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Coal Is Expensive And Not Getting Any Cheaper

By Climate Guest Contributor  

"Coal Is Expensive And Not Getting Any Cheaper"

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by Jackie Weidman

Contrary to coal industry spin, coal is not the cheapest resource for electricity generation — and it is only becoming more expensive, according to a new report titled “Coal is not Cheap Power.”

The study, put together by the Alaskan non-profit Groundtruth Trekking, looked at 20 years of power generation and price data and found:

  • 35 of the 48 coal-burning states show no significant correlation between proportion of coal fired electricity and electricity prices
  • Less than 10 out of 48 coal-burning states show positive correlation between proportion of coal-fired electricity and electricity prices [1]
  • States experiencing high energy prices cannot solve the problem by burning more coal
  • States reducing coal use will not necessarily see prices rise
  • For newly constructed plants, coal is not the cheapest option

The study found that there is very little correlation between coal use and the cost of electricity.  Other factors – particularly regional energy supply — are what influence consumer prices.  The states with the lowest electricity prices (using 2009 data) are Idaho, with an average price of 5.7 cents per kilowatt-hour, and Kentucky with, 5.8 cents per kilowatt-hour. Those low prices are due to their abundant hydropower and coal resources, respectively. However, that doesn’t mean that other states can simply increase production of those resources to lower electricity prices.

States must make decisions about electricity generation based on available resources and energy needs. For example, burning coal in Arizona is correlated with higher energy prices.  This is because Arizona’s coal deposits are small and other electricity sources, like nuclear, gas, and hydro are more cost-effective.

Some states have reduced their coal use without electricity price increases. Florida and Colorado, for instance, reduced coal use by over 20 and 30 percent respectively, with no price hike.

The study found that coal is the most expensive energy when “externalized costs” are factored in. These are the costs of coal use paid for by society, rather than by ratepayers.  This includes the impact on public health and property from increased air pollution. Our reliance on coal has cost the economy between $345 and $534 billion, according to the “Full Cost Accounting for the Life Cycle of Coal” study by the Center for Health and the Global Environment at Harvard Medical School:

“The yearly and cumulative costs stemming from the aerosolized, soil, and water pollutants associated with the mining, processing, transport, and combustion of coal affects individuals, families, communities, ecological integrity, and the global climate.  The economic implications go far beyond the prices we pay for electricity.”

And the price of coal in the U.S. is only increasing as the percentage of coal burned for electricity decreases. This is because it has become more expensive to produce coal, even without external costs factored in. Coal generated  less than 40 percent of U.S. electricity in November and December of 2011, the lowest it has been in 33 years, according to new Energy Information Administration (EIA) data.  The EIA reports that “the last time coal’s share of total generation was below 40 percent for a monthly total was in March 1978.”

In the coming years, some utilities plan to shutter old, inefficient, dirty coal plants rather than invest in pollution reduction.  Meanwhile, the prices for natural gas and renewables continue to drop, making coal less competitive.  The EIA predicts that the upward trend in coal prices reflects “that cost savings from technological improvements in coal mining will be outweighed by increases in production costs.”

With every passing week, it’s becoming harder and harder for the coal industry to claim that coal is “cheap.”

Jackie Weidman is a special assistant for energy and environmental policy at the Center for American Progress.

[1] The 13 states that have significant correlations are nearly evenly split between positive and negative correlations.

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One Response to Coal Is Expensive And Not Getting Any Cheaper

  1. Thank you for referencing Dr. Epstein’s work on coal. We hope interested people will visit our new website (http://chge.med.harvard.edu) to learn more about the effects our energy choices have on our health.