Sunday, July 11, 2010

Coal and Electricity Generation

World Wide Growth In Coal

Per the official US Energy Information Administration statistics (they have an excellent site, the link to this data is here, the use of coal for electricity generation will continue to grow over the next 25 years (their forecast goes through 2035). In 2007, the world generated 7.92 trillion kilowatt hours using coal, or 42% of global energy generation. In 2035, they predict that 15.02 trillion kilowatt hours of energy will be produced using coal, or 43% of global energy generation. Thus in an ABSOLUTE sense power generating by the use of coal will increase by approximately NINETY PERCENT over the next 25 years (through 2035), and the total output of power generated by coal in 2035 will be approximately equal to EIGHTY PERCENT of power being generated from ALL sources today (coal will be 15.02 trillion kwh in 2035 vs. 18.77 in 2007, the year with the most recent statistics available).

The purpose of this background is to explain that the continued use of coal for the world as a whole will continue at the same approximate percentage that it provides today (about 42-43%) and that the absolute generation of power utilizing coal will almost double in the next 25 years (increases 90%).

Thus for all the talk of alternative energy, the reality, world-wide, is that coal is the largest share of generation and will continue to remain this way for the foreseeable future. So if you believe that we are moving to alternative energy as a whole, it isn't true, and if you believe that coal is going away, if anything it is going to almost double in the next 25 years.

The reality is that everything that we make that is energy intensive won't be made in the US - it will be made overseas (along with the jobs and tax revenues that come with this), and it will just be exported to us. It is the same net outcome for the planet as a whole, except that we won't produce what we need and we will have to find some way to pay the other countries that provide it for us. And if there is an issue with rising temperatures, what we do in the US isn't going to matter overall because we are not the largest part of the economy and huge investments in coal fired generation are occurring around the world despite our thoughts to the contrary.

The United States and Coal

For all of our talk about "renewable" generation, coal remains the largest component of US electricity generation. The United States has abundant reserves of coal and coal technologies are proven and cost efficient. The US Environmental Protection Agency (EPA) recently proposed new emissions guidelines that, if passed, will result in the shut down of many older coal plants that would require significant re-fitting. From the article:
The rules will probably trigger the closing of the “smallest and dirtiest coal plants” when coupled with new limits expected from the EPA for mercury emissions from coal- fired generators, K. Whitney Stanco, a Washington-based analyst with Concept Capital, said in a research note to clients today before the regulations were announced. The agency doesn’t know whether the regulations would result in shutting plants, McCarthy of the EPA said.
The part of the quote that I find most howlingly funny is that the EPA doesn't know if this new rule would result in the closure of older coal plants - the sad part is that this is probably true, because why would they care about the practical impact of a rule that they are considering?

Building a Coal Plant in Illinois

The Chicago Tribune recently wrote an article about the Prairie State Energy Campus, a massive new 1600 MW facility being built in downstate Illinois, titled "Clean coal dream a costly nightmare".

In the past I have taken journalists who write about energy to task for their misrepresentations and, while this isn't a terrible article, the headline writer mis-represents the situation. The new plant being built was NEVER a "clean coal" plant as planted in the popular imagination; this plant was the last of the old-school coal plants with scrubbers. The plant will be one of the largest emitters of pollutants as now defined by the EPA just because it is large and will be run continuously (while many of the smaller coal plants will likely end up getting shut down, see above), since the citizens of Illinois seem to like their air conditioning and to run whatever industry remains in our state. There simply is very little base load generation being built, anywhere, so once this plant is up it will run probably for the rest of our lifetimes.

This plant is a "mine mouth" plant which means that the coal is mined locally and doesn't have to cross the country to reach the site, which reduces operating costs. The plant also is linked to the nearby coal fields, so not only does it supply generating capacity, it is linked to its own fuel source should the price of coal increase in the future.

The cost of this plant has more than doubled since original estimates were made, to $4.4 billion dollars. The plant was proposed in 2001 but never-ending environmental protests and the non-value adding permitting and government process put it years behind schedule. In the mean time I can only imagine how many coal plants were put up in China and I have to believe that their cost / MW is a fraction of ours in the USA, even adjusted for the fact that this plant has modern scrubbers and many of the Chinese plants have little in the way of emissions controls (this is now changing, and it is likely that future clean coal technologies will come out of China since they are making it a priority and the costs to build a plant and the time lines are so much better than in the litigious USA).

The Ultimate Outcome:

Thus here are the conclusions based on the data above:

1) the world will continue to rely on coal for the largest portion of power generation
2) the ABSOLUTE volume of power generated by goal will almost double in the next 25 years
3) building coal plants in the USA is exceedingly difficult, expensive and time consuming
4) there is a lot of regulatory uncertainty about what the EPA is trying to do, and they don't even bother considering the economic impacts of their actions
5) the future decisions about how to provide base load power for the USA are going to be difficult and costly because coal is out and nuclear power is substantially delayed and non-economic; we are just relying on our existing resources until they run out and will then have to pick up the pieces
6) these items will go with a power shift towards places that use low cost coal to run their economies vs those that choose to go with high cost sources; we will still use the same economic goods, but we will just have to buy them from someone else, similar to how we are hostage to those that provide us foreign oil today

Cross posted at Chicago Boyz

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