March 09, 2008
Opposition Cuts Back New Coal Electric Plans

The amount of oil available for import (in contrast to the larger amounts produced or exported) by OECD countries (basically the most developed countries) looks set to decline. We need substitutes. The obstacles in the way of many of those substitutes keep growing. Fear of carbon taxes has helped drive cancellation of many new proposed coal electric plants.

Utilities canceled or put on hold at least 45 coal plants in development last year, according to a new analysis by the US Department of Energy's National Energy Technology Laboratory in Pittsburgh. These moves – a sharp reversal from a year ago, when the industry had more than 150 such plants in development – signal the waning of a major US expansion into coal.

Part of the reticence to build new coal electric plants stems from rising construction costs. Nuclear power is faced with the same problem. High prices for construction materials lowers the profit protential of proposed plants. I wonder whether the high costs are transitory. If not then we are going to pay more for electricity as demand rises.

Natural-gas and renewable power projects have leapt ahead of coal in the development pipeline, according to Global Energy Decisions, a Boulder, Colo., energy information supplier. Gas and renewables each show more than 70,000 megawatts under development compared with about 66,000 megawatts in the coal-power pipeline.

This year could diminish coal's future prospects even more. Wall Street investment banks last month said they will now evaluate the cost of carbon emissions before approving power plants, raising the bar much higher for new coal projects, analysts say.

The turn from coal to natural gas will raise electric prices. On the bright side, the higher prices will make renewables and nuclear power more competitive.

I do not expect the growing opposition to coal electric plants necessarily will cause the United States to reach a peak in coal usage in the next 5 or so years. As world oil production declines another surge in demand for coal will come from a desparate move to convert coal into liquid fuel. So limits on use of coal for electricity just leaves more coal available to power cars with the product of coal-to-liquid plants.

Lots of states are turning against new coal electric power.

State governments already are leading the movement to curb greenhouse gases, with 26 now requiring that a percentage of electricity come from renewable sources, such as wind and solar. Those include five of the top ten coal-producing states — Pennsylvania, Montana, Texas, Colorado and Illinois.

Nearly all of those 26 states also have signed on to three separate, regional cap-and-trade systems that will eventually require cuts in carbon dioxide emissions from power plants and other industrial sources. Under those systems, coal-fired power plants would be given or have to buy credits for the carbon dioxide they produce and pay for additional credits if they do not meet reduction targets.

This opposition to coal will increase the demand for nuclear power. But construction cost increases hit nuclear harder than coal because nuclear power plants are more capital intensive. Power plant construction costs have risen very dramatically since 2000.

The costs that drive the rates that power customers pay have been going up dramatically, according to the new Power Capital Costs Index (PCCI) developed by IHS Inc. (NYSE: IHS) and Cambridge Energy Research Associates (CERA) and introduced today at the CERAWeek 2008 conference in Houston. The index shows the cost of new power plant construction in North America increased 27 percent in 12 months and 19 percent in the most recent six months, reaching a level 130 percent higher than in 2000.

The new PCCI -- which tracks the costs of building coal, gas, wind and nuclear power plants indexed to year 2000 -- registered 231 index points in the third quarter period ending in October, indicating a power plant that cost $1 billion in 2000 would, on average, cost $2.31 billion today.

“These costs are beginning to act as a drag on the power industry’s ability to expand to meet growing North American demand, and leading to delays and postponements in the building of new power plants,” said Candida Scott, lead researcher for the Capital Costs Analysis Forum for Power, a new project of CERA. “As the cost of construction rises, firms may become reluctant to invest in new plants, or delay and postpone these projects, in turn constraining the growth of capacity.”

...

“Although the PCCI has been on an upward trend since 2000, a surge that began in 2005 has pushed costs up 76 percent in the past three years,” according to Scott. “The latest increases have been driven by continued high activity levels globally, especially for nuclear plants, with continued tightness in the equipment and engineering markets, as well as historically high levels for raw materials.” Excluding nuclear plants, costs have risen 79 percent since 2000, she noted.

I hope big strides are made in lowering the costs of solar and wind power. Otherwise look for big price increases in electric bills in the coming years. Also, high construction costs for nuclear and coal electric plants reduce the amount of substitution possible for dwindling oil. Less energy substitution means lower living standards.

Share |      Randall Parker, 2008 March 09 12:51 AM  Energy Electric Generators


Comments
Ned said at March 9, 2008 1:54 PM:

I don't understand why carbon taxes would apply to the combustion of coal but not natural gas, which is mostly methane (CH4). Natural gas is regarded as "cleaner" because it doesn't produce particulates and stuff like mercury as coal does. But the oxidation of a methane molecule produces a molecule of CO2, just as the oxidation of a carbon atom (coal) does. So why shouldn't the carbon tax apply to natural gas as well? Anyway, the entire concept of "carbon taxes" is just outrageous - another attempt to extort revenue from citizens based on the scientifically dubious concept of human activity causing "global warming." Such a regressive tax will do little to reduce carbon dioxide emissions and will hammer the poorest members of society the hardest, with higher prices for things such as electricity, home heating and gasoline. And since China has become the biggest global emitter of carbon dioxide, shouldn't we ask the Chinese to pay some sort of carbon tax too? Fat chance....

