Coal’s Worst Fear Affirmed in Analysis of Obama Climate Plan

(Bloomberg) — A new government analysis of President

Barack Obama’s signature effort to fight climate change affirms

what critics suspected: the proposal could further weaken an

already battered coal industry.

Electricity generation from the carbon-intensive fossil

fuel would fall by 90 gigawatts, more than twice the decline

government analysts had predicted as recently as April,

according to a report released Friday by the Energy Information

Administration. There were about 292 gigawatts of coal-fired

generation capacity in 2014, according to EIA.

Most of the coal-plant closures would occur by 2020, when

the Environmental Protection Agency’s proposal to cut carbon

dioxide emissions would kick in. Consumers may also take a hit

as electricity prices would increase as much as 7 percent on

average by 2025, partly because of the costs of building new

power plants.

“In short, EIA confirms EPA’s rule is all pain, no gain —

a symbolic gesture that continues the administration’s policy

path for destroying high wage jobs for generations,” said Hal Quinn, chief executive officer of the National Mining

Association, a lobbying group that represents companies

including Peabody Energy Corp.

Coal, which has served as the backbone of U.S. electricity

generation for decades, is in a steep downturn amid competition

from lower-cost natural gas and pressure to meet tougher

emissions standards.

Economic Benefit

The Obama administration’s proposal, released in June, is

not final. Supporters, including Senator Maria Cantwell, a

Washington Democrat, said the EIA projected the plan would cut

carbon emissions from all U.S. power plants 25 percent below

2005 levels by 2020.

“As proposed, the Clean Power Plan will significantly

reduce carbon pollution that will deliver climate and health

benefits of up to $93 billion,” said Liz Purchia, a spokeswoman

for the EPA.

The EIA analysis doesn’t consider possible health and

environmental benefits. It predicts a minor impact on the U.S.

economy overall. Gross domestic production could fall as much as

0.25 percent by 2040, assuming emissions are further restricted

after 2030, the EIA said.

Purchia said the EPA is reviewing more than 4 million

public comments and working to ensure the plan is affordable.

Coal’s Decline

The EIA analysis found that coal production will decline 20

percent by 2020 and 32 percent by 2035, from a business-as-usual


Coal use has already been dropping, generating 37 percent

of the country’s electricity in February -– down from over 50

percent in 2007, according to the EIA.

The market capitalization of the publicly traded U.S. coal

companies has shrunk to about $19.4 billion from $78 billion in

2011, according to data compiled by Bloomberg.

Patriot Coal Corp. filed for bankruptcy last week for the

second time in three years, joining at least a half dozen other

coal producers that have sought protection amid the downturn.

Murray Energy Corp., the closely held miner that’s rapidly

expanded amid the downturn, is now planning to lay off a quarter

of its staff — about 1,800 people — at nine locations,

according to a person familiar with the situation, who asked not

to be identified Thursday because the information isn’t public.

Peabody spokesman Chris Curran said the U.S. should rely on

technology “not closures” to reduce carbon dioxide emissions

from fossil fuels.

Natural Gas

Natural-gas use initially would replace lost coal, with

wind power and other renewable energy sources taking a greater

share of U.S. electricity production in later years, the EIA


Natural gas generation in April and May is predicted to

have almost reached the level of coal use for the first time

since April 2012, the EIA said in a short-term energy outlook on

May 12.

While retail electricity prices are projected to increase

as much as 7 percent on average from 2020 to 2025, in some

regions the costs begin to recede to the EIA’s baseline levels

by 2030. Electricity costs in the Southwest and Southeast may

remain higher than without the EPA rule, according to the


Steve Clemmer, director of energy research at the Union of

Concerned Scientists, a Cambridge, Massachusetts-based

environmental group, said the analysis shows the cost impacts

from the rule to be modest.

“The increase in natural gas use in early years followed

by a big shift to less polluting renewable energy enables the

country to continue the transition away from coal,” Clemmer

said in a statement.

Representative Lamar Smith, a Texas Republican and critic

of the EPA, requested the analysis from EIA.

To contact the reporters on this story:

Jim Snyder in Washington at;

Tim Loh in New York at

To contact the editors responsible for this story:

Romaine Bostick at;

Jon Morgan at

Steve Geimann

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