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EPA regulations to steer market away from coal

Stricter Environmental Protection Agency regulations could steer the energy market away from coal, according to a recent Duke study.

The study estimated the electricity generation cost for 304 coal-fired plants and 358 natural gas plants with the EPA regulations that will be implemented by 2016, said lead author Lincoln Pratson, chair of earth and ocean sciences. The EPA regulations will restrict the emission of nitrogen oxides, sulfur dioxide, particulate matter and mercury. The regulations could make nearly two-thirds of the nation’s coal plants as expensive to run as natural gas plants.

“Emissions standards already exist for pretty much all of these criteria pollutants and toxins,” Patson said. “What the EPA is doing is lowering those thresholds further so it’s making it harder and harder for power plants to meet those thresholds.”

Although natural gas plants emit one of the primary pollutants—mono-nitrogen oxides—energy plants powered by coal emit a greater array of these contaminants. Additional EPA restrictions will therefore have a greater effect on coal plants, Pratson noted.

“If you tighten the emissions threshold on all those pollutants, then natural gas plants will only need to make sure they are meeting the tighter restrictions on mono-nitrogen oxides,” said Pratson, “Coal has to meet the tighter restrictions across the board for those pollutants.”

Duke Energy, an electric power company headquartered in Charlotte, has experienced the impact of these particular regulations within their own power plants. The company has anticipated this downward trend and is reacting accordingly, said Duke Energy Communication Strategist Lisa Hoffmann. The company is currently building new plants with more efficient technologies and also evaluating older coal power plants.

“We have a pretty aggressive retirement program that’s currently underway,” Hoffmann said. “We analyze on a unit-to-unit basis whether it makes more sense to retrofit the units or to shut them down.”

Beyond legislation, the study noted that natural gas has become more available domestically due to fracking technologies and other forms of extraction. This increased availability has driven down the price of natural gas, making gas the more favorable energy option, Pratson explained.

The United States, which is currently a gas and oil importer, could move toward exporting in the next two decades, said Billy Pizer, associate professor of public policy, economics and environment.

Pratson also noted that the move away from coal toward natural gas is very sensitive to price fluctuations. Although the price is currently low, further regulations on fracking and increased demand due to exports could drive prices up in the future.

“Right now, natural gas prices are very low by historic standards,” he said. “It won’t take too much of a rise in the price of natural gas in respect to coal to put us back in that situation that existed before—which was that coal plants were cheaper to run than natural gas ones.”


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