The U.S. coal industry is facing a grim outlook in 2012, and the Environmental Protection Agency’s (EPA) pollution rules are one big reason.
The Mercury and Air Toxics Standards and the Cross-State Air Pollution Rule have contributed to the premature shutdown of several coal plants and the idling of coal mines across the country. The EPA’s attack on coal is sending electricity bills skyrocketing as more expensive sources of energy take coal’s place. While anti-coal protestors cheer, American families are paying the price.
Alpha Natural Resources, a major Appalachian coal producer, announced plans to lower coal production last Friday as demand for coal by electric utilities is dropping:
Alpha subsidiaries in Kentucky and West Virginia will idle four mines immediately and two others between now and early 2013, while several other mines will alter work schedules or reduce the number of production crews. Altogether 10 mining operations are affected, four in eastern Kentucky and six in southern West Virginia.… Alpha’s Central Appalachian businesses are seeing more electric utilities switch from thermal coal to natural gas to take advantage of gas prices at 10-year lows. A series of federal regulatory actions also have prompted utilities to implement plans for shutting down a number of generating stations that have traditionally run on coals sourced from Central Appalachia.
Just a week earlier, Ohio-based FirstEnergy directly cited the impact of environmental regulations as the basis for retiring six coal plants by September of this year:
Its generation subsidiaries will retire six older coal-fired power plants located in Ohio, Pennsylvania and Maryland by September 1, 2012. The decision to close the plants is based on the U.S. Environmental Protection Agency Mercury and Air Toxics Standards (MATS), which were recently finalized, and other environmental regulations.
Natural gas prices are currently at a decade low, but as demand continues to grow, natural gas prices will likely rise. The switch from coal to natural gas by electric utilities in response to the EPA regulations is thus a boon to both environmentalists and the natural gas industry. As Charles Blanchard, the U.S. power sector analyst at Bloomberg New Energy Finance, explains:
The interests of fossil fuel producers and environmentalists are (unusually) aligned: higher domestic gas prices would bode well both for gas producers and higher-cost renewable energy projects.… The impetus for [rising gas prices] will emanate from within the United States, as old age and EPA regulation force the closure of dozens of gigawatts of coal power plants.
Household electricity bills, which skyrocketed in 2010, will continue to rise as Americans are forced to use more expensive sources of energy to power their businesses and homes. This in turn will result in higher prices for other goods and services as higher electricity prices increase production costs.
Those most hurt by policies that increase the price of energy are lower-income households, which spend a much larger portion of their income on energy, and senior citizens, who have the highest per-capita residential energy consumption.