Randall Parker said at March 9, 2008 2:16 PM:

Ned,

It is my understanding that coal has a lot of carbon that is not reduced by hydrogen or not by much. So you have to basically turn more carbon molecules into CO2 to get the same amount of heat and electricity as you would if you use methane propane.

Therefore a carbon tax increases the price of coal electric more than it increases the price of natural gas electric.

Mind you, natural gas costs more per therm of heat than coal. So the tax on carbon has to be high enough to overcome the initial cost advantage of coal.

Sleek Green said at March 9, 2008 4:10 PM:

If we want to kill off 90% or more of Earth's human parasites, keep in mind that we must begin somewhere. Making the cost of the good life unsustainable is a good place to start. The whole thing runs on electricity and oil. We've got all approaches covered pretty well. Friends on the inside, friends on the outside. It all works out.

Randall Parker said at March 9, 2008 5:52 PM:

Sleek Green,

I see biomass energy as a technique for reversing damaging human population growth. We grow food in the United States that gives enough calories to poor people all over the world so they can breed. Okay, take that food and use it to power our cars instead. Suddenly we can see limits to population growth where limits weren't previously possible.

Mind you, I do not know if that is why the proponents of biomass energy push it so much. The farmers obviously want higher food prices. But what of the other proponents of biomass energy? Maybe in the privacy of their minds they see it as a way to impose limits on human population growth.

I find myself lately feeling a lot more at peace with damaging elites and damaging masses. Yes, it all works out.

Fat Man said at March 9, 2008 8:19 PM:

See my comment re construction costs to Prospects For Solar Thermal Power.

Fat Man said at March 9, 2008 8:43 PM:

It's comments like Sleek Green's that make me disdain environmentalists, and reject environmentalism. The notion that humans are "parasites" is completely repugnant to all systems of political and ethical thought. All such systems must have as their first axiom, the fundamental rule of Roman Law expressed by Cicero, which serves as the epigraph to John Locke's "Two Treatises of Civil Government": "Salus Populi Suprema Lex Esto", (The Welfare of the People Is The Highest Law").

Ned said at March 10, 2008 6:47 AM:

RP -

I've done a little homework on the topic - look at this:

Fossil Fuel Emission Levels
- Pounds per Billion Btu of Energy Input
Pollutant Natural Gas Oil Coal
Carbon Dioxide 117,000 164,000 208,000
Carbon Monoxide 40 33 208
Nitrogen Oxides 92 448 457
Sulfur Dioxide 1 1,122 2,591
Particulates 7 84 2,744
Mercury 0 0.007 0.016

(http://www.naturalgas.org/environment/naturalgas.asp).

Also, consider this:

Coal is one of the most impure of fuels. Its impurities range from trace quantities of many metals, including uranium and thorium, to much larger quantities of aluminum and iron to still larger quantities of impurities such as sulfur. Products of coal combustion include the oxides of carbon, nitrogen, and sulfur; carcinogenic and mutagenic substances; and recoverable minerals of commercial value, including nuclear fuels naturally occurring in coal.

(http://www.ornl.gov/info/ornlreview/rev26-34/text/colmain.html).

So coal is dirty and natural gas is clean - but we already knew that. The amount of CO2 emitted by natural gas combustion to obtain a defined quantity of energy (heat) appears to be slightly more than half that of a similar amount of coal. So, strictly in terms of carbon (as CO2), the tax on natural gas combustion should be slightly more than half that on coal, no? Of course, this ignores all the other stuff that coal combustion dumps into the atmosphere, but we're only talking carbon taxes here. Of course, natural gas is not as abundant as coal, and the two biggest CO2 emitters, China and the US, have large coal reserves. In fact, China is opening a new coal plant on the average of about every three days.

(OH, and I'm sorry about the compressed format on the first table, but I couldn't fix it. Look up the link to view the numbers better).

Wolf-Dog said at March 10, 2008 2:14 PM:

The metals and sulfur can be removed in advanced coal fired plants, at a reasonable cost. But unfortunately the Chinese coal fired plants (including the recently constructed ones) do not have this modern equipment, and so the mercury and sulfur pollution in China is already making life unsustainable in many parts of the country.

As for CO_2, the greenhouse effect is a danger, but at the same time, there is significant progress in developing algae and other plants that absorb a lot of CO_2 from the atmosphere, or even directly from the coal fired plants. Some of the algae yield more than 50 % oil per weight, and there are hybrid poplar trees that grow 8 feet per year (and these are ideal for making cellulosic alcohol.) But in any case, if only the sulfur and heavy metals can be removed when coal is burned, the resulting CO_2 generated in order to charge electric cars, would be 4 times less than the CO_2 generated by burnign gasoline in cars (this is because electric cars are much more energy efficient than converting heat from gasoline into mechanical energy.) In other words, if we used coal based electricity to charge electric cars, we would get a lot less CO_2 pollution than burning gasoline, and the heavy metals and sulfur can be removed from the chimneys at a reasonable cost.

Already the US Air Force has a program that blends coal based liquid fuels into the jet fuel.

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