U.S. Coal Capacity Set To Drop Dramatically By 2050

By Charles Kennedy - 

U.S. coal power generation capacity is set to drop by half between now and 2050, the Energy Information Administration has forecast, citing rising costs because of tighter emission regulation and intensifying competition from gas, wind, and solar.

The forecast is under the EIA’s so-called High Zero-Carbon Technology Cost scenario. Under a Reference Scenario, coal capacity is seen shrinking by as much as 64% to 73 GW by 2050. Under the most ambitious scenario, envisaging low costs for the transition to zero carbon, the EIA predicts an 88% drop in coal capacity by 2050.

The forecast comes as the Environmental Protection Agency proposes new, more stringent regulations for power generators that would likely affect the economics of coal power in quite a negative way.

The environmental regulator proposes to establish emission guidelines for large, frequently used existing fossil fuel-fired stationary combustion turbines, generally natural gas-fired, as well as to strengthen the current New Source Performance Standards (NSPS) for newly built fossil fuel-fired stationary combustion turbines.

The proposal limiting how much greenhouse gases fossil fuel power plants can emit would mean that plants currently not complying with the proposed limits would either have to shut down or install new equipment to curb emissions.

According to EPA, the proposal for coal and new natural gas power plants would avoid up to 617 million metric tons of total carbon dioxide through 2042. This would be equivalent to reducing the annual emissions of 137 million passenger vehicles, roughly half the cars in the United States.

EPA has also estimated that the net climate and health benefits of the standards on new gas and existing coal-fired power plants could be up to $85 billion through 2042.

Meanwhile, the North American Reliability Corp. has warned that electricity shortages threaten most of the United States this summer because of high demand and lower than necessary supply due to, among other things, the retirement of coal-fired plants.

“A combination of extreme peak demand, low wind, and high outage rates from thermal generators could require system operators to use emergency procedures, up to and including temporary manual load shedding,” NERC said.

By Charles Kennedy for Oilprice.com

May 12, 2023