Coal Tattoo

The coal industry and coal-fired utilities continue to complaint that the Obama EPA’s proposals to reduce power plant air pollution are the end of the world … but here’s what Platts reported yesterday:

Up to 40 GW of additional coal plant retirements over the next two decades will result from regulations proposed by the US Environmental Protection Agency, consultancy ICF International said Monday in its third quarter Energy Outlook.

The report is a far cry from the consultancy’s first quarter report, which estimated that 68 GW of coal-fired plant retirements would occur over the same period due to the series of expected regulations.

The ICF news release is here, reporting:

Contrary to some projections that indicate environmental regulations will severely impact U.S. coal production, ICF projects that U.S. coal production and prices will remain stable. In particular, demand for low sulfur Powder River Basin coal and low-cost, high-sulfur Illinois Basin coal is expected to be strong.

Platts explained:

The current report bases its estimate of impact by taking into account the Cross-State Air Pollution Rule, the Utility MACT, coal combustion residuals rule, a cooling water intake rule and a future CO2 rule. ICF estimates that the CO2 rule will be in effect by 2020, and assess a carbon price of $15/ton.

The new prediction falls below those forecasted by other analysts and industry insiders, which is partly because of analysts’ changing notion of the regulation details.

John Blaney, managing director of ICF, said:

I think everybody’s projections are evolving as the regulations change and as we learn about what will be contained in the forthcoming regulations.


Another, newer realization by the authors is that the coal plant retirements won’t affect coal consumption by utilities as much as previously thought.

“It’s a couple of things,” Blaney said. “First, most of the retirements are among smaller and older [plants] that are already running at lower capacity factors, so they’ll have proportionally less of an impact on demand than expected. And some of the existing plants will ramp up to meet extra demand.”