NCPA - National Center for Policy Analysis

Is There Still a Case for Coal?

June 11, 2012

On March 27, the Environmental Protection Agency (EPA) proposed what it calls the first "Clean Air Act standard for carbon pollution for new power plants."  The proposal, if enacted, will effectively outlaw the construction of new coal-fired power plants in the United States by capping acceptable carbon dioxide emissions at a level below what is attainable by modern plants, says Robert Bryce, a senior fellow at the Manhattan Institute.

This proposal will effectively eliminate the expansion of coal-fueled electricity domestically.  This will not only be enormously costly to American electricity consumers, but is also unlikely to reduce emissions.

  • Coal provides about 46 percent of domestic electricity, with natural gas providing about 24 percent and nuclear 20 percent.
  • The United States has about 237 billion tons of coal reserves -- about 28 percent of the world's known deposits -- and about 241 years of supply at current rates of consumption.
  • It is also one of the cheapest sources of energy: the Energy Information Agency estimates that by 2016, coal-fired production will cost $95 per megawatt-hour compared with $96 for onshore wind, $211 for photovoltaic generation and $244 for offshore wind.
  • The reduction of such a large and cheap source of electricity for American consumers will have substantial impacts.

Additionally, though the EPA is motivated by the goal of reducing carbon dioxide emissions, its policy will target companies that are assisting it with equally important objectives.  The newest coal-fired plants are reducing emissions of sulfur dioxide and nitrogen oxide (other gas emissions targeted by the Clean Air Act) to levels far below those mandated by the EPA.

Finally, the new rule will prove to be completely ineffective at reducing carbon dioxide emissions worldwide.

  • As domestic coal use declines, U.S. producers are selling more of their product overseas.
  • Between 2010 and 2011, U.S. coal exports increased by more than 31 percent to about 80 million tons, and coal exports now account for about 8 percent of all U.S. coal production.
  • The ongoing increase in global coal consumption will make any reductions in U.S. coal consumption and carbon dioxide emissions insignificant.
  • Over the last decade, global carbon dioxide emissions rose by 28.5 percent, despite a reduction in the United States' emissions by 1.7 percent over the same period.

Source: Robert Bryce, "Is There Still a Case for Coal?" Manhattan Institute, May 2012.

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