Retirements of older units, retrofits of existing units with pollution controls, and the construction of some new coal-fueled units are expected to significantly change the coal-fired generating fleet, making it capable of emitting lower levels of pollutants than the current fleet but reducing its capacity.
That is according to a recent report done by the Government Accountability Office that looks at the coal-fired power industry and the impacts of U.S. Environmental Protection Agency initiatives that are impacting the viability of many coal plants. The report was prepared for Sen. Jay Rockefeller, D-W.Va., the Chairman of the Senate Committee on Commerce, Science, and Transportation.
“Two broad trends are affecting power companies’ decisions related to coal-fueled generating units – recent environmental regulations and changing market conditions, such as the recent decrease in the price of natural gas,” GAO wrote. “Regarding retirements, forecasts GAO reviewed based on current policies project that power companies may retire 15 to 24 percent of coal-fueled generating capacity by 2035 – an amount consistent with GAO’s analysis.”
GAO’s statistical analysis, examining data on power companies that have announced plans to retire coal units, found that these companies are more likely to retire units that are older, smaller, and more polluting. For example, the units companies plan to retire emitted an average of twice as much SO2 per unit of fuel used in 2011 as units that companies do not plan to retire. Based on the characteristics of the units companies plan to retire, GAO estimated additional capacity that may retire. In total, GAO identified 15% to 18% of coal-fueled capacity that power companies either plan to retire or that GAO estimated may retire, which is an amount consistent with the forecasts GAO reviewed.
Regarding retrofits, the coal-fueled fleet may also become less polluting in the future as power companies install controls on many remaining units. New coal-fueled units are likely to be less polluting as they must incorporate advanced technologies to reduce emissions of regulated pollutants. “Coal-fueled capacity may decline in the future as less capacity is expected to be built than is expected to retire,” GAO noted, which is pretty much the understatement of the year considering the dozens of coal-fired plants targeted for retirement and the handful either planned or in construction.
According to stakeholders and three long-term forecasts GAO reviewed, coal is generally expected to remain a key fuel source for U.S. electricity generation in the future, but coal’s share as a source of electricity may continue to decline. For example, in a forecast based on current policies, the U.S. Energy Information Administration (EIA) forecasts that the amount of electricity generated using coal is expected to remain relatively constant through 2035, but it forecasts that the share of coal-fueled generation will decline from 42% in 2011 to 38% in 2035.
GAO notes that EIA thinks coal will remain viable
“Available information suggests that the future U.S. use of coal may be determined by several key factors, including the price of natural gas and environmental regulations,” GAO noted. “For example, available information suggests that the price of coal compared with other fuel sources will influence how economically attractive it is to use coal to generate electricity. EIA assessed several scenarios of future fuel prices and forecasts that coal’s share of U.S. electricity generation will fall to 30 percent in 2035 if natural gas prices are low or 40 percent if natural gas prices are high. In addition, some stakeholders told GAO that the future use of coal could be significantly affected if existing environmental regulations become more stringent or if additional environmental regulations are issued. For example, EIA forecasts that two hypothetical future policies that reduce carbon dioxide emissions from the electricity sector by 46 percent and 76 percent would result in coal’s share of U.S. electricity generation falling to 16 and 4 percent in 2035, respectively.”
In 2011, 1,387 coal-fueled units produced about 42% of the nation’s electricity, GAO pointed out. After decades of growth, U.S. coal production and consumption have fallen lately, primarily due to declines in the use of coal to generate electricity.
Size can be important when assessing the economics of additional investments needed to continue to operate coal units, as smaller units can be more expensive to retrofit, maintain, and operate on a per-MW basis, GAO said. For example, some power companies may choose to install flue gas desulfurization units—known as scrubbers—to control SO2 and other air emissions. According to an EPA report, a typical 100 MW coal-fueled unit could incur capital costs 66% to 74% higher per MW to install a scrubber than a 700 MW unit.
“Scrubbers have been used commercially since the early 1970s and are the most common technology for reducing SO2 emissions,” the report said. “They are capable of removing up to 99 percent of SO2 emissions and work by injecting a sorbent—a material used to absorb molecules of a substance—into flue gas that reacts with pollutants to form a substance that is collected and removed. Scrubbers can also reduce emissions of mercury and other air pollutants. Another approach to reducing SO2 emissions from coal-fueled electricity generating units is to switch from using coal with a higher sulfur content to coal with a lower sulfur content or to blend higher-sulfur coal with lower-sulfur coal. However, according to studies we reviewed, power companies may install scrubbers or other new control equipment to meet the requirements of new regulations. In addition, smaller generating units are generally less fuel-efficient than larger units. Units that are planned for retirement average 175 MW of capacity compared with units that are not planned for retirement that average 351 MW of capacity.”