Word on the Street: Coal is Dead
May 3, 2014
But then, technically, so are zombies.
The Supreme Court upheld Tuesday a 2011 federal rule governing the amount of air pollution some states can let drift across their borders into their downwind neighbors. The 6-2 ruling is a win for the Obama administration, which has leveraged executive powers to curb pollutants from the nation’s power sector. Under Tuesday’s ruling, some 28 Midwestern and Southern states will have to cut emissions of sulfur dioxide and nitrogen oxide from coal-fired power plants.
Supporters of the law cheered the ruling, saying it would protect millions of Americans from pollutants that have been linked to public-health issues. Critics of the White House’s climate action plan have likened it to a “war on coal,” threatening an industry that supplies about 40 percent of the nation’s electricity.
Coal’s outlook remains bright abroad, where it is largely fueling developing economies, and new technologies could make the world’s most polluting fuel a viable option in a low-carbon economy. But Tuesday’s Supreme Court decision is the latest in a series of blows to coal’s future in the United States, and foreshadows pending rules that would have an even greater impact on the industry.
Perhaps the greatest existential threat to US coal comes not from federal regulations, but from decades of innovation that have unlocked a natural gas bonanza in the US. As production has ballooned over the past five years, prices have fallen, leading many utilities to shift from coal-fired power plants to ones that run on natural gas.
Even if Tuesday’s Supreme Court ruling further dims coal’s future, coal is nonetheless expected to make up 32 percent of US electricity production in 2040, according to the US Energy Information Administration (EIA). Coal’s outlook is even better abroad, where China, India, and other rapidly expanding economies are eager customers for the inexpensive fuel. World coal consumption is expected to rise at an average rate of 1.3 percent per year through 2040, according to EIA.
That’s bad news for the environment. With the highest carbon content of all the fossil fuels, coal makes up about 44 percent of global carbon emissions, according to the Paris-based International Energy Agency. It is also a major source of sulfur dioxide and nitrogen dioxide, the two pollutants under consideration in Tuesday’s ruling.
Investors in coal-burning utilities are brushing off a decision by the U.S. Supreme Court this week that gave federal regulators more power to control air pollution.
Time, they say, is on their side.
It will be years more before utilities feel any pain from new rules as companies, lawyers and regulators wrangle over how to apply restrictions and fresh legal challenges work their way through lower courts.
In the meantime, power companies already have been upgrading their coal plants to meet stricter pollution limits, while phasing out older plants that have no chance of making it.
“We expect the Supreme Court decision to have a very limited impact on the U.S. coal-fired fleet,” said Hugh Wynne, an analyst for Sanford C. Bernstein & Co. Improvements already made to comply with previous pollution limits mean new targets will be met “with relative ease” by the time they are implemented, he said in an interview.