Monday, April 26, 2010

Ending the use of coal overnight: new study shows it's possible

One of the common arguments against climate legislation is that clean energy technology just isn't ready yet. Most often, it's made to defend coal, and usually goes something like this: "Sure, maybe eventually we can replace coal, but right now that would be too expensive. For the next 50 years, we'll need to continue using coal at the same time we're developing cleaner alternative fuels."

This argument has always been illogical. Just because alternatives to coal are expensive now does not mean they always will be, and a major national push would soon bring down costs through economies of scale. But a new study goes even further, showing the "technology not there" argument to be not just illogical, but factually incorrect. In fact, the United States could replace nearly 100% of its coal-fired power generation--and do so almost overnight. How? With natural gas (which emits 50% less CO2 than coal). The Financial Times reports:

The shift from coal-fired generation to gas- fired generation sounds like something that would be lengthy and difficult to accomplish. But a new report by PFC Energy, the consultancy, indicates it is anything but. The report says US gas fired power plants average about 25 per cent utilisation, compared with 70-75 per cent for coal.

So operating existing plants at 72 per cent utilisation would theoretically increase gas demand by 30bn cubic feet per day - a rise of about 50 per cent - and displace almost all coal fired capacity. In doing so, carbon dioxide from the power sector would be cut 50 per cent, according to PFC.

Note that this is referring to existing power plants. In other words, we could completely eliminate the use of coal in this country without building hundreds of new power plants.

Also note that this is a recent development. Just three years ago, the idea of abundant natural gas replacing coal actually was ludicrous, and coal's defenders at least had a point. But that's no longer true. The difference is new technology that has unlocked previously out-of-reach shale gas formations such as the Marcellus Shale in Appalachia.

Providentially, much of the nation's most promising gas potential is in the very states where coal is currently strongest politically: West Virginia, Pennsylvania, and Ohio.

All of a sudden, coal miners who fear job losses from shutting down coal mines now could have gas fields in which to work. Looks like King Coal could have some competition for its most supportive Senators. (Indeed, last month The Hill reported that the natural gas lobby is "pushing new incentives to encourage utilities to switch from coal to natural gas, [and] in doing so, the sector is starting a lobbying fight with the coal industry." All I can say is, go get 'em boys.)

The bottom line: any time you hear someone say that the technology isn't there to switch from coal, you're being fed PR dog food. We don't have to wait for solar and wind costs to come down before abandoning coal, because natural gas is already cheap and abundant - and we can make the switch overnight. All that's needed is political will.


  1. Hey Andrew, I enjoyed the writeup. I haven't done much research on Coal/Gas in a year or two, but I worked in a group that invested in and financed the industry in 2008. At the time, the issue wasn't so much capacity or technology, but it was cost. The reason the natural gas generators currently run at low capacity is due to higher cost of power generated in this manner vs. coal. Most natural gas generation is considered "peak" generation; that is, when the cheap baseload generators (coal, nuclear, hydro) reach capacity during peak hours, the natural gas generators are powered up to meet the demand. Then, when electric needs drop during the day, the natural gas generators are powered down. The natural gas generators are simply less efficient in terms of $ than the coal plants.

    If we see a switch to more natural gas from coal, free market economics suggests the cost of natural gas to power these plants will increase as well as demand rises. At the end of the day, I'd love to have more clean energy and I think most would agree. But what happens when the utility companies have to increase rates significantly and electric bills go up. For many, that won't matter, but an extra $10, $20, $50 or more per month for low/middle class families could be very hard on them.

    There are lot of moving parts, and you make a great point about some of them. The industry is moving in the direction of cleaner energy (many states no longer allow new coal plant permits!), and I hope that the pace of change accelerates. I think there's a place for government here to help move that change along, but small minded politicians will have trouble supporting such a notion.

  2. Kellen - thanks for the comment. Were the higher costs of gas due to higher fuel costs (natural gas prices peaked in 2008, but have fallen by about 60% since then), or due to costs inherent to the process of burning the fuel? e.g. if 1,000,000 BTU worth of coal and 1,000,000 worth of gas cost the same price, would it still cost more to operate a gas-fired plant?

    Also, the $10-$50 extra a family would pay is negligible, for a few reasons.

    First, the current bills would rebate proceeds from cap-and-trade or carbon taxes to low income families to offset the higher bills. Second, the harm to these families and society caused by burning coal (particulate matter pollution that kills 20,000 per year, costs of global warming and ocean acidification on these families' children, mountaintop removal and pollution of drinking water) more than outweigh the small amount extra they'd be paying in utilities.

