What Impact Will the Election Have on Coal-fired Power Plants in the U.S.?

The media has concluded that the future of coal-fired power generation in the U.S. was adversely impacted by the election of President Obama for a second term. This is not necessarily the case. In fact the short term impact could be very positive for the industry and particularly the suppliers of air pollution control systems, cooling towers, and intake water treatment systems.

There are two phases of impact. The first and immediate phase deals with the upgrade or retirement of existing plants. The second phase deals with the life extension and additions of capacity for the longer term.

Relative to the first phase what is most needed is clarity and certainty. The Obama re-election will do much more to achieve this than would a Romney presidency. The EPA in the first year under President Obama was pursuing a pro active course to promulgate regulations covering priority pollutants and toxics. In the last two years EPA has bowed to political pressures and has attempted to delay rather than promulgate. When the judicial system has to be the force to accelerate action, it is proof of a weakened administrative body.

All parties (utilities, environmentalists and government) will be happier with the resolution of the issues. Delay is expensive and only increases the long term expense. Keep in mind that the rest of the world is installing scrubbers and SCR on its coal-fired power plants. China is adding 800,000 MW of SCR while the U.S. is dithering about 30,000 MW more or less. So it is untenable that the U.S. would want to be doing less than developing countries.

There is a future for coal-fired power. There is not a future for coal-fired power without air pollution controls. Supercritical generators can be retrofitted to existing power plants to make them highly efficient and cost effective. The low cost of natural gas is only a temporary phenomenon. There are two paths. The cost of extraction can be low or high. If the cost remains low the gas will be converted to liquids and LNG. If the cost is high, less will be produced and it will be used for residential heating. In either case the price of gas rises to a ratio against crude oil of 1 to 10. With $100/barrel oil you will have $10/MMBtu gas. In any case it will not compete with coal for power generation with appropriate regulations in place.

The problems will resolve themselves if there is relatively tough but enlightened regulation. Improving performance through increased boiler efficiency and stringent air emission regulations makes economic and environmental sense. Onerous regulation of CO₂ emissions does not. The industry will be well served to fight the battles on this basis.