Firstly, the cost of constructing or retrofitting coal-fired electric power plants and the rising cost of coal. They have made coal power an extremely risky long-term investment. This is according to a report released today by the Union of Concerned Scientists (UCS).
The report, “A Risky Proposition: The Financial Hazards of New Investments in Coal Plants”. It also identified a number of other factors that make investing in coal a gamble. That’s including its continuing threat to public health and the environment.
More than 70 percent of U.S. coal-plant capacity is already more than 30 years old. Most noteworthy, the operating lifetime for which coal plants were typically designed. Then a third went online before 1970. More importantly, some plant operators have announced they will retire old plants.
So then others are planning to retrofit their plants with modern pollution control technology. This would reduce emissions of several dangerous pollutants, but not carbon.
Therefore, such investments would not only make it harder to protect the climate. In addition, it will also expose investors and ratepayers to a host of financial threats.
The factors that make coal power such a precarious investment include:
• U.S. coal prices are rising and driving higher. That’s from soaring global demand. That’s especially from Asia. Also, Spot prices for Appalachia coal spiked dramatically in 2008. They could spike again.
Thereby all of the increases are largely due to international demand. As well, those prices are steadily rising again with the global economic recovery. And the price for a one-month contract for coal from Wyoming’s Powder River Basin. It rose 67 percent between October 2009 and October 2010. So yes western coal has been less exposed to volatile global markets. Although that situation is changing. Therefore it started once major coal producers in the West have announced plans to increase their exports. That’s when China and other Asian markets are picking up that coal.
• Coal prices also are driven higher by constraints on supply. The amount of economically recoverable coal reserves are smaller than thought.
• Major coal projects face high, unpredictable construction costs. The cost of building a new coal plant in the United States is doubling every five years.
• There is no cost advantage coal power traditionally enjoyed over cleaner energy options. It has largely disappeared when it comes to new green plants. Therefore, Power from new coal plants cost more than power from eco. For example, new solar plants, wind facilities and the best geothermal sites. As well and much more noteworthy too versus investing in energy efficiency.
• Coal power is the largest U.S. carbon pollution source. It is contributing one-third of all energy-related emissions. In excesses of and more than the entire surface transportation sector. That’s why coal-fired power plants are facing increasing pressure to dramatically cut emissions. Thereby to help curb climate change. So the cost of generating electricity from new coal plants could increase 11 to 37 percent under a range of carbon prices in the future.
• Carbon capture and storage (CCS) retrofits cannot be counted on. That’s to affordably cut emissions. Federal studies show adding CCS to a new plant could increase generating costs by 36 to 78 percent. All while retrofitting an existing plant increases its costs by 330 percent.
• Federal and state governments are promoting energy efficiency and clean energy sources, which will cut demand for coal power. Twenty-seven states have energy efficiency standards or a standard pending, and several states now require annual reductions in electricity use of at least 2 percent. Twenty-nine states now have a standard requiring utilities to increase their reliance on renewable energy sources, more than doubling since 2004.
• Coal plants also face new costs associated with such harmful emissions as sulfur dioxide and nitrogen oxide, which are associated with thousands of deaths annually, and mercury, which threatens the brain development of infants and children.
Source: Union of Concerned Scientists