away from competitors in West Virginia and Kentucky.
And no coal basin is immune to the onslaught of cheap natural gas. In April, gas overtook coal as the largest source of electricity generation, government data show. Near the Marcellus shale formation, gas fell below 80 cents per million British thermal units in July.
Benchmark Central Appalachia coal has meanwhile fallen 11 per cent since last year to US$43.13 (RM164) a ton, the equivalent of US$1.80 per million Btu.
Nor are producers safe from retiring coal-fired plants. Obama’s Clean Power Plan would cut coal-fired electricity by 90 gigawatts, the Energy Information Administration said in May.
There were about 292 gigawatts of coal-fired generation capacity in 2014, according to EIA.
Details of the plan released ahead of the full roll-out on Monday show deep emissions cuts will be required, by curbing the country’s use of coal and natural gas. By 2030, coal’s share of power generation will have fallen to 27 per cent, Environmental Protection Agency Administrator Gina McCarthy said Sunday.
That’d be down from 33 per cent in May. — WP-Bloomberg