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Coal boom declines as global warming boosts natural gas and renewable power

March 12th 2008

Coal

Some 45 coal-fired power plants were either cancelled or delayed in the past 12 months, according to a report by the US Department of Energy's National Energy Technology Laboratory. The trend reverses the utility industry’s craving for coal plants with some 150 such facilities in development.

Indeed, natural-gas and renewable projects have now outpaced coal plants, according to Global Energy Decisions, an energy information supplier. Non coal plans total more than 70,000 megawatts while coal has dropped to just 66,000 megawatts in the pipeline.

Investors have become cautious which is taking a toll on coal development plans. "You turn off the money spigot, you've turned off those plants," said Robert Linden, a senior oil and gas analyst at Pace Global in New York.

About 28 coal-fired power plants already under construction are moving forward, as are plant expansions. But for six other facilities "near construction," their fate has become unknown. Another 80 plants “in development” may be cancelled outright. Last year, Texas utility TXU alone canceled eight of its planned 11 coal-fired power plants.

Whether coal is booming or not, is a debate. "We're in the middle of a coal building boom with more new coal plants now under construction than anytime since the 1980s," asserts Joe Lucas, executive director of Americans for Balanced Energy Choices, a coal and utility lobby group.

But others see a downturn calling it a crisis. “Where is the electricity we need for the next 50 years going to come from?" said Gregory Boyce, chairman of Peabody Energy, adding, “We view it as short-term and very unfortunate because we need to continue to build these new coal plants – that are at least 15 to 20 percent more carbon-efficient than the plants they replace – while we continue to work on technologies for the next generation of plants that are carbon-capture ready or that capture carbon and store it.”

But those moving to natural gas and renewable energy,  the picture is brighter. In Florida, two coal-fired power plants were cancelled in favor of natural-gas facilities. PacifiCorp, a utility owned by Warren Buffett, has rejected coal-fired power expansion, and now prefers adding gas and wind.

The natural-gas industry is enjoying the boom, as scores of power plants are planned to meet America’s 1.2 percent annual electricity demand growth.

Numerous renewable alternative sources will augment natural gas power plants. Texas is now the country’s number one state for wind-power with Kansas not far behind. Indeed, the Kansas wind power industry is growing so fast, companies there cannot find enough qualified workers. California is deriving a significant amount of energy from geo-thermal. Thin-film solar strips are rapidly taking up roof space. Moreover, co-generation has become an increasingly popular concept as heat emission from machines are captured and sent back into the grid or other users. Hence, alternative sources are slowly but surely burning into the power industry’s desire for the dirty, health hazardous fuel that is coal.


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