By Brandon Moseley
Alabama Political Reporter
The Obama administration’s new regulations limiting green house emissions combined with low natural gas prices could force many American coal powered power plants to close. According to a new report in ‘The Economist’ Obama’s environmental regulations could cost $144 billion to replace or retrofit existing power plants.
The Brattle Group study estimated that 59,000 to 77,000 megawatts (MW) of coal plant capacity is likely to retire over the next five years. The firm had two years ago estimated 25,000 less megawatts in an earlier study. There is about 317,000 MW of coal-fired capacity now in the United States. One megawatt can power about 1,000 homes.
Frank Graves, the co-author of the study said, “Everything else being equal, this amount of retirement will be enough to increase prices in both electric and gas markets for a few years, but we do not envision that impact to be large or persistent enough to alter retirement decisions.”
Brattle explained that the increase in the amount of coal plants to close is partially due to low natural gas prices. Also the poor economy has led to a lowering of the projected demand for power.
The economists explained that these shifting market conditions have resulted in an acceleration in announced coal plant retirements. Power generating companies have already announced the retirement of some 30,000 MW of coal plants by 2016. Brattle said that Obama’s. Environmental Protection Agency (EPA) still has to finalize some rules related to emissions, cooling water and coal ash.
Because of the remaining environmental uncertainty, Brattle’s economists had developed “strict” and “lenient” scenarios. If the yet to be written rules are lenient then 59,000 MW are likely to retire. Under stricter rules Brattle estimates that 77,000 MW could close.
The biggest coal-fired generation companies in the United States include American Electric Power Co, Duke Energy Corp, Southern Co, Xcel Energy Inc , GenOn Energy Inc and FirstEnergy Corp. Southern Company is the parent company of Alabama Power.
Alabama Congressman Spencer Bachus said, “At a time when we have again been reminded of our dangerous dependence on energy from hostile regimes, it makes no sense to take American-mined coal off the table. It is our most abundant domestic energy resource and the industry employs thousands of people in the State of Alabama alone. Coal is a vital part of our national energy mix and can play an important role in achieving greater energy security for our country.”
Ryan Lizza wrote in “The New Yorker” that Obama is likely to continue his war on coal if he is reelected to a second term. Lizza wrote, “President Obama Has Said “The Most Important Policy He Could Address” In A Second Term Is Climate Change. “Obama has an ambitious second-term agenda, which, at least in broad ways, his campaign is beginning to highlight. The President has said that the most important policy he could address in his second term is climate change, one of the few issues that he thinks could fundamentally improve the world decades from now.”
The President’s persecution of the American coal industry was raised in the Presidential debate. “I like coal,” Gov. Mitt Romney said, speaking directly to the president. “People in the coal industry feel like it’s getting crushed by your policies.”
According to the study retirement of coal plants could increase if natural gas prices drop. If natural gas prices increase then the industry could slow or decrease coal plant retirements.
