Exports keeping coal industry alive despite surge in natural gas
The surge in U.S. oil and natural gas production and increasing efforts to regulate emissions from coal-fired power plants has caused business leaders and analysts to question king coal’s rank in the energy economy.
Last month, the Energy Information Administration forecasted that natural gas will surpass coal as the number one source of electricity generation by 2040 with Pennsylvania at the center of this changing energy landscape. In October, coal giant Consol Energy sold off five mines in West Virginia with plans to reinvest in natural gas production.
Today, The Wall Street journal takes a look at the future of the coal industry, which appears to be less than bright, but certainly more than dim:
Demand is being stoked by the rise of power-hungry middle classes in emerging economies, led by China and India. By the end of this decade, coal is expected to surpass oil as the world’s dominant fuel source, according to a recent study by consultant Wood Mackenzie.
Two-thirds of coal’s growth will be driven by demand for electricity in China, the firm says. “China’s demand for coal will almost single-handedly propel the growth of coal,” William Durbin, Wood Mackenzie’s head of global markets, said in a recent speech.
Concern over the links between climate change and carbon emissions linked to coal could reduce consumption. Assuming weak economic growth and the strictest environmental rules, global coal demand could drop to 3.3 billion tons in 2035 from around five billion today, according to the International Energy Agency. But if politicians and regulators decide that the benefits of coal outweigh the environmental risks and craft looser regulations, coal demand could rise to six billion tons, the agency says.
The Environmental Protection Agency has proposed regulations to curb emissions from all new coal- and natural gas-fired power plants and is currently working on rules to cut pollution from currently operating plants. The Obama administration is targeting power plants because they are some of the biggest emitters of carbon dioxide, a powerful greenhouse gas. However, the coal industry is pushing back against what it calls a “war on coal” and the cost of complying with more stringent regulations.