Coal’s Future Looks Dim

At the Citizens’ Utility Board, we always have an eye on coal. We fought PacifiCorp’s plan to build three additional coal plants and we worked to ensure that the Boardman coal plant is phased out by the end of 2020. CUB continues to keep a watchful eye on the impact of coal on the state and region.

That’s why the abstract of a recent study published in the Annals of the New York Academy of Sciences caught our eye with a very intriguing proposal:

“Each stage in the life cycle of coal—extraction, transport, processing, and combustion—generates a waste stream and carries multiple hazards for health and the environment. These costs are external to the coal industry and are thus often considered “externalities.” We estimate that the life cycle effects of coal and the waste stream generated are costing the U.S. public a third to over one-half of a trillion dollars annually. Many of these so-called externalities are, moreover, cumulative. Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of nonfossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive. We focus on Appalachia, though coal is mined in other regions of the United States and is burned throughout the world.”

This study’s conclusions bring up issues that are not necessarily considered in the practice of routine utility regulation. The Oregon Public Utility Commission is required to assess the generation portfolios of utilities on a least-cost, least-risk basis. This means that only the direct costs to the utility are considered in the approval process, regardless of the environmental or health impacts of generation. The risk of more stringent regulations on emissions from state and federal authorities, however, is a major consideration because it would lead to direct costs, and has factored in to a number of recent Commission decisions to steer utilities towards renewable sources of energy and away from fossil fuels. That said, CUB has to play by the Commission’s rules; meaning that a life-cycle analysis of the impacts of coal is more instructive for policy makers in Congress and the Legislature than it is as a guide for utility regulation.

Looking at the entire life cycle impacts of coal paints an ugly picture indeed. The process of extracting coal from the earth releases large amounts of methane into the atmosphere, which is itself a significant climate change impact. There are also the human costs of mining accidents, such as last year’s disaster at the Upper Big Branch mine that killed 29 miners. Mountaintop removal mining projects in Appalachia pollute streams, irreparably scar the landscape, and devastate forestland, resulting in carbon emissions from the loss of soil and forest plants. Mining wastes are impounded in large ponds adjacent to mines, many of which are situated in unstable areas that occasionally have catastrophic spills and pollute streams and drinking water sources.

Once the coal is mined, there is still the issue of transporting it to a power plant. Even though many plants are located adjacent to mines, 70% of rail traffic in the US is dedicated to coal transport. There are enormous opportunity costs associated with tying up such a large portion of the rail system to move a single resource. Additionally, hundreds of people die in rail accidents related to transporting coal each year; for 2007, the costs related to these deaths approached $1.8 billion.

Coal combustion to generate electricity causes a variety of air pollution and air quality issues worldwide. In addition to emissions of CO2 and other greenhouse gases, there are a number of other nasty airborne byproducts from coal combustion. Particulate matter causes haze and affects asthma sufferers; sulfur dioxide and nitrous oxides contribute to problems with acid rain and respiratory illnesses; mercury, arsenic, and other heavy metals kill aquatic life and are associated with increased rates of cardiovascular diseases and delayed childhood development. Most modern coal plants capture the fly ash that is emitted from their smokestacks, sequestering it in ponds on site. Like mining waste impoundments, these ponds hold millions of gallons of polluted water and are a risk for devastating spills, such as the one that occurred in Tennessee in 2008.

The primary driver of the study is the contribution of coal-fired power plants to climate change. The 7.85 billion tons of annual CO2 emissions from coal plants constitute 30% of emissions worldwide and over 70% of the CO2 emissions from generating electricity. Particulate matter (i.e., soot) is also a contributor to climate change, as it is very effective at trapping heat in the atmosphere. All of these emissions are accumulating in the atmosphere at a rate that is significantly altering the Earth’s climate. It is difficult to imagine that CO2 emissions will remain unregulated for many more years, given the dramatic impacts we are observing in climate and weather patterns worldwide. Climate change emissions are likely the single riskiest factor in operating coal plants, as it is likely that there will soon be large costs associated with burning coal and releasing carbon emissions.

The sum total of all of the environmental and health externalities associated with coal-fired electricity generation is staggering. The study places its best total estimate at $345.3 billion annually, with a range of $175 to $523 billion. If these costs were fully internalized, the cost of a kWh of electricity generated by coal would increase by somewhere between 9 and 26 cents/kWh, effectively yielding a 2 to 4-fold increase in rates for coal-dependent utilities.

The study also calls out carbon capture and storage (CCS), also known as “clean coal” technology, as a counterproductive development that will actually increase coal usage. This is due to the fact that CCS requires somewhere between 25% and 40% more coal to produce the same amount of electricity as is generated today. That increased usage would also increase the myriad environmental impacts associated with the life cycle of coal, thereby virtually eliminating any net benefits accrued from reduced the carbon emissions from generation.

CUB is committed to representing Oregon ratepayers’ values as well as keeping their rates low. We are confident that a strong majority of Oregonians are unhappy with the idea that generating energy this way results in low bills but high external costs. While coal may provide energy at what appears to be a low cost now, it is increasingly evident that when the health and environmental costs of the entire life cycle of coal are unbearable in the long run. CUB, along with a coalition of environmental allies, has successfully lobbied PGE to commit to closing its only coal plant over 20 years earlier than originally scheduled. The fight will now move on to PacifiCorp’s fleet of coal plants in the near future. We will keep you posted on the developments as we review the costs associated with PacifiCorp coal plants later this year.

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