  3. One problem that I came across in a book titles "Opportunities Beyond Carbon" was that without developing the means to produce fertiliser from natural gas, human population would have been limited to around 3 billion (relying on legume and compost to fix nitrogen). Now, I'm not sure how much truth there is to this (I'm waiting for the author of that chapter to supply me a reference as it was stated as part of a Q & A section), but with the potential 9 billion odd people alive when natural gas runs out, I'm worried about how we use it.
    If you're interested, I'll pass on the reference when I have it.

  4. Sorry, the book I was referring to was, "Biodiversity: integrating conservation and production", it was on page 40, chapter 4 by Barney Foran.

  5. if your facts are accurate (i'm not in a position, nor do i have the time, to check), then we should push this idea hard.

    cutting co2 by 50%, and increasing the cost of fossil fuel based electricity would accomplish two important goals at once: the first is obvious, and the second, the price of electricity, is desirable to encourage a transition to renewable energy generation.

    hitting a 50% co2 reduction "overnight" would be a tremendous step towards hansen's postulated goal of eliminating all coal based co2, and increasing price of oil and gas, by 2030.


  6. Thanks for this post. There are a number of issues with this proposal. Here are a few:

    1. Natural gas costs much more per Btu than coal. Coal costs between $2 and $3 per million Btu while gas costs between $6 and $7 per million Btu (source EIA of the US DOE). These are average prices for fuel delivered in the USA to electric utilities.
    2. Prices for fuel can vary substantially based on multiple factors such as production location, use location, transportation method, purchase contract details, type of coal, etc. As an example, coal for use in New England may be 4 times more expensive than coal for use in the Midwest.
    3. Broadly speaking, there are two types of gas fired power plants, “simple” gas combustion turbines and combined cycle. The combined cycle plants are much more energy efficient (and more expensive to build) than the gas turbines, approximately 55% energy efficiency versus roughly 25% respectively. This compares to coal plant efficiency of about 30%. The combined cycle plants operate much of the time, in some cases providing base load power. In contrast, gas turbines operate as “peaker plants” (as referred to in comment from Kellen). Because of their high fuel costs, these plants are typically used only as a “last resort” to satisfy peak demands or to provide backup for outages at other plants.
    4. Combined cycle plants are already largely used near capacity. Any broad switch from coal to gas, as proposed, would entail a dramatic increase in the use of inefficient gas turbine plants. The cost of electricity from these plants is several times more expensive than the coal based electricity it is replacing, for example $0.09 per kWh versus $0.03. So, yes the overall price of electricity could increase substantially.
    5. Most of the coal plants are older and fully depreciated. Many of the gas fired plants are newer. As such, the gas plants can have higher “fixed costs” than the coal plants. This could further add to the cost of electricity.
    6. Gas fired plants are not distributed evenly throughout the USA, nor are coal plants. Replacing one with the other will entail massive re-distribution of electric power. This is unlikely to be feasible with the USA’s existing grid. To the extent that it is feasible, such “wheeling” of power adds to the cost.
    7. A fuel switch to natural gas as proposed would entail a dramatic increase in gas consumption. It is unlikely the existing gas infrastructure can support this. As a simple indicator, each winter we come close to depleting all natural gas in storage. It then takes roughly 8 months of gas production to rebuild the gas inventory in storage each year.
    8. In addition to gas storage, other gas infrastructure issues could include availability of: drilling rigs; pipeline capacity; skilled labor, etc
    9. If all coal plants are “shut down”, there will be cost that can be charged to utility customers including those associated with residual asset value and cost of dismantling and cleanup of these plants. These costs will further boost electricity prices.
    10. If the gas peaker plants are running “full time”, what will provide the function of these plants, peak and emergency generating capacity? Absent such capacity there will be a greatly increased likelihood of blackouts/brownouts.
    11. With this proposal, other infrastructure will also become immediately obsolete, for example a large number of railcars and barges. How do you propose handling this economic dislocation?
    12. A large increase in the use of nat gas will result in a large increase in the price of nat gas, further increasing the cost of electricity.

    I could go on, but the preceding provides an indication of the range of issues with this proposal. While nat gas may be able to replace all coal generation, it will not be quick or easy or inexpensive and may not even be desirable, given other high value uses for natural gas.

  7. So let me reword that: Thnx for the treat! But yeah Thnkx for spending the time to discuss this, I feel strongly about it and love reading more on this topic. If possible, as you become expertise, would you mind updating your blog with more details?
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  13. I could go on, but the preceding provides an indication of the range of issues with this proposal. While nat gas may be able to replace all coal generation, it will not be quick or easy or inexpensive and may not even be desirable, given other high value uses for natural gas.